Consumer behavior of Rural India

• IAS = Rs.10 million
• IFS, IPS = Rs.8 million
• Other Gazetted officer = Rs. 4 million
• Non Gazetted officer = Rs.1million
• Pvt. Job Manager and above ( college brand doesn't matter) = Rs.0.5 million

You all must be wondering what I am trying to prove here. Well my friends I am trying to quote the price of groom in rural Indian market. I got to know the above figures as one of my distant cousin (born in small village but studied in girls Pilani hostel Rajasthan) is suppose to get married and when her parents started looking for suitable groom, above figure was quoted by the respective parents of groom. Well as relative of girl I felt terrible but as marketer I saw an opportunity. By looking at the price label I was confident that rural consumers in India definitely trust government products. I mean the products endorsed by government agencies have more value as compared to product endorsed by private agencies.

Since I had interest in the life of rural India therefore I decided to spend some time with villagers and to do so, I went to my native place to learn the changes in the rural environment. I found out that rural consumers tend to lead a relaxed life and are more brand loyal as compared to urban counterpart. Once they become habitual of service/product, it is difficult to change their habit and they tend to feel pride in showing off luxury items (if they get good deal).

Cultural values and norms have stronger influence. (Jeans t shirt is strictly no no in villages). Superstitions and beliefs in omens are high. Woman role is limited to run a household and take care of family. She has little or no say in buying decision except for products like saree, bangles, Alta, Bindi..etc ( I mean the products which are for her own consumption).

Reference group has huge impact on buying decision. Relatives and people from same caste and community are important reference group. 80% of rural India has joint family structure and I won’t be surprised if after 10 years only 50% of rural India stays in joint family because like any other change rural India is also changing. As a result rural India tends to exhibit collective consumer behavior as most products are purchased for the consumption of everyone in the family.

Before we proceed further I would like to share one of my experiences with rural people. When I was 7 year old I had gone to spend summer vacation at my maternal grand parents house. In the same year my maternal aunt was getting married. As part of the custom, brother of the bride goes to pick the bride for something called “ Pag phera”. I got the opportunity to go with maternal uncle to pick the bride. When I entered their huge aangan I was shocked to see the house. It had automatic doors, swimming pool, All bathrooms had bathtubs and shower, Beautiful landscape, gardens……. That house was definitely piece of beauty. Well the point I am trying to make here is rural India has two categories of people ( I have included upper middle class in rich segment and lower middle class in poor segment)
• Rural Rich
• Rural Poor
And trust me you cannot find out the difference between rural rich and rural poor by looking at them because even rural rich will wear same clothes as poor(only difference would be cloth material). Saving is highest in rural India. People tend to save more as compared to their urban counterpart. They only invest in basic needs or for renovation of house( in case of any occasion like marriage or festivals). Their demands are very basic but mind it they can afford luxury items, but their saving habit as well as fear of abduction does not allow them to buy luxury item.
Rural poor comprises of landless laborers, daily wage earners, family servants, pundit who perform pooja in house & temples, lower caste…etc where as rural rich consist of landlords, government officers, SME’s..etc. This categorization of rich and poor forces us to assume that consumption is driven to large extent by occupation and income of the customers. Another important factor that influences demand is instability of income of farmer which is directly linked to seasonability of agricultural production as well as unpredictable monsoon.

The landless laborers & daily wage earners get their remuneration on day to day basis. Some get cash & some get Anaaz (cereals) we can say that barter system still exist in villages. Therefore they purchase small quantities of product at a time, mostly on daily basis or for one or two days consumption. Rural consumers show preference for bold and primary colours. All dark colours except black colour are auspicious for any occasion ( Keep this point in mind while deciding packaging of product). Rural consumers also exhibit a certain specific patterns in five stage buying decision process ;-
• Problem Recognition
• Information search
• Evaluation of alternatives
• Purchase decision
• Post purchase behavior

( Please note that above buying decision process is sourced from buygrid framework)


Community plays an important role during information search and problem recognition stage. Even if needs are internally triggered these are shaped by interacting with the reference group mainly community. Low penetration of mass media and dominant presence of community influence the problem recognition stage through word of mouth. Publicity efforts by different government agencies and non government organization working in rural India play crucial roles in creating awareness during problem recognition stage. Fairs, haats, exhibition, roadshows .. etc are some of the methods of information search. Opinion leaders & people who are perceived to be knowledgeable like sarpanch, Mukhiya, school teachers play important role as information providers & advisors. As the perceived risk of buying tends to be higher in rural consumers, they exhibit greater involvement in purchase process leading to more detailed information search behaviors. Since the reach of electronic media and other mass advertising is low in rural areas dependence on information advice and suggestion from other people are higher however as the exposure to electronic media and information technology is increasing rural consumers are more informed about the service and their dependence on traditional reference group is waning. E.g cellular phone. Today the penetration of cellular phone has increased tremendously in rural India so if you are planning to tap the rural market, mobile advertising in Hindi or regional language is best bet.( Now all the product managers of mobile advertising will ask me same question : Handset doesn’t support, how can we send the communication in Hindi or regional language… My answer to that question is think think…Everything is possible in terms of technology. Technology should work in accordance with business requirement not vice versa).

