Service Logic Marketing - Komatsu & Caterpillar Case

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Service Logic Marketing - Komatsu & Caterpillar Case

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Themes

Marketing, Komatsu, Caterpillar, construction, MPC Marketing Profit Center, service logic, communication, teamwork, Pepe Brousset, CSA Customer Service Agreement, heavy machinery,

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Abstract

Despite the global competition, the American construction machinery company, Caterpillar, is still the leader today, partly thanks to the quality of its machines. However, to cope with growing competition, quality, producing a defect-free product or service right from the beginning is not enough to stand out. Because the company could not distinguish itself by prices, it had to find another solution: producing a value proposition that customers need and want. Fortunately, very early on, Caterpillar changed its strategy from product-oriented to service-oriented. Although this change is a success, it also has its limits in a world where territories have very heterogeneous markets. It is therefore necessary to re-design the Caterpillar business model by going further in the adoption of a service logic.

Background and Problem Identification
From Caterpillar to Dealers
From Dealers to Customers
Implications
Conclusion

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[...] Implications These two suggestions would also bring new challenges to Caterpillar. This would make it more difficult to centralize information because opening new MPCs also means more intermediaries between the customer and Caterpillar headquarters. To avoid scattering, it is necessary for each actor to dialogue and trust each other. The solution to this challenge could be found in the creation of an integrated whole. The answer could be a "relatively self-contained, self-regulating system of resource-integrating actors connected by shared institutional arrangements and mutual value creation through service exchange." Vargo & Lusch (2016). [...]

[...] Service Logic Marketing - Komatsu & Caterpillar Case Background and Problem Identification Despite the global competition, the American construction machinery company, Caterpillar, is still the leader today, partly thanks to the quality of its machines. However, to cope with growing competition, quality, producing a defect-free product or service right from the beginning (Gummesson, 2007) is not enough to stand out. Because the company could not distinguish itself by prices, it had to find another solution: producing a value proposition that customers need and want (Gummesson, 2007). [...]

[...] To best meet the demands of customers, it is therefore necessary for Caterpillar to adapt to each market. To do this, the company would have to implement MPCs in each country. The proximity between the dealers and the MPC is all the more important as it will create a relationship of trust between all the actors. Indeed, the SDL emphasizes the importance of relationships between actors and in particular the importance of dialogue and trust between them. According to Grönroos (2017), "Many managers do not understand that the quality of the relationships is based on trust." To sum up, one of Caterpillar's strengths is its long, trusting relationships with many dealers. [...]

[...] Thus, thinking in terms of ecosystem will make up for the lack of teamwork and communication. References Akaka, Melissa. A. and Stephen L. Vargo (2015)."Extending the context of service: from encounters to ecosystems," Journal of Services Marketing, 453-462. Grönroos, Christian (2017). "On value and value creation in service: a management perspective," Journal of Creating Value, 125-141. Gummesson, Evert (2007). "Exit services marketing-enter service marketing," Journal of Customer Behaviour, 113-141. Lusch, Robert F. [...]

[...] However, the impossibility of implementing this system in Latin America has raised questions. Moreover, Caterpillar's competitors also offer similar after-sales services to their customers. As a result, the CSA strategy is no longer sufficient and inadequate for all markets. So, the question is, what improvements does the CSA strategy needs to make it suitable for all markets and to make Caterpillar stand out from the competition and thus increase its profits? The following paragraphs will explain the suggestions (the opportunities and risks they provide) proposed to Pepe Brousset and LACD to redesign the Caterpillar business model according to the service logic. [...]

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