Case Analysis

Vanraj Mini Tractors:

Is Small Beautiful?

Submitted To:

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Prof. Aashish Argade

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Thepla Cartel
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Name Roll No.

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Arth Patel p39013

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Pratik Giri p39040

Vivek Gor p39058
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Jaimin Vyas p39059

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Sibadittya Baidya p39053

Saurabh Hirekhan p39049

https://www.coursehero.com/file/58083900/SectionA-Thepla-Cartel-Vanraj-Mini-Tractorpdf/
 Analysis:

The given case talks about deciding on the market segment for Vanraj 10 HP mini-tractors-
an innovation from a small farmer in Gujarat, India and thus, selecting the most appropriate
market segment. The segmentation can be done on the basis of the land holding, the type of
soil (geographical) and by the type of the crop cultivated. Four market segments were thus
identified namely, small and marginal farmers, large farmers, industries, and horticulture
farmers. The focal states for Vanraj Mini- Tractors are Uttar Pradesh, Madhya Pradesh,
Gujarat, and Maharashtra.

Field trials conducted to check its functionality in black and laterite soils have provided

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satisfactory results therefore, segmentation on type of soil (geographical) doesn’t seem

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necessary. To solve the dilemma of choosing the right segment for Vanraj we have done cost-

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benefit analysis from the perspective of small farmers having average land holding size of 1.4

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hectare. 90% of tractors are bought on credit availed from banks. There exists a restriction in
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availing credit from banks by the marginal farmers since their land holdings are less than 3
acres, Vanraj may not be viable for them. Thus, marginal farmers are not a part of the target
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segment. As per the case, to target small farmers, we need to make them switch from use of
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bullocks or from the use of rented tractors to Vanraj mini-tractors.

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Problem Statement:
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Mr. Trivedi, the decision maker, believed that the tractor would serve the needs of small and
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marginal farmers better, but his colleagues wanted him to think further before selecting any
particular market segment for targeting.
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Alternatives:

We can evaluate the different markets segments for Vanraj based on various factors like
demographics segment, land holdings and financial ease, geographic segmentation etc.

(i) Demographic segmentation:

a. Marginal and small farmers: This segment accounts for 82% of the total landholdings but
the farmers did not own tractors. Also, no big player is serving this segment and therefore, it
can prove to be the best segment for Vanraj mini-tractors.

https://www.coursehero.com/file/58083900/SectionA-Thepla-Cartel-Vanraj-Mini-Tractorpdf/
 b. Large farmers: They are small in number but the market is highly profitable. All the big
tractor manufacturers serve in this segment. Thus, there isn’t much scope for Vanraj mini-
tractors currently.

c. Industry: With few modifications, Vanraj mini-tractors could be used in material handling
operations. The tractor has a holding capacity of 2 tonnes. This is also a good market segment
for Vanraj in industries like municipal corporations, airports, manufacturing industries etc.

d. Horticulture Farming: In Gujarat and Maharashtra the concept of horticulture farming is

increasing. This segment has large landholdings therefore, a good market for Vanraj mini-
tractors. This is the highest growing market as compared to other markets.

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(ii) Land holdings and financial ease:

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a. Small and marginal farmers have an average landholdings size of 0.4 hectare and 1.4

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hectare. This segment accounts for 82% of the total landholdings. Also, the average
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landholding size is decreasing and the use of small tractors will therefore, increase. As a
result, the overall demand for small tractors will increase as well.
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b. Farmers with as little as 3 acre of land could avail tractor finance from banks which will
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increase the demand of tractors.

(iii) Geographic segmentation:

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a. North India: Soil type in Punjab, Uttar Pradesh, and Haryana is alluvial which requires
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lower horsepower tractors for undertaking farming activities.

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b. Southern and western India: Gujarat, Maharashtra, and Madhya Pradesh have harder soil
types (laterite and black soil) which require higher horsepower tractors. But since tractor
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densities were gradually increasing in this segment, future sales are expected to increase.

Recommendations:

Vanraj mini-tractors should be targeted for the segment comprising of small farmers mainly,
as they provide huge potential market and M/S Pramal should cash on first mover advantage.
Semi-medium and medium farmers should also be considered as they provide market
potential in horticulture industry which in turn, presents market potential for Vanraj. It is
concentrated only in few states like Maharashtra, Gujarat, and Uttar Pradesh and has shown
high growth rate.

https://www.coursehero.com/file/58083900/SectionA-Thepla-Cartel-Vanraj-Mini-Tractorpdf/

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