Customer Classification and customer profile

Customer Classification | CATERPILLAR CONFIDENTIAL: YELLOW

SCALING NEW HEIGHTS IN EXECUTION

Customer ClassificationOverview

2014

Marcial Jr. MilitanteBusiness DevelopmentService Mktg. Specialist



What is Customer Classification?

• Objective: Classify a customer based on their primary business type

• Classify customers by one principal industry and subsequently collect transaction data for those customers for all business the dealer transacts with the customer

• Journey of Classification– From major split of customers by geography … to a fully segmented business

by Customer Industry (primarily) – From today’s Principal Work Code (PWC) reporting only which aims to

capture an individual machine’s initial application … to a primary industry plus the transactions related to the customer



Why are we doing Customer Classification?

• Enterprise Alignment– End-to-End responsibility for a group of customers

• Connecting the business to customers • Work across the customers’ value chain including all relevant products and

services• View of customer profit contribution to drive the Group’s decisions and

enhance profitability• For large accounts, centralized coverage in customer’s home base region with

global coordination• For customers that work in multiple Industries, lead account manager works

across Industries to serve customers



How will Customer Classification benefit the dealer?

• Support at Cat determined by customer segment (know who to call)

• Faster communication & resolution of issues– Shorter communication structure– Clarified responsibility & decision rights– Single point of accountability

• More industry specialists – the “oak trees”• Better recognition of Customer Value-chain

– Customer focused not product or industry focused• Product & service development aligned to customer

value drivers• Dedicated dealer development responsibility

Beyond Product

45%

Brand10%

Product45%

Caterpillar’s Value Proposition



Vision for Information Usage at Dealer & Caterpillar

• Data mining & analysis– Understand the customer

• What jobs they do• What products they use• What services they require• Regional variations

• Identify most valuable customers– Across Dealers / Territories / Industries

• Identify most valuable industry sub-segments– What customers are in what industries and where– What is the opportunity

• Align product & service development with customer business requirements and value creation

• Develop Distribution requirements• Find what’s missing• Feed the marketing planning and business planning process

– Single source for VOC

Understanding how value is delivered,

begins by understanding what the

customer is trying to accomplish



Caterpillar Industries

Machine Industries• Mining • Quarry & Aggregates• Large Contractor• Waste • Industrial • Local Contractor • Agriculture• Forestry• Government• Pipeline

Customers will be classified into one primary industry




• Mining – Contains all customers, surface and underground, primarily involved in the business of extraction of

metals (copper, iron ore, gold, led, zinc, uranium, etc.) and non-metallic minerals (coal, salt, talcum, oil sands, phosphate, diamonds, etc.).

• Quarry & Aggregates– Contains all customers primarily involved in the extraction, handling, processing and sale of crushed

rock, stone, sand, gravel, cement, ready-mix concrete, concrete products, lime, gypsum products, recycled aggregates and clay.

• Waste– Inclusive of all waste management operations including landfill & site construction, collection,

transportation, processing, incineration, disposal & renewable energy production. • Industrial

– The Industrial Market consists of scrap and recycled materials handling, demolition, utility companies, port/stevedore/bulk handling, manufacturing, brick and glass products, primary & fab. metal products, petroleum, chemical & rubber, ag commodities and food products, wholesale and retail trade. This is not a homogenous market. Sub-industry value chains are dissimilar and not linked. Work involved includes the processing and handling of material.

• Forestry– Customers engaged in the management of forests and related natural resources for the production and

supply of wood fiber and services to wood fiber businesses. Primary work includes a wide variety of management, harvesting, handling, and processing of wood fiber and sale of wood products. A broad range of purpose-built machines, along with traditional machines and specialized work tools support this industry.




• Pipeline– Contractors engaged in the construction of Mainline Pipeline projects which includes all phases of

construction and major maintenance of mainline pipelines used for the transmission of all commodities. • Local Contractor

– Local/regional territory of operation, cash-flow sensitive, typically working as a sub-contractor or on small projects, typically operating smaller machines (below 20t), typically <10 employees and typically <10 machines in developed countries and <4 in developing countries.

