Indian companies fail to respond to changing needs of rural consumer

According to Accenture's report, businesses need to build trust and loyalty in the rural market

Businesses in India are more confident than ever about the growth of rural markets, but are failing to respond to the changing needs and behaviours of consumers, says a report.

While businesses in India have built their physical footprint in these regions they need to build trust and loyalty in this market, said Accenture in its annual research report.

It also said that the findings of the survey defied conventional wisdom that rural consumers care most about price and will settle for sub-standard offerings to achieve the best deal.

Rural consumers are aspirational and strive to purchase branded, high quality products, it said, adding that around 71% of respondents have purchased branded products and 59% see them as trustworthy.

"The expectations of today's rural Indian consumers differ markedly from those of previous generations. They are moving away from purely economic concepts of value driven by low prices, towards a broader notion of value that combines price with utility,features of products and services," said Sanjay Dawar MD for Accenture's Strategy practice in India.

Interestingly, only 7% of the respondents said that advertisements influence their final purchase decisions.

"While these findings convey a shift in rural consumption patterns, Indian businesses are still using conventional marketing channels, such as celebrity endorsed advertisements, to reach these consumers," the report said.

It noted that rural consumers are better networked and proactively seek information through multiple sources. Additionally, women and children now play a more empowered role in purchasing decisions and travel further to buy goods and services.

"Being present is not sufficient to be competitive. To succeed, companies must extend from physical touchpoints to experience-led 'trust points'," Dawar said.

As per the report, while many business believe consumers make most planned purchases on special occasions, more than half (55%) of the respondents said they make such purchases as the need arises.

Likewise, while many companies underestimate the importance of customer service in rural markets, almost half (49%) of respondents consider high-quality customer services to be an important factor when making purchases.

"To meet the changing needs of the rural consumers, companies will need to adapt their product portfolio, their value propositions and their go-to-market strategies," Accenture Strategy MD Sales and Customer Services Raghuram Devarakonda said.

The research involved 2,800 consumers and customer service officers at 40 businesses in several states.