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Do you know the real rural consumer?

Increased awareness and aspirations are creating distinct consumer segments in rural India

Sanjay Dawar Raghuram Devarakonda & Vineet Ahuja 

Companies and business executives in India remain bullish about the enormous potential India's hinterland has to offer. The market is vast and yet remains untapped. Most businesses have tried to capture this opportunity by building their geographic footprint - hoping that reaching rural consumers this way would guarantee a share of their wallet. Physical reach matters, but it is not enough in itself to ensure success in the future. An Accenture's survey conducted to study behaviours and attitude of rural consumers across 10 Indian states as well as a quantitative survey that went to more than 2,800 consumers in 320 villages and 32 census towns in 8 states, reveal that half of the respondents visit nearby towns and district headquarters to make their purchases. This indicates an opportunity for companies to understand rural consumers' aspirations - is it just the "availability" factor or is there a deep desire for a better shopping experience that explains their evolving behaviour?

To find answers to some of these critical questions, companies should first resist viewing rural Indian consumers as a homogeneous group. Accenture's research indicates that increased awareness coupled with individual aspirations is creating distinct consumer segments in India's hinterlands. One of the key findings of the survey led to defining India's rural consumer segments into four broad categories - Traditionalists, Steady Climbers, Young Enthusiasts and the Village Elites. While these four segments can help companies develop more tailored marketing strategies, consumers within each segment are not identical in their preferences and needs. Companies, therefore, must customise their offerings and strategies to win over these sets of consumers.

Traditionalists are conservative rural consumers who rely on conventional channels to make their purchase decisions. Necessity drives most of their purchase decisions and they opt for the cheapest offerings available. They have lower literacy levels compared to other consumer segments, are cautious spenders and lead difficult lives. Almost 41 per cent of the consumers Accenture surveyed fell under this category.

Steady Climbers aspire for a better and comfortable lifestyle. They are conscious about their social standing and strive to improve this by buying branded products and offerings.

Young Enthusiasts are rural consumers aged 18-28 years - use technology extensively and buy branded products to enhance their social image. They want to emulate their urban counterparts and for them a brand's image speaks volumes about their social standing among their peers. Although this is still a minor segment - only 2 per cent of the survey sample - they are increasingly shaping decisions of consumers in other segments.

Village Elites boast of high education and awareness levels. They demand the best in product quality, features and aesthetics. They aren't exactly brand loyalists. About 30 per cent of the survey sample fell under this segment.

While companies believe that consumers make most planned purchases on special occasions, 55 per cent of respondents said they make such purchases as the need arises. This is particularly true of Traditionalists, Village Elites and Steady Climbers. For Young Enthusiasts, however, timing of festivals and other special occasions strongly influence when they buy. Though companies underestimate the importance of customer service in rural markets, almost half (49 per cent) of the respondents consider it an important factor when making purchases. In fact, 63 per cent tell others about a bad purchase experience.

Another long-standing assumption is that rural consumers care only about price and seek low-cost versions of products. The reality: Respondents give 66 per cent weightage to brand image, functionality and aesthetics. Price, though important, gets 34 per cent weightage.

Accenture's findings also suggest a growing dissatisfaction among rural consumers with product assortment available to them. They want an "urban-like" shopping experience. An increasing number of consumers from Village Elites, Young Enthusiasts and Steady Climbers segments reported visiting shopping malls in nearby cities or towns to make purchases, often accompanied by their immediate family members. A small yet growing segment of rural consumers (25-34 year olds) is also browsing the internet for information on products, brands and prices. Most of these individuals fall in the Young Enthusiasts and Village Elite segments. Interestingly, only 7 per cent of the respondents mentioned television advertisements and celebrity endorsements having an impact on their final purchase decisions.

The report cites traditional influencers losing some of their power while newer sets of influencers gain relevance - women (who are earning members), children, youth segment (internet savvy who help guide the family in purchase decisions), professional experts (doctors, beauticians, architects) and progressive farmers.

While Traditionalists rely on traditional influencers, Steady Climbers and Village Elites rely more on their spouses, their children and professional experts. Young Enthusiasts seek help from online sources to validate information in addition to gathering input from friends or family members. Companies, therefore, need to develop a strong network of influencers and advocates depending on the customer segment they are targeting.

There's also opportunity for companies to leverage the mobile phone platform to strengthen reach. This can help bridge the last-mile reach to spread brand messages in a cost-effective manner. With an increasingly connected rural population and the cost advantage it offers as compared to traditional media in rural areas, mobile marketing is set to become the future of rural marketing.

Companies need to let go of outdated assumptions about rural consumers and win their trust by understanding what they want by tapping into the right influencers. Just being physically present is no longer sufficient. There is also a need to connect "mentally" with rural India consumers to understand their needs, what they value and deliver to those expectations consistently.

Managing Director and Lead, Accenture Strategy, Accenture, India

MD, Sales & Customer Services Practice, Accenture Strategy, Accenture, India

Principal, Accenture Strategy, Accenture, India

First Published: Mon, March 09 2015. 00:11 IST