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Table I: Total Cost of Ownership for different options Other 10HP Tractors



Big tractors (30-50)


8-10 years


8-9 years 1.7 lakhs

8-9 years

25000 Costs 25-30,000 Assembled 1.7 lakhs 1.9 lakhs Chinese One lakh (belt driven) Subsidy 30,000 Tending and Shed maintenance (Opportunity costs/Savings) 10-15% of s.price 15*1.7= 23500 2.4 lakhs 2.4- 4 lakhs 35: 2.5 l 50: 3.5 l

Price Investment

Service- life time costs Maintenance Running Costs Fodder/ Diesel Consumption

10-15% of s. price 15*1.9= 28500 Diesel consumption 1.5*40*1000*8= 4.8 lakhs

10-15% of sp 2.4 *15= 36000

8 years @ 15,000=1.2 lakhs (additional 3 year fodder costs) 1.45 lakhs (Additional 45,000)

4.8 lakhs

4 litres/hour 1000*4*40=1,60,000 1,60,000*8= 12.8 lakhs

Total Life time costs

6.985 lakhs High price; Lower maintenance; Useful features Compared to small tractors

6.74 lakhs

15.56 lakhs Rs. 50,000 more for a 35 BHP compared to Vanraj Symbol or power, masculinty and prosperity


Most economical, Low investment Labour intensive

Less costly than Vanraj

Table2: Characteristics of Market Segments Small & Marginal Farmers Difficult to assess? No of prospects Two million farmers in Gujarat alone; 35 million in four states May be required by a small percentage of the total s&Marginal farmers Subsistence farming. Low landholding size Use bullocks; economic viability is doubtful 82% of the total land holdings did not use tractors 35 MM of 42 MM (in four states). Use bullocks Difficult; low incomes; small land holdings 1.6 million in Gujarat; 10 Million in four states In thousands; across different states Orchard and Horticulture farmers Farmer concentrated in Southern and Central parts of Gujarat- Large land holdings


Big Farmers


Need for Tractors

Commercial farming; High Use

Material Handling; Tractors as well as other machines

Commercial farming; Inter culture operation; Spraying pesticides; Transportation of fruits/vegetables

Use of Tractors

Use of big tractors

Buy or lease material handling equipments

Large farmers in commercial farming. May own many types of tractors

Availability of finance




Table 3: Evaluating Market Segments (Pls. refer Page. 219 of text book) Small & Marginal Farmers Difficult Ability to buy to be assessed Orchard and Horticulture farmers

Criteria Measurable (size, purchasing power and relevant segment characteristics ) Substantial (Adequate potential and Profitable) Accessible (effectively reach & serve)

Big Farmers Yes; may be hetrogenous and may contain different sub segments & special needs ? (need medium/ big tractors) Yes




Large nos ; may not be profitable to serve Difficult Large nos & widely spread; Large nos difficult to reach; sell, service


Yes; Growing segment Yes; concentrated in certain regions; easier to access

Yes; personal selling may be required

Differentiable (relevant value proposition)


Yes; as an additional multipurpose tractor Yes; Place may pose problems

Yes; but may demand higher marketing efforts Yes; additional test /license requirement

Yes; niche segment; special needs; High (Few, concentrated customers)

Difficult ; Actionable however Place: (ability to develop sales and marketing service may not programs) be easy

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