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Using Services marketing to develop and deliver Integrated Solutions at Caterpillar in Latin America

Presented By

Sudhir Mishra (043055)

Puneet Jain (043039) Irshad Ali (043027)

Arpan Sengupta (043014) Chetan Sharma (043017)


Benjamin Holt tested the first track type tractor.

C. L. Best Tractor Co. and the Holt Manufacturing company merged to form Caterpillar. 1925

First overseas manufacturing facility in U.K.

300 different model starting from 5 HP to 22,000 HP. 2000


Total sales exceed $41 bn.

Distribution Structure
1 2 3 4

Marketing Profit Centre Dealers Customers

Customer Segmentation
Products and Industries Product Support

Large Small

Do it myself Work with me Do it for me

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 mar

Type Service Offered Strengths Weakness

Third Party Service Providers like Fluor

Aftermarket Suppliers Customers having own mechanics.

Management of Caterpillar and Non- Caterpillar Products.

Will fit parts.

Dealer network in Latin America Successful relationship

Lower Costs

Less Sophisticated

Quality Not able to keep up with technical prowess of Caterpillar Financial Reserves

Repairs of parts. Customize offerings

Local Workshop Repairs of parts. More (mainly previous acceptance caterpillar dealers)

Competitive Manufacturers like Komatsu, John

Almost everything that Caterpillar offers.

Dealer network in Latin America

Not established

Porters five forces models.

1. High Product Quality 2. Good dealer relationship. 3. Holds large portion of market share(53%)

1. Poor Segmentation 2. No after sale service 3. Less control over distribution network. 4. CSA agreement not promoted properly

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

1. Threat of Competitors 2. Threat of substitutes.

Jim Owens

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

Listening Gap

Companys Understanding of Customer Expectation Inadequate Research Lack of Upward Communication Insufficient Relationship Focus Inadequate Service Recovery

Partially Designed

Sporadically Performed

No post interaction customer survey

Interaction b/w Management & Customer No Segmentation

Identifying the benefits and attributes that customer expects

Structured Brainstorming

Requirements Research

Generalizable across Industries

What customer wants?

Trailer Call and Post Transaction Survey

Better than compliant solicitation

Short list of questions Capture information about key service encounters

Dual BenefitMarket Research Tool and Customer Service

Relationship and SERVQUAL surveys

Determine the Average Score Gap Assess along the 5 dimensions Compare SERVQUAL score of Competitors Access 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

The Customer Pyramid

Segment: Spend more Less cost to maintain +ve word to mouth

Customer having Customer Service Agreement (CSA) for years





Segment: Cost More-Effort, Money Less Return

Do It Myself


Do It For Me

Importance/Performance Matrix

Responsiveness Relationship


Reliability Assurance


Limited Action



Attribute Performance

Hig h

Action plan

Regional Distribution Services Divisions Customer care Quarry and waste




Excavatio n Earthmoving Building Construction Products

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

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 Questionnaire 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?

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

Referred to others or not Service provide adequate or not Customer Satisfaction Service they would like to avail? Any frequently occurring problem? Comparison with other companys services(if they are owning a different brand of tractors)

Product 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 CSAs to the different segments?

General Construction Companies Large Medium Small

Do it for me
Highly Customized with little standard services

Do it with me
Less customized + Basic standard services

Do it myself
Less customized with more emphasis on consultation, information dissemination, diagnosis , READILY available service team and finance if required + Offer Inspection CSAs so that client can compare himself if he needs service.

Flat Monthly/Yearly subscription

Cost for the type of service performed or Operating hours

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

The Service designs and standar ds gap

Customer Driven Standards

Promised but expectations not met Operationally focused not customer driven
Customer Interact with sales people what to offer and what to deliver Contries: Culture, law, structure

Inadequate physical evidence and service escape

Issues brought ahead

Creation of CSAs 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
Empathize Human Voice Etiquettes

Soft standard and soft measurement

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

Building a Service Blueprint It should be adhered to strictly.


Create and design new CSAs

Idea Generation

Service concept and evaluation Business analysis

Service prototype development and testing Market testing Commercialization Post introduction Evaluation

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.


Deficiency in human resource policies


Failure to match supply and demand Customers not fulfilling roles Problems with services intermediary


Gaps Identified

Lack of qualified mechanics Fewer resources to find them No proper attention on interaction and communication skills Lack of team work: silo based approach Formal ways to communicate did not exist Reliable system not available to dealers Scheduling process was complex Customers contributed to gap: moderately Supply demand mismatch Unattractive presentation of CSA to customers

Service Performance Gap

Deficiencies in HR Policies
Lack of qualified mechanics Fewer resources to find them No proper attention on interaction and communication skills Lack of team work

Customer Role

No proper details provided by customers No details about service interval provided

No reliable system to track services Scheduling process was cumbersome

Service Intermediaries

Failure to match supply & Demand

Supply demand mismatch Technical shortage During peak times Short notices

Suggestion to fill gaps

Employees role

Interactive marketing Delivering the promise Providers Customers

Internal marketing (Enabling the promise)

External marketing (making the promise)

Company (caterpillar)

Improving customer roles

Define Customer Roles Effective Customer participatio n

Educate and reward customers

Manage the customer Mix

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.

Service Delivery

Lack of integrated service mkt communication


Inefficient management of customer expectation

Over promising Inadequate horizontal communication

External Communication to customers

Gaps Identified

Promotion was focused on product not on service Absence of brochures or advertisement describing CSAs. Tangibility issues No clear definition of different CSAs Absence 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

Internal and external material to

communicate and operate CSAs

1. Specialized training programs for salesperson. 2. Brochures 3. Training Modules regular training sessions on and 4. 5.


off line. Dealers(successful) may be involved. Dedicated self service websites. Service camps. Monthly Customer meets. Organization of exhibition fairs to educate the customer about new features and products.

If we stay focused on making sure we have a great value equation for the customer, we can go through cycles and still compete and be successful.