1. ACKNOWLEDGEMENT
This project report prepared by me is a result of several helping hands of the Marketing
Department of Escorts Ltd. The knowledge of our management studies is absolutely
incomplete without its proper implementation and application in diversified corporate
world of today.
An understanding of the study like this is never an outcome of efforts put in by single
person; rather it imprints involvement of numbers of persons who directly or indirectly
helped me in completing the study.
First of all I would like to thank Mr.ASHUTOSH SINGH (Area Business Manager) as
his knowledge and experience has been a guiding light during my project. I offer a
sincere thanks to Prof R J Masilamani (Project Guide) for his full-fledged cooperation,
care and immense amount of help without which it would have been really difficulty to
complete this project.
1
2. INDEX
1. ACKNOWLEDGEMENT
2. EXECUTIVE SUMMARY
3. HISTORY OF TRACTORS
4. INDUSTRY PROFILE
5. COMPANY PORFILE
6. RECENT DEVELOPMENTS IN ESCORTS
7. RESEARCH OBJECTIVE
8. HYPOTHESIS
9. LIMITATIONS
10. RESEARCH METHODOLOGY
11. FINDINGS
12. SUGGESTIONS/RECOMMENDATIONS
13. CONCLUSION
APPENDIX
BIBLIOGRAPHY
2
3. EXECUTIVE SUMMARY:
Indian tractor market is through a very crucial period. Being the largest tractor market in
the world in unit terms; it is going to witness tremendous competition it has not seen till
now. The key concern for Escorts in this war of competition, are:
Adverse Govt. policies.
Economic slowdown.
High competition.
Recession in global economy.
Fluctuations in exchange rates.
Low farm mechanization practices.
Inadequate credit practices being promoted.
Farm income getting stabilized.
These factors have to be overcome to push the tractor sales. The other players competing
with Escorts are M&M, PTL, EICHER, SONALIKA, NEW HOLLAND STANDARD
etc. M&M which is one of the toughest competitors to ESCORTS have gained much
higher popularity and market share. The reason behind is that farmers in India prefer low
fuel consuming tractor.
During the course of my training, I have studied and analyzed the following:
The competition in terms of market share among the players in Rohtak
district.
Order winners for tractor industry in Rohtak district.
Problems and reasons for Escorts downfall and its current situation in
Rohtak district.
Ideal dealer promotion activities to increase the market share in Rohtak
district.
Reasons for rise of New Holland in higher HP segment i.e. >50HP in
Bahadurgarh area of Jhajjar district.
3
4. Found out why some customers are preferring New Holland over Farmtrac
and what are the order winners which are working for new Holland in
Bahadurgarh area.
After identification of the problems I have tried to recommend various strategies and
methods at both the firm and dealer’s front so as to increase the tractor sales in Rohtak
district and bahadurgarh tehsil of Jajjar district.
The limitation of the project is that it is confined to a smaller area, which may not be a
proper representation of the country as a whole but can represent the district; further
research can be made in different states to get a clear picture of the market in India.
Combining all the survey data from questionnaire on an EXCEL sheet showed that:
Escort suffers from several critical disadvantages against its main
competitors which are mentioned later in the report.
Brand and Resale value are the most important criteria of purchase in
majority of cases when farmers in Rohtak district make their choice
among different models. Price of tractor comes after brand image as a
criterion for purchase.
Low fuel consumption and better after sales service are the next most
important criteria for the existing customers of tractors in Rohtak district.
TAFE dealer is trusted more by customers of Rohtak district while most of
the TAFE customers are not satisfied with their tractor. This provides us
with an opportunity to convert the TAFE customers by contacting them
and if the Farmtrac dealer can improve his image in the area. At present as
per the survey most of the customers don’t trust Farmtrac dealer.
New Holland is gaining ground in Bahadurgarh tehsil due to its better
product features i.e. Power steering and oil brakes at a lower price.
Though Escorts has also introduced Power steering and oil brakes but it
needs to advertise aggressively so that New Holland is unable to dent the
market share of Escorts further.
4
5. Farmtrac dealer in bahadurgarh has lost 15% of customers to New Holland
due to its workshop manager’s bad behavior and poor service.
The enquiry follow-up by salesman has to be improved in Bahadurgarh as
Escorts has lost 69% of customers due to inadequate follow-up after
receiving enquiry at showroom.
Jhajjar district differs from Rohtak district in terms of criteria for purchase
of tractors. In Jhajjar majority of customers want value for money i.e. they
want a tractor with best features at the lowest price irrespective of brand.
After identification of these problems I have tried to recommend various strategies and
methods at both the firm and dealer’s front so as to increase the tractor sales.
The limitation of the project is that it is confined to a smaller area, which may not be a
proper representation of a country as a whole but can represent the Rohtak district;
further research can be made in different states to get a clear picture of the market in
India.
5
7. HISTORY OF TRACTORS
The invention of tractors drastically transformed the agricultural industry. They altered
the way farming had been done for countless years, during which only minor
improvement had been made. The new machinery enabled the production of vast
amounts of food that lead to great technical progress of the twentieth century. The first
engine powered farm tractor used steam engine and was introduced in 1868. Built as
small road locomotives, these engines were operated by one man, provided the engine
was less than 5 tons in weight. They were used for general road haulage and in particular
for timber trade.
The most popular steam tractor was the Garret 4 CD. In 1907, the first experiment gas
powered tractor produced by Henry Ford under the direction of chief engineer Joseph
Galamb. However this machine was referred to as an “Automobile plow” and not a
“tractor” .Gas powered tractors began to be used extensively in farming since 1910.
