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Subject: Marketing Management

Assignment No: 1

Topic: Marketing mix of Tractor Industry in India.

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PREFACE

The tractor industry in India has developed over the years to become one of the largest tractor
markets in the world. From just about 50,000 units in early eighties the size of the tractor market
in the country has grown up to over 200,000 units. Today the industry comprises of 14 players,
including 3 MNCs. The opportunities still are huge considering the low farm mechanization
levels in the country, when compared to other developed economies across the world. After a
downturn during last 3-4 years, the industry is back on a growth path, which i believe would
sustain in coming years as well. Key concern for the industry is its dependence on agricultural
income in hands of farmers and the state of monsoon.

Tractor Segments: 30 - 40 HP dominates with over 50 percent share. The tractor industry is
classified into three broad segments, based on the power delivered by the engine Horse Power
(HP).

INDUSTRY STRUCTURE

From a small beginning in the 1960s, when a few thousand tractors were produced, India is now
one of the largest producers of tractors in the world, along with the US. The Green Revolution of
the late 1960s and increasing recourse to scientific cultivation have resulted in a substantial
increase in the demand for tractors.
From a production of 2,000 tractors in FY1971, the volume sales of the industry reached
2,66,073 units in FY2000. The tractor industry’s growth has dropped to a low of 2-3% in 1998-
99, as well as in 1999-2000. Product losses and unremunerative prices in a few States, in the past
few seasons, have added to the downtrend, but the biggest adverse impact has been
overproduction and billing by some of the leading players.

COMPETITORS

Six main players - Mahindra & Mahindra Ltd (M&M), Tractors and Farm Equipment Ltd
(TAFE), Escorts Ltd, Punjab Tractors Ltd (PTL), Eicher Ltd, and Hindustan Machine Tools Ltd
(HMT) - control most of the market, while a couple of players in the unorganized sector
specialize in used tractors.

Mahindra & Mahindra is the leader in the industry, with a market share of 27%. Three
multinationals, New Ford Holland, John Deere and Greaves, have entered the market in the past
two years, but their combined sales have been below 6,000 units. All Indian brands, except
Punjab Tractors Ltd, have had overseas tie-ups and support since the beginning.

Below is a representation of the market share of major tractor manufacturers in India.

MAHINDRA TRACTORS

Mahindra Tractors, the farm equipment division of Mahindra & Mahindra, builds and sources
tractors that are sold worldwide across six continents. Mahindra is also among the top three
tractor manufacturers in the world.. Mahindra has a huge consumer base in India, China and
America and a growing base in Australasia. The company builds more tractors in India than any
other manufacturer, and has the capacity to build 150,000 tractors a year. In 1963, M&M formed
a joint venture with International Harvester to manufacture tractors carrying the Mahindra
nameplate for the Indian market. Armed with engineering, tooling and manufacturing know-how
gained from this relationship, M&M developed its first tractor, the B-275.Mahindra compact
tractors and utility tractors are some of the toughest, most durable on the planet. Mahindra
Tractors with sales of nearly 85,000 units annually is one of the largest tractor companies in the
world, and is number one in sales in India - the largest tractor market in the world.

Manindra tractors has been the leading producer and manufacturer of tractors in India since a
long time.

What then is it that has enabled Mahindra to hold on to this position for so long?In this small
treatise of Mahindra Tractors I will try to profile the products,place,pricing,promotion strategies
that Mahindra tractors have been following successfully since a long time.The 4P’s as they are
popularly known as are perhaps the most important factors which determine the success of a
product and an organisationIt is of utmost importance that an organization is able to get a right
mix of these 4P’s for their success.

1.PRODUCT

In the domestic business, the Farm Equipment Sector has had an unparalleled market leadership
for the last 24 years. It is the largest producer of tractors in India. Today, the domestic market
share of FES is around 42%. (Mahindra brand: 30% and Swaraj brand: 12%). The Mahindra
group's Farm Equipment Sector (FES) is amongst the top three tractor brands in the world. It has
won the Japan Quality Medal in 2007.

