TILLERsMARKETINGPLAN

EXECUTIVE SUMMARY

Power tiller technology can ease the situation to a great extent and can make the life of farmers harmonious besides raising the yield and monetary gain. What a farmer can not perform with the help of bullocks and tractors with implements, power tiller can; thus bring in new hope to farmers. However the sale of Power tillers have not as per the forecasts and the product is a dying product even though after registering a growth in past five years although the agriculture equipment market is projected to cross 120 billion $ by 2014 in India.

Various reasons have been attributed towards the dull performance of tillers. Lack of awareness among the farmers regarding the usage benefits and latest government initiatives. Lack of entrepreneur ship by farmers and the constant comparisons to tractors seem to come in the way of tillers.

MaRkEtiNg StrAtEgY.

We have come to the conclusion that the tillers market is green for next eight to ten years before mini tractors take over the business of tillers and tillers die down completely. Hence Milking the market for next seven years and putting all your resources to boost up the sales and creating awareness to farmers about tillers seems an ideal choice.

Placing the tillers as a paddy player will also be very useful due to limitation of tractors in paddy cultivation and the additional cycle of crop it in turn gifts the farmers.

Creating a Brand image in the mean time which in turn is beneficial for the mini-tractors which will be launched after 8 – 10 years.

The perfect plan is to milk the tillers market for next seven years and to boost there sale as much as possible in this period, at the same time start to diversify into mini tractors before tillers die down and to create a line for paddy farming to be able to skim the market in next six to seven years.

Index

Executive Summary.............................................................................................................................02

Introduction.........................................................................................................................................03

Knowing the area.................................................................................................................................04

Knowing the market............................................................................................................................05

Tormenting tides.................................................................................................................................06

Rough Sea............................................................................................................................................06

Tillers Vs Tractors................................................................................................................................07

Ground realities and Government........................................................................................................07

Market survey.......................................................................................................................................08

Our take................................................................................................................................................08

Our findings..........................................................................................................................................09

Market Strategy....................................................................................................................................10

Financials..............................................................................................................................................11

Financial sheets

Sale forecast.........................................................................................................................................13

Conclusion............................................................................................................................................14

INTRODUCTION.

The main objective is to be able to boost the sales of tillers in the Indian market. Which is a dying product. We have kept a target of 5 years. In the initial stages the plan is launched in

Udupi/ Manipal district of Karnataka. Then, the plan is made available PAN India after seeing the market reaction from Udupi district.. To better understand the market an in-depth analysis of the market was done.

KNOWING THE AREA.

Udupi district has a population of 11,09,494. There are nine Hobalies, 146 grama panchayats, 11,567 industries with a literacy rate over 80%.

Udupi district is essentially an agriculture district with more than 80% of population depends on agriculture for their livelihood where as only 40% of the available land is used for agriculture. Rest is either forest land or land unsuitable for agriculture. Agriculture is confined mainly to the valley area and is by and large confined to the traditional kharif cultivations depending on the monsoon. Paddy is the main crop raised by 75% of the cultivated area in kharif season. The labour costs being high and the returns being low, Low-lying areas under paddy cultivation may be encouraged to take up alternate crops like sugarcane. The other crops are chillies, sweet potato, ginger and vegetables. In rabi season, paddy, chillies, black gram and green gram are raised. Pulses are raised during dry season.. There is no any major irrigation scheme in Udupi district. The minor irrigation schemes include both surface water and ground water schemes.

The district has 1.83 lakh farmers. Most of them are small and marginal farmers with land holding of less than 2 hectares. The three tire structure of Panchayati Raj comprises of zilla panchayat at Udupi, three taluk panchayat at Karkala, Kundapura and Udupi and 146 gram panchayats. Udupi taluk has 61 gram panchayats fallowed by Kandupura 56 gram panchayats and Karkala with 29 gram panchayats. Administratively, Udupi has 248 villages, 146 grama panchayats, one city Municipality and two town Municipalities.