7
9. A PERSPECTIVE
The Background (up to 1960)
Agriculture till independence through:-
Age bound tradition
Large dependence upon rainfall
Animal drawn power
Poor seed strains and
No fertilizer/pesticide use
Post independence agriculture accorded highest priority with large emphasis on
extension of irrigation.
Mechanization makes a beginning with introduction of imported tractors and it
reaches 1500 units.
The Beginning (1960-1965)
Government emphasizes on industrialization. Entrepreneurs invited to set-up units
and imports restricted.
Five units setup in private sector all with following collaborations:-
- EICHER - 1960
- TAFE - 1961
- HINDUSTAN - 1963
- ESCORTS - 1964
- MAHINDRA - 1965
9
10. Despite government emphasis on rapid indigenization-Manufacturing operations
largely limited to assembly of CKD kits.
Indigenization confined to simpler machined & sheet metal components.
By 1965-1966 domestic production rose to 5714 units & imports decline to 1989
units.
The Second Phase (1965-1975)
Successful introduction of HYV seeds in 1967.Sudden upsurge in tractor demand (up
to 50% P.A.).
Consequent shortage & heavy price premiums on tractors.
Government liberalized imports and imposed statutory price & distribution controls to
eliminate premiums.
Domestic production rises to 20099 units in 1970-71 and imports follow suit to
13,300 units.
Slow pace of indigenization of industry sensed in 1971 & new entrepreneurs invited.
18 Applicants approach government- only 6 establish units.
- ETL - 1971
- HMT - 1971
- PTL - 1974
- KIRLOSKAR - 1974
- PTPL - 1974
- HARSHA - 1975
Cheaper imports from eastern Europe-domestic production declines to
18,000 units while imports soar to 20,000 units in 1972-73.
Imports restricted in 1973 and domestic production rises to 24,425 units. Imports decline to
1100 units in 1975.
10
11. The Maturing Years (1975 Onwards)
Pace of indigenization spurred by increasing government pressure,
increased competition & overall industrial development in the country.
By 1978 indigenous content – 100% barring few exception.
Statutory price & distribution controls removed in 1975.
Demand grows @ 14% up to 1981 & industry keeps pace.Imports banned
in 1977.
Market sizes grows up to 71024 units in 1980-81.Credit restrictions
imposed in 1982-83 and demand decline to 63,155 units.
Corrective measure by government and industry recovers slowly by 1987.
Growth in industry reaches to 163,407 units in 199495.
While 4 new units set-up during this phase:
1) Veer Pratap 2) VST Tiller Tractors.
3) Auto tractors 4)Asian Kramer.
Simultaneously Kiroskar, Auto tractor, PTPL and Harsha phased out.
The Competitive Era of 2000
Four new units set-up during 1997-2000
- Bajaj Tempo Limited
- International Tractors (Sonalika) limited.
- New Holland Tractors (1) private limited.
- L & T john Deere limited.
Due to poor rain there was a drop in tractor industry in 2000-1. With 235768 units the
industry shared a negative growth of 8% ever last year.
11
12. While the established international brand started their production in India. New tractor
companies e.g. Sonalika, Indofarm and Standard tractors also make their presence felt in
tractor industry.
INDUSTRY PROFILE
12
13. INDUSTRY PROFILE
AGRI MACHINERY
The Indian tractor industry is dominated by low priced, rugged, versatile and low to
medium powered tractors. The main reason being the inability of Indian farmer to invest
heavily in farm mechanization. Tractors are categorized on the basis of horse power of
engine. In India the popular range of tractors is 20-40 hp as compared to 60 hp in Europe
and 90 hp in USA. Though large tractors are economically unviable in India but more
recently high power tractors are also being sold in states like Punjab. Tractors available in
India are of one fourth hp as compared to developed countries. Availability of the credit
is the most crucial factor impacting tractors demand. In India 90% of the tractors are
financed by bank credit at concessional rate. Increased use of irrigation facilities, shift
towards high investment in agriculture are responsible for higher tractor demand in
India.India is the world’s largest tractor market since 1996.
Escorts have played a pivotal role in the agricultural growth of India for over five
decades. It is one of the leading tractor manufacturers of the country. Escorts produces
tractors in the 30-40 HP and above range and has already sold over 6 lac tractors. Its
tractors are marketed under three brand names, viz. Escorts, Powertrac and Framtrac.
Escorts brand of tractors are symbolic of reliability and trust and enjoy the confidence of
the farming community for the last 40 years. Powertarc brand of tractors are the most
fuel-efficient tractors in their respective categories that offer excellent value for money
13
14. and have helped the farmers improve their respective categories that offer excellent value
for money and have helped the farmers improve their quality of life. Framtrac brand are
the most powerful premium range of tractors that give maximum productivity to the
farmers. Spanning these three brands, the company has a full range of tractors to cater to
the domestic as well as overseas markets.
The company is developing state-of-the-highly fuel efficient engines with the assistance
of AVL of Austria and has also entered into a joint venture with Carraro of Italy for the
manufacturing of transmission and axles.
To understand the tractor industry, one has to first look at the market segmentation based
on HP.The industry can be spilt into five classes on the bases of horse power.