The table below gives us the various product ranges of Mahindra Tractor division.
It includes range of tractors as regards horsepower and their market names.

Farm Equipment Segment

Tractor Below 30 HP • Yuvraj • 265 DI Bhoomiputra

• 265 DI Sarpanch
Tractors Between 30- • Arjun 445 DI • 475 DI - Sarpanch
40 HP • 275 DI TU Sarpanch
• 475 DI – Bhoomiputra
• 275 DI TU Bhoomiputra
Tractors Above 40 HP • Arjun 555 DI • 575 DI Bhoomiputra
• 2Arjun 605 DI
• 585 DI – Sarpanch
• 575 DI - Sarpanch
Farm Implements • Rigid Tine Cultivator • Mounted Mould
• Mounted Offset Disk • Board Plough
Harrow • Heavy Duty Tiller
• Spring Loaded Tiller
• Mounted Disc Plough • Reversible Plough

• Leveller

Mahindra Tractors has always been known for its quality.As a company it enjoys
areputation for sturdy products with very less complaints of breakdowns.The major
reason behind this being that it was one of the very first companies to recognize
that in the agricultural segment it was very essential to maintain the quality of the
product.As aresult og=f this Mahindra invest a lot in ensuring supreme quality of
their product.

Some of the measures taken by Mahindra to ensure good quality continuous

improvement and customer satisfaction with regards to the above are:

QUALITY CIRCLES
Quality Circles give every employee, responsibility for quality. The philosophy behind this is the
view that each person is having unutilised potentials which can manifest through education and
study.Improvement of the individual will enables company to improve its employees as assets, to
be developed.
The Quality Circles give an opportunity to the employees to get involved with the company

PRODUCT DEVELOPMENT
Many fitness for use problems can be traced to the design of the product and the design of the
process.Since product development itself is a process, this process needs to be designed and
controlled well for good results. The ISO 9001 quality system standards gives a good guidance
for designing the quality system applicable to product development.
Since the advent of liberalization and globalization, multi-nationals manufacturing tractors have
been entering the market, to be able to compete with them it is imperative to have such a
department.

SUPPLIER UPGRADATION
Since more than eighty per cent of the parts used for assembling the tractor are outsourced, the
outgoing quality of the tractor very largely depends upon the quality of the parts received from
the suppliers.Hence,there is a strong need for upgrading the suppliers.To upgrade too many
suppliers entails lot of effort and resources. To optimize the use of resources, the suppliers are
selected for upgrading based on criteria developed, keeping the future needs in view.
Progressively, the number of suppliers are being reduced, to enable the existing supplier to take
advantage of economy of scale and be able to invest in better technology and employ good
quality systems.Under the scheme of supplier upgradation long term relationship with suppliers
are established for mutual benefits. The suppliers are given technical assistance, to upgrade
themselves.

QUALITY IN MANUFACTURING
Manufacturing has become one of the important marketing tools in the division.
Quality, length of lead times for delivery, flexibility in manufacturing, improvement of current
products and new product development are all controlled by the factory.
2.PRICE
Pricing of a product such as tractors or farm equipment in a country like ours has to be given
utmost importance.The pricing must be such that consumers can afford the product as well there
should be facilities like loan available to the consumer.Mahindra maintains a price that will not
only enable and encourage consumers to buy their products but also has tie ups with various
banks in order to provide loans to the customers.The customers who are generally farmers
benefit a lot from such a policy.Mahindra has always ensured that consumers get the best quality
possible at lowest prices.They do not believe in increasing prices rapidly when it comes to the
farm equipment sector.the above is in keeping with the fact that the segment that the farm
equipment covers is the rural market were consumers are highly motivated and influenced by a
price policy which is not fluctuating and fits their pocket.The advantage that Mahindra enjoys as
a brand name due to its heritage ensures that consumers do not have any problem in obtaining
loans.Besides Mahindra’s effective dealer network is always there to help at every step.