• Large Contractor– Traditional heavy construction contractors who generally focus on multiple sub-industries, utilize core

Caterpillar machines, typically have more than 11 employees, and who do business locally, regionally, nationally and internationally.

• Agriculture– Contains those customers in food production. Segments of agriculture include beef producers, dairy

producers, poultry producers and pork producers in animal production. In crop and plant production you will have customers who grow and produce corn, soybeans, wheat, fruits and vegetables. In addition you will have companies that provide support to these producers providing the inputs for their operations. Examples to include fertilizer companies, feed companies, etc.

• Governmental– Federal, state and local governments including counties, townships, municipalities, public utilities,

special authorities (airports), not-for-profits, port authorities and aboriginal groups (Native American, Inuit etc.).



Industry Decision Tree

Is the customer a Federal Government OR military sales

OR a governmental agency purchasing under a Government tender OR a Government Department OR Municipality? Excludes

State Owned Enterprises

GovernmentalYES

Customer is a plant hire/ rental house?

NO

YES

Is the largest share of the customer's income/ revenue in Mining, Quarry & Aggregates,

Waste, Pipeline, Industrial, Forestry, Agriculture?

NO Classify respective industry

Customer

NO

Is the customer a large contractor or a local

contractor based on the Guidelines?

Large Contractor Local Contractor

YES

Is the company a rental distribution channel based on the

Rental Guidelines?

YES

Rental/ Plant Hire

NO



Rental & Local Contractor Guidelines

• Guidelines to Determine if a Company is a Rental Distribution Channel– Does the company offer similar services to similar end users as The Cat Rental

Store?– Does the company rent without operators only?– Does the company manage the business by financial utilization?– Does the company get by paid by a period of time (hours, days, weeks, etc.)?– Does the company see renting from another company as a missed opportunity?

• Guidelines to Determine if a Customer is a LOCAL Contractor – Does the customer primarily operate BCP sized equipment?– Does the customer have less than 10 non-seasonal employees?– Does the customer operate a machine(s) less than 2000 hours per year?– For customers in North America, South America, Australia-Pacific, Japan, Europe,

Africa, CIS & Middle East, does the customer have less than 10 machines (Cat & Non-Cat, competitive-sized) or earn an annual revenue less than $5M USD?

– For customers in the Asia Pacific region (except Australia-Pacific and Japan), does the customer have less than 4 machines or earn an annual revenue less than $1M USD?



Governmental Classification Guidelines

• A customer is private if:– Autonomy to prospect (move around to bid on jobs)– Ability to make money, produce a profit– Operates as a private enterprise, even if it is government owned

• A customer is governmental if:– Operates as a municipality (I.e. does the normal activities to maintain a

town/county/state like road maintenance, garbage, cleaning, sewer and water, etc.)

– Operates only in its own territory / self-contained (purchases equipment to do their own work and does not do work outside their territory)



Other Equipment

• Equipment to be included in “Number of machines” is Cat and Non-Cat Competitive-sized equivalent

• Equipment not included:– On-highway trucks– Lift trucks– Water pumps driven by engine– Allied equipment– Agriculture equipment



Classification Solution

Solution Description• CIC Code: Four-position alpha and numeric code that is assigned to each customer

based on the type of work the customer is primarily engaged in• Assign a customer with one CIC code at a master customer data level (code does not

change often)• Use existing CIC process to obtain top-tier classification by modifying existing and

adding additional CIC codes (primarily for Local and Large)

Top-Tier

LG 24

PrimarySub-Industry

+

Large Contractor ResidentialConstruction

Customer Industry Code (CIC)

155: Landscaping

150: Nurseries

240: Building, Residential

250: Building, Commercial

Landscaping

Residential Building

Commercial Building

Principle Work Code (PWC)Sub-SegmentsSegment

General Construction



Rental Channel Classification

• Rental Classification– EQ52 - Rental Company - Independent Local (Businesses primarily

engaged in rental of equipment, generators or rental services items, locally owned and operated.)

– EQ53 - Rental Company National / Regional (Businesses primarily engaged in rental of equipment, generators or rental services items, regional or national in scope, operating from multiple locations.)

– EQ54 - Rental Company with Operators (Businesses primary - not necessarily exclusively - engaged in rental of equipment with operators.)