A - 0-25hp
B - 26-35hp
C - 33-39hp
D - 40-45hp
E - 46hp-Above
. Among the major player M&M, ESCORTS, PUNJAB TRACTOR& EICHER have a
presence across all the major segments. EICHER which was predominantly a player in
the 21-30 hp segment has now moved upward following the shrinking market in the low
hp segment.
To sustain the present momentum and to realize the future goals, Escorts is investing
heavily for strengthening new product development programmes and enhancement of
R&D capabilities. Additionally, funds have been invested towards modernization of its
manufacturing facilities bringing them to international standards. The company has one
of the most comprehensive distribution network comprising of over 1212 dealers, sub
dealers, distributors and stockists. Escorts has over 30 area offices spread across the
country. It has a manufacturing capacity of over 100000 tractors per annum. Escorts Agri
Machinery Group is looking at forward and backward integration through food
processing, food chains and genetic engineering. It will be expanding its product range by
launching highly specialized tractors and draft implements.
14
15. In line to their vision of becoming a major player in sub 100 HP segment in the global
markets, they have increased their reach from a major regional player to major global
markets which stretch from North America to Australia covering all continents. Despite
the strict competition by other major tractor manufacturers they have been able to gain
constant volumes in the global market.
Their products are marketed mainly in USA, central and Easter Europe through Poland,
Ghana, Tanzania, Malaysia, Australia, Tunisia, Chile, turkey, Sri Lanka, Kenya,
Bangladesh, South Africa and many other countries.
To consolidate its presence in the overseas markets, the company has venture in the USA
and Europe (Poland). It has recently acquired a majority stake in a tractor distributing
company in USA.
Escorts is selling tractors in Turkey, Australia, Bangladesh, Sri Lanka, Nepal, Kenya,
Tanzania, South Africa etc. through its dealer’s network in these countries. Escorts have
very ambitious plans to expand the dealer’s networks in other potential countries in the
coming years.
Technological and business collaboration with world leaders over the years, globally
competitive indigenous engineering capabilities, over 1600 sales and service outlets and
footprints in over 40 countries have been instrumental in making Escorts the Indian
multinational. At a time when the world is looking at India as an outsourcing destination,
Escorts is rightly placed to be the dependable outsourcing partner of world's leading
engineering corporations looking at outsourcing manufacture of engines, transmissions,
gears, hydraulics, implements and attachments to tractors, and shock absorbers for heavy
trailers.
15
17. COMPANY PROFILE
Escorts is one of the country`s biggest tractor makers. The company manufactures farm
equipment, automotive components, railway ancillaries, construction machinery, shock
absorbers and telecom equipment. It has a joint venture with Long Manufacturing of
North Carolina for the manufacture, assembly and sale of tractors.
THE ESCORTS SYMBOL
The ESCORTS symbol means more than what could be seen by the eyes. It has been
prepared with certain objective and is symbolic in more than one way.
The philosophy behind ESCORTS and the “E” in the ESCORTS is “ENTERPRISE” the
hexagon is a symbol of craftsmanship and productivity. The work and people in escorts
are represented by the spanner superimposed on the hexagons which form a letter “E”.
17
18. Escorts the single world company describes the character philosophy & success of the
company which grew leaps and bounds for five decades Escorts has been in the core
sectors like agriculture, transportation & resource for engineering change, through
optimum product performance.
In every step of the way, Escorts had inducted the latest technology by forming alliance
with the most advanced engineering suited to Indian need and situation.
To make sure the finished product and service is delivered, the company has an extra
ordinary distribution & service network that stays with the customers.
Background
In 1960, Escorts set up the strategic Agri Machinery Group (AMG) to venture into
tractors.
In 1965, rolled out first batch of tractors under the brand name of Escorts.
In 1969 a separate company, Escorts Tractors Ltd., was established with equity
participation of Ford Motor Co., Basildon, UK for the manufacture of Ford
agricultural tractors in India.
In the year 1996 Escorts Tractors Ltd. formally merged with the parent company,
Escorts Ltd.
Since inception, Escorts Ltd has manufactured over 1 million tractors.
MISSION:
“Escorts Endeavour’s to transform lives in rural and urban India by
leading the revolution in agricultural mechanization, modernization of
automotive and railway technology, as well as transformation of Indian
construction industry”
BRAND:
“The Escorts brand shall continue to guard its legacy of being a brand that
18
19. customers trust; where employees attain their full potential; and where nation
building is a way of life.”
PRODUCT LINE OF ESCORTS LDT.
A B C D E
ESCORTS ESC 325 ESC 335 ESC MPT
TRACTORS JOSH JOSH JAWAN
POWERTRAC PT 434 PT 439 PT 445 PT 455
TRACTORS
FARMTRAC FT 30 FT 35 FT 45 FT 60
FT 45 DT FT60DX
TRACTORS HERO CHAMPION FT 50 EPI FT60DT
FT 65 EPI
FT 70
FT 70 DT
FT 80
FT 80 DT
A - 0-25hp
B - 26-35hp
C - 33-39hp
D - 40-45hp
E - 46hp-Above
19
21. RECENT DEVELOPMENTS:
1) The Hon'ble High Court of Punjab and Haryana at Chandigarh has approved the
Scheme of Arrangement between Escorts Agri Machinery Inc., USA and Escorts
Ltd. and their respective shareholders and creditors for merger / amalgamation of
EAMI into Escorts.
2) Escorts Construction Equipment Limited has signed an agreement with the
Chinese Hunan Zoomlion International Trade Co Ltd for marketing the
latter's truck cranes in India.
3) Powertrac 4455 marks the company’s entry in the 4-cylinder tractor
segment.
