Mukesh Lohan_Tractors Industry
Transcript of Mukesh Lohan_Tractors Industry
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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 thankMr.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 andimmense amount of help without which it would have been really difficulty to complete
this project.
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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
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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.
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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 dealers 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 dont 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.
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Farmtrac dealer in bahadurgarh has lost 15% of customers to New Holland
due to its workshop managers 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 dealers 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.
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HISTORY OF TRACTORS
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INDIAN TRACTOR INDUSTRYINDIAN TRACTOR INDUSTRY
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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 andimports restricted.
Five units setup in private sector all with following collaborations:-
- EICHER - 1960
- TAFE - 1961
- HINDUSTAN - 1963
- ESCORTS - 1964
- MAHINDRA - 1965
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.
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The Second Phase (1965-1975)
Successful introduction of HYV seeds in 1967.Sudden upsurge in tractor demand (up to50% 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.
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.
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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 1994\95.
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.
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.
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INDUSTRY PROFILEINDUSTRY PROFILE
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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 inIndia 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
worlds 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 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.
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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 basedon 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.
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.
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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 USAand 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 dealers network in these countries. Escorts have
very ambitious plans to expand the dealers 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.
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COMPANY PROFILECOMPANY PROFILE
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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.
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.
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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 agriculturaltractors 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 Endeavours 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
customers trust; where employees attain their full potential; and where nation
building is a way of life.
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PRODUCT LINE OF ESCORTS LDT.
A B C D E
ESCORTS
TRACTORS
ESC 325
JOSH
ESC 335
JOSH
ESC MPT
JAWAN
POWERTRAC
TRACTORS
PT 434 PT 439 PT 445 PT 455
FARMTRAC
TRACTORS
FT 30
HERO
FT 35
CHAMPION
FT 45FT 45 DT
FT 50 EPI
FT 60FT60DX
FT60DT
FT 65 EPIFT 70
FT 70 DT
FT 80FT 80 DT
A - 0-25hp
B - 26-35hp
C - 33-39hp
D - 40-45hp
E - 46hp-Above
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RECENT DEVELOPMENTS IN
ESCORTS
RECENT DEVELOPMENTS:
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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 companys entry in the 4-cylinder tractor
segment.
4) The companys 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 formarketing 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.
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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.
Segment-Wise revenue for FY 09(Rs mn):Segment Revenue (Rs. million)
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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
STATEMENT OF PURPOSE
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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 1960raised 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.
I have studied the competition and the perception with which a customers 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
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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.
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
dealers initiative, this can enhance sales by helping in designing various sales promotion
activities.
HYPOTHESIS
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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.
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.
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LIMITATIONSLIMITATIONS
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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 companys failure probably is that they
are unable to enforce their guidelines on the dealers.
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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.
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REASEARCH METHODOLOGYREASEARCH 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
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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.
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FINDINGSFINDINGS
FINDINGS
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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 companys 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:
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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 reliableservice.
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 consumption4 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.
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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:
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S
N
O CRITERIA FOR PURCHASE
NUMBER OF
CUSTOMERS
PERCENTAGE
1BRAND VALUE AND RESALEVALUE 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 43TOTAL 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
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focus on maintaining its brand image to increase and protect its market share in Rohtak
district.
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 featuresand benefits offered by the product.
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ESCORTS BRAND PERSONALITY IN CUSTOMERS MINDS :
Customers in Rohtak district identify Escorts with Farmtrac and especially FT60.
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 criterias 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 currentposition 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..
INCREASES
PRESTEGE
GOOD
RESALE
VALUE
POWERFULL
TRACTOR
FARMTRAC
BRAND
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2) Behavioral training should be given to Dealer and dealerships staff to provide
better service to customers.
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:
Escortss Positioning Map Vis a Vis its competitors:
40
High Brand
Value
Low Brand
Value
High Price
Low Price
SonalikaO
Mahindra
O
Escorts O
TAFE
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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 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 NHESCOR
TSMAHINDRA
SWARAJ
EICHER TAFE
SONALIKA
TOTAL TRACTORS 51 147 115 66 198 61 30TOTAL MARKET
SHARE 7.10%
20.47
% 16.02% 9.19%
27.58
% 8.50% 4.18%VILLAGES MARKETSHARE 7.53%
17.98% 17.12% 9.59%
27.91% 7.88% 3.94%
CITY MARKETSHARE 5.22%
31.34% 11.19% 7.46%
26.12%
11.19% 5.22%
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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.
Also we can see that escorts needs to focus on villages 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 nofollow-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.
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NOC: Number of customers.
Coverage of Farmtrac dealer was found out to be 73% which looks good but 69% ofenquiries 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
PERCENT
AGE
1LOWER PRICE,POWER STEERING AND
OIL BRAKES. 8 31%
2REFERENCE BY OTHER NEWHOLLAND
CUSTOMERS 8 31%
3POOR SERVICE AND BEHAVIOUR BY FT
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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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 ofpoor 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 behavioraltraining of dealer and dealerships staffare required to increase satisfaction of existing
customers of Escorts.
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RECOMMANDATIONS &RECOMMANDATIONS &
SUGGESTIONSSUGGESTIONS
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 makesure 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.
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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 promptservice 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. Farmers 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 balance
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that would require a full replenishment process tied to customer demand. Product
availability is a key aspect of the customers 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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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 tractors 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.
3 Needs engine repair early.
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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 brands share in advertising arena or
share of voice. Based on these facts and some historical data we can establish some kindof 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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B 13% 15%
C 08% 09%
-- -- --
-- -- --
D 0% 02%
Here a brand D doesnt advertise at all still has a market share of 2%. Leading brands
are enjoying economics of scale but they cant 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 companys 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 i.e. Oil
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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.
Below mentioned strategies and policies will help Escorts in halting the progress of
New Holland in higher HP segment in Bahadurgarh tehsil:
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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 staffare 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
and steps should be taken to increase the market share. Analysis of all the villages is
attached with the report.
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CONCLUSIONCONCLUSION
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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
consultancy for enquiries related to agriculture. This can be done by recruiting a trained
professional at regional office level.
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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 FORMSection 1: Profiling of Customers
A. Contact Details
I. Name
II. Fathers name
III. Village Post Office
IV. Tehsil/Sub DivisionV. 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
VII. Total number of tractor at present
VIII. Most recently purchased tractor model
X1 Previous tractor models (used or posses ever)
X2
X3
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IX. Average year for changing tractor
ownership (what should be the normal period inyears for changing tractors)
X. Tractor company closest to customer ( mentionthe name of the company)
XI. Total number of visit to dealership during tractorwarranty period (nos)
XII. Total visit to dealership after warranty period (ina year)(Nos)
XIII. Application for which the tractor used mostly
1. Haulage 2. agriculture 3.others
XIV. In future, wouldyou buy
1. The same model again 2. Different model ofthe same company 3.a tractors from a different
company
4.cant say for sure
FEEDBACK FORMSection 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 dealerGeneral Feedback