No rollup to a customer industry



Other Types of Classification

• Miscellaneous Classification– EQ10 - Dealers - Machinery, Equipment and Supplies (Caterpillar

affiliated)– EQ15 - Sub-Dealers - Machinery, Equipment and Supplies (Caterpillar

affiliated)– EQ20 - Dealers - Machinery, Equipment and Supplies (OEM

affiliated)– EQ30 - Brokers, Auctions, Resellers and Independent Dealers– EQ40 - Equipment and Engine Salvage– EQ50 - Rental Company (Caterpillar Dealer Affiliated)– EQ51 - Rental Company (OEM Dealer Affiliated)– EQ99 - Equipment Repair Parts Services

No rollup to a customer industry;

Tactical in nature as every sales

transaction will need a CIC code



Local Contractors – Customer Profile

People Local Contractors are cash flow oriented. They get paid when a job is done, and in turn decide what bills will be paid from this income, and which will wait until the next job is finished. One side of their reputation is built based on how they manage this. The other side is formed by their ability to satisfactorily complete the work when they committed. Whether working for a homeowner, or subcontracting for a large contractor, when they can get it done is a big element of their daily activity.

Observable behavior: Can do. Local Contactors want to be recognized as capable.They observe and imitate other contractors, looking for the best methods to complete

a type of job. Regional techniques often emerge. Live Free. Going in business is a lifestyle choice. They respect others who have made the same choice and it can influence where they go for

supplies. Inseparable. Social networks become a platform for marketing, with referrals and word of mouth being the key medium. Likewise, the local

business community continuously judges and legitimizes his company. For a small local contractor, it is not just business, it is personal. Conflicted. If his business grows, the local small contractor faces a fork in the road to become a large contractor or remain small. He will choose

to trade the raw satisfaction of building, for time to “see” more people. He also chooses to trade some individual freedom as he becomes more dependent on employees, suppliers, and customers The desire for more respect and income may be visible, but the tradeoffs may not be readily apparent.

WorkA local contractor’s work is likewise small by comparison, lasting from a couple days to a couple weeks. They typically work within a 50 mile radius. Working for private individuals, they usually contribute the design of the project and there may or may not be blue prints. They act as a subcontractor frequently. They commonly choose to work in earthmoving, specialty trades (masons, plumbers, electricians), landscaping, and agricultural industries (clearing, soil erosion, irrigation). Tasks are highly varied ranging from removal, clearing, and demolition activities, to installation, finishing, and structural construction, with everything in between. While they may have a core capability, if work comes up that requires them to take on adjacent vertical elements to get the work, they can be convinced to do more than they care to. For instance, a sewer contractor may do the hookup to a house, even though he’d rather stick to main line installation. Again, they learn by watching others to gain the knowledge necessary to get the work they want.



Large Contractor – Customer Profile

People Large Contractors are project oriented. Success is determined by effectively managing the construction of civil engineered projects to completion on time and in spec. Time is at the front of their thoughts. Companies rely on competitive advantages built in during the bidding process to turn a profit. Site managers may, and do deviate from the methods originally estimated and any project inevitability becomes a series of “lost and found” margins.

Observable behavior: Pride in ability to develop and deploy unique methods to complete tasks – (choice of systems, job setup).

It is a key to how they differentiate and compete. Loath rework – (water content resulting inadequate compaction, material slides, interpretation of prints, errors in grade) Paranoid of unexpected events that impact the schedule. (loyal to subcontractors they trust, lodging crews at a distance, delivery commitments

from suppliers) Acutely aware of resource burden (fleet utilization, balance sheets and cash specifically for bonding). This drives them to manage a work

backlog. Hungry for growth. ( HR, Financials, Territory expansion) In many cases, a large contractor has been in business for more than 25 years and has been passed on as a family business. This is evident with

family names as company titles. ProjectsCommon projects large contractors pursue include: Roads, Bridges, Airports, Dams, Irrigation Systems, Building Sites, Sewer, Water and other Underground Utilities. Major Job tasks can be broken into: Prep (clearing, environmental installation), Cutting (blasting, ripping, hammering, trenching, loading, hauling), Filling (crushing, hauling, compacting) Installing (lifting, base material placement, compaction, paving), Finishing (grading, seeding, landscaping). While some contractors choose to specialize, a great number engage in multiple project types. By their own description, Earthmoving is what they do and is the common thread between them. The acute awareness of resource investment leads some companies beyond contracting, into plant hire and rental where they can leverage their knowledge of equipment ownership and operating costs, as well as apply developed concepts of financial leverage and asset utilization.



