A case solution for Vanraj Tractors to improve penetration of low capacity tractors.

1. Market and
Industry
Analysis
Feasibility
Analysis
Segment
Selection
Marketing Mix
Future
Activities
Team Name : No Holds Barred
College Name : SIBM Pune
Team Details :
Vinit Gandhi
Subhrojyoti Tripathy
Ankit Kawad
Nisha Shankar
Flow of Presentation

2. Bargaining Power of Buyers
• Default rate of small and marginal farmers
: High
•Price sensitivity : Mod to High
• Product differentiation: Mod
•Substitutes available: High
• Buyer Concentration: Low
Bargaining Power of Suppliers
• Supplier Concentration: Low
• Cost of Switching Suppliers:
Mod
• Alternative Suppliers: High
• Propensity(Integrate Forward): Nil
Threat of New Entry
• Time & Cost of Entry: High
• Entry Barriers: Mod
• Brand loyalty: High
• Economies of Scale: Low
• Labour Knowledge: Low
• Learning Curve: Mod
Threat of Substitutes (OEMs/Garages)
• No. of substitutes: Low
• Quality/performance of substitutes: Nil
Competitive Rivalry
• No. of Competitors: High
•Fixed costs/Value added: High
• Industry growth : Mod
• Product Differences: High
• Switching Cost: Low
• Customer Loyalty: Low to Mod
Moderate Low
Low/Moderate Low
High
Emergence of Sanedo and Bullet Shanti
No major player in the segment
Highly attractive due to increasing non-agri applications of tractors
Industry applications and small farm holdings attractive due to easy manoeuvrability, low price and
maintenance, decreasing farm holding size
Easy customization for sub-segments of customers
Increasing demand from western states for multi purpose tractors with <20HP capacity
Varietyof
Applications
High
High
HorsePower
Low
Vanraj
>20 HP
Huge Potent
Gap
Note: Size of the bubble
represents the perceived
variety in applications
offered
Competitor and GAPAnalysis
PORTER’s Analysis: Low-Moderate risk
<20 HP
Market and Industry Analysis
Gap Analysis
Mahindra
TAFE
Escorts
Eicher
FOCUS SECTOR ANALYSIS

3. Per Year Bullock (in Rs.) Vanraj
(in Rs.)
Rent (in Rs.)
Initial 27500 190000 0
Life span Useful life- 8 years 8 years -
Fuel/Fodder cost per
year
Fodder cost = Rs.20000 Fuel cost
14 lts/acre*2
crops/year*Rs
32/liter*3.7(land size)
= Rs.3315
Fixed cost
Rs. 25000/season*2
=Rs.50000/year
Variable cost
Diesel cost/acre: 14
lts*Rs.32/liter*3.7*2
=Rs. 3315/acre
Maintenance
cost/year
3437 (12.5% for 8 years) 2968 (12.5% for 8
years)
0
Inter-culturing cost 400 man-hours @ Rs.
10/hr for 1 Hectare
=400*10*3.7=14800
(Included in Fuel cost) 0
Interest 19000 (@10 % per
year)
0
Total cost/year 38237 25283 53315
Feasibility Analysis
STRENGTH
•Low priced tractors
•Low maintenance and fuel
consumption
•Power takeoff point, functions as
generator
•Multiple uses by consumer and
business segments
•Single cast body- less wear and
tear
WEAKNESS
•Access to limited markets
•Low brand awareness
•Weak distribution network
•Narrow product range
OPPORTUNITY
•Large segment of marginal/small
farmers
•Decreasing size of farm holdings
•Tie up with rural co-ops and
municipal corporations
•Easy availability of credit to
farmers
•Incresed focus on increasing farm
yields
THREATS
•Threat from major established
players
•Low cost Chinese tractors and
parts
•Threat of bad monsoons
SWOT Analysis
Comparing Associated costs