KNOWING THE MARKET

Indian market consists of 10% of the world agricultural equipments market and is sized at a whooping 8.2 billion $. Overall world agricultural equipment market is predicted to grow annually at a rate of 4.8% annually and crossed 80 billion $ mark in 2010.

The Indian Tiller Market is growing at 20% CAGR since the past 5 years in Volume terms post the policy reform period.

Yet WE DARE TO TERM TILLERS AS A DYING PRODUCT.

WHY?????

We shall get down to it too

But first let us understand tillers a little more in depth. Tillers are automated farming equipments used to till land. However they evolved into a multiuse machine used for tilling, irrigation, weeding and other functions. Originated from Japan, the tillers have gone on to be a phenomenal success in China and the sales of Tillers catching up in Bangladesh as well.

Power tillers can be used throughout where the following situations exist:-

• Where paddy is predominant. Where other predominant crops are cultivated in combination with paddy.

• Where intercropping and inter-culture is practiced in horticultural and plantation crops.

• Small land holdings upto 2.5 hectares and HP requirement is lesser.

• Where dearth of power for cultivation hinders timely operation.

• Hilly areas where narrow bench terraces are difficult to negotiate.

• Where farmers cannot afford to buy tractors.

If in the situation described above power tillers are put to use, it is anticipated that there would be a vast potential for the use of power tiller. If Japan can boast up putting 6 million and China 1.9 million power tillers in use in their farms where cultivated areas are just 5.27 and 100 million hectares respectively, it should not be difficult in India to increase power

tiller use where cultivated land is 140 million hectares. It must be added that the average holding size of both these countries are similar to India.

There are mainly 4 manufacturers of power tillers in India producing about 8 models in the range of 8-12 hp. In addition to them there are 4 other manufacturers who are importing Chinese make of power tillers and selling in the country. The total sale of power tillers in the country during 2001 was 16018 numbers. The major sales of power tillers are in the States of West Bengal, Tamil Nadu, Karnataka, Assam, Kerala, Orissa and

Maharashtra.

TORMENTING TIDES

During the green revolution period of mid-sixties, the prospect of the power tiller was considered very high. It was estimated during the fourth five year plan that the annual demand for the power tiller may sky-rocket to 80,000 units. However, the experience over the years shattered the hope when the demand could barely reach 2,540 units (1975-76) per annum. Till the end of 1986, the situation did not alter much but by the year 1998 the annual sale has been picked upto 14000 units.

THE ROUGH SEA?????

major reasons for low demand were put as

(i) non-availability of 3 to 5 hp low cost power tillers ,(ii) rising of selling price,(iii) lack of confidence in farmers due to absence of training and after sales

service,(iv) non-availability of well matched implements etc.

There seems to be some still deeper reasons for the power tiller not drawing the attention of potential users. Mentioned here are those farmers who

(a) have smaller holdings of 2 ha or so

(b) cultivate paddy

(c) share bullock or tractor services from other on custom basis.

Although these farmers have the potential to make investments and generate capital from the farm, they do not have sufficient courage to take higher risk of investing say Rs. 1.35 lakh in power tillers. What makes them suffer is the lack of entrepreneurship. It is not that such potential buyers are waiting indefinitely to make choice of an appropriate farm power source but the number who are deciding in favour of power tillers are small. A large chunk of potential buyers may not have enough savings to contribute for margin money thereby making them ineligible for loan from banking institutions.

TILLERS VS TRACTORS

The debate has always been to buy a tractor instead of tillers, if one plans to enter into agricultural equipment. So we carried out a study on tractors and tillers and what we concluded was :

India is a major paddy cultivator with 22% of global paddy cultivation share belonging to India. But however, many of the tractors in India are not primarily designed for operations in paddy fields. Farmers particularly of paddy areas which comprise 28 % of the arable land in the country face the challenging task of timely preparation of seed bed and transplanting of paddy seedlings They are mostly of medium or heavy types with low ground clearance and inadequate sealing mechanism against mud. These tractors have a tendency to sink in the puddle soils and this makes them unsuitable for paddy cultivation. If a tractor is used for transplantation, the disturbance to puddle soil is so high that transplanted seedlings face the difficulty of proper stand and stability. More importantly, our small size plots of land make it quite cumbersome, tedious and time consuming for most of the available tractor models to meet the requirements of paddy field operations.