Mining – Customer Profile

People Miners are process oriented. Success is determined by effectively managing ongoing and relatively steady state processes – working towards the optimization of their longer term resource. Production and Cost are balanced against Time to optimize their resource within the commodity cycle. Activities considered core vary by customer with a range from pure exploration and investment (outsourcing all operational activities) through to complete in-house operations and maintenance including end-product delivery. Customers range in size from global mega players, to local/regional in scale.

Observable behavior: Continuously improving the operations through effective application of people and scale. Pursuit of uptime. Maintenance is the primary “owner” of mobile equipment. Their view is reliability and cost related. They are

seen as delivering uptime to the operation. Machine availability is the primary metric. Internal conflict. The size of these companies requires organizational division. The best miners are those that can effectively

combine the opposing interests of maintenance and operations. Wealthy. Most miners and mine contractors are resource rich (money, people, and expertise) due to the scale of their projects and

the downside risk of poor performance. Consistency of performance allows them to narrow their reserve.

OperationsMines around the world vary significantly in type, scale, and location. They are commonly at the larger end of our industry norm and located in remote (often hard to access) zones. Once established they will usually operate for many years (15-30 being normal).

Major job tasks can be broken into: Site Preparation and Access (establish roads, access tunnels, etc.), Drill and Blast (breaking rock), Overburden Removal (moving non ore bearing material – typically the most significant earthmoving activity, load and haul, push, dragline), Ore Extraction (load and haul, continuous mining), and Support Activities (access road maintenance, haul road maintenance, drainage, processing support).



Industrial – Customer Profile

People Industrial businesses work on the fringes of other larger industries and their work is process oriented. It is common for them to have long-term contracts with their customers including a number of performance penalties. Significant amount of business opportunity exist beyond the initial sale, which can be high margin if tied to the customer’s performance penalties. Partnerships with key suppliers are valued.

Observable behavior: Professionally Dirty – Whether processing slag, scrap, steel, radioactive waste, or working on the river, industrial businesses are dirty.

They combat this environment with processes and strive for a professional image. Entrepreneurial – Industrial people see money where no one else does. They enter and exit businesses / projects quickly depending on

the money. Being on the fringe of larger industries drives creativity. Competitive – Industry circles are relatively small and participation in trade groups is high. Networks are tight and there is a history of

deals won and deals lost between customers. Loyalties build in this tight, competitive environment. Squeezed – Industrial customers are often caught in the middle. They deal with large, powerful unions (workers comp, training,

absentee, strikes, and grievances). They have to comply with significant regulations (OSHA for example). Ultimately, they serve large, powerful customers – steel companies, shipping companies, large corporate offices. Cost sharing arrangements, for example, are common.

Job-SiteIndustrial customers work on job-sites. The job-sites are processing-orientated – cutting, moving, stacking, piling, loading. They tend to have flexible equipment and use it for multiple processes. A few of these processes will be unique and not run everyday. For this, they have equipment on stand-by or they stretch the use of their main processing equipment. The job-sites are specialized and often fill a small area of an overall larger job-site, typically in the back. Job-sites may include: scrap yards, steel mills, factories and ports. Job-sites tend to have piles and stacks. Equipment on a job-site may be intermixed with other companies’ equipment.



Quarry & Aggregates – Customer Profile

People Q&A customers are driven by production, cost per ton and profit. These fixed site businesses involve highly integrated processes oriented around efficient production of rock, sand & gravel. Safety, environmental impact issues and acquisitions leading to industry consolidations have been significant trends over the last decade. Customer size ranges form global corporate account groups to local family owned sand & gravel pits.

Observable behavior: Friendly neighbors. A key driver in the cost of aggregates is transportation which drives locations in close proximity to communities served.

