Online Test 4 Stp Case Study 6s3t1y

Case Study for STP Caterpillar CAT 777 Dump Truck

Introduction Developing a market strategy that supply’s a consistent and sustainable benefit to your customers requires considerable time and resources. Retaining your customers, building your customer numbers and staying one step ahead of your competitors requires even further time and resources. So how do the experts utilise precious time and resources to maintain the flow of knowledge of the buyer’s needs and perceived values and how can this be shaped to gain a competitive advantage over their competition. Developing a market plan for the sale of your product requires an understanding of your potential buyer’s circumstances. These circumstances can and do include the individual or group needs, preferences, resources and behaviours. “Market segmentation is a crucial marketing strategy. Its aim is to identify and delineate market segments or "sets of buyers" which would then become targets for the company's marketing plans” (Caroline Tynan, 1987). The Company: Caterpillar Incorporated Caterpillar Incorporated has been in existence since 1925 and is one of the largest manufacturers of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The Company currently has over 3 million machines in use. “Historically, Cat has been recognized for providing the highest quality. Continued success depends on exceeding the quality expectations of customers and standing behind everything the company does” (McBroom, 2009). Caterpillar – CAT 777 The CAT 777 is a mid - capacity off road truck which gives it versatility between the mining and construction markets. Having a long and successful track record the product has seen many technical developments. “Since the 1970's one incarnation or another could be found on site, they were almost ubiquitous” (Latimer, 2012).

Background Information: Caterpillar Incorporated was formed in 1925 with development of the brand name CAT adopted in 1950. “The quality of Caterpillar’s products reflects the power and heritage of the company” (McBroom, 2009). “Until the 1950s, the CAT and Caterpillar names were synonymous. In the 1950s, CAT emerged as a distinct brand under the Caterpillar Inc. umbrella. Today the CAT brand represents the largest and most respected family of products and services in earth-moving industries worldwide.” (Beal, Frohne, Jia, Johnson, & Solomon, 2010). Within the world of mining and construction, the Caterpillar CAT brand is impossible to miss. “Research shows that a typical customer relies heavily on the strength of the brand partnership for . To customers, Caterpillar and local Cat dealers represent a single promise of high-quality products and services.” (Gierke, 2006).

“Market segmentation is a crucial marketing strategy. Its aim is to identify and delineate market segments or "sets of buyers" which would then become targets for the company's marketing plans” (Caroline Tynan, 1987). Caterpillar distributes its CAT 777 product through 178 independently owned and operated dealerships worldwide. (See Figure 1). “Today, Caterpillar Inc. has customers in more than 180 countries and employs more than 100,000 people globally”, (Sawayada, Fairy, & Yepez, 2011). This local ownership approach assists with access and service of their product, aids incountry political and legal issues and intermarket distribution of products and supplys whilst maintaining global transparency for their product. Through locally owned dealerships, business representation can be dealt with on a personal face to face level while negotiating with the individuals that make the regional purchasing decisions. “The 777D on display represents the most popular large off-highway truck in Caterpillar history.” (Caterpillar outlines presence at forthcoming IMME in Kolkata, 2012). The local dealer network also generates a familiarity with the customer’s operational issues, assisting in responsiveness and agility to supplying solutions for situational issues which may arise. “Caterpillar’s dealer network is known to provide customers with outstanding customer service: perhaps most importantly, Caterpillar is known for speedily repairing broken equipment and ensuring small periods of downtime” (Caterpillar, Inc., 2012). The CAT 777 product has a long and illustrious heritage and is a well-known product, familiar to global business. This familiarity develops brand knowledge, a positive attitude towards the product and response which is often demonstrated through international mining shows. “A major theme for Finning at the show was promoting the lowest operating cost per ton using advanced technology. Showcasing the 777G was a perfect complement to this message” (The 777G Makes an Impression at the Canadian Institute of Mining Exhibition and Conference, 2013). Consideration of the market which the CAT 777 is utilised within will also define its potential market Usage Rate which in this product case is the resource and construction industry markets. Defining potential usage rate will deliver a broad economic situation for the potential market, its size, profitability, and potential purchasing power of its customers. (Beal, Frohne, Jia, Johnson, & Solomon, 2010). The core benefits which the CAT 777 aims to provide for are value, responsive, reliability, relationship, sustainable and ethical. “Founded in 1952, the Caterpillar Foundation has donated more than $300 million toward education, the environment, and helping people meet basic needs” (Farrell, 2010). “The Caterpillar 777 has been the industry’s leading haul truck in the 85 to 95 ton class” (Orlemann, 2000).

Considering Rated delivers a direct measure of their customer’s size, purchasing power and substantiality within their existing and new customers in the resources and construction industries. Specific segmentation also helps enable Caterpillar to access their customers, differentiate regional marketing strategies and action customer’s requirements. “Measure. Because Caterpillar tracks sales data linked directly to marketing expenditures, ROI data is available. The results have been impressive.” (Altier, 2012).

