Tractor Manufacturer

C: Sure, since how long have we been seeing a decline in the profit? And how much decline have we seen?

I: So, we’ve seen around 18% decline in profit and the market share has been declining since the past 3 years.

C: And have our competitors also seen a decline in profits? Or is it a company specific issue?

I: We haven't heard about our competitors facing a decline in profits.

C: Alright, since the profits are declining, it could be due to increasing costs or decreasing revenue. have we been seeing a decline in our revenues?

I: Yes, we’ve seen a decline in our revenues. 

C: Alright, Can you share some insights on the company’s product mix?

I: So, our products can be best classified based on HP:

C: Great thank you. From the first look, the first 2 buckets – contribute to 60% of revenue – however, the growth has been stagnant and in the second segment declining. I would want to deep dive into these 2 buckets first.

I: Sure, go ahead.

C: Alright, I also want to understand more about the customer base? Specially for the first 2 buckets.

I: So, basically, we cater to dealers' companies, small-time tractor vendors as well as direct consumers. For HP 20-40, our major consumers are farmers.

C: So, I would like to divide the process into 3 parts – Pre-Processing, Processing, Sales/Distribution and After-Sales. Are we witnessing a loss in demand, or should I consider evaluating the manufacturing capabilities of the plant?

I: Our manufacturing process is at par with the competitors, and we are able to meet the demand with ease, but there has been a decline in the demand.

C: And have there been any changes in our price or the price of the competitors?

I: No, there haven’t been any changes that we are aware of.

C: So, since price and quality do not seem to be the issue, I would like to focus on understanding why there is a loss in demand in this segment. For this, I would want to conduct a Need-Gap analysis to understand if we’re meeting the customer’s demands. Do we have any information about if the consumers (small farmers) are satisfied with our product? 

I: For most parts of the country, we have had no complaints. However, a major segment of our consumers is based in Northern Part – Punjab, Haryana, UP & Bihar. And we have received feedback that the consumers here are not satisfied with the performance of the tractor.

C: That’s interesting. Since the customers are not satisfied with the performance of the tractor, the issue could lie with the fact that they are using lower HP tractors. 

I: Yes, that makes sense since consumers here are opting out of buying lower HP tractors. What would be your solution? 

C: Since we have the manufacturing capabilities, we need to offer 40-50 HP & >50 HP tractors in these areas. Thus, we need to reduce the number of smaller tractors and increase the production of  40-50 & >50 HP tractors.

I: Alright, thanks. We can close the case here.