Pricing Strategy for Tractor in Bihar

Rural marketing for tractors in Bihar state

Demographics of Bihar
Population: 82,998,509 Nearly 85% live in Rural areas Literacy rate: 47% Agriculture accounts for 35% Almost 58% of Biharis are below 25 years age(highest in India)

Geographies of Bihar
Area: 38,202 sq mi (98,940 km2) Agriculture of Bihar: Rich and Diverse Average Rainfall: 1186 mm

Agricultural land area: 9,360,000 hectares

As per the National Sample Survey Organisation :

Average revenue of farmers in Bihar = Rs. 1810 per month (2012 data)

Segmentation :
65 % farmers - Rs. 1210 / Mnth 25% farmers - Rs. 2240 / Mnth 10% farmers - Rs. 5130 and above / Mnth

Size of tractor market 6% (2012 data) Highest in Eastern region (Orissa, Bihar and Bengal) Eastern region is the lowest amongst other regions Tractor sale growth of 35% Y-o-Y basis (2010 data)

Mango Guava Lichi Pinapple Brinjal

Cauliflow er Cabbage

Market Share of the Tractor Market

Others 8%

Market Share of Tractor Companies in Bihar

New Holland 5%

John Deere 6% ITL 8% Escorts 10%

M&M 40%

TAFE 23%
Source: Indian Tractor Market Report IIM-C June 2013

Tractor Sales and Growth Trends in Bihar

Year 2008 2009 2010 2011 % Contribution to National Sales* 2.6 3.3 4 5.7 YoY Growth % 20 25 27 49

2012

6.1

35

Source: Indian Tractor Market Report IIM-C June 2013

Classification of tractors
The Indian tractor market is broadly classified into five segments
1. 2. 3. 4. 5.

less-than-20 hp 21-30 hp 31-40 hp 41-50 hp 50+ hp

42% of Indian market is in the 31-40 hp category Share of 40+hp tractors gone up to 44% in 2011

Price
Approximate Tractor price list
1. 2. 3. 4. 15 hp - ~Rs162,000 30 hp - ~Rs330,000 50 hp - ~Rs485,000 60 hp - ~Rs525 000 ~Rs575000

FACTS
Soil Alluvial Fertile soil (Indo Gangetic plain) Income Rs. 1810 / Month(60-70%) Tractor Sales (East India) 40000 units

Tractor Growth 6.1% (2012)

Rainfall - 1186 mm (average yearly)

Model 2-Pricing Strategy

Model 1 - Value Based Pricing

Example Value conscious pricing

TAFE MF 1030DI
Basic cost: Rs 1,88,000 Power: 30hp Maintenance: Rs 9000 Diesel cost: Rs 21000 Average life: 14 years

Pricing Strategy
Model 2 Price Conscious pricing

Example - Price Conscious pricing

Mahindra Yuvraj V/s the bulls

Other measures to encourage purchases

Credit facilities to farmers Increasing in dealerships

Discount pricing method can be used during festive seasons

Service and maintenance facilities Various payment options