Rural Assignment Case On Mahindra

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Major issue that the company is facing:

For over two decades, Mahindra Tractors is the undisputed leader of the Indian tractor market, which is the largest tractor market in the world. But company has recently filed a dip in its domestic sales and facing few issues which has lowered its stock process too. M&M is perceived lesser advanced in technological ability as compared to foreign players. Also labor productivity is quite low compared to competitors. One of the major issues is its major dependence on the rural sector. The company should concentrate more on strategies like cost advantage and differentiation which can help them in providing low cost farming solutions to farmers.

Explain the environment challenges faced by the company:
With the technological advancement, foreign players are major challenge for the company to operate under the present 100% FDI policy. Also the political factors can impact the industry like mechanization of agriculture with a view to boost food grain production. Also some ecological factors like weather and climate change can be a challenge. Acid rain, Green house effect and with greater environmental awareness this external factors is becoming a significant issue for firms to consider which M&M needs to keep in Mind. The growing desire to protect the environment is having an impact on many industries, as environment friendly products and processes are affecting demand patterns and creating business opportunities. Also the legal environment in which firms operate can be a challenge. Any legal changes like any collaboration with government which shapes policy issues or a new Agricultural policy can again be an environment challenge to be cared.

Effectiveness of the rural marketing strategy of Mahindra:
The rural marketing strategy of Mahindra Tractors has been very effective and has resulted in a better communication with the farmers, which consequently lead to an increase in number of tractors sold in the rural market. The services which Mahindra offers post-purchase have also helped them to build up a trusted relationship with the farmers. Mahindra has implemented a certain personalized and specific communications with the farmers as their marketing strategy wherein they use a number of nonconventional methods to promote their brands and create awareness in the rural market. These methods have been majorly successful because of their application and product specific messages which the farmer wants to help him understand what exactly he is going to get out the product and how it beneficial to him. To develop more bonded relationship in the rural community, Mahindra’s initiatives to promote the local sports talents in the villages have been a major contributor. Mahindra’s rural marketing strategy has been majorly customer centric with an inclusion of social concerns which is why it has been doing medical camps, training to farmers for empowerment, training to learn new innovative agri-technologies, etc. This is seen in the rural market as a helping hand, a concerned person, and that is why Mahindra is a leader in the rural market with a huge percentage of market share, in fact everywhere!

Deciphering the rural marketing strategy of Mahindra:
Rural marketing strategy: The strategy has been primarily been based upon providing better products for the farmers within their affordable range keeping in mind the ground realities of rural market and farmers’ wish list. Despite the constraints of the poor reach, literacy problems, language barriers, etc., Mahindra took up a strategy of personalized communication with the farmers and talk to them and provide them the appropriate products. The focus has been to generate an interest in the rural community about its tractors by going hand-in-hand with the farmers, listening to what they have to say, being emphatic to their problems, helping them, training them, etc. The main aim of such a strategy has been to build a trust in the farmers for the Mahindra brand by doing campaigns, village outreach programs, etc., by proving them the technically modern, yet user friendly and attractive tractors.

Future course of action to improve its performance:
As it is mentioned in the case study that 93 millions farmers out of 116 million have plots, five acres or less in size so there is huge opportunity in this segment for Mahindra Tractors to launch their products in less horse power and slightly cheaper so that these people can afford also. Because of the concept of nuclear families in rural also family size as well as land holding size is decreasing. In rural tractor is not only used for the agriculture purpose but it is also used as a domestic transport vehicle in most of the rural areas in which they can carry their purchased products from market. So if the appropriate product of their range and power will be launched then there is huge potential for Mahindra Tractors in this segment. Less than 10% of the farmers in India own Tractors and 70% of India is rural so we can see from this Fact itself that what a huge demand and opportunity is there for tractor players. This is because they don’t have huge amount to afford to buy it and in place of Buying they take it on rent from the farmers who owns a Tractor. So Mahindra should launch products of low range. Whereas the brand of Tractor which a rich Farmer own is linked to his personality like a rich person in Urban area owns a luxurious car. So they should launch products of low range as well as premium range.

Additional Insights:
There are many poor people and various tribal community of India which owns land but don’t have money to afford for tractors and to do agriculture that is why their land remains barren. So Mahindra should adopt some project for helping those poor in agriculture as a part of their Corporate Social Responsibility (CSR). Either they can start giving Tractors on rent at affordable price or by allowing 3-4 farmers to buy tractor together. They can also help them in various agriculture operations like providing seeds, irrigation facilities, agricultural inputs etc. Due to this they will be able to increase their brand awareness and there is possibility of more penetration in rural market.

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