A Marketer’s Guide To Changing Rural Consumer Behaviour
There are many Sitaranis in Indian villages who are driving spending decisions, prioritizing spending on income generating services vs consumption goods and marketer’s should see this as an opportunity.
I was surprised when during a rural household visit, the head of the house Ramjibhai looked at his wife Sitarani when I asked him a question about spending habits. He was telling me that his wife is best placed to answer that question. This and dozens of similar visits and hundreds of such rural interactions later it became clear to me that a structural shift was taking place in the heart of rural India. The shift was not subtle nor slow. But was going quite unnoticed. And hence it became important to highlight to the businesses and enterprises selling commercial or social goods and services into rural India.
There are three main shifts taking place — spending on services; focus on income generating spending and the changing role of women in spending decisions. Let’s delve into each of these and see what they mean for a marketer.
1) Services to the fore
In the last few years the typical consumption basket of a rural household has seen a marked shift towards spending on services v/s goods. Starting from education, telecommunications, entertainment, healthcare, financial services or information. It’s all about services. These services put together are taking a much larger share of the rural household wallet. And there is a reason for this and we can see a common pattern between all of them. Marketers will be well served to understand this and focus on it. The common pattern is somewhat connected to the second shift which I will talk about below
2) Income generating spending
Consumer preferences have evolved over the years and the rural consumer has become much more savvy. The repeated droughts or unseasonal rains and low crop prices have contributed to this sense of discipline when it comes to spending. Villagers are much more conscious of how and where they spend their incremental dollar of income. They are prioritizing spending on goods or services which can help them boost their incomes. Whether it is another two wheeler , tractor or SUV which can be a means of earning or education or job related travel or even English speaking classes — they all find top priority before more mundane pure consumption spending can happen or even upgrading to a better brand. No wonder many have been surprised at slowing premiumization on the one hand but robust two wheeler sales on the other..
3) Changing role of women in driving spending decisions
Last but not the least — women are playing a much larger role not only in earning but therefore also in spending. It should not come as a surprise that women are contributing more to the income of the household as well. Whether it is by working in aanganwadis or schools or joining Self help or join lending groups to start small businesses. They have become an important contributor to the rural household income. And this means they have found a louder voice in spending decisions too. Should the household spend for their daughters education or to send their son to the nearest town to get special training or should they spend on buying that long awaited television or appliance — it is the lady in the house who is deciding more often than you think. Marketers should understand this and onboard this thinking when they plan product launches, pricing and consumer communication and outreach. It will be a waste to ignore this emerging power centre of rural India.
There is another very important overarching point that is critical to understand if one wants to gauge rural demand well. I call it the Hierarchy of cash flows. What it means is that the farmer and his family react in a particular way to changes in their income. It will be naive to assume that the very first improvement in his income will boost his spending on goods and services. This hierarchy is real because of the fairly high and fast increasing level of rural indebtedness. This forces him to first repay his gold loan, then keep some for emergency healthcare or obligatory spending ( weddings etc.) before he starts to look at more regular goods and services. This is important because the first good monsoon or a big hike in MSP or large flow of NREGA projects will not immediately lead to higher rural demand — and that is an important lesson for rural businesses to understand and prepare for. You will be surprised how often seasoned rural companies have missed reading this phenomenon…
There are many Sitaranis in Indian villages who are driving spending decisions, prioritizing spending on income generating services vs consumption goods and marketer’s should see this as an opportunity but also a wake up call to reimagine their marketing mix for rural India.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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