4) The company’s Net sales and PAT is expected to grow at a CAGR of 10%
and 126% over FY08 to FY11E.
5) Escorts arm to market Chinese firm's truck cranes Escorts Construction
Equipment Limited (ECEL), part of the Escorts Group, has signed an
agreement with the Chinese Hunan Zoomlion International Trade Co Ltd for
marketing the latter's truck cranes in India.ECEL will market a range of
truck cranes of Hunan Zoomlion, including the 'All-Terrain Truck Cranes'.
Currently ECEL has Pick-n-Carry cranes 5T-23T and Rough Terrain Slew
Cranes 17T-40T under its product portfolio.
21
22. Results (Q4FY09)
For the fourth quarter, the top line of the company increased 12YoY and
stood at Rs.6113.37mn against Rs.5452.58mn of the same period of the
last year. The bottom line of the company for the quarter stood at
Rs.600.34mn from Rs.-11.88mn of the corresponding period of the previous
year i.e., an increase of 5153%YoY.
22
23. Segment-Wise revenue for FY 09(Rs mn):
Segment Revenue (Rs. million)
Agri Machinery Products 19,051.68
Railway Equipments 1,994.69
Auto Ancillary Products 866.32
Unallocable 69.42
Total 21,982.11
Less: Inter Segment Revenue -101.54
Net sales/income from
Operations 21,880.57
23
24. STATEMENT OF PURPOSE
The tractor industry has been showing continuous volatility over several years. Tractor
sales are highly related to monsoons and agricultural production. Agriculture accounts for
the majority of workforce. In post independence era and agricultural revolution in 1960
raised the productivity levels on one hand, but widened income disparities between rich
and poor farmers on the other. Today the 8000 crore tractor segment is at par with the
automobile industry. But the huge growth in the segment over the past decade saw tractor
companies earning huge profits; this has created a tough competition among players in
the industry.
24
25. I have studied the competition and the perception with which a customer’s purchase the
tractor in Rohtak district. As a presentation of the population, in the project the different
blocks in the district are to be used as sample which will represent the districts
population.
Also recently Newholland tractors has started gaining market share in E Segment i.e. >46
HP. This has dented Farmtrac,s market share the most as this area has been a strong hold
of FT 60 (50 HP) in Rohtak district.
So i have also tried to find out various order winners which are working for New Holland
in Teh-Bahadurgarh so that a proper marketing strategy can be designed to halt the
progress of New Holland in this area.
RESEARCH OBJECTIVE
Decreasing geographical boundaries due to economic liberalization in the last few years
have led to intense competition. A number of players, flushed with capital have entered
the market and a dynamic corporate strategy to face ever increasing challenge is of vital
importance. To study and suggest marketing strategies at Escorts Ltd it was critical for
me to understand the competitive position of the different players involved in the
industry.
25
26. The first objective of the present study is to analyze the competitive structure of the
Rohtak districts tractor market. Threat of intense competition looms large over all the
existing and upcoming players, the outcome of which of which is going to shape the
industry for a long time to come.
In the present competitive scenario a firm has to remain continuously innovative in terms
of products and strategy for a long-term competitive advantage. Escorts Ltd. is also trying
hard to attain the lead in the tractor industry by introducing new and improved products
through innovative marketing.
Hence it is quite important to know what factors determine the purchase of tractor and
brand so that an effective marketing strategy can be designed. To find out this I have
been assigned Rohtak district where profile of customer has gone a sea change in recent
due to highly increased prices of property and decreased agricultural land. This change in
profile of customer has made their criteria of purchase of tractor different from other
districts.
Though average agricultural land holding has decreased in areas like Bahadurgarh but
still some players like New Holland are increasing their presence in higher HP. Reasons
for the same are to be found out.
The third objective is to prepare a strategy for dealers with respect to the above two
objectives so as to increase sales. As the sale of tractors is heavily dependent on the
dealer’s initiative, this can enhance sales by helping in designing various sales promotion
activities.
HYPOTHESIS
The hypothesis of this project is to find whether there is a variation in the number of
tractors of a particular brand present in the different blocks of Rohtak District.
26
27. This hypothesis is tested by using the statistical tools ANOVA (analysis of variance)
among two groups, one group is the different blocks and the other is the number of
tractors present in that block.
The hypothesis is true which showed that there is no variation in the number if tractors
being sold in different blocks, i.e. it cannot be said that one brand is dominating in a
particular block due to the strategy of penetration adopted by that brand. This also shows
that the customer is not inclined towards a particular brand and prefers a tractor which
gives best value for money with respect to his needs.
27
29. LIMITATIONS
PRODUCT:
The various disadvantages that Escorts faces in comparison to its nearest competitor
TAFE are:
1) Spares are costly.
2) Dealer is not trusted by customers.
3) Tractor prices are high.
4) As per feedback FT 60 is not effective in 7 ft rotavator.
5) Problem of leakage in FT65 EPI.
The above mentioned problems are major irritants to the farmers in Rohtak district.
There is a high demand for second hand and old tractors in Rohtak district that increases
servicing revenue but reduces sales.
PRICING:
Non uniformity in pricing:
The price varies from dealer to dealer. In different districts of Haryana the dealers have
different prices for same models. The dealers themselves are to be blamed for the fiasco,
as they do not stick to the company guidelines. The company’s failure probably is that
they are unable to enforce their guidelines on the dealers.
