New Delhi; November 11, 2009 – Telecom operators that plan expansion into the rural reaches of India need to better understand their customers’ needs, according to a report released today by Accenture (NYSE: ACN) at its Global Convergence Forum. The Global Convergence Forum brings together some of the world’s most influential executives and industry experts from the fields of communications, media, entertainment, electronics and high-tech.
The report, entitled “Wanted: New Business Models for Profitable Rural Expansion,” calls for telecom operators to think beyond the typical business model to achieve success in India’s rural geographic markets. The research found that telecom operators underestimate the complexity and maturity of the rural consumer base and the rationale that rural consumers use to make buying decisions.
The research on which the report is based consisted of in-depth interviews with 15 senior-level executives representative of India’s mobile telephony industry and a detailed survey of more than 2,400 rural consumers through one-on-one interviews. The survey’s aim was to examine how telecom operators can succeed by tapping into India’s rural population, which represents the next wave of growth for the industry.
When asked to list the top three reasons why consumers would become mobile customers, both the executives interviewed and the consumers participating in the survey ranked mobile phones first as the cheapest way to communicate. Consumers ranked dependable communications second, and as a tool to enhance privacy third, as reasons why they might become mobile customers. Senior executives, however, ranked the mobile phone as a status symbol as the second most important value proposition for rural customers, and the mobile phone as an entertainment platform as the third most important value proposition, which was inconsistent with consumers’ views.
“Telecom providers are yet to create and implement business models capable of driving sustained profitable growth through a rural expansion strategy,” said Kumar Ranjan, India lead for Accenture’s Communications & High Tech group, “Obviously, an important prerequisite in the creation of successful business models is the implicit understanding of the needs and buyer values of one’s consumers.
“Our research shows that mobile operators need to develop a more accurate understanding of the mobile value proposition in rural communities, as well as the potential barriers to winning over potential customers if they are to achieve profitable growth through rural expansion.”
The research also probed the mobile value equation perceptions of rural consumers, with more than half (52 percent) of those surveyed citing ease of use, followed by a mobile phone’s usefulness during emergencies and as a tool to contact people quickly.
The executives interviewed said that the lack of information available to rural consumers about various mobile offerings was a barrier to the consumers’ decision-making on mobile phone purchases. However, this sentiment was not supported by the consumers surveyed. Ninety percent of consumers surveyed indicated that while a detailed comparison of mobile operators may not be readily available, they had a general understanding of mobile offerings and had the information they needed to make a buying decision.
“In order to develop an effective business model that will enable telecom operators to create a differentiated experience for rural consumers, telecom operators must better understand the real needs of diverse populations like those in emerging economies such as India,” said Martin Cole, group chief executive of Accenture’s Global Communications & High Tech operating group. “This requires that they move to a truly customer-centric strategy if they want to be profitable. For India’s rural markets, simplicity – good, solid handsets and reliable voice services – is the name of the game.”
Handset, services costs are key impediments to becoming a mobile customer
More than half (54 percent) of consumers surveyed said that the cost of the phone (36 percent) and mobile services (18 percent) prevented them from becoming a mobile customer. Both the executives and consumers ranked handset cost as the primary obstacle for mobile adoption.