GROUND REALITIES AND GOVERNMENT

75% are Small & Marginal farmers in India for whom Power Tillers are very ideal.

Government Subsidies is the single Largest Factor Driving Tiller Sales in India. The magnitude of Subsidy is state specific. For instance Chattisgarh is providing Rs. 90,000/tiller subsidy, while Jharkhand & Bihar are providing Rs. 65,000/tiller. Assam Govt. in its FY10 Budget stated that 20 power tillers will be provided to each assembly constituency at 75 percent discount. Therefore, annual Tiller Demand from Assam should be 124 constituencies x 20 = 2480 tillers. Central Government Subsidy on Tillers = Rs. 45,000. On an average, Government Subsidies reduce the price of a Tiller, to a farmer by 50%. For the remaining amount (net of Subsidy), PSU Banks give credit at 5% rate of Interest to farmers for Tiller purchases. The government thrust to Increase in agricultural lending also works in favour of the The Indian Tiller Market.

Compared to 6,00,000 tiller units p.a. sold in China, India sells just 53,000 unitsp.a. even though total arable land in India is more than in China.Even Bangladesh has sales of close to 50,000 units p.a. This shows the incredible under penetration of The Indian Tiller Market.

In FY11, the Indian Power Tiller Market was about 53,000 Tillers out of which, VSTTL sold 23,450 units, KAMCO sold 12,000 units and Chinese Imports (10-12 importers) were 17,000 units.

MARKET SURVEY

engaged in door to door survey. 300 farmers were chosen. Manipal/Uduipi was targeted for

the survey. The farmers were asked about tillers and if they knew what they did. They were

even asked if they were interested in knowing about the product and what all benefits could

be obtained from them. Further if they would want to know about government schemes and

would ever want to buy one.

RESULT: 1 person in 300 farmers was a tiller user. 1 in every 3 farmers wanted to know

about tillers( read potential) .

OUR TAKE.

The power tiller appears to be replacing the animal power more effectively and help in the scenario of, increasing demand for human labour. The small and marginal farmers form major clientele for custom hiring of power tiller. In highly fragmented and small holdings, power tiller is preferred for arduous farm operations like paddling and preparatory tillage.The power tillers are cost effective source of farm power as the power tiller owner are able to recover even the fixed cost and earn handsome margin from custom hiring unlike the tractor owner, who are not able to recover the fixed costs out of the custom hiring charges. Economics of a power tiller put to annual use of 800 hr under custom hiring has been worked out. Power tiller helped in reducing the seasonal fallows and thereby substantially increasing cropping intensity.

The power tiller enables farmers to diversify cropping pattern and increase in yield of crops. They also adopt High Yielding Varieties (HYV) .

The power tillers are more effective in the areas having high concentration of small and marginal farmers and highly fragmented holdings.

Power tiller are preferred by small farmers and are being used primarily for earning cash income through custom hiring. Thus, this machine provides opportunities for self employment in rural areas. Even marginal farmers and landless labourers effectively and profitably use the power tiller for self employment.

The incremental income gained from the activity is found to vary between Rs. 30786 in East coast plains to Rs. 75434 in Southern Plateau and hill region. In conclusion, it proves that the level of incremental income in power tiller is high and repayment of loan is relatively easier. therefore, power tillers are likely to improve the economic conditions of smaller farmers.

OUR FINDINGS

• Small Tractor (below 20HP) Market will grow even faster than the tiller market. Few states give Subsidy for Small Tractors.

• Marketing it as paddy players. This segment will take approx. 2 years to mature and produce meaningful sales.

