Marketers to revisit their rural strategy Accenture

Growing wages and aspirations have changed the way rural India makes its decision of buying consumer goods.
Marketers to revisit their rural strategy Accenture

Rural consumers in India have turned brand conscious, trusting well-known names and buying products that align to their aspirations, according to a recent study.

According to Accenture’s report ‘From Touchpoints to Trustpoints: Winning Over India’s Aspiring Rural Consumers’, 71 percent customers prefer buying branded products and 59 percent see brands as “trustworthy”. They also give 66 percent weightage to brand image and functionality.

The report also highlighted that decision-making among the rural shopper has undergone a shift. The impact of traditional influencers such as community leaders, village heads, local shopkeepers among others are losing their ground. Only one percent and six percent of village respondents said the key influencer for their last big-ticket purchase was the village head or the local shopkeeper, respectively.

Only seven percent respondents said advertisement and celebrity endorsements have an impact on their final purchase decision. Of the respondents, 46 percent claimed advertisements and celebrity endorsements have no influence at all and 47 percent said it has limited influence but no bearing on their final purchase decisions.

Rather word-of-mouth recommendations from friends and family remain the biggest source of information in both planned and impulse purchases — bigger than television advertisements and company marketing campaigns. Research further suggests that rural consumers, even if they cannot do much about their bad experiences with products or companies, do not shy away from spreading the word. Almost 63 percent of respondents said they tell others around them when they have a bad purchase experience. 

The study 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 of channel partners and in-depth interviews with more than 40 business leaders.

“We describe how India’s rural consumers are changing on three key dimensions, changing in ways that defy long-standing stereotypes and outdated assumptions,” said Sanjay Dawar, managing director and India lead, Accenture Strategy, in the report.  

Given the roughly 850 million people living in 643,000 villages throughout India, most companies recognise that they cannot afford to overlook these consumers. Most businesses have tried to capture the rural market opportunity by building their geographic footprint — hoping that reaching rural consumers this way would guarantee a share of their wallet.

“Yes, physical reach matters, but it will not be sufficient in itself to ensure sustainable growth in the future. Companies will also need to make concerted efforts to connect “mentally” with the rural consumers to really understand how rural consumers are then using those insights to create more advanced experiences that build trust and loyalty with these consumers, at every step in the purchase journey,” said the report.

The report divides the rural consumer into four basket–traditionalist, steady climbers, young enthusiasts, and village elites. And companies will need strategies according to these consumers.

One of the biggest drivers of growing rural demand over the past few years has been the rise in rural wages. Rural wages have recorded a sharp increase of 17.3 percent during the period FY2009–FY2013. Some of the factors that have caused the spike in wages include government policies such as MGNREGA (rural employment scheme), a rise in minimum support price of food items, better realisations for food commodities in the international markets and increased participation of rural labour in construction industry. Spending on non-food items rose from 40 percent of total spend in FY 2005 to more than 50 percent in FY 2012.

Image consciousness also drives Aspirational behaviour. Many rural consumers take immense pride in owning popular brands and believe that such ownership enhances their social standing. The survey indicates 15-20 percent of rural households have purchased automobiles, consumer durables and personal gadgets in the last year. Among such households, 20-30 percent plan to buy more consumer durables next year. Research findings indicate that there is a class of products that are in demand by rural consumers to satisfy the urge to establish their social status in their villages and meet their desire to live an urban lifestyle.

Nearly 42 percent of the 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 Changing Face of Rural India