Market potential for road construction machinery; M/S Larsen & Toubro Ltd, Bangalore

Abstract

PROJECT STUDY 1 TITLE Assessment of the market potential for Hydrostatic Pavers and identifying the relevant issues to determine a marketing strategy for L&T's Pavers. OBJECTIVES 1. To assess the current market potential for hydrostatic pavers with electronic sensor. 2. To recommend features desired by the customers. 3. To determine an appropriate pricing and strategy. RECOMMENDATIONS 1. Hydrostatic pavers have a very good market and the time is ripe for L&T to enter this market. It is advisable for L&T to enter the market as early as possible, especially as Ingersoll Rand is planning to enter the market. Also, the current batch of World Bank aided projects will be awarded soon and contractors will be making their purchase decisions shortly after. 2. Hydrostatic Pavers with electronic sensor have very good market potential as a number of World Bank aided projects are being taken up. But it is advisable, that L&T provides the whole range of pavers i.e., both mechanical and hydrostatic, to hedge the risks in case World Bank aid gets 3 curtailed and the demand for H.P.'s diminishes. As 01 now demand for hydrostatic pavers with electronic sensor is primarily determined by the quantum 01 World Bank's aid for the road projects. Market penetration will also be easier if the whole range is made available. Going in for mechanical pavers should not entail any additional investment if facilities are established for manufacture of hydrostatic pavers. 3. Efforts should be made towards making the various state authorities make the use of H.P.'s mandatory for the road projects in their states. This is the best way to boost demand. Authorities should be made to specify method specifications rather than end specifications. 4. Customers should be given the option of converting L&T's mechanical pavers to hydrostatic pavers to cater to the segment who would like to avail this option. 5. It is advisable to keep track of World Bank's aid for road projects every year and determine marketing strategy accordingly as demand production and for hydrostatic pavers is primarily determined by the quantum of World Bank's aid for the roads sector (as of now). A very good estimate of the demand for H.P.'s can be obtained from the demand forecast for tandem vibratory asphalt compactors, as these two products go together. For the current year demand for tandem asphalt compactors is 4 estimated to be around 30 to 40 machines. 6. Stronger screeds should be provided. This aspect should be highlighted for pushing sales as customers feel the need for stronger screeds than what are presently available on Indian machines. 7. After sales service provided by the only manufacturer of hydrostatic pavers in India is not very good. L&T's strength in after sales service should be stressed and can be used to break into the market. 8. Leyland engine must be used to power the paver as most of the respondent's preferred it to other engines. 9. L&T's pavers should be designed for a production capacity of not more than 120 tons per hour. Screed width should be 2. 5M to 4. 5M. 10. A premium of not more than 10% to 15% can be charged over Appollo's hydrostatic paver. Landed cost of imported pavers should be considered before deciding on a pricing strategy. 11. It will be beneficial if awareness of the advantages of using H. P.'s is increased amongst Government bodies and contractors, in coordination with other manufacturers and M. O. S. T.

PROJECT STUDY 2 TITLE Assessment of market potential compactors and identifying the relevant issues to determine a ,-------- marketing strategy for Towed Vibratory Compactors. OBJECTIVES 1. To assess the segment wise market potential for Towed Vibratory Compactors. 2. To identify relevant issues effecting the market potential and to design, an appropriate Positioning strategy for the product. 3. To recommend features desired by the customers. RECOMMENDATIQNS 1. T.V. C. have good potential, irrespective of the area of application (roads and irrigation). 42. 5 % of the sample said they would consider buying the product if available. 2. Towed Vibratory Compactor will have to be approved by the M.O. S. T. if it is to penetrate the roads segment. 3. There exists a market for a medium cost, medium capacity and medium quality machine, and as of now there is no product in the market catering to this segment. The Towed Vibratory Compactor can effectively cater to this market and plug the 6 gaps, in the market, existing right now. It is recommended that L&T plug this gap at the earliest lest this gap be used by some other company to gain a foothold in the market for Vibratory Compactors. 4. Although T. V. C. will expand the market for Compactors (as a class), especially by catering segment which has not been going for the Standard Vibratory to the Vibratory Compactors due to their high cost, they will also eat into the market for Standard Vibratory Compactors. This can be avoided by positioning T. V. C. 's distinctly from Standard V. C. 's, by designing them for single frequency and single amplitude, though some respondents wanted T. V. C. to have dual amplitude and dual frequency. This will also reduce the cost of the T. V. C. 5. Alternately, two different models can be introduced: i. A cheaper version with single frequency and single amplitude. ii. Dual frequency dual amplitude version on which higher premium can be charged. 6. Efforts should be directed towards making the various authorities make the use of Vibratory Compactors mandatory. 7. The T. V. C. should be designed for a production capacity between 175 and 200 cu. m. per hr. making it a medium capacity machine. This will make it ideally suitable for contractors who are not going for Standard V. C. 's as they do not require 7 such high production capacities. 8. Options for both plain and sheep foot rollers should be made available. This will increase the width of the market. 9. The T.V. C. should be priced between Rs 5 lakhs and Rs 10 lakhs. Lesser the price, greater the penetration. Greater penetration of the market by T.V. C. 's will achieve the purpose of establishing the concept of Vibratory Soil Compactors which will have an impact on the market for Standard V. C.'s. 10. It will be beneficial to promote awareness, of the benefits of vibratory compaction, in coordination with M. O.S.T. and other manufacturers.