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Rural consumers are not urban’s poorer cousins

LiveMint logoLiveMint 17-05-2017 Shuchi Bansal

The rural market is not “urban” with a time lag. Nor is it a “poorer” market where smaller versions of what sells in urban India work. “The drivers of behaviour are different, motivations and aspirations are different,” says Alpana Parida, managing director at DY Works, the brand strategy and design firm which has unraveled a report titled Emerging Rural Consumer Behaviours. The study is based on data from close to 100 villages in Uttar Pradesh, Gujarat, Tamil Nadu, Odisha, Madhya Pradesh, Andhra Pradesh, Telangana, Karnataka, Haryana, Punjab and Rajasthan. DY Works has come up with the study after three years of regular visits to the rural markets in these states.

Parida says that although the firm initially started work in rural India for one of its beverage clients, it soon got interested enough to study the market for its own deeper understanding.

Its first insight was that it is a feast and famine market. This means that unlike the urban salaried class with regular cash flows, the agrarian economy has 1.5 to 2 crop cycles and the cash flows follow those. The money is not just a number in your salary account. In rural India, wealth (through harvest or gold) is visible. So success is visual and, culturally, abundance matters.

The rural consumer goes on a buying binge post harvest and lives frugally thereafter. So you would see him splurge on air conditioners (for tractor cabins, for instance) flat screen TVs and other high-value items. Often, he is willing to spend on the non-essentials disproportionate to his actual standard of living.

Parida recalls meeting a well-to-do farmer in the Amravati region of Maharashtra who had bought a helicopter after a good harvest. Although the helicopter had little use for him, he admitted to buying it as he had the money. “We saw this kind of behaviour time and again,” says Parida. A Gujarat farmer sent his son and his cousin to study in Ahmedabad at a cost of Rs1 lakh a month. The farmer, who owned 200 acres of land, also splurged on his son’s wedding. Parida remembers seeing a gargantuan wedding photo album that cost close to Rs50,000. Clearly, celebrations also see disproportionate spending.

Minimalism does not work. DY Works found a consumer who bought a gold strap for his Titan watch and got diamonds studded on it. The intrinsic value of things is important to the rural consumer.

Power in rural India is also aspirational. Rural markets have been defined by a passive mind set. Consumers here are either waiting for the rains or procurement pricing or for the government subsidies. They feel they lack control over their destiny. For this reason, sons of farmers no longer want to be farmers. They seek control, and products that give them a sense of power and control such as mobile phones and bikes are popular. Education centres are cropping up as education is seen to be giving a greater sense of control over destiny. Power is flaunted. It is never subtle. Even pucca homes are symbols of power.

To be sure, youth is no longer content to be a passive recipient. “Control is something they deeply desire,” says Parida. To them, the urban symbolizes control. It’s seen as a better life with better choices. Urban, in their mind, is what offers control plus a better life. Women are also seeking power through education and work. “Even in the Kutch region, where the sex ratio is worse than in Haryana, girls are studying,” says Parida. They are becoming income earners. They work in farms, factories, shops, and homes. Since sons are no longer keen on taking up farming, women of the house are increasingly involved in agriculture. Clearly, companies need to think afresh about rural markets. This market needs innovations and products that are specific to their needs and aspirations. An understanding of the rural consumer requires deep insights into his shifting beliefs.

To be sure, most rural families are actively seeking multiple incomes. It is a big thing now. This could be from farming, driving autorickshaws, renting out tractors, opening a kirana shop or from a job as a teacher. This is leading to higher disposable incomes as, in any case, their food costs are low considering they grow what they eat.

“Rural consumer is more empowered than you thought and has more money than you thought,” says Parida. “It is frightening how little rural innovation happens across the board because the belief is that the rural consumer knows very little.” Parida, who is a frequent visitor to the villages to study rural consumption and behaviour, finds it difficult to accept when companies push truncated and cheaper versions of their products in these markets.

“It’s sad that so few clients are genuinely interested in creating a rural strategy. These markets are viewed as rural hubs for distribution. Consumer firms feel that if they get their distribution right here, their job is done. But their ground-up rural strategy is non-existent.”

Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff.

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