Caterpillar and the CAT 777 product is primarily involved within Business to Business and Business to Government markets (Beal, Frohne, Jia, Johnson, & Solomon, 2010). The nature of target markets are focused on large scale projects backed with substantial private and sometimes public investments with tight completion times and operating targets which are often governed by world economic events such as the Global Finacial Crisis of 2008. “With mine plans running 10 to 20 years, some of Caterpillar's largest customers, like BHP Billiton (BHP.AX) (BLT.L) and Newmont Mining (NEM.N), are expecting 18-month delays on some mine projects and remain optimistic longer-term.” (Vaporean, 2009). The purchase price of the CAT 777 is not necessarily the centre point for customers as efficient, effective equipment with professional product is sought to get the job done. These markets all have common needs which the CAT 777 fulfills in economically hauling rock. “The G Series 777 has new levels of performance, operator comfort and durability. With 7% more torque for work and fuel saving strategies that conform to customer needs, the 777G is delivering excellent customer value with reduced life cycle costs” (Mining Trucks - CAT, 2013). The CAT 777 product has successfully remained in a mature market since its inception, periodically reinvigorated and adding value by series updates such as the new ‘G’ series. , “The 777 was first introduced by Caterpillar in 1977 and has proven to be a workhorse for mining and large earthmoving customers” (Caterpillar introduces 777G off-highway truck, 2013). A successful product differentiated through periodic unique technical updates and successfully marketed across the globe through a differentiated market strategy by region and dealerships, “The solution was simple: allow the dealer to use its name alongside the Cat trademark.” (Gierke, 2006).

Caterpillars chief competition comes in the form of Komatsu which produces a product of similar capacity to the CAT 777. The CAT 777 has had a long successful history. “The 777G replaces the 777F and delivers greater levels of production and fuel efficiency as well as enhanced safety, operator comfort and service convenience.” (Caterpillar introduces 777G off-highway truck, 2013). “Caterpillar’s reputation is built on producing quality products, and these products provide a competitive advantage” (McBroom, 2009). “In recent years, the Peoria, Illinois-based company has called the 178 independently owned businesses that distribute its earth-moving products worldwide everything from "a critical competitive differentiator" to "the foundation" of its success.” (Kelleher, 2014). By regionalising their dealerships across the globe, Caterpillar marketing maintains brand transparency and familiarity internationaly to motivated buyers creating access to their products and services which stimulates effective demand for the CAT 777 product. “Equivalent for all other regions besides the U.S. and Canada, the 777G is ready to work” (777G Off-Highway Truck, 2014). The approach, coupled with a competitive price has maintained a sustainable competitive advantage over their competitors. “Ensure that customers make more money using Caterpillar equipment than using competitor’s equipment.” (Abbey, Jordan, Ratlif, Spencer, & Zaunbrecher, 2011). “Consumers typically choose products that give them the greatest value” (Adam&Armstrong, 2008). The CAT 777 has been a prominent product since 1977 and has gone through many series upgrades. Investing in product development and providing a superior supply chain and after sales through its dealerships, Caterpillar demonstrates value and commitment to its Target Market. “Caterpillar’s goal is to go beyond the traditional transactional customer-dealer relationship and move into more of a partnership type of relationship.” (Beal, Frohne, Jia, Johnson, & Solomon, 2010). The Caterpillar company and their products are an integral and reliable part of the business. They provide for this by promoting the quality performance of their products, superior field service, developing sustainable relationships and a logistics and supply chain second to none. Service and personnel differentiation is a strong component in Caterpillars positioning statement. “Sustainable Development for Caterpillar means leveraging technology and innovation to increase efficiency and productivity with less impact on the environment and helping our customers do the same – enabling their businesses to become more productive by providing products, services and solutions that use resources more efficiently” (Sustainability, 2013). The Caterpillar CAT 777 product has demonstrated its success through its duration of continued production and legacy of developments since its release in 1977. Demonstrated quality, benefit and value are chief drivers of the product remaining dominant within its market but the brands ability to adapt to globalisation through its marketing strategies and global dealer network has been highly successful.

“Caterpillar has come up with the model for how a big American manufacturing company can not only survive, but prosper, in a highly competitive global economy” (Pearlstein, 2006). By reinventing social contracts and outsourcing to lower cost regions and countries Caterpillar has maintained a high quality CAT 777 product which is competitively priced to the world business markets. “Caterpillar CEO Doug Oberhelman stands before a 777 mining truck, which carries a payload of 100 tons. Cat, already the world's top maker of monster machines, is trying to establish itself as the dominant player in developing markets” (Colvin, 2011).

