CASE STUDY

USING SERVICES MARKETING TO DEVELOP

AND DELIVER INTEGRATED SOLUTIONS AT
CATERPILLAR IN LATIN AMERICA

Group Member Name Group Member ID

Sakib Rahman 41735029
Abu Md. Tariq 41735027
Nishat Hossain 41735012
Sinthya Binta Taher MPHIL Reg no: 109

Submitted to

Prof. Dr. Mubina Khondkar

Service Marketing

MKT 528

Section B

EMBA
 INTRODUCTION
History of Caterpillar

• Benjamin Holt tested the first track type tractor

1904

• C. L. Best Tractor Co. and the Holt Manufacturing

1925 company merged to form Caterpillar

• First overseas manufacturing facility in U.K

1951

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

2000 HP

• Total sales exceed $41 bn

2006
Products

Caterpillar provides a wide range of products used in many different industries. The majority of
machine applications address earth-moving needs including excavation, loading and carrying of
material.

• Motor Grader
• Skid loader
• Articulated truck
• Track type tractor
• Wheel loader
• Off highway truck
• Backhoe truck
• Hydraulic Excavator

Competitors

Type Service Offered Strengths Weaknesses

Third Party Service Management of Dealer network in Less Sophisticated
Providers like Fluor Caterpillar and Non- Latin America
Caterpillar Products. Successful
relationship
Aftermarket Well fit parts Lower Cost Quality
Suppliers
Customer having Repair of parts Customize offerings Not able to keep up
own machine with technical
process of Caterpillar
Local Workshop Repair of parts More acceptance Financial Reserves
(mainly previous
caterpillar dealers)
Competitive Almost everything Dealer network in Not Established
Manufacturers like that Caterpillar Latin America
Komatsu, John offers.
Deere,
Volvo
Plan

Bundle Customer Select three pilot

Service Dealerships in Latin Gaps Assessment
Find solutions to fill
Agreements(CSA’s) America(worth $1 with the three pilot
these Gaps.
along with the billion) and sell the Dealerships.
product. CSA’s.

Different Offering for different segment

Large Medium Small

Do it for me Do it with me Do it myself

Less customized with more

Highly customize with little emphasis on consultation,
Less customize with basic
standard service information dissemination,
standard
Flat monthly or yearly diagnosis , READILY available
Cost for operating hours service team and finance if
subscription
required fer Inspection CSA’s
Listening Gap

Listening Gap, is the difference between customer expectations of service and company understanding
of those expectations. A primary cause in many firms for not meeting customers' expectations is that the
firm lacks accurate understanding of exactly what those expectations are.

Service Design and Standard Gap

the service performance gap, which occurs when service is not performed according to the standards
set. It attempts to define the antecedents of the gap. service quality gap model: is a gap method
in service quality measurement, a tool that can be used by Product Manager across all industries. The
aim of this model is to: Identify the gaps between customer expectation and the actual services provided
at different stages of service delivery.
Performance Gap

The difference between the current situation and the intended situation. Performance gap analysis helps
a business identify how far it has come toward reaching its goals and how far it still needs to go to attain
them, with the objective of developing a concrete strategy to close any existing gap.

Communication Gap

Communication Gap is when the meaning intended by the speaker or sender is not what is understood
by the recipient. As stated above, there might be several reasons for communication gap between
employees.
Problem fitting to gap model

As result below issue found

• Promotion was focused on product not on service

• Absence of brochures or advertisement describing CSAs
• Tangibility issues
What else do you need to learn in the Listening Gap (Gap 1) about customer needs and
expectations? LACD had general information from the customer value surveys, but this
information did not tell them what service features customers expected in the CSAs. What
were they and how could they find out? In particular, how could they find out what they
needed to know to established standards in the Design and Standards Gap (Gap 2)?

Not knowing what customers expect is one of the root causes of now not handing over to
customer expectations. Hence it is truly necessary to examine and understand purchaser
expectations and gap between Company perceptions & patron expectations.

• Features of service which are important to customers

• What level of these features’ customer expect?
• What customers think the company can and should do when problems occur in service
delivery

From the case, we came to know some of general attributes of CSA and their respective
importance with respect to customers’ expectations. But it is not clear

• What aspect of responsiveness is the customer really looking for?

