Vanraj Tractors - Small Is Beautiful

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ASIAN CASE RESEARCH JOURNAL, VOL. 12, ISSUE 2, 141–160 (2008)

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Asian Case Res. J. 2008.12:141-160. Downloaded from www.worldscientific.com by 111.93.137.133 on 02/06/13. For personal use only. The author is a doctoral candidate in marketing at the Institute of Rural Management Anand (IRMA). He would like to express his gratitude to J. H. Trivedi, J. D. Patel, and Pragnesh Patel for their unstinted support and cooperation in data collection. He would like to thank Professor Debiprasa Mishra for his guidance throughout the case writing and Professor Arvind Gupta for his helpful inputs to the teaching note. The intention of this case is to portray the dilemma faced by the decision maker and not to judge correct or incorrect handling of the situation. Please address all correspondence to Pratik Modi, Doctoral Researcher, Quarter No: C–28, IRMA Campus, Institute of Rural Management, Anand (IRMA), Anand – 388 001, Gujarat, India. E-mail: pratikmodi_78@yahoo.com.

Vanraj Mini-Tractors: Is Small Beautiful?
“We are almost ready for the commercial production of 10 horsepower Vanraj mini-tractors,” said Jagdip Trivedi, proudly showing the Central Motor Vehicle Rules (CMVR) compliance certification from the Central Farm Machinery Testing and Training Institute at Budhni in Madhya Pradesh. CMVR certification permits commercial sales and registration of vehicles with the Regional Transport Offices (RTOs) in India. Trivedi had sent registration circular to all district RTOs in the states of Gujarat, Madhya Pradesh, Maharashtra, and Uttar Pradesh, as he was planning to roll out this wonder machine soon. Trivedi was one of the three partners in M/s Pramal Farmatics Pvt. Ltd., which was ready to manufacture and market 10 horsepower (HP) mini-tractors under the brand name ‘Vanraj’. “My immediate concern is to select the most appropriate market segment for Vanraj. We are a small-scale industry and we have to be extremely productive in our marketing efforts,” said Trivedi. A study conducted by some management students under the guidance of Trivedi identified four market segments for the Vanraj tractors: small and marginal farmers, large farmers, industries, and horticulture farmers. Marginal and small farmers were large in numbers but no big player currently served this segment. The level of farm mechanization was extremely low in the segment as these farmers continued subsistence farming using bullocks for tilling and other agricultural operations. Large

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farmersa, though small in number, were a lucrative market segment. They were relatively better off and had higher level of farm mechanization. All the big players in the tractor market were focused on serving this market segment. Vanraj 10 HP mini-tractor, with a few modifications, could also be used in material handling operations in industries, airports, and municipal corporations. Area under horticulture farming was increasing, especially in Gujarat and Maharashtra (see Annex 1 for area under horticulture farming). Southern and central parts of Gujarat had a high concentration of orchard owners and horticulture farmers. Similarly, Maharashtra also had a few concentrated pockets of horticulture farming. Generally, horticulture farmers had large landholdings, and thus formed market niche within the market segment of large farmers. On average, Gujarat, Madhya Pradesh, Maharashtra, and Uttar Pradesh accounted for annual sales of 17345, 28443, 15288, and 54392 units of big tractorsb, respectively. However, no big company in India ever tried to explore the potential of less than 20 HP mini-tractors that many experts opined were ideal for marginal and small farmersc. Trivedi was convinced that Vanraj mini-tractor was the product that small and marginal farmers in India needed. “It will prove to be a boon for small farmers as Vanraj addresses most of their problems, which no other big tractor does,” said Trivedi. Statistics...
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