29
30. COSTING:
ABC costing should be followed as flat overheads are charged on all the models. These
results in a well performing models getting less advantage to the other non performing
ones on which there are higher margins which puts Escorts at a disadvantage position
compared to its competitors.
30
31. REASEARCH METHODOLOGY
RESEARCH METHOOLOGY
This research is confined to Rohtak District and Bahadurgarh tehsil of Jhajjar district
having a lot of potential to contribute to the tractor industry.
This research is an exploratory research as the potential market is also explored for
various sales opportunities. The sample size of the study is 44 villages. The different
villages covered in the research are from two districts:
1. JHAJJAR
31
32. 2. ROHTAK
Data collection and questionnaire design
The primary data is more important as compared to secondary data, keeping the objective
in mind. The primary data is collected from the consumers and prospective customers of
different tractors by personal interviews. Secondary data that include the commercial
marketing information services, which can help to understand the results, obtained from
primary data.
The questionnaire designed is attached as FEEDBACK FORM. The data obtained is too
feeded in MS_EXCEL so as to analyses the data statistically.
32
35. These finding are from the survey results that were feeded and analyzed on MS-EXCEL
sheet.
MARKET SHARE IN 2007-2008:
Market share represents the company’s total sales expressed in the number of total
market sales in the Rohtak district Vis a Vis total tractor sold in the region.
Escorts is facing tough competitive from M&M, TAFE and NEWHOLLAND. All are
trying to increase their share over the past few years which has reduced the market share
of ESCORTS. In 2007-2008 Escorts had a market share of 21% in Rohtak district.
Various market players have exploited the Rohtak region and the respective market share
of major players is as follows:
ESCORTS - 21%
M&M - 12%
TAFE - 27%
The above figures depict the competition in front of ESCORTS.
MARKET SHARE IN 2008-2009:
In 2008-2009 ESCORTS has maintained its market share whereas TAFE has increased
by 2% in this year and M&M also has increased its market share by 1%. This year market
share of major players is as follows:
ESCORTS - 21%
M&M - 13%
EICHER - 29%
AWARENESS:
35
36. Awareness of Farmtrac brand is very good in Rohtak district but we are getting hit by
poor service by the dealer. As the impact of dealer in the region is profound, company
should make sure that the dealer takes care of Farmtrac brand by good, prompt and
reliable service.
Awareness of JOSH, POWRETRAC and MPT-JAWAN is not enough and has to be
improved to gain any mileage out of these brands in Rohtak region.
The result shows that the awareness of POWERTRAC is the highest which indicates
better penetration, whereas MPT-JAWAN and JOSH have not penetrated the market due
to lack of publicity and sales promotion. Hence the company should promote them and
penetrate the market so as to capture the market of ISHER 241.
REASONS FOR PURCHASE:
A particular model of mostly sought due to the following characteristics:
1 Brand value and Resale value
2 Lower price
3 Low fuel consumption
4 Better after sales service
5 Use in Rotavator application
EXPECTATIONS OF TRACTOR OWNERS FROM PRODUCT, COMPANY
AND DEALER:
1 Availability of spare parts at reasonable price.
36
37. 2 Better and quick servicing.
3 Good resale value.
4 Effective pulling and ploughing capabilities.
5 Hassel free Warranty on spare parts.
6 Low maintenance and running cost.
7 Low interest cost on loan.
8 Transparent and reliable policies by the company and dealer.
DECISION INFLUENCERS:
Major influencers in tractor purchase decision are Mechanics, Gram Pradhan or the head
of family. Brokers who come to the village can be influencers in some cases.
ACCESSORIES PROVIDED:
There is tendency of switching to brands that provide free gift lie toe hooks, canopy or
small stereos with the tractors.
ORDER WINNERS FOR TRACTOR COMPANIES IN DISTRICT ROHTAK:
37
38. S
NO CRITERIA FOR PURCHASE NUMBER OF CUSTOMERS PERCENTAGE
1 BRAND VALUE AND RESALE VALUE 20 47%
2 LOWER PRICE 14 33%
3 LOW FUEL CONSUMPTION 4 9%
4 BETTER SERVICE 3 7%
5 ROTAVATOR APPLICATION 2 5%
TOTAL NO OF CUSTOMERS RESPONDED 43
TOTAL NO OF CUSTOMERS CONTACTED 81
NUMBER OF VILLLAGES COVERED 33
TOTAL INQUIRIES RECEIVED 16
Figure 1 : Order winners in district Rohtak
We can see in the above graph that 80 % of customers consider Brand value, Resale
value and Price of the tractor as the major criteria while purchasing a tractor. So Escorts
should focus on maintaining its brand image to increase and protect its market share in
Rohtak district.
38
39. Price of the tractor should be as per the customer expectations or as per competition. We
can say that the price should match with what the customer is ready to give for the
features and benefits offered by the product.
39
40. ESCORTS BRAND PERSONALITY IN CUSTOMERS MINDS :
Customers in Rohtak district identify Escorts with Farmtrac and especially FT60.
POWERFULL
TRACTOR
FARMTRAC
BRAND
GOOD
INCREASES RESALE
PRESTEGE VALUE
So Escorts scores well in most important criteria for purchase of tractors in Rohtak
district i.e. Brand and Resale value. It accounts for 47% of purchases. But the company
needs to focus on maintaining their brand image by concentrating on new product
developments and good after sales service.