• A desired proportion of unwilling potential buyers can be motivated into becoming actual buyers by assuring them of necessary credit support and giving them complete understanding of the repayment ethics etc. alongwith the promise that their land would remain safe if they follow them

• Particularly for power tiller purchase and arranging margin money, farmers could be told that it would be better for them to join hands with some other farmers to raise margin money and buy a power tiller for collective use. Government assistance provided to such farmers also needs to be brought to the knowledge of potential buyers

MARKETING STRATEGY

After carefully studying the market and the product the strategy which we have come up with is basically to milk the market in next seven to eight years before the market of mini tractors take over tillers as mini tractors are already evolving and few states have also started subsidising on the mini-tractors.

Creating a Brand image in the mean time which in turn is beneficial for the mini-tractors which will be launched after 8 – 10 years.

The next strategy is to market a new line of tillers specially as paddy players as the paddy cultivators, if educated properly about the product, they will prefer this equipment blind-folded specially as even tractors seem to fail in paddy cultivation.

Third strategy is to market and make people aware of this machine and the incentives provided by the government and new loan and interest schemes provided by government.

FINANCIALs

The budget has been prepared for the company VST tillers as they control the supply of tillers in the Udupi area and has enough steel to boost the sales of tillers and extract profit from the market.

Year – 1 Budget : 26,00,000

Explanation : The first year the company shall get into promotional activities , the sale force shall go to all the panchayats and start telling them about tillers and their usage. Will interact with as many as farmers and educate them about govt. Schemes and product. Promotional campaigns on tv and radio shall be introduced on local and fm channels.

Few panchayats will be given a tiller to try and see the advantages in real life. The goal will be to able to cover all the panchayats and have them try out the tiller and its advantage in next five years for atleast a quarter.

Year – 2 Budget : 38,00,000.

Explanation : The concept of paddy player has materialised , the market is apt and the product is expected to roll out next year, which shall be marketed as a paddy player in major. The increase in budget is for the new line which shall be introduced next year and educating farmers campaign for this line shall start from this year as well.

Year – 3 Budget : 52,00,000.

Explanation : The paddy player has been launched and intensive marketing and educating campaigns are launched for the new paddy player. The marketing team shall go down to every village in the district and inform the farmers about usage , schemes and how it would be beneficial. The promotion shall now be of two products normal tillers and the other of the paddy players.

Year – 4 Budget : 64,00,000

Explanation : The paddy player launched is being taken to remote and far fetched areas, both the lines are being promoted and people being made aware of the products and its usage, however the company shall also move into branding activities and organise scientist talks, free health camps and farming expo’s to gain the customer trust. Feedback from existing customers shall be taken and their complaints if any shall be catered to.

Year – 5 Budget : 76,00,000

Explanation : the branding activities shall be at its peak this year, various customer driven programs , education seminars and building a well or so shall be done by the company.

The idea will be to create a name of trust and recognition which shall be beneficial when the company launches mini tractors down the line and also in existing scenario where the promotional campaigns shall run.

Year – 6 Budget : 60,00,000

The promotional activities shall be slowed down and branding activities shall continue. The motive will be to milk the tillers market as much as possible as the tillers market are expected to last for a couple of years more and continue being close to farmers and their conditions.

1 2 3 4 5 60

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

f(x) = 845714.285714286 x + 2306666.66666667

Series1Linear (Series1)

SALES FORECAST .

The company has a current sale of 500 units in Udupi district alone.

The tiller industry is expected to grow at 20% in sales volume for next five years.

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The promotional campaigns and strategy should be able to show results by the end of the year and we can expect an rise in number of sale at the end of first year only.

The revenues allocated to the marketing team at no point exceed the sales revenue obtained from uduipi area only.

1 2 3 4 5 6 7 8 90

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CONCLUSION

The main motive to boost the sale should be achieved by implementing these strategies and a base to launch mini-tractors which shall be achieved by the strategies mentioned. The promotion and creating awareness has also being catered to in the strategy. Hence we should be able to boost the sales in the given time frame, milk the market of tillers before the market dies and successfully move on to mini-tractors and in the entire process create a brand name among the target group too.

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SUBMITTED BY : GROUP E2. Abhimanyu

Amit Bharat Deepti Sindhu