1. Executive Summary
We are planning to re-launch Massey Ferguson’s Forage Harvester with the self propelled features called Self-Propelled Forage Harvester. The model name will change from MF FORTIA to SP FORTIA. The reason behind the re-launching is that the Self-Propelled Harvester used extensively for the harvesting of forage maize which is used as complement grass silage for the feeding of livestock in winter. And as we are aware of the fact that the Forage maize grown 100,000 hectares annually mainly in the south region of UK (Countryside, 2011). Last year, the sale for Self-Propelled Harvester was 150 units (Association, 2011) and this year unit sales exceed this number. And in future it is expected to increase with more intensity. So in order to grab this opportunity, we need to have harvester in this category (Self-Propelled) and specially to be introduced in the South Regions of UK which are South East of England and South West of England. So this report focuses primarily on the Re-launch of Massey Ferguson’s Self-Propelled Harvester in UK (especially in Southern Region). The marketing strategy which will be used is Focus Cost. The reason adopting this strategy is that Massey Ferguson is new in this category (Self-Propelled) so in order to penetrate in this market, we need to emphasize more on increasing market share so the only way to do this is to concrete more on Sales bracket not on profit.
The primary marketing objective is to aim for 10% market share in Self-Propelled Harvester sector in a first year through the sale of about 15 units. The primary financial objective is to achieve Breakeven Sales level in the first year.
2. Current Situation
UK agriculture machinery & equipment market worth estimated of a total revenue of £2.2 Billion of which about 65.2% (£1.4 Billion) used to be satisfied through imports (IBISWorld, 2011). That is the reason that the government does not impose any import duty on the import of Agriculture machinery. On the other hand customer has to pay VAT (Value Added Tax) of about 20% on the purchase of any Agriculture Machinery or Equipment. UK’s agricultural machinery market shown compound annual growth rate (CAGR) of about 8.7% between the period of 2006-2010 and it is expected to be increased by CAGR of 3.3% for the period 2010-2015 (Group, 2011).
The sale of Self-Propelled Harvester is the main highlight of UK’s agriculture equipment market. About 150 units sold in previous year and this year unit sales exceed this number. And in future it is expected to increase with more intensity (Association, 2011).
3. Company Analysis
Massey Ferguson is the subsidiary of American based agricultural machinery & equipment manufacturer known as AGCO Corporation. Massey Ferguson has Harvester Production Plant M residing in Beauvais (France). Massey Ferguson is the AGCO’s best-selling brand in UK (in terms of volume). But from the past few years, it is clearly observed that Massey Ferguson continuously losing its market-share shown in the figure below:
Figure 1 Massey Ferguson's Market-Share for the period (2002-2009)
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Massey Ferguson desperately needs to grab some opportunities to increase its market-share. That is why we are re-launching its forage harvester with SelfPropelled feature to give new shape to their decreasing market-share. But for this purpose, we don’t need to change the company’s supply chain.
4. Customer Analysis
UK agriculture machinery & equipment market’s customers have two type of buying patterns:
1. Ready to pay great amount of money but not buy anything (Agricultural Machinery) without the clear demonstration of its working or without a recommendation from another farmer (Word of Mouth).
2. Last minute buyer, who makes decision at the eleventh hour when there is no other option left. It means that some farmers buy machinery only when it is critical and wants the immediate delivery of that machinery (KourosBrothers, 2009).
So from the above two characteristics of customer it is clear that price & quality are considered to be important variables in buying any agricultural machinery.
5. Competitor Analysis
John Deere is a subsidiary of Deere & Company. Its products and services are used to be marketed through independent retail networks & outlets (Group, 2011). John Deere is the leader in UK Agricultural Machinery sales. Even in field of Self-propelled harvester John Deere has maximum market-share.
New Holland is a brand of CNH Global which is known for the manufacturing of agricultural and construction equipment. New Holland is the only close competitor of John Deere in the field of Self-propelled harvester.
Claas is a brand of Claas Group (operates in Germany, UK, France & US). Main products fall under Claas brand are combine and forage harvester which usually marketed mostly in European region that is why its market share for SelfPropelled in UK is around 10%.
Krone, a North-American company which is specialized in the manufacturing of forage harvester is leader in US market but when it comes to UK, it is far away from the competition it own only 5% market-share.
Table 1 Self-Propelled Forage Harvester Market Share in UK Market
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Source: Agricultural Engineers Association (UK Machinery Industry Fact Report, 2011)
6. Porter Five Forces (Industry Analysis)
We have used Porter Five Forces Analysis to determine the industry in which we are re-launching the market offering is attractive or not. The detail of analysis explained below:
6.1. Intensity of Rivalry
UK Agriculture Machinery market has the domination of small number of large multinational players (Group, 2011). The competition is intense due to the production factors (high fixed costs and low switching costs).
6.2. Bargaining Power of Suppliers
The bargaining power of suppliers is weak as there is low differentiation among raw materials (such as steel and aluminum) being used in this market. The other factor which results in the lowering of suppliers’ power is the low switching cost among suppliers.
6.3. Bargaining Power of Customers
Strong brand reputation and buyers’ loyalty to dealers residing in UK leads to the weakening of buyer’s bargaining power.
6.4. Threat of New Entrants
Threat of New Entrants is measured by observing entry and exit barriers of industry. Both the entry and exit barriers are high as industry requires high fixed costs and high running costs.
6.5. Threat of Substitutes
The only substitute of agriculture machinery is to have manual labor. But if we observe the current trend in UK market the increasing cost of hiring farm workers as well as increased legislation from the Health & Safety Executives makes the weakening of Substitutes’ Threats.
So according to Porter’s Five Force Industry Analysis, UK Agricultural Machinery Industry is very attractive to enter.
7. PESTEL Analysis
PESTEL is Industry Analysis tool being used to identify the opportunities and threats to Massey Ferguson while re-launching its SP FORTIA in UK Agricultural Machinery Market. Below are the details of all PESTEL aspects:
7.1. Political Environment
This is the strong aspect of this country as the political conditions are stable and the political policies are also consistent. Other factors which contributes to the positivity of this aspects are low import duties, strong legislation system and government initiatives towards the reduction of Greenhouse Gas Emission.
7.2. Economical Environment
Prior to the Political Aspect, UK’s Economical aspect is also proved to be the opportunity for Agriculture Machinery Industry. The features of UK economical factors on its agricultural industry are mentioned below:
 Strategy proposed by Michael Porter’s in his Generic Strategies Framework, which is to offer low cost product to customers in one particular category.
 AGCO Corporation has four subsidiaries: Challenger, Fendt, Massey Ferguson and Valtra.
 The group operates through three business segments: the agricultural equipment, industrial engineering and production technology.
- Quote paper
- Junaid Javaid et al. (Author), 2012, Marketing plan and Strategy for the Relaunch of Massey Fergusson’s Forage Harvester, Munich, GRIN Verlag, https://www.grin.com/document/267427