Escorts is lagging behind its major competitors in the other four criteria’s of purchase
mentioned above i.e. Low Price, Low Fuel consumption, Good service and Rotavator
application. These facts need to be taken care of to maintain and improve Escorts current
position in Rohtak district by doing the following:
1) Awareness and sales of Powertrac brand needs to be improved, so that it can be
used to counter low priced tractors and low fuel consuming tractors..
2) Behavioral training should be given to Dealer and dealerships staff to provide
better service to customers.
40
41. 3) Special care and feedback of FT65 EPI customers should be taken to establish this
product in Rotavator application.
PERCEPTION MAPPING OF MAJOR PLAYERS IN ROHTAK DISTRICT:
Escorts’s Positioning Map Vis a Vis its competitors:
High Price
Escorts O
Low Brand High Brand
Value Mahindra Value
TAFE O
O
SonalikaO
Low Price
Escorts is having higher Brand and Resale value as compared to TAFE,
Mahindra and Sonalika but Escorts Brand value has decreased
considerably over a period of time due to increased competition so
41
42. steps i.e. better product, service and advertising must be done to
maintain brand Escorts lead.
ORDER WINNERS FOR NEW HOLLAND IN BAHADURGAH TEHSIL:
PROBLEM STATEMENT: To find out the reason of increasing market share of
New Holland tractors.
AREA: Bahadurgarh
DISTRICT: Jhajjar.
FOCUS CUSTOMERS: New Holland customers who purchased New Holland in F-09.
MODE OF SURVEY: Personal Interviews.
INDUSTRY SCENERIO IN BAHADURGARH IN F09
COMPANY NAME NH ESCORTS MAHINDRA SWARAJ EICHER TAFE SONALIKA
TOTAL TRACTORS 51 147 115 66 198 61 30
TOTAL MARKET SHARE 7.10% 20.47% 16.02% 9.19% 27.58% 8.50% 4.18%
VILLAGES MARKET
SHARE 7.53% 17.98% 17.12% 9.59% 27.91% 7.88% 3.94%
CITY MARKET SHARE 5.22% 31.34% 11.19% 7.46% 26.12% 11.19% 5.22%
TAFE group (Eicher & Tafe) and M&M are major competitors to escorts in Bahadurgarh
tehsil. But recently New Holland tractors has gained sizable market share of 7 %.It is
increasing its presence in > 50 HP segment and denting the market share of escorts the
most because it is directly competing with FT60 of Escorts ltd.
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43. Also we can see that escorts needs to focus on village’s market share i.e. 17% which is
well below the 35 % market share of TAFE group.
1) First of all I found out what is the coverage of Farmtrac dealer i.e. How many of lost
customers to New Holland were contacted by Farmtrac dealer or their salesman?
NOC PERCENTAGE
Not covered by dealer or Salesman. 7 27%
Customers came to dealership but no follow-up was
done by salesman. 18 69%
Covered by salesman. 1 4%
TOTAL NEW HOLLAND CUSTOMERS VISITED 26
Figure 2: Coverage of Farmtrac dealer in Bahadurgarh.
NOC: Number of customers.
43
44. Coverage of Farmtrac dealer was found out to be 73% which looks good but 69% of
enquiries received were not followed up properly by salesman due to which we lost these
customers to New Holland.
2) Then I found out what was the reason of purchasing New Holland or order winners
working for New Holland in Bahadurgarh Tehsil of Jhajjar district?
S NO REASON FOR PURCHASE OF NH NUMBER OF CUSTOMERS PERCENTAGE
LOWER PRICE,POWER STEERING AND
1 OIL BRAKES. 8 31%
REFERENCE BY OTHER NEWHOLLAND
2 CUSTOMERS 8 31%
POOR SERVICE AND BEHAVIOUR BY FT
3 DEALER 4 15%
4 RELATION WITH NH DEALER 2 8%
5 ROTAVATOR APPLICATION 2 8%
6 NO PRIVATE LOAN FOR FT 1 4%
7 OLD NEWHOLLAND LOYAL CUSTOMERS 1 4%
TOTAL 26 100%
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45. Figure 3: Order winners working for New Holland.
1) Major reason i.e. 31% of lost customers was better product features i.e. Power
steering and oil brakes provided by New Holland at lower price. Major product
improvements have already been done by Escorts in FT 60.Though there is need to
advertise them aggressively.
2) The next 31% customers purchased New Holland just because reference was given by
other New Holland customers. This helps us in understanding that the New Holland
dealer is using their existing customers as promoters, which is a well established strategy
of increasing market share in a highly competitive environment. This strategy should also
be used by Escorts to increase loyalty of their existing customers.
3) 15% of customers were lost because of poor service and bad behavior to existing
customers. This shows that some customers are not satisfied with service and behavior of
Bahadurgarh dealer. Significant steps i.e. Customer feedback, Technical and
behavioral training of dealer and dealerships staff are required to increase satisfaction
of existing customers of Escorts.
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47. RECOMMANDATIONS &
SUGGESTIONS
SUGGESTIONS & RECOMMENDATIONS:
Below mentioned strategies and policies can be helpful in making escorts a market
leader in Rohtak district:
Straddling:
Escorts has good Brand image and Resale value in Rohtak district but is having higher
prices as compared to its major competitor TAFE and Mahindra. Company should
make sure that dealer is not overcharging the customers. It can be done by doing
regular audits in field. Company should try to maintain a proper balance between
Brand and Cost to customer.
47
48. Superior services:
To maintain the lead in Brand value Escorts should have an effective and responsive
spare parts and sales service systems which can help in delivering best and prompt
service during a break down. These advantages can help in consolidating its presence
in the market that the competitors do not have.
