Session 8,9- October 31, 2015
Segmentation and Targeting
Case Discussion Case:

Vanraj Mini Tractors: Is Small Beautiful?

1. Evaluate the attractiveness of different market segments for Vanraj?
The segmentation can be done on the basis of the land holding, the type of soil (geographical) and by the type of the crop cultivated.
The focus states for Vanraj Mini Tractors are MP, UP, Gujarat and Maharashtra. Field trials conducted to check its functionality in black and laterite soils have provided satisfactory results so segmentation on type of soil (geographical) doesn’t seem necessary.
To understand and to solve the problem of choosing the right segment for Vanraj we have focused on the cost benefit analysis from the perspective of small farmers having average land holding (as per the report and economic survey) size of 1.4 hectare.
It is noted that Majority of the tractors are bought on credit availed from banks. Due to restriction in credit from banks to marginal farmers as their land holdings are less than 3 acres; Vanraj may not be viable for them. Thus marginal farmers are not part of the target segment.
But As per case to target small farmers they need to make them switch from use of bullocks or from the use of rented tractors to Vanraj.
From the cost benefit analysis it would be possible for us to conclude that using Vanraj tractor provides clear advantage over using services of rented tractor by a small farmer. When we compare it with the use of Bullocks the initial cost of Vanraj may be higher but it has many added advantage like possibilities of alternative uses of Vanraj adding to revenue generation and better results. It would also increase efficiency in agriculture operations. Thus for a small farmer it is a better option to switch to Vanraj from bullocks as well as from the use of service from a rented tractor.

2. Which market segment would you target? Why? Thus the major objective for them should be clearly to target small farmers and capitalize on first mover advantage, as there is no branded player catering to needs of small farmers. Requirements of marginal farmers match with small farmers, marginal farmers will present an opportunity for small farmers to rent out services of Vanraj to them, which would give additional revenue to small farmers.
Vanraj tractor’s added features of better maneuverability and control in farm operations make it suitable for small operational holdings which are emerging as a result of land fragmentation. Three wheel convertibility and smaller size favors its use in intercultural operations. Intercultural operations form an important component of Horticulture Farming, thus Vanraj will have acceptance among horticulture farmers.
Thus owners of many such farms are Semi-medium, medium and large horticulture farmers and thus will use Vanraj as an additional tractor specialized for intercultural operations. Thus the company may look to increase its target segment in future to cater the needs of above segments of horticulture farmers.