Vietnam's rural consumers affected by word-of-mouth: Nielsen

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Traditional trade channels continue to play a pivotal role though the number of modern retail outlets is increasing, a Nielsen study finds Traditional trade channels continue to play a pivotal role though the number of modern retail outlets is increasing, a Nielsen study finds
As consumers in rural Vietnam appreciate advice from those around them, businesses should nurture their brands’ fans and retailers to enhance the power of word-of-mouth, a Nielsen study has found.
The rural community, which accounts for 68 percent of the country’s 90 million people, is enjoying income growth of around 44 percent since 2012, the study said, yet this high-potential group remains largely unknown to many businesses.
The study, conducted last January by Nielsen, a global information and measurement company, found that 81 percent of rural consumers say they value the opinions and commendations of others, compared to just 46 percent of urban consumers.
A further 70 percent are affected by others’ recommendations in their buying decisions.
Not only valuing the recommendations of family and friends, rural consumers also respond positively to those from retailers. Around 90 percent of retailers recommend products to shoppers and 31 percent of the latter follow the advices.
With up to 27.5 million shoppers visiting retail stores every day, retailer recommendations can be a power form of brand endorsement, the study said.
The study pointed out that television remains key to reach rural consumers as 99 percent watch television on a regular basis and 69 percent claim to obtain product information via this source.
While internet penetration remains relatively low, digital usage is on the rise among younger consumers. More than half use the internet more frequently than they did a year ago, and internet penetration for 18 to 24 years old stands at 30 percent.
The study found that traditional trade channels continue to play a pivotal role though the number of modern retail outlets is increasing.
Wet markets are the most popular retail channel in rural Vietnam with a person making 16 visits per month on average, followed by fair markets and street vendors.
Modern outlets such as grocery stores experience between six to nine visits per month on average, while supermarkets trail well-below at just one visit every two months.
Traditional trade also accounts for a large share of retail spending in rural Vietnam. A shopper spends VND655,000 (US$31.1) a month on average at traditional outlets compared to VND175,000 (US$8.3) at modern outlets.
Shoppers prefer personal and household care products, beverages and dairy products from modern outlets and fresh foods and some household items from traditional outlets.
With rural consumers’ aspirational outlook and fascination with urban lifestyles, there are opportunities for growth in categories which appeal to the desire for progression and lifestyle changes, in particular health and beauty and household cleaning products, the study revealed.
Rural consumers also show a thirst for new products – 77 percent want to try new products and 95 percent appreciate having a wide range of products to choose from.
Although their wealth is expanding, consumers in rural Vietnam remain frugal in spending and look for products with reassurance and low risk.
Product fakes and copies are rife in Vietnam with one in four rural consumers having experienced faked or low quality products. As a result, consumers are cautious with their purchases.
Earning their trust by providing proof of authenticity, quality and origin are critical, the study said.
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