Superior parts management:
Care should be taken to use only genuine spare parts at dealership. Also ABC analysis
of spare parts stock should be done so that stocking of non moving parts can be
avoided. As the second hand tractor sales are increasing, need for spare parts and
repair increase thus creating a demand for spare parts. Escorts should develop a
superior parts management system that can increase its margins in the end business.
Good financing:
As the government policies are favoring the purchase of tractors and trailers by the
farmers, easy finance should be made available to the needy farmers with reasonably
low interest rates. This would improve farm mechanization opportunities and in turn
increase the demand for tractors. Farmer’s credit cards should be promoted and their
availability should be wide. Company should have a direct tie up with banks.
Managing the value chain:
Escorts should look at both upstream and downstream to improve efficiency and
deliver value more effectively to customers. Demand and supply should have a proper
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49. balance that would require a full replenishment process tied to customer demand.
Product availability is a key aspect of the customer’s perception of value, developing a
system that would enable it to replenish products at dealership quickly that would help
to manage the value chain, resulting in customer satisfaction.
Supply chain development activities:
Dealer evolution practices with emphasis on time delivery and quality should be
maintained. The company should concentrate on supply chain that can otherwise cause
downslide in the effectiveness of the service offering.
So as to be market leader the following analysis can help to find the tractors demand
in F 09-10.
Assuming the market is increasing at the rate of 12% in Rohtak district.
Total sales of Farmtrac in Rohtak district in 2008 = 132
Total sales of Farmtrac in Rohtak district in 2009 = 147
Industry in 2008 = 615
Industry in 2009 = 690
Industry growth rate = 12%
As average monsoon is being predicted for F10.The industry growth rate should be at
least 10% in F10.
Industry in F10 is expected to be more then 760.
So in order to be the market leader in Rohtak district in 2010, the sales should be at
least 206(.27*760) units.
The result shows that the company should sell 200-210 tractors in 2010 to be a market
leader in Rohtak district.
Expanding the total market:
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50. Escorts should expand the market by creating new users, every model of Escorts has
the potential of attracting buyers who are unaware of the product or are resisting it
because of price or lack of certain features. The tractor’s use and benefits should be
properly demonstrated to the consumers so as to use the product like Powertrac, MPT
Jawan and Josh to its fullest capacity. These models should be advertised through
Melas and Road shows that would increase the awareness level among the farmers.
Defending market share:
Defending its market share should be the main criteria for Escorts; this is possible only
through continuous innovation. It should develop new product and customer services,
effective distribution and cost reduction. It keeps increasing its competitive strength
and value to customers. As replacement cycle in Rohtak is 7-8 years thus there is a
great opportunity for the company to buy those tractors which are in the market at
cheaper rates and sell the new ones at better discounts, which would help increase
market share, Kisan melas should be organized to educate the farmers on the right
farming practice, tie ups with banks to provide better and efficient loan facilities
would help increase sales.
Expanding market share:
Escorts can improve its profitability by increasing its market share. This can possibly
be done by providing better quality product, increasing the brand image and targeting
the weakness of other brands. Some of which i found out through my survey are as
follows:
Weaknesses of Sonalika
1 Problem of availability of spares.
2 Problem of availability of mechanic.
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51. 3 Needs engine repair early.
4 Large turning radius.
5 Front lifting.
6 Not effective in Rotavator.
Weaknesses of Messy:
1 Needs engine repair early.
2 Breaks star gear pinion in heavy load.
3 Leakage from clutch shaft seal.
4 Cannot pull heavy load.
Weaknesses of Isher:
1 Noise in rear axle.
Training the farmer to utilize the resources available at the fullest possible manner can
increase the brand image.
“Dynamic difference”
This is the model used by Unilever worldwide and in my opinion it has more chance
of being provided successful in the present context. Required data collection is
relatively easy and effect of any change in advertising spending on market share can
be measured directly and in an easier way. The methodology of this model is as under:
Suppose in a market there are 5-6 brands. Now out of these it is likely that 75-85% of
the total market is dominated by 3-4 leading brands with other being happy to remain
strong in certain pockets and with a smaller market share. So basically the market
share figure may not exactly match with the respective brand’s share in advertising
arena or share of voice. Based on these facts and some historical data we can establish
some kind of direct relationship between SOV (share of volume) and SOM (share of
market) for any brand with leading brands enjoying some economics of scale.
BRANDS SOV SOM
A 10% 12%
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52. B 13% 15%
C 08% 09%
-- -- --
-- -- --
D 0% 02%
Here a brand D doesn’t advertise at all still has a market share of 2%. Leading brands
are enjoying economics of scale but they can’t afford to go down beyond certain
critical point in SOV without risking loss of some percentage point in SOM. Therefore
from these observations possibly a relation can be build up linking change in SOV
over last time horizon, without change in SOM. Now with 3 to 5 years data, this
relationship can be plotted and the marketer can develop fairly good idea about what
change in SOM will happen if he changes their SOV by certain percentage point. This
relationship will hold well till any drastic change.
To increase the market share of Escorts, following strategies can be adopted.
Market Expansion:
The company can try to expand the number of brand users by converting the non-users
of tractors by providing them with good credit facilities and warranties on spare parts.