Significant investments in dust control, run-off and erosion control, noise management related to blasting and site reclamation are made to avoid friction in the community. Restrictions on new site permitting have put a premium on existing reserves at current sites.

Asset Managers. Maximizing uptime requires tracking and performing scheduled maintenance on assets, including crushers and conveyors. They repair and rebuild components making them some of the worlds best at managing asset life cycles.

Driven to lower cost per unit measured. Pit bosses watch operator techniques, blasting patterns experimented with, haul road lay-out and maintenance, crusher capacity and stocking piling are examples of tweaks made everyday.

Metrics Minded. The main office often posts daily production results, maintenance schedules, safety records and work rotations on large easy to read whiteboards or monitors. Cooperation among local leaders and teams is typically high. Companies with multiple sites often engage in friendly competition when comparing production rates.

The Quarry SiteAggregates are produced primarily through sand and gravel operations, or stone quarrying. Geology determines between the two. Sand and gravel is characterized virgin bank loading usually into mobile crushers and screens. Stone quarry requires blasting and material is delivered to a stationary crusher. A pit boss is usually assigned to monitor the fleet and maximize production. Like mining, operations and maintenance motives are not always aligned. In addition to the production operations, inventory of finished product is maintained and sold from the same site. On site scales are many times combined with a main office. Not only is the quarry a production facility, but also a direct sales outlet.



Waste – Customer Profile

People Waste customers are service providers to their customers. They cover the spectrum of ownership: public, private and governmental. They have industrial customers, commercial customers, residential customers, and serve one-off events. They are process oriented, but the process differs by region because the waste composition and needs of the market differs by region. These customers are at the front of a number of growing trends: recycling, green, alternative energy.

Observable behavior: Image – Whether collecting or compacting, waste customers strive to have their operations bright, clean and efficient. Focused on Customers – The one day a waste company fails to collect one of their customer’s trash can erase years of superior performance.

Community Minded – Waste customers contend with the notion that few people welcome a waste dump in their backyard … being a good

neighbor is very important. Assets and People – Waste customers are constantly tracking their large fleets of equipment, trash bins and the people collecting the trash.

Reducing the number of people collectors and keeping them safe is significant. Green – Reclaiming used dumps, recycling, alternate fuels, landfill liners … waste customers are environmentally savvy and are at the

forefront of sustainability. Regulations – The waste industry is highly regulated driving waste customers to do a significant amount of recording, reporting and testing.

OperationsWaste operations can be broken into: collection (very low entry barriers), landfill disposal (new permits hard to get), recycling (growing opportunity) and energy generation (waste-to-energy). Some customers are fully integrated across these areas. Waste operations are adopting solutions that help them respond to their customers quicker and more accurately (did trash get picked-up from a customer) and that help them get more from less (increasing compaction allowing them to get additional life out of a dump).

More sophisticated waste operations and alternative methods of waste disposal in emerging markets are just starting to emerge.



Forestry – Customer Profile

People Forestry customers typically work in small crews – containing a team of 5-10 people and a series of machines depending on the harvest method, tree type and topography. A very typical crew working in plantation timber would have a feller buncher, followed by a skidder/or forwarder a log loader and then a number of road trucks for delivery.

Observable behavior: Integrated Supply Chain - The logging crew will typically be highly integrated with the mill that is being supplied. Most mills function on a

“just in time” basis. Therefore the mill will control scheduling and locations in order to maximize system productivity while maintaining mill throughput with minimal inventory. Logging crews thus operate on and off at the mills direction.

Keep it in the Family - The logging becomes a family tradition carried on through the generations. The resourcefulness and skills of the trade are handed down. Beyond the immediate family, loggers as a whole are a tight knit community, ready to help a fellow logger.

Controlled- Mills and Paper companies have extended their control to the timber plots. Loggers subcontract the logging operation and their contract spells out where and what they will cut, and what they will be paid. It is a common practice for a mill to “finance” the logger’s equipment exerting further constraint on the logger’s financial room. Loggers are in a hard spot in the value chain.

Logging OperationsA logging crew is mobile. They cut in remote locations in most any conditions. Equipment is pushed to the extreme end of an application zone. The nature of handling large trees is hazardous. Typical operations involve build/clearing access roads, cutting and processing, skidding/forwarding and loading on to on highway transport. The operation finishes at the mill with specialized log loading equipment. Mechanization of processing varies with different levels of labor utilized.



