What Drives The Behaviour Of Indian Rural Consumers

What Drives The Behaviour Of Rural Indian Consumers? 

With a large proportion of the population residing in rural areas, understanding the behaviour of rural consumers is crucial for businesses aiming to tap into this market. The rural consumer market in India represents a significant segment of the overall economy. In fact, rural commerce in India is expected to grow at a Compound Annual Growth Rate (CAGR) of about 20%. They represent a larger pie of the economy driving demand and consumption across a heterogeneous mix of preferences.

source: The Mint

 

To tap into the potential of rural markets, it’s crucial to understand what makes these consumers tick. Let’s dive into the key factors shaping rural consumer behaviour and debunk some common myths.

Characteristics of Rural Consumers

Rural consumers in India possess unique characteristics that differentiate them from urban consumers. While it’s difficult to club them into various closely bound groups, still for marketing demand analysis, let’s look at some of their key characteristics.

Key traits include:

• • Education: Rural consumers often have lower literacy levels, which significantly impacts how they perceive and process marketing messages. This makes visual and audio media more effective than print. For instance, brands like Hindustan Unilever Limited (HUL) use audio-visual campaigns to reach rural audiences effectively.

• Age Group

The rural population skews younger than urban areas:

• Under 25: 55%
• 25-45: 30%
• Over 45: 15%

This youthful demographic is hungry for new products and experiences, but they’re also deeply rooted in tradition. It’s a tightrope walk for marketers!

• Income Levels: Typically, rural consumers have lower disposable incomes. As a result, they prefer affordable and value-for-money products. 

Though rural incomes vary wildly, don’t be fooled – there’s still plenty of purchasing power in these areas. Farming’s the big decider here, shaping not just incomes but also consumption patterns. Seasons and crop cycles? They’re a big deal for rural spending.

Percentage of Rural Population	Income Group
60%	Low
30%	Middle
10%	High

For example, Coca-Cola successfully captured the rural market by introducing smaller, lower-priced bottles, making their products more accessible

• Occupation: While agriculture is the primary occupation, rural consumers also include artisans, weavers, and small-scale traders. This diversity in occupation impacts their purchasing behavior and preferences. Initiatives like HUL’s Shakti program leverage local women entrepreneurs to sell products, understanding local needs and preferences better.
• Impact of Reference Groups: Influential figures in rural communities, such as teachers, health workers, and local leaders, play a crucial role in shaping consumer preferences. Brands often engage with these local influencers to build trust and drive product adoption through word-of-mouth marketing.
• Media Habits: Due to lower literacy rates, rural consumers favour non-print media. With increasing internet penetration, rural India accounted for 53% of India’s total internet consumption in 2023. Mobile internet and social media platforms have become vital channels for reaching rural consumers.
• Brand Loyalty: Rural consumers tend to exhibit strong brand loyalty. They stick to brands they trust and perceive as offering good value. This loyalty can be leveraged by maintaining consistent product quality and effective after-sales service.
• Value for Money: Quality and cost-effectiveness are paramount for rural consumers. They often rely on word-of-mouth recommendations to make purchasing decisions. Companies like HUL have successfully used sachets for products like shampoos, providing affordable options that do not compromise on quality.

Types of Rural Consumers based On Consumption Patterns

Rural consumers can be broadly categorized into three types:

Households: These consumers purchase goods for personal or family use and have distinct purchasing behaviour driven by their unique socio-economic conditions. They prioritize essential goods and services, often seeking value-for-money products due to limited disposable incomes. FMCG Brands like P&G, HUL cater to this segment by offering affordable products in smaller packaging sizes, such as sachets for shampoos and detergents,  and even edible oils making them accessible to cost-sensitive rural households​ .

Rural Industrial Consumers: This category includes individuals or entities buying products for use in agricultural or small-scale industrial activities. They are typically involved in farming, poultry, dairy farming, or small-scale manufacturing and require products like fertilizers, seeds, agricultural machinery, and tools. Companies like Mahindra & Mahindra and ITC cater to this segment by providing tailored agricultural solutions and machinery. 