As the tractor market in Rohtak is at its maturity, major volumes would come by
exchanging second hand tractors from the farmers and giving them new ones at a
discount and at lower interest rates. The old tractors can be sold in those areas where
the purchasing power of the farmer is low. The purchase of old tractors should
compromise of all brands, and while reselling them it should be repaired and
rebranded as Escorts; this will increase company’s profitability.
Advertising:
The best and cheapest medium of advertising in village is paintings and hoarding as
wall paintings would catch attention of farmer and the hoarding would help increase
the awareness among them. Escorts has made necessary changes in its product FT60
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53. i.e. Oil brakes, Extra torque and Power steering etc. But the same is to be advertised
heavily so that progress of some competitors like New Holland can be halted.
Sales Promotion:
The company should increase its sales promotion activities by giving the farmers
seasonal offers and coupons for purchase of implements, warranties, gifts and rebates.
This can be possible by organizing meals for 2-3 blocks together which bring the
farmer at a common platform this would reduce the burden on salesman.
Services:
Dealer should provide door step service and the same should be tracked by company
through proper systems. Appropriate incentives should be given to dealers to
encourage them to give doorstep services to farmers. Rohtak being in a small area it is
possible for the dealer to give doorstep service to 50% customers to start with. All the
labour, parts replaced, transportation, mileage and costs are to be entered in database
for further review and records. Costs for such a service will vary by locations and
service intervals defined in the contract.
Rohtak dealer should also work on improving the image of workshop and dealership
by ensuring the availability of all the genuine spare parts at reasonable cost in
workshop.
It is necessary to keep in constant touch with all the under warranty tractors
especially customers who have purchased FT65 EPI so that all the problems like
leakage etc can be resolved as per customer satisfactions and new product can be
established.
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54. Below mentioned strategies and policies will help Escorts in halting the progress
of New Holland in higher HP segment in Bahadurgarh tehsil:
1) New Holland is providing better product features i.e. Power steering and oil
brakes at lower price. Major product improvements have already been done by Escorts
in FT 60.There is need to advertise these changes aggressively through Wall painting,
hoardings and media.
2) New Holland dealer is using their existing customers as promoters, which is a well
established strategy of increasing market share in a highly competitive environment.
This strategy should also be used by Escorts to increase loyalty of their existing
customers. The same should be measured and watched time to time.
3) Some customers are not satisfied with service and behavior of Bahadurgarh dealer.
Significant steps i.e. Customer feedback, Technical and behavioral training of
dealer and dealerships staff are required to increase satisfaction of existing customers
of Escorts.
4) Enquiries received at dealership are not being recorded; neither proper follow up is
being done. Systems should be followed so that conversion of enquiries can be tracked
and monitored.
5) Salesman have not been assigned territories in Bahadurgarh tehsil. It is necessary to
track the performance of salesman and make them accountable for their area.
6) Workshop staff like works Manager and mechanics should also be given targets of
Sales through service. Proper incentive should be given for the same.
7) Escorts is having only 18% market share in villages compared to 36% of ISHER
group. High potential villages like Mandouthi, Badli and Asaudha should be focused
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55. and steps should be taken to increase the market share. Analysis of all the villages is
attached with the report.
CONCLUSION
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56. CONCLUSION
Overall Escorts needs to have effective marketing strategies to increase their sales in
Rohtak district and Bahadurgarh tehsil of Jhajjar district. These can be:
Brand building through superior service.
Use existing customers as promoters.
Extensive and effective dealership systems.
Superior parts management.
Effective advertising of latest developments in product.
Easy financing.
Farmers should be emotionally involved with Escorts Company by helping them in their
problems like new and improved seed procurement, soil testing and by providing
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57. consultancy for enquiries related to agriculture. This can be done by recruiting a trained
professional at regional office level.
A system of Toll free number to register customer complaints should be launched in areas
like Rohtak where dealer is big and can support such initiatives. This becomes even more
necessary as the customer is educated and service problems if not resolved quickly can
become major irritant to them.
This project can be further improved by covering larger areas having extensive one to one
talk with customers.
FEEDBACK FORM
Section 1: Profiling of Customers
A. Contact Details
I. Name
II. Father’s name
III. Village Post Office
IV. Tehsil/Sub Division
V. District State
VI. Pin
VII. Contact Phone number: STD CODE: No:
VIII. Mobile No
B. Related Information
I. Age
II. Present Land in Acres
III. Major crops
IV. Total land in which crop are grown(leased
+ own)
V. Annual income from agriculture from all sources
(in Rs.)
VI. Total years of experience with tractor
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58. VII. Total number of tractor at present
VIII. Most recently purchased tractor model
X1 Previous tractor models (used or posses ever)
X2
X3
IX. Average year for changing tractor
ownership (what should be the normal period in
years for changing tractors)
X. Tractor company closest to customer ( mention
the name of the company)
XI. Total number of visit to dealership during tractor
warranty period (nos)
XII. Total visit to dealership after warranty period (in
a year)(Nos)
XIII. Application for which the tractor used mostly
1. Haulage 2. agriculture 3.others
XIV. In future, would you buy
1. The same model again 2. Different model of
the same company 3.a tractors from a different
company
4.can’t say for sure
FEEDBACK FORM
Section 2: Feedback
C .FEEDBACK
I. Present tractor
II. Year of purchase
III. Purchasing price
IV. Usage
V. Fuel consumption
VI. Criteria for purchase
VII. Requirement of new tractor
VIII. Contacted by Salesman of Farmtrac or not
IX. Rotavator used or not
X. Feedback about Farmtrac brand
XI. Feedback about Farmtrac dealer
General Feedback
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