Pipeline – Customer Profile

People Pipeline Contractors are transient and highly mobile and have relied on strong relationships with key suppliers/distributors, who understand their business needs and follow them from project to project to ensure needs are met regardless of location.

Typical pipeliner is a hands-on manager, with multi-generation heritage in the business, 15 to 40 years of experience, well connected in the industry, places high value on business knowledge, responsiveness, relationship, and trust from key suppliers who understand their business needs. Demands regional and global consistency for machines and product support

Pipeline contractors are high production oriented, demanding single point of accountability from the suppliers and ability to solve multiple problems and meet various needs. They are skeptical about product innovation and value robust, proven technologies. Although they are traditionally used to taking care of their own equipment fleet by working in remote locations or under severe weather conditions, they appreciate and value service support from our dealer channel and can evolve into using a “do it with me” service model. Parts availability, commonality of product support, convenience and speed are valued over price.

Customer DefinitionThe pipeline market is defined as a narrow, customer-focused segment, specialized in pipeline construction or the construction applications related to the pipeline (Mainline/Distribution lines,Stations, DOT/PIP upgrades, Expansions, Repairs, Integrity projects, Anomaly Investigations, Double jointing) Contractors are transient and highly mobile working on multiple diameter cross-country projects traversing across multiple dealer territories for a limited timeframe (3-6 months domestically and 12-18 months internationally).

There is a small group of pipeline customers, who operate both nationally(home country) and internationally on short-duration construction projects with specific rentals requirements, unique specialty equipment (non-Cat) and traditional machines with special configuration (TTT w/ angle blades, winches). They demand global consistency in procurement and product support coverage; industry knowledge and responsiveness are highly valued.

Success in this industry lies in the targeted approach: having single accountability with a global critical mass to provide equipment with greatest efficiency, ability to provide total solutions to all customer needs, maximize price realization, and lowest cost of distribution.

ProjectsPipelines are the lifeblood of modern civilization, delivering oil, natural gas, water, or other products from the source to the point of where they are needed. Bringing energy and resources to the world.A pipeline construction project works much like a fast moving assembly line: it is broken into manageable lengths (spreads), constructed by a highly specialized pipeline contractor. As one crew completes its work, the next crew will move into position to complete its portion of the construction process. That’s why pipeliners need reliability and uptime or they start losing money. If you have a piece of equipment go down, it shuts other operations down. A pipeline construction spread may be 50 to 150 miles in length, with the front of the spread clearing and the back of the spread restoring to natural state. The contractors utilize Track-Type Tractors (D6R/T,D7R, D8R/T), Excavators (336DL, 345DL), Motor Graders (14M), and Pipelayers. A typical large diameter construction spread will require 60 machines valued at $30 Million per spread.



Governmental – Customer Profile

People Governmental customers are primarily elected officials for cities, townships, counties, state and federal governments. This group also includes Native American Tribes, special authorities (water districts, port authorities), not for profits (501C3) and public utilities. The governmental market in North America is a consistent, stable industry that does not fluctuate much from year to year. The Federal government along with Central and South America has larger fluctuations in purchases from year to year.

Observable behavior: Low Bid – many agencies feel that they are required to purchase products from the lowest bidder Life Cycle Costing – some agencies are starting to look at the total cost of owning and operating a machine and considering that cost

rather than just the initial purchase price Contract Purchasing – state and federal agencies tend to negotiate a contract for each year (or more) that employees can buy from.

Local governments have historically gone to bid, but are starting to purchase off of contracts because of a simplified purchasing process

Budget Cycles – agencies tend to purchase items either at the beginning or end of a budget year (use it or lose it philosophy with money)

Relationship Selling – Relationships are key in selling to counties. They tend to be longer term employees and are more likely to purchase based on past history or a total value message.

OperationsGovernmental operations cover a wide variety of tasks all that focus on public service. Local and State governments are responsible for everything from parks to landfills to highway construction and repair. Federal agencies require delivery around the world and machine typically have very specific modifications including armor.