Hence as a marketer if you are planning to target rural consumer than ask below questions to yourself:-

1. How is need being satisfied or addressed today ?
2. How will your product / service meet identified needs?
3. Why it is better than alternatives from the customer’s perspective?
4. What will compel consumer to buy your product?
5. Which aspects of the business are most critical?
6. Which aspects need to be done well and which ones exceptionally well?
7. Which aspects, if done marginally, could sink the business?
8. What talent/expertise is needed to meet critical needs of business?
9. How will you attract that talent?
10. Begin with needs and align talent with it
a. Don’t start with people available
11. Who pays what and why?
a. Specific customer groups
b. Sell price - why reasonable?
c. Volume
i. Initial, Ramp up rate, Reasonable potential
12. Cost Structure
a. COGS
b. Gross Profit (Rs. & %)
c. Distribution Costs
d. Marketing Costs
e. Support Costs
f. Net Potential

Assuming need is basic like soap/shampoo then the my plan would be as follows :-
1. Understand the need of the customer (Begin with the need not the product or service). Suppose need is Soap/Shampoo.

2. Once we have figured out need, now let’s try to segment the base ( since the need is basic we assume that entire rural base is target base) and develop the product accordingly. Based on consumers need I have developed Soap A with 3 product extensions
a. Soap A1 (for Men)
b. Soap A2( for Women)
c. Soap A3( for Children)

(Note: If you study rural Indians you will find that entire family uses the same soap so why should we place different soaps for different segment. Answer is 1) to change habit of one soap/family 2) Rich can afford different soap for different family members 3) Poor usually buy 1 or 2 day consumption so product will be within their reach.)

3. Then segmenting rural base into below categories
• Region/Villages
 Rich
• Men
• Women
• Children
 Poor
• Men
• Women
• Children

4. Secondly build up sales force (from rural India only) who can personally visit Sarpanch/Mukhiya of village.

5. Take Sarpanch/Mukhiya into confidence and try to make them your distributor. Since most of them are rich and would not like to sell your product for lower margin therefore you need to really negotiate with them and if they themselves do not want to associate with your product then ask them to nominate someone. Treat them like your super boss and keep saying “ yes boss”…

6. Position your product separately for Rich and poor. For Rich you can sell 30 days consumption at one go and for poor you can sell pouches/sachets. Instead of taking cash from poor, you can accept anaaz (based on your market behavior. If in local market shopkeepers accept anaaz from customers then you should as well accept anaaz but if it increases your cost then you need to think of selling anaaz on daily basis to local market only and convert them to cash.) If you can print Mukhiya name on the packaging it will be customer delight because they treat Mukhiya equal to GOD.

7. After doing the above activities, analyze the No’s & you will find that 30% of consumers are contributing to your 70% sale. You have two choices
a. Either you concentrate on those 30 % high users
b. Or Increase volume by concentrating on 70% low users

If I would have been at your place I would have gone for mixed strategy, concentrating on both volume and 30:70 rule, because you cannot ignore tomorrow’s future for today’s present.

Hmmm …. Let’s come to an end of this discussion. Please note that I have no experience in selling FMCG products in rural market so my assumptions could be incorrect. I have tried to put across my thought process based on my observation and discussion with villagers. I end this write up with a quote “ haseka Rural India to badhega rural market” means “ Smiling Rural India will lead to growing Rural market”.

Special thanks to
• Shri Bhola Pandey ( Mukhiya Vill Satpipra)
• Mrs. Seema Singh, Mrs. Nirmala Choudhary and Mrs. Sita Pandey ( My family Members)

Glossary
pag phera = a custom followed in Hindu marriage
Aangan = courtyard
Mukhiya/Sarpanch = Leader
Alta/bindi = makeup items used by Indian women
Pooja = offering prayers to GOD
COGS = Cost of goods sold.
IAS = Indian administrative services
IFS=Indian foreign services
IPS=Indian Police service
Super boss = bosses’ boss ( please note that there is no word as super boss in dictionary)