Vanraj Mini-Tractors: Is Small Beautiful

1. Evaluate the attractiveness of different market segments for Vanraj?

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

A. Demographic segmentation:
a. Marginal and small farmers: This segment accounted for 82% of total landholdings but
did not own tractors. No big player is serving in this segment. Best for Vanraj.
b. Large farmers: Small in number but high profit market. All big players serve in this
segment. Not much scope for Vanraj currently.
c. Industry: With few modification Vanraj could be used in material handling operations.
The tractor has a holding capacity of 2 tones. 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 this is increasing. This segment has
large landholdings therefore a good market for Vanraj. This is the highest growing
market.

B. Land holdings and financial ease:

a. Small and marginal farmers has an average landholdings size of 0.4 and 1.4 hectare. This
segment accounted for 82% of total landholdings. Also the average landholding is
decreasing, use of small tractors will increase and therefore the demand.
b. Farmers with as little as 3 acre of land could avail tractor finance from banks which will
increase the demand of tractors.

C. Geographic segmentation:
a. North India: Soil type in Punjab, Uttar Pradesh, and Haryana was alluvial which required
lower horsepower tractor for farming activities.
b. Southern and western India: Including Gujarat, Maharashtra and Madhya Pradesh has
harder soil types laterite and black soil which require higher horsepower tractors. But
since tractor densities were gradually increasing in this segment, future sales are
expected to increase.

2. Which market segment would you target? Why?

Based on the analysis of market segment as described above, I will choose Marginal and small
segment and Horticulture segment and will make it the key part of the strategy.

The selection of the segment is based on the details of the segment and the features of the Vanraj
which is best fit for this market segment.

A. This segment accounted for 82% of landholdings and as there is not much competition, and
these makes this segment as the best to be targeted.
B. The average size of the landholding in this segment is .4 hectare and 1.4 hectare for small and
marginal farmers, which makes this segment ideal for low capacity (<20 HP) tractors. And that is
why capacity of Vanraj (10 HP) is ideal for this market.
C. One of the biggest advantages of Vanraj is the low cost even for the small farmers.
D. Government also provide subsidy for tractors capacity < 30 HP, which is a big financial relief for
small farmers.
E. As most of the farmers in this segment uses traditional methods of farming such as bullocks
which require high maintenance cost throughout the year. The cost of maintaining Vanraj is not
high. Even a local mechanic could repair and service the tractor.
F. As this segment has less area of landholding, farmers can avail tractor finance from banks.
G. The Vanraj has lowest diesel consumption (1.5 Lt. / hour). A small farmer taking 2 crops a year
about 900 to 1000 hours per year, which could result in large savings on fuel cost.
H. The Vanraj has power take off with gear selection functionality. Marginal and small farmers can
use the Vanraj for other functions like water pump for irrigation, thresher etc.
I. Vanraj could reach small corners of land which makes it ideal for small farmers.