To meet these varied requirements governmental customers require a wide variety of machines that encompass nearly all of the Caterpillar product line. Governmental customers are also looking at options to make their agencies more “green” and will look at recycling, hybrid cars and cleaner engines as a positive benefit



Marine – Customer Profile

Ocean Going• Long Hours/Distances – Economy vs. Speed• Economical Transport of Materials and Goods• Propulsion and Auxiliary Engines• Types

– Container Ships– Tankers– Ferries– Cruise Ships– Feeder Vessels

• Customer Requirements– Fuel Consumption– Reliability – Durability

Commercial• Revenue Generating Application• Variable operation / long hours• Propulsion and Auxiliary engines• Types:

– Tugs / Tows– Supply Boats– Fishing Boats– Government / Military

• Customer Requirements– Fuel Consumption– Reliability / Durability – Power Density (Speed)– Maintenance / Operating Costs

Pleasure Craft• End use is recreational• Highly visible segment• Propulsion and Auxiliary• Types:

– Powerboats– Sport Fishing– Custom Yachts

• Customer Requirements:– Power Density – Reliability – Speed



Petroleum – Customer Profile

• Well Servicing: Customers (either OEMs or end users) that use engines, transmission and packages for the Well Service Industry used to complete new wells or improve production from existing wells (completion, stimulation, cementing, fracturing, acidizing, nitrogen pumping, and blending). Also includes customers that use auxiliary power packs for the Well Service Industry. This includes items from the Industrial, Petroleum, and Marine price lists.

• Petroleum Gas Compression: Customers that purchase gas engines used to drive compressors for the recovery, gathering, processing, storage, and transmission of field gas, associated gas, or processed gas. All products that come from the Gas Industrial price list.

• Drilling: Customers use engines, transmission and packages used to drill oil, gas or geothermal wells (including emergency genset). This includes Petroleum, Industrial, EPG, and Marine price list products.

• Petroleum Production and Pumping: Customers use engines in the generation of mechanical and electrical power for exploration, recovery and transmission of petroleum products including gathering, production, pumping, and refining Applications include camp power, emergency gensets (non-drilling), prime power at production and storage facilities, cranes, fire pumps, air compressors, primary or secondary recovery systems such as down hold pumps, water flood or disposal systems, etc. This includes rental products which fit Petroleum Production/Pumping market segment description. This includes Industrial, Marine, and EPG price list products.



Agriculture – Customer Profile

AG OperationsAg ServicesCustom cleans chicken barns; Lives in Kentucky; Owns 2 TH, 4 SSL,and 6 trucks; son and five hired staff; cost of fuel, products and labor force him to get more barns cleaned faster; frustrated that Cat won’t custom build high capacity TH for him. Crop ProductionGrows 10,000 acres of corn in Indiana; Owns two Lexion combines, 6 Deere ag tractors, two planters and Bobcat SSL; brother and two hired staff help; relies on dealers for all equipment repairs and annual inspections, likes his Deere and Cat dealer but neither could/would sell him SSL, weather and commodity prices are his stress factors.Livestock Has 150,000 head beef feedlot in Dalhart, Texas; Owns 6 wheel loaders, 2 SSL, 1 BHL, generator for backup power and fleet of feed trucks;has 42 employees; high price of feed and fuel are taking away most profits; relies on dealer for all equipment repairs and loaner/rental if any problems; Mixed farming Has 7000 milking cows and 20,000 acres of alfalfa in Kansas: Two sons and 120 hired staff keep operation going; has 7 Cat WL, 13 Cat TH, 2 Deere SSL, 32 Cat engines; finding good labor, maintaining animal health and milk price keep stressed; uses Cat dealer for everything possible as he gets excellent services and is dealer branch largest customer in units and dollars.

People

Generally Ag customers have between 5 to 20 employees, and their geographic reach is basically local. The Ag customers are very loyal to local dealers, and relationship is key point for AG customers to be engaged with local dealers. In terms of buying patterns, AG customers tend to purchase or lease machines. Used equipment role is relevant to AG customers, as well new machines. The purchasing decisions are made at year end, and it is a very price sensitive market. The AG customers are driven by commodities prices for their output, and in they use future market indications to spread price risks.

Customer Classification and customer profile

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