Using Services marketing to develop and deliver Integrated Solutions at

Caterpillar in Latin America

Presented By

Arpan Sengupt

a (043014)

Chetan Sharma

(043017)

Irshad Ali (043027)

Puneet Jain

(043039)

Sudhir Mishra

(043055)

“Every customer is diff erent, but one thing is absolutely the same, they all wantthe world’s best products, readily available and ready to work every day,”CaterpillarChairman and CEO Doug Oberhelman

Introduction

1904

•Benjamin Holt tested the first track type tractor.

1925

•C. L. Best Tractor Co. and the Holt Manufacturing company merged to form Caterpillar.

1951

•First overseas manufacturing facility in U.K.

2000

•300 different model starting from 5 HP to 22,000 HP.

2006

•Total sales exceed $41 bn.

Distribution Structure

1

•Corporation

2

•Marketing Profit Centre

3

•Dealers

4

•Customers

Customer SegmentationProducts

and Industries

Large

Small

Product Support

Do it myself

Work with me

Do it for me

Find out the products customers want. Design

and build them. Keep themRunning. Rebuild and recycle.Do it better than anybody else

Shift in Focus

This is because:-

1. Increased Competition.2. Threat of substitutes in form of cheaper products.3. Loss of huge amount of revenue in the after sales market.

CompetitorsType Service

OfferedStrengths Weakness

Third Party Service Providers like Fluor

Management of Caterpillar and Non- Caterpillar Products.

Dealer network in Latin AmericaSuccessful relationship

Less Sophisticated

Aftermarket Suppliers

Will fit parts. Lower Costs Quality

Customers having own mechanics.

Repairs of parts.

Customize offerings

Not able to keep up with technical prowess of Caterpillar

Local Workshop(mainly previous caterpillar dealers)

Repairs of parts.

More acceptance

Financial Reserves

Competitive Manufacturers likeKomatsu, John Deere, Volvo

Almost everything that Caterpillar offers.

Dealer network in Latin America

Not established

Porter’s five forces models.

1. High Product Quality

2. Good dealer relationship.

3. Holds large portion of market share(53%)

1. Poor Segmentation2. No after sale service3. Less control over distribution network.4. CSA agreement not promoted properly

Huge untapped After sale marketExpected expected to grow at 30% per year

1. Threat of Competitors2. Threat of substitutes.

We are well-positioned for long-term success. And Team Caterpillar is hungry to make our company even better. By streamlining the organization and clarifying roles and responsibilities, we can refocus our efforts on those we are here to serve our customers

Jim Owens

GAP 1

Listening Gap

Company’s Understanding of Customer Expectation

Inadequate ResearchLack of Upward

CommunicationInsufficient Relationship

FocusInadequate Service Recovery

Partially DesignedSporadically Performed

No post interaction customer survey

Interaction b/w

Management & Customer

No Segmentation

Requirements Research

Identifying the benefits and attributes that customer expects

Generalizable across Industries

‘What’ customer wants?

Structured Brainstorming

Capture information about key service encounters

Short list of questions

Better than compliant solicitation

Dual Benefit- Market Research Tool and Customer Service

Trailer Call and Post Transaction Survey

Relationship and SERVQUAL surveys

Determine the Average Score GapAssess along the 5 dimensionsCompare SERVQUAL score of CompetitorsAccess the Internal service quality

Lost Customer Research

Similar to exit interviews

Open ended + In-depth Questions

Establish an early warning system

Future Expectation Research

Environment scanning and Querying of Customers

Asking Customers who are Opinion leaders/Innovators

Platinum

Gold

Iron

Lead

Segment:Spend moreLess cost to maintain+ve word to mouth

Segment:Cost More-Effort, MoneyLess Return

The Customer Pyramid

Customer having

Customer Service

Agreement

(CSA)for years

Do It Myself Change Do It For

Me

Opportunity Strength

Limited Action Maintain

Attribute Performance

Importance

High

LowHigh

Responsiveness

Tangible

Relationship

ReliabilityAssurance

Importance/Performance Matrix

Segmentation

Dealers

Mining

Quarry and

waste

Excavation

Earthmoving

Building Construction

Products

Regional Distribution

Services Divisions

Customer care

Servicemen

END To END

Client would need to call the central toll free number, SMS or open a ticket online

This central number would then link and connect the client to the nearest/best service distributor

Action plan

Responsiveness – Customer requirement is maximum up-time

for equipment and timely delivery of service Reminder call to customers before expiry of

CSA Service number availability with consumer. Taking feedback from the customer after

every service. The time taken by company to act on the

complaint.

Empathy – Customization of service Conduct of the people Employee Empowerment

Assurance – The technical know how of the people who are

involved in service process Ability to instill confidence in the customer.

Reliability – Representative should be able to correctly

identify and delegate the issue. Service men should be able to report to the site

within the promised time(quantifiable).

Tangibles – The tools and servicing equipments used Technology used

Market Research

Product Questionna

ire

Product support

Questionnaire

Product Questionnaire(semi-annual)(At the time of purchase)

What are the purpose of purchasing this machine?

Does he/she had experience in related areas?

Does he have other similar machines?

What are the attributes he/she is looking in the machine?

AHP modelFactor Analysis

Product Support Questionnaire(Quarter)(After sale of product)

Referred to others or notService provide adequate or notService they would like to avail?Any frequently occurring

problem?Comparison with other

company’s services(if they are owning a different brand of tractors)

Customer Satisfaction

TechnologyProduct support questionnaire to

be floated through emails.Data analysis through SPSS , SAP.Online support centre.CSA brochure to be made

available in the website.

New CSA Documents and its salesforce To be prepared separately for each division based on

both the researches and to be sold by separate salesforce..

