An Accenture study shows changes defy assumptions of rural buying patterns as footprint of media, telecom increases
Mumbai: Penetration of media and telecom services has changed the way India’s rural consumers buy. Like their urban counterparts, consumers in the hinterland have become more aspirational, striving to purchase branded, high-quality products. They have also become more discerning, no longer willing to accept inferior products simply because they cost less, according to a research study by Accenture Strategy, India, a management consulting and technology services company.
The changing rural consumer is also defying stereotypes and outdated assumptions. There is no longer one rural consumer—a generic entity who supposedly can be served profitably with one-size-fits-all strategies, according to the Accenture report, which is the third in its Masters of Rural Markets series.
Moreover, traditional influencers no longer have a strong hold over the rural consumer.
Only 1% get influenced by the village head and about 6% still listen to the shopkeeper. Even the role of the television is diminishing, with only 7% of the rural consumers getting influenced by claimed and celebrity endorsements, said the study, which included 10 focus group discussions with rural consumers in 10 Indian states, a quantitative survey of 2,800 rural respondents in eight states, interactions with executives from more than 70 channel partners and in-depth interviews with more than 40 business leaders.
Over the last few years, marketers have been expanding to the interiors to capture a share of rural consumer spending. For instance, Hindustan Unilever Ltd, the country’s largest consumer packaged goods company by sales, added one million stores under direct coverage in 2013 across rural and urban India, taking its total direct reach to 3.2 million outlets.
Dabur India Ltd, the maker of household brands like Babool toothpaste, Sani Fresh toilet cleaner, Hajmola tablets and Glucose-D, has increased its penetration from 14,000 villages to 40,000 as part of its so-called “project double" programme launched in fiscal 2013.
“Physical reach is important, but it will not be enough in itself to ensure sustainable growth in India’s rural markets in the long term," said Sanjay Dawar, a managing director and India lead at Accenture Strategy, in the report, while explaining that companies will also have to extend their “mental reach" to rural consumers.
The rural consumer has evolved and can be broadly classified as traditionalists, steady climbers, young enthusiasts and village elites, said the report.
According to the report, traditionalists are the conservative rural consumers that rely on conventional channels to make their purchase decisions and necessity drives most of their purchase decisions and price is a key factor. Steady climbers aspire for a more comfortable lifestyle and strive to buy branded products. Young enthusiasts are rural consumers aged 18-28, make extensive use of digital technology and buy branded products to enhance their social image. Village elites are the progressive rural consumers, boasting high education and awareness levels, and desire the best in all products.
“There is no difference between the urban and the rural consumer," says Mayank Shah, group product manager, Parle Products Pvt. Ltd, the maker of Parle G, Monaco and Krack Jack biscuits, while explaining that due to media and telecom penetration, the aspirations of rural consumers have become similar to those of the urban consumer. Their consumption patterns are similar, the difference being in the total spending outlay, which could be less, Shah said.
The total number of telecom subscribers (mobile plus landline) in rural India crossed 378 million in July 2014. And of the 205 million Internet users in India in 2013, 68 million lived in rural areas.
Moreover, one-fourth of the 100 million people in India who access the Internet using mobile devices live in rural areas. This base of digital consumers is only expected to grow, said the report.
Interestingly, almost one in two of the respondents expressed a willingness to purchase online in the near future, said the survey.
Consumers in India’s hinterlands now view value through a broader lens as well—seeing it defined by more than just price.
“Nearly 42% of our survey respondents indicated product upgrading as a reason for spending more in a category. These consumers are defying conventional wisdom which says that rural consumers care most about getting the lowest possible price and will settle for sub-standard offerings to get the best deal," the report said.
In fact, 71% of the survey respondents claimed to have purchased branded products and 59% of consumers said they bought them because they felt the products stood for quality and trustworthiness. As such, price as a factor accounted for 34% of the weightage as compared to 66% weightage for brand image, functionality and aesthetics, said the survey.
“The next generation of the rural consumer who is coming in has a higher exposure level than the previous generation," says Arun Pal, chief operating officer for Kenstar at Videocon Industries Ltd, while explaining that the previous generation was traditional and conservative but the younger rural consumer is open to experimenting and wants convenience.
For consumer durable makers, demand in categories like panels (flat televisions) is split equally between urban and rural and the cathode ray tube (CRT) television is almost dead, says Pal of Videocon, while explaining that just two years ago, panels were considered an urban product.
“Companies are increasing their reach and product portfolio availability into the interiors," says Jitendra Agarwal, Nashik-based stockist and distributor for companies like Britannia Industries Ltd, Dabur, Marico Ltd and Mondelez India Foods Ltd, while explaining that his reach in the villages around Nashik has expanded to cover even those with population of 3,000 as there is a demand for the branded products.
At Parle Products, the product range in the interiors has increased from basic biscuits like Parle G to include creams and cookies over the past few years, said Shah.
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