The list below contains Mahindra tractor models with their prices
3.PLACE

The Indian tractor market is the largest in the world accounting for one third of the worlds
production.The tractor industry has been rapidly growing over the last few decades.It is expected
that the tractor industry will sustain its level of growth and even surpass it in the years to
come.Hence as a marketplace India holds tremendous potential and Mahindra tractors has been
consistently tapping the potential of rural India and has emerged as the leader in tractor market
since the last 14 years. The Mahindra Group’s Farm Equipment Sector is the largest producer of
agricultural tractors in India. It has enjoyed an unparalleled market leadership in the domestic
market for the last 23 years. With a 30% market share, the Bhoomiputra, Sarpanch and Arjun
brands of tractors make the Group’s Farm Equipment Sector present in all the major
segments in India. Mahindra & Mahindra recently consolidated it position as the leader of
the Indian tractor industry when it acquired 43% stake in Punjab Tractors, the owner of
the leading Swaraj brand of tractors.
It has a large customer base of 12, 00,000 satisfied customers and the deepest distribution
reach. The Sector has four manufacturing facilities in India, located in Mumbai and
Nagpur in Maharashtra, Rudrapur in Uttaranchal and Jaipur in Rajasthan.

One of the major reasons why Mahindra has been able to do so is because of its efficient sales
and distribution channel and a very effective and widespread dealer network.Mahindra has a
dealer network of around 400 at last count and is present in almost every nook and corner with
special focus on the northern part of India which forms the major customer base.

4.PROMOTION

The major market for tractors is rural india.Mahindra has excelled when it comes to promoting
its products.Mahindra has promoted its products by a number of tried and tested and innovative
methods as well.Apart from the tried and tested methods of television promos Mahindra has tried
and excelled in several other realms of promotion and advertising.Listed below are some of the
various recognitions Mahindra has won for its exceptional promotional activities.
The innovative Mahindra Toofan Carnival campaign for the Sarpanch 595DI Super Turbo was
awarded two Golds at the Rural Marketing Agencies Association of India (RMAAI) Awards
2006.
The Awards were won in the categories of Best Innovative Rural Marketing Initiative .
The Toofan Carnival promotional campaign launched in F04 was designed to launch the 595DI
Super Turbo – India’s first Turbo Tractor and brought to vivid life the brand promise of ‘Ho
Jaao Toofan Pe Savar.’ Campaign objectives were to build excitement around the brand launch,
depict power and provide an innovative ‘touch and try’ experience for the rural consumer.
The campaign saw RC&M, the communications partner on the campaign, dramatically launch
the product by breaking a pre-fabricated brick wall to establish the promise of Power. The
campaign was conducted across 1000 villages in 100 districts and contacted over 3 lakh farmers.
RMAAI is an association of organisations that protects and promotes the cause of rural
marketing in India. The entries for the awards were judged by Rama Bijapurkar, Sunil Alagh and
Harish Bijoor. The award is an industry acknowledgement for innovation in communication and
execution excellence.

Bagging the 2nd Prize for ‘Best Display’ of tractors at the recently concluded AGRO TECH –
2006, organised by CII in Chandigarh, FES has completed a hat-trick of AGRO-TECH Awards.
At this Biennial Agro Technology fair, FES had received the 1st Prize of ‘Best Display’ in 2002,
2004.
FES used this exhibition as a platform to showcase the new MAHINDRA SHAAN – India’s first
multi-utility tractor. There was a tremendous response from the visiting farmers who had shown
keen interest in the amazing tractor which could take different workloads of haulage and
farming.