• Customer may ask for Caterpillar maintenance person within an hour but does he willing
to pay for the same

Best practices should constantly be adopted and extensive base throughout any company. The
case says that there are few clients at some dealers, who are really relaxed and loyal. This is the
cause that CSA renewal is a good deal higher at these customers. Moreover, the dealers have
also higher share of wallet in these customers. So instead of walking the challenge at entire
purchaser base it shall be better to run the venture at these chosen customers who can also
signify a unique section such as development or may also be from extraordinary section (such
as mining, construction, Agriculture).
These features and expectations and service design and standards can be found out through
following:

a. First of all, do a proper segmentation of these customer base

b. Create dialogue with these customers (segment wise) through dinner meetings or get-
together: As people used to share lot of information during dinner and drinks table

c. By organizing hotel seminars, meeting at various social gatherings: Dealer persons,

Regional Sales Manager can conduct seminar where people from dealer together with contact
points of customer shall be invited to have face to face interaction which later lead to
friendship and efficient flow of information

d. Developing personal relationship: Generally, people disclose and confide when they
trust the other person

Based on findings from these meetings some brief guidelines such as features of service,
standards and service scape expectations can be framed as follows:

1. Responsiveness:

• Fast action on receipt of complaint/Breakdown Machine

• Immediate availability of required spare parts & maintenance personnel
• Standards may be within 3 days m/c ready to resume work
• Attending of problem by CAT / Dealer person within 24 hrs

2. Reliability:

• Can perform right job at the first time itself

• Excellent quality of Product
• Trustworthy personnel who are able to do job as required
• Service available when needed

3. Assurance:

• M/C ready on time as promised

• Performs only necessary work
• Correct and genuine parts being used during maintenance

4. Relationship:
 • Courteous and friendly service
• Exchange of information frequently

5. Tangibles:

• Response in mail
• Fliers & brochures
• Proper documentation of job performed with spares used
• Demonstration life calculation sheets of spare parts of equipment such as Pumps,
Compressors, Valves, seals, actuators etc.

These standards and elements may additionally put in hierarchy manner primarily based on
Importance for client and willingness to pay for value and can be considered as actionable
points. Based on the outcome, the entire blueprint & provider scape want to debated and
brainstormed amongst all stake holders earlier than implementation. This type of market
lookup workout wants to be repeated every 3/5 years to make the provider scape in demand as
per market dynamics.

Should they offer different CSAs to the different segments of general construction? What
would that imply for research, standards, and implementation?

Different segments may have distinctive needs and shopping for power. Customer carrier
settlement CSA be aligned to their needs, requirement and spending pocket. CSA have to
furnish price to purchaser as well as earn profitability for the company. Hence CAT must offer
distinctive CSA to the extraordinary segments of customers.

• Equipment are used in various segments

• Some customers buy equipment together with service agreement

• Service agreement takes care regarding refurbishment of equipment and maintaining

the uptime and productivity

• It also emphasis on having equipment for 100% of the time

• Customer pay for CSA and repair services to achieve these goals
• Customer who buy complex and sophisticated equipment such as Long wall, Continuous
miners and construction equipment would like to go ahead with CSA

• Customer who buy general equipment would like to carry maintenance by their own

• These customers do not value for uptime and productivity too much

• There are some customers who operate internationally whereas CAT has regional
dealers, these customers require or need a single contact point regarding CSAs. Moreover,
customer want to have a single stop service agency which can service their entire fleet of
equipment whether be CAT, Komatsu, Volvo, etc.

• Some customer also buy will fit component on the basis of lower cost and ready to
compromise on quality

• Some customers have old and traditional fleet of equipment which can be serviced
through normal and general tools and techniques and hence go for local workshop

These five principles need to be adopted during research of service

User- centered: Services should be experienced and designed through the customer’s eyes

Co-creative: All stakeholders should be included in the service design process

Sequencing: A service should be visualized as a sequence of interrelated actions

Evidencing: Intangible services should be visualized in terms of physical artifacts

Holistic: The entire environment of a service should be considered

Moreover, the above information suggest that research should imply for

a. What is different type of customer in general construction industries

b. How can they be sub segmented further based on their needs and requirements?
c. Involve key Front-line people catering to larger accounts and customer contact persons
in new service development aligned with CAT vision, mission statement and growth plan
i. What type of service they require with the product?
ii. Do they just require service of oil and filter checking at required time interval or
detailed service whenever needed?
iii. Do they really give importance to uptime and productivity of machine?
iv. Are they willing to pay for the service?
d. These shall help in framing of Service product portfolio & organization structure
implementing new service development
 GENERAL
CONSTRUCTION