Rural Resellers: These are retailers in rural areas who purchase goods for resale to local customers. They play a crucial role in the distribution chain, ensuring the availability of products in remote areas, braving challenges like limited infrastructure and logistical issues. To address these, companies employ innovative distribution strategies, such as setting up local warehouses or using mobile vans for last-mile delivery. For instance, Amul uses a fleet of refrigerated mobile vans to distribute its dairy products across rural areas, ensuring product freshness and availability​​.

 

Myths about Rural Consumers

Several myths about rural consumers persist, which can mislead marketers:

• Preference for Low-Priced Products

Myth busted! While price matters, rural consumers aren’t just looking for the cheapest option. They want value for money. Quality trumps low price, especially for important purchases.

• Homogeneous Consumer Base

Wrong, not even close. Rural consumers are as diverse as their urban counterparts. Age, income, education, and personal preferences create a rich tapestry of consumer types.

• Lack of Brand Awareness

Wrong, once again! Rural consumers are increasingly brand-conscious. They might not have access to all brands, but they know what they like and stick to it.

• Indiscriminate Purchase Behaviour

This couldn’t be further from the truth. Rural consumers are often more careful with their money, researching products and seeking recommendations before buying.

• Multi-Use of Products

While rural consumers do appreciate versatility, they’re not opposed to specialized products. It’s all about perceived value and utility.

 

Exploitation of Rural Consumers

 

Unfortunately, rural consumers sometimes fall prey to unethical business practices  such as overpricing, fake products, misinformation, and expired goods. Limited access to information and fewer shopping options can make them vulnerable. But they’re getting savvier, and companies that exploit rural markets often face backlash.

Rural Consumer Behaviour

Understanding rural consumer behaviour involves analyzing the socio-cultural, economic, and political factors that influence purchasing decisions. Key forces include:

• Socio-Cultural Factors: You can’t talk about rural consumers without talking about culture.It’s a whole different ball game from urban life. It’s steeped in traditions, with a strong focus on community and family. This cultural backdrop colors every aspect of rural consumer behavior and guides their choices.

 

• Group Influence: Peer groups and community leaders heavily influence purchasing decisions, reflecting their close-knit community structure. So any marketer has to be cognizant of the fact that any consumer dissonance can spread like wildfire amongst the rural populace.

 

• Personality and Self Concept

Rural consumers aren’t a monolith. They’ve got diverse personalities and self-images that shape their preferences. Some crave modernity, others stick to tradition. Understanding these nuances is key for marketers.

• Literacy

Rural literacy rates are on the rise, but they’re still lower than urban areas. This affects how rural consumers process information and make decisions. Smart marketers adapt their messaging accordingly.

• Employment

Jobs in rural areas are often seasonal and unstable leading to fluctuating incomes and cautious spending habits. Rural consumers might splurge during good times but tighten their belts when work’s scarce.

• Infrastructure and Technology

Rural infrastructure’s improving, but it’s still playing catch-up. Poor roads, spotty electricity, and limited internet access shape how rural consumers shop and what they buy. But change is coming – fast.

• Government Policies

From subsidies to development schemes, government policies have a huge impact on rural consumers. They can boost purchasing power, create new markets, or change consumption patterns overnight.

 

Classification Based on Behaviour

Rural consumers can be classified into various behavioural groups:

1. Habitual Group: Regular buyers of familiar brands, so mostly brand loyal.
2. Cognitive Group: Analytical and informed decision-makers.
3. Emotional Group: Purchasers driven by emotions and brand appeal.
4. Impulsive Group: Spontaneous buyers influenced by immediate needs or desires.
5. New Group: First-time buyers exploring new products and brands.

Conclusion: Why It Matters?

Understanding rural consumer behaviour is essential for devising effective marketing strategies tailored to the unique needs of this segment. But it’s no small task.  They’re a complex, diverse group with unique needs and preferences. But for companies willing to put in the effort, rural markets offer enormous potential.By addressing the specific characteristics, preferences, and challenges faced by rural consumers, businesses can successfully tap into this vast market and develop long-term loyalty.

The key? Don’t assume. Take the time to really understand rural consumers – their lives, their challenges, their aspirations. It’s not just about selling products; it’s about building relationships and adding value to rural communities.

As India’s rural areas continue to develop, so will rural consumer behavior. Staying on top of these changes is crucial for any company looking to succeed in this dynamic market