What rural consumers want

Consumer behaviour in rural markets changed over the last 10 years owing to better roads, higher education, stronger media reach and mobile phones


A retail seller based in Nellapatla village, Warangal in Andhra Pradesh. Photo: Mint
A retail seller based in Nellapatla village, Warangal in Andhra Pradesh. Photo: Mint

Mumbai: Rural consumers are changing. They are not loyal to brands. Their reasons for consuming a brand are very different from those of their urban counterparts and what makes them even more complex is that often, their reasons for consuming products are starkly different even to consumers in other rural markets. These key findings are from an indicator study titled R|Scape which was released late on Monday evening.

The study, which was launched with the aim of helping marketers understand rural consumer behaviour, was conducted by the Indian Institute of Management Ahmedabad (IIMA); MaRs Monitoring and Research Systems Pvt. Ltd, a full service research agency; Decision Point Pvt. Ltd, a specialized consumer and retail analytics firm; and Geometry Global Encompass Network an experiential marketing firm from the WPP Group.

The study covers 6,000 rural consumers across eight states—Uttar Pradesh, Rajasthan, West Bengal, Maharashtra, Bihar, Gujarat, Andhra Pradesh and Tamil Nadu—and includes 20 popular categories including deodorants, shampoos, hair oil, lipsticks, toothpaste, cooking oil, biscuits, breakfast cereal, shoes, mutual funds and life insurance, among others.

“The idea is to stop looking at the (rural) market as a monolith,” said P.K. Sinha, professor of marketing, IIMA, explaining that up until now, marketers would at best acknowledge that there was a difference in states.

“We believe that it is time for companies to move beyond developing just market strategy to developing a consumer-based strategy,” he said.

The need for the study emerged as consumer behaviour in rural markets changed over the last 10 years owing to better road connectivity, higher education, stronger media reach and increasing penetration of mobile phones, among others.

While consumer product companies were aggressive about reach in rural markets to drive sales growth, in the last few years that growth had started tapering, explained Ravi Shankar, founder and CEO at Decision Point.

“Increasingly, it became clear that companies would need to focus on consumer segments rather than rural geographical segments,” he said.

The study, which was able to generate category-level adoption, purchase and consumption-related insights based on inputs such as age, gender, religion/state threw up some key findings.

“Rural consumer segmentation needs to be a function of adherence to village norms and urban centricity,” said Rahul Saigal, group chief operating officer, Geometry Global Encompass Network, explaining that segmenting them on socio-economic class parameters alone was no longer relevant.

For instance, rural consumers who were more rural-centric tended to be more fixed in their views and consumption patterns and were more worried about what their peers in the village thought. While urban-centric consumers were more open to exploring what their counterparts in Indian cities were consuming.

The study also found that consumers were exhibiting a lack of brand fidelity both attitudinally and behaviourally. Some consumers maintained that they liked to change the product they used, even if it was a good product, which meant that there was a need for brands to start creating stronger brand loyalty among rural consumers.

What came out strongly in the study was that reasons for adoption and consumption of categories was very different for urban and rural consumers, hence the same advertising and brand positioning rarely worked across both markets.

For instance, when it came to studying the usage of deodorants by young males in rural India, a majority of respondents maintained that they bought deodorants as it worked against perspiration (45%), followed by the fact that it gave them confidence in front of their male friends (28%). A mere 5% bought it because it would impress girls.

“Which is interesting, considering that a majority of advertising in this category is about impressing girls,” said Raghu Roy, chief executive, MaRs Monitoring and Research Systems.

Another important finding was that rural markets were not homogeneous, and that rural consumers in different markets behaved differently. Making a case in point, Rahul Kishore, manager marketing analytics-South Asia, Hindustan Unilever Ltd, maintained that regional markets were not homogenous.

“What is interesting as well as challenging for us is that consumers in rural markets can have starkly different reasons for buying and consuming products. For instance, migrants in Bangladesh who are used to sending chunks of money back home each month, tend to prefer buying large pack sizes. While consumers in Bihar, who largely earn daily wages, tend to buy small pack sizes, as they don’t have that kind of liquidity.”