Value uptime &

productivity Low cost segment Do it ourselves/
Old & traditional yourselves
willing to pay
equipment General equipment
Sophisticated equipment

e. Based on the above table, research, brain storming need to be conducted to generate a
new idea to cater to the needs of all segments, expansion of existing services with
modification and development of new service model as well as probable ways to go
diversification
f. Based on the same Idea generated, it shall be regarded a good fit then service concept
needs to be developed considering the point that what concept is and what customer
need it is filling through multiple iterations and discussion. With proper concept definition,
a description of service that represents specific characteristics need to be prepared
g. These service concept need to be discussed with probable customers and front-end
employees for their response with clear rationale
h. Assuming service concept is been evaluated by customers and employees then we need
to decide regarding economic feasibility and potential profit implications. Demand
analysis, operation feasibility, revenue projections and cost analyses are assessed at this
stage. Concept need to pass profitability and feasibility screening
i. Once it passes all these hurdles it is ready for implementation. Now a prototype service
product needs to be created and tested for customer acceptance. All stakeholders need
to be involved so that the service concept can be refined to the point at which a detailed
service blueprint illustrating customer experience and the implementation plan for the
service can be produced
j. Now, the complete commercialization process needs to be reviewed and subsequently
changes need to be made considering delivery process, staffing and marketing mix
variables on the basis of actual market dynamics.
What standards and measures should be set in the Design and Standards Gap (Gap 2) to deliver
to customer expectations? How formal should they be? How should LACD create and design
the new CSAs? How should they get everyone in the dealerships to learn about them and get
on board to deliver them?

The standards and measures which should be set in the design and standards Gap to deliver to
customer expectations are

 Standard CSA – defined process, terms and conditions. It should be part of performance
evaluation for dealership and its employees.
 Focus on speed and response time on the basis of customer delights points collected after
research, create service Blueprint
 Very formal since it will give competitive edge

The standards should be both hard and soft:

Hard Standards such as:

• Attending of customer service requirement within 24 hrs.

• Machines should be ready for use within 3 days max
• Responsiveness to complaints call within 24 hrs.
• Intimation and confirmation through email of complaint login no to customer within 2
hrs. of receipt of complaint call
• Delivery of required spares within 2 working days at the site

These can be measured through following:

1. Ship to target: % of orders delivered on time with complete accuracy

2. On Time first time fix: % of problems related to maintenance of equipment fixed on the
first visit by a service representative arriving at the time promised
By following steps, we can get everyone in the dealerships to learn about them and also get
on board to deliver them:

 Service/sales expert - KRA

  Formal training
 Mentoring
 Using technology – tools like CRM - Standardized and customized reports
 Empowering technicians
 Internal communication channel like extranet, portals
 Fixed targets for team
 Dedicated team and equipment

How should the dealerships overcome all the Performance Gap (Gap 3) issues that they faced
in order to insure consistent delivery?

Customer Driven Service design & Standards

•Shortage of trained employee/technicians

Deficiencies in human •Attention not given to their interaction or communication skills
resources policies •Performance monitoring of technicians varied from dealer to dealer
• No formal forum for communication b/w inter department personnel

Customer who do not fulfill •Customer not providing position of vehicle during service requirement
roles •Customer forget to inform dealer about machine reaching service interval

• Lack of communication among parts , service and sales department

Failure to match supply and • Not having reliable system for keeping track of machines routine inspection
demand • Absence of effective communication b/w customers & dealers employee
•Shortage of trained employess in peak season and vice versa
Problems with
intermediaries &channels Not having reliable system for keeping track of machines routine inspection

Services Delivery

Cat HR policy should be framed in connection with

• training, learning and development of Dealer’s employees
• training should stress on presentation, Soft skills, report writing and effective
communication
 • A formal forum for communication between parts, service and sales personnel needs to
be created where they can exchange their experience and best practices w.r.t customers
• Robust software technique should be devised which will tell, when the customer’s
equipment is in need of services
• Timely logging of service call and reminder or intimation before this time
• Tie up with technical institutes like Technological university or college or training
institution
• Cross training
• Performance appraisals - mandatory training of soft skills, variable pays
• Meetings of different HODs daily for better understanding of problems and
communication
• CRM, Scheduling of resources should be done accordingly, daily reports which tell about
• Customer care center should be developed on each dealership
• Introducing shift system in dealerships during peak months

What internal and external materials were necessary to communicate the CSAs to salespeople
and customers? What else would be needed?

The case says that there is absence of wonderful Sales tools in connection with CSAs. CAT
employees are segmented in such a way that Sales Personnel does no longer promote CSAs
neither they reap incentive with its sales. CSAs are very custom-made and their offering vary from
customer to customer. Hence due to lack of proper know-how of CSAs, personnel and sellers
used to do over promise or below promise. The internal and external materials necessary are as
follows:

1. Service Circulars – with the servicemen, dealers, etc.

2. Service Manuals – these contain the complete info about the machine and how to operate
or service it.
3. Brochures
4. Training Modules – regular training sessions on and off line.
5. Dedicated self-service websites.
6. Service camps.
7. Monthly Customer meets.
8. Internal web portals giving product info.