Bibliography 777G Off-Highway Truck. (2014). Retrieved from Finning.CAT: http://www.finning.co.uk/products/New_Equipment/Default.aspx?classid=406 &groupid=307&model=777G%20(Tier%202)&langid=en&prodid=18265928&p age=over&printFlag=false&sc=M610&unit=metric Abbey, K., Jordan, N., Ratlif, K., Spencer, S., & Zaunbrecher, K. (2011, October 3). Caterpillar. Retrieved from Caterpillar: http://www.slideshare.net/knabbey/caterpillar-inc-9513915 Adam&Armstrong. (2008). Principles of Marketing. China: Pearson. Altier, T. (2012, June 2012). MarketingProfs. Retrieved from Understand Your Customers Better: Four Tips From Caterpillar: http://www.marketingprofs.com/opinions/2012/23601/understand-yourcustomers-better-four-tips-from-caterpillar Beal, R., Frohne, J., Jia, T., Johnson, M., & Solomon, S. (2010, December 14). Caterpillar - Integrated Company Analysis. Wisconsin School of Business. Wisconsin: Wisconsin School of Business. Retrieved March 2014, from Business Library: http://business.library.wisc.edu/resources/kavajecz/10_Fall/Caterpillar_Report .pdf Cable, J. (2011, August 24). Caterpillar to Build New Factory, Proving Ground in China. Retrieved from Industry Week: http://www.industryweek.com/globaleconomy/caterpillar-build-new-factory-proving-ground-china Caroline Tynan, J. D. (1987). Market Segmentation. Retrieved from Journal of Marketing Management: http://itu.dk/people/petermeldgaard/B12/lektion%204/Market%20Segementati on.pdf Caterpillar introduces 777G off-highway truck. (2013, March). Retrieved from Mining: http://www.mining.com/caterpillar-introduces-777g-off-highway-truck/ Caterpillar outlines presence at forthcoming IMME in Kolkata. (2012, November 19). Retrieved from IM-International Mining: http://www.immining.com/2012/11/19/caterpillar-outlines-presence-at-forthcoming-imme-inkolkata/ Caterpillar, Inc. (2012). Retrieved from Hasson Investments: http://hassoninvestments.com/?page_id=78 Colvin, G. (2011, May 12). Caterpillar is absolutely crushing it. Retrieved from CNN Money: http://management.fortune.cnn.com/2011/05/12/caterpillar-isabsolutely-crushing-it/ Farrell, C. (2010, January 14). America's Most Generous Corporate Foundation. Retrieved March 2014, from Bloombergs Business Week: http://images.businessweek.com/ss/10/01/0114_most_generous_corporate_f oundations/20.htm Gierke, M. (2006). Caterpillar Dealer Identity:. Design Management Review, 8. Retrieved from Design Management Review: http://www.dmi.org/dmi/html//06171GIE55.pdf Kelleher, J. (2014, March 20). From dumb iron to Big Data: Caterpillar's dealer sales push. Retrieved from Reuters: http://www.reuters.com/article/2014/03/20/uscaterpillar-dealers-insight-idUSBREA2J0Q320140320

Latimer, C. (2012, May 24). The new kid on the block. Retrieved from Mining Australian: http://www.miningaustralia.com.au/features/the-new-kid-on-theblock McBroom, H. (2009, July). 6 Sigma: Foundation for Quality at Caterpillar. Retrieved from Peoria Magazines: http://www.peoriamagazines.com/ibi/2009/jul/6-sigma Mining Trucks - CAT. (2013). Retrieved March 2014, from Mining.CAT.com: https://mining.cat.com/products/surface-mining/mining-trucks Orlemann, E. (2000). Caterpillar Chronicle: The History of the World's Greatest Earthmovers. Motor Books International. Pearlstein, S. (2006, April 19). Caterpillar's Turnaround, a Chance to Reinvent Globalisation. Retrieved from The Washington Post: http://www.washingtonpost.com/wpdyn/content/article/2006/04/18/AR2006041801884.html Sawayada, J., Fairy, E., & Yepez, M. (2011). Caterpillar Become an Ethical Role Model. Daniels Fund Ethics Initiative at the University of New Mexico. Retrieved March 2014, from Danielsethics: http://danielsethics.mgt.unm.edu/pdf/Caterpillar%20Case.pdf Street Smarts in Mining. (2007). Retrieved from InfoMine: http://www.infomine.com/library/videos/211c0/caterpillar_777_dump_truck_dri ve_by,_alberta_oilsands.aspx Sustainability. (2013). Retrieved from Caterpillar: http://www.caterpillar.com/en/company/sustainability.html The 777G Makes an Impression at the Canadian Institute of Mining Exhibition and Conference. (2013). Retrieved from Mining.CAT.com: https://mining.cat.com/cda/layout?m=1425&x=7&id=3712518 Vaporean, C. (2009, March 10). Caterpillar orders show 18-month turn in mining. Retrieved from Reuters: http://www.reuters.com/article/2009/03/11/us-miningsummit-caterpillar-idUSTRE52969420090311

Appendices

Figure 1: Worldwide Coverage http://www.slideshare.net/knabbey/caterpillar-inc-9513915

Appendix 2

Figure 2: Caterpillar Competition http://www.slideshare.net/knabbey/caterpillar-inc-9513915