The ultra modern ‘ARJUN Ultra-1 CE with Front End Loader FEL 60 attachment featuring ‘Ton
Plus’ technology was also showcased towards increasing work productivity across varied
construction usages. Also on display were the `235 DI Bhoomiputra’ with Airflow Technology
which has made a mark in the Single Cylinder Tractor segment and the ‘WORLD TRACTOR’,
a 7520 4-wheel drive model which has been already launched in the U.S.A. and is a big success.
FES’ small tractor i.e. the Yuvraj 225 Compact Powerful Tractor which is assembled at our
MCTCL China Plant and is very suitable for orchards and for farmers with less than five acre
land holdings also attracted attention at the stall.
This splendid display of
tractors made the M&M stall
the talk of the exhibition.
Visiting farners were very
excited to see these five new
tractors and over 1500
enquiries were generated.
These are under scrutiny and
further follow-up by the
respective area offices for
conversion into actual orders.
Friendly hostesses distributed
pocket calenders, plastic carry
bags, leaflets, etc. while
collecting the customers’ data.
There was also a quiz contest
and a lucky draw every hour
for farmers. The valedictory
session of this mega exhibition
was held on December 12, Mr. Gautam Nagwekar, Chief Operating Officer, Farm
2006. Equipment Sector, M&M, at the Mahindra stall.
 Mrs. Asha Sharma, Financial Commissioner
& Principal Secretary – Agriculture, Govt.
of Haryana and the Guest of Honour
presented a Silver Salver and the Certificate
for the 2nd prize for ‘Best Display’ to Mr.
Ravi Kant, Sr. Manager - Advertising &
Promotions M&M, FES. Under the
The certificate won by the FES Stall at leadership of Mr. Sanjeev Goyle, VP –
Agrotech.
PMMS, Ravi had put in a lot of effort
towards ensuring such a splendid display at the M&M stall.

It is clearly evident from the above examples of Mahindras recognition at various renowned
promotion activities that they lay a lot of stress on marketing promotion.In an industry like this it
is very essential to be able to take your products to the consumers which Mahindra has clearly
been doing by displays at various stalls and expos.Mahindra also conducts various social
initiatives wherein it gets the necessary platform for showcasing its products to the rural
consumers

Innovation has always been one of Mahindra’s greatest fortes.They have also been trying new
promotional techniques.One of them being declaration of freedom week for farmers in
2007.This freedom week gave a great impetus to sales and helped in arousing awareness for their
products as well.Besides it also served as a good CSR activity.

The freedom week consisted of:

A week-long program that presents new expressions of freedom for the Indian Farmer

* Freedom from interest -

- on loans, with 0% interest scheme

- service cost on tractors, with labor-free service

- traditional ways of farming, through exchange scheme

- traveling distances to get his own and his tractor’s health checked, with the unique Swasth
Tractor, Swasth Chalak scheme; and

* A special offer for soldiers from Indian Armed Forces under the Mahindra Jai Jawan se Jai
Kisan scheme

Mumbai, August 13, 2007: Celebrating the spirit of freedom, Mahindra & Mahindra Limited, the
No. 1 tractor manufacturer in the country, today flagged off the Mahindra Swatantrata Mahotsav
- a week-long program that presents the farmer with a host of benefits, such as 0% interest
scheme on loans, exchange of old tractors, labour free service and health check-up camps for
farmers. The benefits will be offered between 13th and 19th August, 2007 at Mahindra Tractor
dealerships across the country.

Commenting on the occasion, Mr. Avinash Patankar, Sr Vice President Sales and Channel
Development, Farm Equipment Sector, M&M said, “Swatantrata Mahotsav’ acknowledges and
celebrates the importance of the Indian farmer and agriculture in shaping the future of the Indian
economy. Over the past six decades, Mahindra has been able to build a huge customer base of
over 12 lakh customers by focusing on customer-centric initiatives and designing its products,
services and offerings, in consonance with the farmer’s needs. Swatantrata Mahotsav is another
customer-centric initiative that will bring smiles on the faces of the farmers. We firmly believe
that an independent farmer is the true identity of Indian Independence.”

This is part of Mahindra Tractors innovative and customer centric approach, which has enabled
it to sustain its leadership position for more than two decades.

On the 60th anniversary of the country’s independence, Mahindra & Mahindra Limited extends
its unique ‘Jai Jawaan se Jai Kisaan’ rehabilitation scheme for the brave soldiers of the country.
Under this scheme, Mahindra tractors will be made available at attractive prices across Mahindra
Tractor dealerships to soldiers of the Indian Armed Forces.

SUMMARY