Cat - Make Dealer Your Partners

8009 Words33 Pages
With its strong network of dealers, Caterpillar designs better products and provides superior customer service. Make Your Dealers Your Partners by Donald V. Fites A decade ago, many observers predicted that Caterpillar would join the long list of U.S. corporations that had fallen to the Japanese. Doomsayers on Wall Street, at business schools, and in the press focused particularly on the rivalry between Caterpillar and Komatsu. With Komatsu boasting tremendous eost advantages (as much as 40% in some product lines) and excellent produets, they accepted as a foregone conclusion that Komatsu would fulfill its vow to "encircle Cat" and become the dominant producer in our industry. Uke many predictions, this one fell short.…show more content…
DRAWINGS BY MICHAEL WIHE But the biggest reason for Caterpillar's success has been our system of distribution and product support and the close customer relationships it fosters. Don't get me wrong: We think we are hetter engineers and manufacturers than our eompetitors. But we are convinced that our single greatest advantage over our competition was and still is our system of distrihution and product support. The backbone of that system is our 186 independent dealers around the world who sell and service our machines and diesel engines. They have played a pivotal role in helping us build and maintain close relationships with customers and gain insights into how we ean improve our products and services to better fill customers' needs. Many features of Caterpillar's distribution system are tailored to meet the unique characteristics of our industry. Eor instance, our industry's sales volume is relatively low: Global sales of earthmoving equipment average 200,000 to 300,000 units per HARVARD BUSINESS REVIEW March April 1996 year. A relatively small number of dealers sell those machines. Even though we might customize some features, sueh as the operator's cab or the paint job, the same standard product can be sold throughout the world. The machines are expensive, but they stay in service for 10 to 12 years on average; many operate for 20 to 30 years. And finally, because these products operate in extremely tough environments, even the

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