4. Assumptions
-Data is valid for current year
-Small and marginal segment to be targeted because of highly competitive market in large tractors category
-Penetration lowest for marginal/small farmers( less ability to pay) and highest in industries
Target Segment
No. of
customers(in '000)
Penetration
rate(Assumed)
Potential
market size
Potential market value
( Price Rs. 1.9 lakh each)
Marginal & Small
farmers 35096 0.05 1754.8 2983.16
Industries 126 0.15 18.9 32.13
Horticulture farmers 2615 0.1 261.5 444.55
Large farmers 10472 0.2 2094.4 3560.48
Highest potential but
very high competition;
entry difficult
No major player;
decreasing size of
farmholdings and
increasing demand for
tractors;
Additional Details :
-650 million farmers, 80% marginal farmers
-Application of <20 HP tractors in irrigation, transportation
-Cheap leasing and low fuel consumption
-Easily available credit for farmers upto Rs. 2 lakh
**Source: http://www.seea.org.in/vol7-1-2007/01.pdf
www.gian.org
VANRAJ Features
-Lowest diesel consumption
-Easy maneuverability, flexible turning radius
-Low cost of distribution from Gujarat
-Power takeoff point functioning as generator
Segment Selection and Generic Features
Hence it makes sense to operate
in the Marginal Segment even
after achieving a lower
penetration rate. Thereby making
it the key focus of our strategy

5. Brand Promise
Your loyal assistant
helping you grow
“Kisaan ka samman/
Udyog ka samadhan”
Personality
• Assistant
• Money
saver
• Power
• Reliability
• Vehicle of
Creation
• Trust
• Value for
Money
• International
Pedigree
Rallying Call
Raj karo Vanraj ke saath
Benefits
• Affordable
• Multi purpose
tractor
• Comes with
extensions
Brand Truths
• Innovator
• Affordable
• Multi
feathered
offerings
Core Insight
An innovator in the tractor market developing
solutions fit for farmers and industries alike
Consumer Target
• Marginal Farmers
• Industries and Governments
Market Definition
• Core: Farmers
Industrial usage
HumansideofBrand
Product (and Brand specifications) &
Pricing
VANRAJ
PRAGATI Leo
Parent Brand
B2C Segment B2B segment
Logo
Brand and Product strategy
Having two separate brands with distinct features for the B2B and B2C Segment
B2C Segment – (10 HP) (1.7 Lacs)
Brand name : Pragati
Brand position : Sturdy, Reliable and Value for money
Features :
• Free maintenance for 3 years
• Additional equipment offered for free based on soil type. (Customized offering)
B2B Segment – (15-20 HP) (1.9 Lacs)
Brand name : Leo
Brand Position : Reliable, Flexible, Cost effective, Affordable mode of transport
Features :
• Free maintenance for 1 year
• Additional equipments offered for industry type (for hauling, construction etc.)
• Easily maneuverable reaches remote places
• Economic in diesel costs.
“RAJ KARO VANRAJ KE SAATH”

6. Key focus Regions:
Places where we would establish the distribution
centres
Place
• Booking centers with display models at strategic
locations.
• Strategic alliance with TAFE for distribution
network
• Tie up with Rural (Sahakari) Banks
• Have distribution centers in prime locations to
provide trials and pick up facilities.
• Tie up with corporate initiatives like ITC e-
Choupal, Mahindra Hariyali
• Free tractor insurance and awareness campaigns
through LIC offices/agents
Places in India
Maharashtra : Nashik, Ratnagiri, Vidharbha, Nanded-
Residual/Black soil type
Gujrat : Junagad, Bhuj, Valsad – Sandy soil
Madhya Pradesh : Bhopal, Ujjain,Jabalpur- Alluvial/ Regur
soil
Uttar Pradesh : Sitapur, Baraili- Mixed(Red/Black)
Distribution Centre Booking Centres

7. Rural
Promotions
Touchpoints
Regional
News
papers
Gram
Shree
Melas
Seeds and
crop
collection
centers
Print ads in
post
offices/
NREGA
distributio
n
State buses
HAATS
PDS outlets
Temples
Promotions:
3 Year Warranty
Scheme
Collective
Farming
Campaign
Micro Finance
Scheme for
Farmers
Campaign to
explain the
money savings
“Main bhi
Vanraj”
Promotion on
Radios
Promotion Theme :
Bullock v/s Vanraj (Cost benefits)
Campaigns and Initiatives

8. Future Decisions
 Enter other geographic locations : Punjab, Haryana, Uttaranchal which are highly competitive once the current
capacity is utilized in Gujrat, Maharashtra, UP and MP.
 Tie up with Government agencies to uplift farmers. Once the success of Vanraj is proved in the near term,
government can be approached to replicate the efficacy elsewhere.
 Increase production capacity to suit the requirement of the large target group once activated.
 Reduce prices by Innovations and find different enhancements which would further improve the efficiency of
the product.
 Tie up with Micro finance institutions to offer special discounts on Vanraj products thereby generating a
continuous sales channel.
 Develop sales channel for other locations in the expansion strategy.
 Focus should be to expand the target market for Mini Tractors by TG Activation and remain a market leader in
that segment.
THANK YOU