Option for purchasing along with the product. To be made available in website as brochures and

forms. Product and service dealer Sales force to be specially

trained for each segments and also given a general overview of all services.

Hiring technicians and empowering them. Differentiations to be communicated in terms of

quality, regular visits by technicians say after 200 hrs.

Other issues

Improper Segmentation◦Company segmented based on do it

myself, do it with me, do it for me but some of the general construction companies were large enough to qualify for ‘Do it for me’ segment.

Different CSA’s to the different segments?

General Construction CompaniesLarge Medium Small

Do it for me

Highly Customized with

little standard services

Flat Monthly/Yearly subscription

Do it with me

Less customized +

Basic standard services

Cost for the type of service performed or

Operating hours

Do it myself

Less customized with more emphasis on consultation, information dissemination,

diagnosis , READILY available service team and finance if required + Offer Inspection

CSA’s so that client can compare himself if he needs

service.

Service Charge at heavy discount.

)

Service Design & Standard Gaps

Poor Service Design

• Few CSAs• CSAs were not branded• CSAs were created in an

ad hoc manner

Customer Driven

Standards

• Promised but expectations not met

• Operationally focused not customer driven

Inadequate physical

evidence and service escape

• Customer Interact with sales people

• what to offer and what to deliver

• Contries: Culture, law, structure

GAP 2

The Servic

e designs and

standards gap

Issues brought ahead Creation of CSA’s was in ad hoc manner as it did not

mostly considered timing, peace of mind, risk reduction etc of customers. Also customers were often located far off (so standard setting gets difficult)

They varied across dealerships. Difficulties in keeping track of what had been

promised. (This gives rise to service non performance and consequently service recovery)

Sales ppl were not the employees who delivered on CSA. They were unsure of what to offer.

Performance standards were operationally focused and not customer focused.

Cultural issues Silos

Setting the standards

To close GAP 2, standards set by the company must be based on customer requirements and expectations rather than just on internal company goals.

SO Customer defined standard Hard standards and Hard measurement

◦ 10 minutes response time from concerned Service centre◦ 4 hours for a service person to arrive◦ Call back to all missed calls◦ 99% calls served

Soft standard and soft measurement◦ Empathize

◦ Human Voice

◦ Etiquettes

In soft measurement – SERVQUAL and relationship and post service and trailer calls

Building a Service Blueprint It should be adhered to strictly.

Blueprint

Create and design new CSA’s

Implementation

Front end Planning

Get everyone learn and deliver about them

Separate training for product and service dealers. They have to be trained in understanding the customer requirements through his past records , empathy and customer research/background.

This gives rise to 2 other factors that need to be built in:-◦ ERP/CRM/DB sharing across the entire Caterpillar.◦ Employee empowerment in extending and offering the services.

Employee reward schemes/performance based bonus appraisals. Internal audits and checks Inventory control systems in place for both product and service

dealers. E.g JIT, VMS Readily available brochures and informational guides for quick

reference. Video that will give respondents the true sense of services and

capabilities offered. Automated reminder about services. Manufacturing products with the important attributes as found out in

the research.

GAP 3

CUSTOMER DRIVEN SERVICE DESIGNS AND STANDARD

SERVICE DELIVERY

Deficiency in human resource policies

Failure to match supply and demand

Customers not fulfilling roles

Problems with services intermediary

Gaps Identified Lack of qualified mechanicsFewer resources to find themNo proper attention on interaction and

communication skillsLack of team work: silo based approachFormal ways to communicate did not existReliable system not available to dealersScheduling process was complexCustomers contributed to gap: moderatelySupply demand mismatchUnattractive presentation of CSA to

customers

Service Performance Gap

Deficiencies in HR Policies

Customer Role

Service Intermediarie

s

Failure to match supply & Demand

Lack of qualified mechanicsFewer resources to find themNo proper attention on interaction and communication skillsLack of team work

No proper details provided by customersNo details about service interval provided No reliable system to track servicesScheduling process was cumbersome

Supply demand mismatchTechnical shortage During peak timesShort notices

Suggestion to fill gaps

Employees’ role

Providers Customers

Company(caterpillar)

Internal marketing(Enabling the promise)

External marketing(making the promise)

Interactive marketingDelivering the promise

Improving customer roles

Define Customer Roles

Educate and reward customers

Manage the customer Mix

Effective Customer participation

Introduction of toll free numbers for customer complaints

A key change in the aligned structure is the creation of five end-to-end Machine Business Divisions: Mining, Quarry & Waste, Excavation, Earthmoving and Building Construction Products.

Online chat with customers.

GAP 4

External Communication to customers

Service Delivery

Lack of integrated service mkt communication

Inefficient management of customer expectation

Over promising

Inadequate horizontal communication

Gaps IdentifiedPromotion was focused on product

not on service Absence of brochures or

advertisement describing CSAs.Tangibility issues No clear definition of different CSAsAbsence of clearly defined service

features led to over-promising.Lack of written communication led to

confusion in verbal communication

Problem fitting to gap model

Promotion was focused on product not on service

Absence of brochures or advertisement describing CSAs.

Tangibility issues

Lack of integrated service mkt communication

No clear definition of different CSAs

Absence of clearly defined service features.

Lack of written communication

Over promising

Inefficeint management of customer expectation

1. Specialized training programs for salesperson.

2. Brochures3. Training Modules – regular training sessions

on and off line. Dealers(successful) may be involved.

4. Dedicated self service websites.5. Service camps.6. Monthly Customer meets.7. Organization of exhibition fairs to educate

the customer about new features and products.

Internal and external material to communicate and operate CSA’s

If we stay focused on makingsure we have a great valueequation for the customer, wecan go through cycles and stillcompete and be successful.