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

mukesh lohan_tractors industry

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