Based on the initial assessment, the client’s sales are far behind the dynamics of the market that gained almost 20% in 2020. In order to boost their sales and at least match the market’s growth rate, the client should consider a set of sales growth opportunities that we identified, including potential decrease in price for compact tractors.
First, compact tractors are likely fairly commoditized as a lot of manufacturers might offer similar options. So, the farmers are likely price-sensitive, and a price decrease might trigger a rapid growth in demand.
Secondly, covid-induced turbulences likely put farmers in tough financial situation and increase market ambiguity, so discounted price might meet farmers’ needs.
We need to consider risks though, as this price decrease might, first, kick off a price war with other tractor manufacturers, secondly, create a perception of the client as a value brand, and thirdly, the economics of this move might not work and we might not reach a break-even point if we decrease the price too much.
That’s why as part of my next steps, I’d like to dig deeper into other sales growth opportunities, build business cases for them and conduct an in-depth analysis of the competitive landscape.