Rural Consumer Behaviour

Understanding Rural Consumer Behavior in India

• The Indian rural market is a complex and dynamic one, with over 65% of the country's
population residing in rural areas. This diverse market is characterized by unique consumer
behaviors, influenced by factors such as income, education, culture, and traditional values.
• Price Sensitivity: A Key Driving Force
• With lower average incomes compared to urban counterparts, rural consumers are highly price-
conscious. They prioritize affordability and often seek the most value for their money. This price
sensitivity is evident in their preference for basic, functional products, often opting for generic
brands rather than premium offerings.
• Example: A study by Nielsen found that over 60% of rural consumers prefer generic brands for
packaged food products, compared to 30% of urban consumers.
• Brand Loyalty: A Spectrum of Attitudes
• Brand loyalty among rural consumers tends to vary across product categories. For essential items
like groceries and personal care products, brand loyalty is often strong, driven by familiarity and
satisfaction with existing brands. However, for non-essential items or those with perceived
higher value, brand loyalty may be weaker, with consumers more open to trying new brands.
• Example: A survey by market research firm AC Nielsen revealed that brand loyalty for
motorcycles is relatively high in rural India, with around 70% of consumers sticking to their
preferred brands.
Understanding Rural Consumer Behavior in India

• Word-of-Mouth Marketing: A Powerful Force

• Word-of-mouth marketing holds immense sway among rural consumers. Personal
recommendations from family, friends, and neighbors play a crucial role in
influencing purchasing decisions. This reliance on trusted sources fosters trust and
credibility in product choices.
• Example: A study by Ogilvy & Mather found that over 80% of rural consumers rely
on word-of-mouth recommendations when making purchase decisions, compared
to 60% of urban consumers.
• Personal Interactions: A Preferred Approach
• Direct personal interactions with sellers are highly valued among rural consumers.
They appreciate the opportunity to engage with vendors, ask questions, and
receive personalized recommendations. This preference for direct contact stems
from a sense of trust and confidence in face-to-face interactions.
• Example: A study by McKinsey & Company found that over 70% of rural
consumers prefer to purchase electronics and appliances from brick-and-mortar
stores, allowing for personal interactions with salespeople.
Understanding Rural Consumer Behavior in India

• Traditional Values and Beliefs

• Traditional values and beliefs play a significant role in shaping rural consumer behavior.
Family and community are often deeply embedded in their purchasing decisions.
Additionally, adherence to religious practices and cultural norms can influence product
choices and brand preferences.
• Example: A survey by market research firm Kantar Worldpanel revealed that over 50% of
rural consumers consider the approval of their family and community to be an important
factor in their purchase decisions.
• Mobile Phones: A Gateway to the Digital World
• Mobile phones have become ubiquitous in rural India, serving as a bridge to the digital
world. While internet penetration remains lower than urban areas, mobile phones are
becoming increasingly important for accessing information, making payments, and
engaging with brands.
• Example: A report by the Internet and Mobile Association of India (IAMAI) found that the
number of mobile internet users in rural India has grown by over 30% annually in recent
years.
 Emerging Trends Shaping Rural Consumer Behavior

• Several emerging trends are shaping rural consumer behavior in India:

• Rising Incomes: As incomes continue to rise in rural areas, consumers
are showing a growing interest in higher-quality products, seeking value
beyond affordability.
• Example: A study by the International Food Policy Research Institute
(IFPRI) found that rural household spending on food and non-food
items has increased by over 10% annually in recent years.
• Increasing Adoption of Technology: The adoption of mobile internet
and e-commerce platforms is expanding, providing rural consumers
with access to a wider range of products and services.
• Example: A report by Google India found that over 50% of rural internet
users are now using e-commerce platforms for online purchases.
 Emerging Trends Shaping Rural Consumer Behavior

• Urbanization and Migration: Rural-to-urban migration is bringing rural

consumers into closer contact with urban trends and
lifestyles, influencing their purchasing choices.
• Example: A study by the World Bank found that over 20 million people
migrated from rural to urban areas in India between 2011 and 2021.
• Brand Awareness and Engagement: Brands are increasingly tailoring their
marketing strategies to resonate with rural consumers, employing social
media, mobile marketing, and localized campaigns.
• Example: A campaign by Hindustan Unilever used localized social media
advertising to reach rural consumers with relevant product messaging in
their local languages.
 Navigating the Rural Market: Understanding Consumer Needs

• To effectively engage with rural consumers, businesses need to:

• Embrace Price Sensitivity: Position products and services at competitive prices,
highlighting value for money.
• Recognize Brand Preferences: Understand the importance of brand loyalty in some
product categories, while also recognizing the potential for brand exploration in
others.
• Leveraging Word-of-Mouth Marketing: Foster strong relationships with influencers and
community leaders to amplify brand messages.
• Prioritizing Personal Interactions: Create immersive retail experiences that cater to the
desire for direct engagement with sellers.
• Respecting Traditional Values: Acknowledge and incorporate traditional values and
preferences into marketing and product development.
• Harnessing Mobile Technology: Leverage mobile phones for targeted marketing,
payments, and customer engagement.
• Adapting to Emerging Trends: Stay abreast of rising incomes, technology adoption,
 BUYING DECISION
PROCESS
RURAL MARKET

Evalua-
Need Informa- Post
tion of Purchase
Recogni- tion Purchase
Alternat-
tion Search
ives Decision Behavior
1. Need Recognition – High involvement product,
productivity drives consumer’s recognition for need.
2. Information Search – From opinion leaders and
influencers. Fuelled by exhibitions and road shows.
• Sources
- Personal
- Commercial
- Public
- Experiential
3. Evaluation of Alternatives – Depends upon the type of
product- convenience or shopping. More importance to price
and quality and operational advantages respectively.

• Evaluation Models
- Expectancy Value Model
o Identifies necessary attributes.
o Evaluates relative importance of each.
o Arrives at overall brand impression for further comparison.

- Lexicographic Model
o Attributes arranged in order of priority.
o Selection made if first attribute is satisfactory.
o If not, second attribute forms the basis for evaluation.
- Conjunctive Model
o Consumer selects product that satisfies the integral
attributes.

- Disjunctive Model
o A brand is selected that has satisfying levels of a
chosen attribute.
4. Purchase Decision – collective decision guided by the
perceived risks associated with the product plus the
key influencers.

• Perceived Risk Factors

- Personal
- Product
- Information availability
- Financial
- Situational
5. Post Purchase Behavior – higher satisfaction and
lower dissonance. Risk taking and expectation level is
low.

Customer satisfaction is the key to building a profitable

and sustainable relationship with customers.