After an aborted attempt years ago, late last year, Eicher launched another determined attempt to break into the fastest growing segment of the tractor market "" the higher horse-power tractor segment. But to break into it, it would have to first shrug off its well-entrenched associations with smaller, less powerful tractors. The Strategist goes behind the scenes.
In 1982, Eicher made its first foray into the 35 horse power (HP) tractor segment. It was a chastening experience. Enough to make Eicher wait for another 14 years before trying again.
This time it couldn't afford to goof-up. The market was gradually, but inevitably, moving to the more powerful tractor segment. While this segment was growing by 10 per cent every year, the category in which Eicher traditionally operated had actually shrunk by 1.5 per cent. Not to mention the better margins for bigger machines.
At the same time, finding a way to exploit this new opportunity promised to be a bumpy ride. Downscaling to a smaller machine is a relatively easier job. To build a 35 horse-power (HP) tractor, Eicher had to go back to the drawing board "" new engine, new production processes. (Until then the company was making only 25 HP tractors.)
And then the marketing team had to devise ways to shrug off Eicher's small tractor maker image. That was a daunting task considering that Eicher's first foray in the early 80s had generated a lot of bad publicity. The product had developed many technical problems.
So, when in November 1996, the newly designed 35 HP plougher rolled out, the company had plenty to worry about. What was it pitted against? Let's understand some tractor market mechanics first.
The market
The 35 HP machines (actually 39HP by the new SAE standards) account for roughly half the tractor market, accounting for sales of 2,20,937 units last year. The segment expanded by 10 per cent last year. Tafe and Mahindra & Mahindra have stranglehold in this market with a 58 per cent cumulative market share. Eicher's strength was in the 25 HP segment, with a commanding 48 per cent of the market. But then this segment was only 11 per cent of the total market.
So why was the market buying less of the less powerful machines?
To begin with, tractorisation was moving southwards. Since the soil was
harder there, and in some areas landholdings were large, more powerful machines were needed. Further, in the northern belt, repeated tillings had hardened the otherwise soft soils in this region. Hence, the market was upgrading to higher HP ractors.
Thus, the company found that although Punjab, UP and Haryana were the markets where the Eicher brand name was well known, it was, however, associated very closely with the small tractors.
The communication objective
Start with a clean slate. That seemed to characterise the company's approach the second time. So this time the product was launched in a relatively unknown market for Eicher, Gujarat. (The 1982 launch was in northern India.) Not only did this mean that the company had no baggage to carry from the past, but the customer profile also allowed, to some extent, a higher success rate for a new product.
Market research done by the company showed that farmers in Gujarat were more literate and knowledgeable than their northern counterparts. And hence more likely to experiment with a new product. A key element in this gameplan was to win over the opinion leaders. "That was important, as the category to a great extent, is driven by the word-of-mouth," says Bhuwan Chaturvedi, managing director, Eicher Ltd.
The roll-out was preceded by the managing director's visit to the state where a press conference was held and the product was shown to the local opinion leaders. These were identified with the help of dealers and Eicher's own marketing staff. "By allowing them to preview the product, we wanted to reinforce their expert status," explains Rakesh Jinsi, general manager, marketing.
He adds, "We planned the launch to maximise impact." Large metallic panels with ad copies were installed at the dealer site. There were processions led by a local dignitory and a senior company official marking the launch. The press campaigns were carried out in colour, a first in the tractor business according to the company.
And since the Eicher name wasn't well-known in those parts, the tagline Naam ek roop anek sought to capitalise on associations with other products coming from the company, the Enfield bikes and Mitsubishi Canter were highlighted. Particularly helpful was the association with Bullet, as it stood for similar attributes as Eicher was trying to endow its 35 HP tractor, that of power and reliability. Today, Eicher is selling close to 500 tractors a month in these markets.
But the crucial test lay ahead. In its traditional markets, the task before Eicher was about changing customer perceptions about the brand. The team had to experiment with the product name to achieve the breakthrough.
"We had to create an image of grandeur, of power and reliability" says Jayaram Easwaran, chief executive, Madhyam Advertising, the agency in charge of company's advertising. Strange though it may seem, but tractor brands literally ended up wrestling each other for a share of the customer's mind. In this unique form of product demonstration, two competing brands of tractors are made to pull in opposite directions "" a tug-of-war, if you
like. A simple way to gauge the power of the machine.
Conventionally, all tractor models are identified by the manufacturers name, followed by a number. So whatever sub-branding is done it is through a series number.
However, using a different series number was not going to give Eicher the grand image it was seeking to build around the product. Hence began a search for a sub brand name, one that would connote power. One constraint was that the name should be easily understood across India. The company settled for Shehanshah (the king of kings) "" a name it discovered most people understood across the regions.
The marketing team also decided that the name was to dominate the advertising copy, amidst the background of bright colours while the company's name would be placed at the bottom. The bright colours "" there was even a yellow machine "" had their own significance. The company wanted to drive home the point that it was the first time that a tractor manufacturer was giving a choice of five different colours. This was splashed prominently in the copy.
The emphasis on colour was based on the observation that, unlike in the West where one uses tractors for agricultural purposes only, in India, they were used for personal carriage as well. "It is not just a capital equipment here, it's a personal vehicle as well. Therefore, there was a case for endowing the tractor with some attributes of personal vehicles," says Rakesh Jinsi. Which meant that changes were body to the tractor body design as well. A stooping front-hood replaced the omnipresent flat one. The body came in sheet metal to complement the colour range.
While both Eicher and Madhyam were confident of the product and the campaign, neither was sure as to how to reach the target audience effectively. "Very little is known about the media habits in rural India," admits Easwaran. Madhyam hired a market research agency to monitor the impact of the campaign so that adjustments could be made quickly. "For instance, the on-going study showed that campaigns in cinema halls were not very effective. TV was giving us better reach, so we stopped theatre
advertising and went whole hog on television," points out Easwaran.
Of course, the plain old tactics of price-offs also helped. "We offered the new tractors to the old 35 HP tractor owners at reduced prices to counter the negative word-of-mouth," says Chaturvedi. The company also offered a buyback after three years in certain pockets at resale values similar to that of competing tractors.
Going by the sales, the response has been good. By the month of June, Eicher was selling 800-odd Shehanshahs every month giving it a marketshare between seven and eight per cent of the 35 HP segment. Out of these, around 60 per cent of the sales are coming from the non-traditional markets which is Jinsi's prime target. "Since, we have a strong presence in our traditional markets with a 25 HP product, we are pushing this one in newer markets," he says.
By the year end, the company hopes to acieve sales of 1300-1400 tractors per month. This will give the company a 15 per cent share of the market. All would depend on Eicher's ability to sustain the momentum of its initial sales.