Caterpillar Dealer Identity: Customer Loyalty and an Extraordinary Partnership

Caterpillar is an organization that has fine-tuned its brand and knows its value in the marketplace. The dilemma is giving that value and the associated relationships with customers a dear presence across an international network of independent dealers. Martin Gierke probes the issues surrounding this problem and describes what Caterpillar is doing to partner the corporate brand effectively with the companies that actually sell and service its products.

A relatively small number of events in 2004 quietly marked a significant milestone for Caterpillar Inc. -the 100th anniversary of the technology that led to the formation of the company. The story of Caterpillar dates back to the late nineteenth century, when Daniel Best and Benjamin Holt each experimented with ways to fulfill the promise steam tractors held for farming. Prior to the merger that formed Caterpillar Tractor Co. in 1925, The Holt Manufacturing Company and C.L. Best Tractor Co. had individually pioneered gasoline-powered track-type tractors (Figures 1,2, and 3).

In 1931, Caterpillar created a separate engine sales group to market diesel engines to other original equipment manufacturers. This group was replaced in 1953 with a sales and marketing division to better serve the needs of a broad range of engine customers. Today, Caterpillar is a leading player in the diesel engine and power generation markets. Engine sales now account for approximately one-third of the company's total sales and revenues. Cat engines power everything from onhighway trucks, buses, ships, pleasure boats, and locomotives to earth-moving, construction, and material-handling equipment. Through generating systems, Cat engines supply power to areas inaccessible to utility power grids, including off-shore oil drilling rigs, remote mines, and isolated communities. Cat generator sets provide emergency power to hospitals, schools, factories, office buildings, and airports. Caterpillar is also the leading supplier of industrial gas turbines through its subsidiary, Solar Turbines Inc., which was purchased in 1981. In 1963, Caterpillar and Mitsubishi Heavy Industries Ltd. formed one of the first joint ventures in Japan to include US ownership. Caterpillar Mitsubishi Ltd. started production in 1965 in a new facility at Sagamihara, 28 miles southwest of Tokyo. Renamed Shin Caterpillar Mitsubishi Ltd. in 1987 to reflect an expansion of the original agreement, the joint venture today is the number-two maker of construction and mining equipment in Japan. In early 2003, Shin Caterpillar Mitsubishi announced plans to expand into the Asian region.

Following a boom period in the 1970s, the worldwide recession of the early 1980s forced Caterpillar to look at long-term changes to lessen the adverse impact of future economic downturns. Among the changes was a $1.8 billion facility modernization program launched in 1987 to streamline the manufacturing process. Caterpillar also diversified the product line to meet a greater variety of customer needs and to reduce sensitivity to economic cycles.

To better focus on critical product and service areas, Caterpillar made several organizational changes during the 1980s. In 1983, Caterpillar Leasing Company was expanded to offer equipment financing options to its customers worldwide and was renamed Caterpillar Financial Services Corporation. The Caterpillar Tractor Co. changed its name in 1986 to Caterpillar Inc.-a more accurate reflection of the enterprise's growing diversity. In 1990, Caterpillar reorganized into business units, with each accountable for its own results. The company continues to fine-tune the organization, which today includes more than 25 business units.

Caterpillar products are manufactured in 50 US facilities and in 65 other locations, including Australia, Belgium, Brazil, Canada, China, England, France, Germany, Hungary, India, Indonesia, Ireland, Italy, Japan, Malaysia, Mexico, The Netherlands, Nigeria, Northern Ireland, Poland, Russia and South Africa. In addition to manufacturing, customers around the globe are served by worldwide Caterpillar facilities focused on marketing, research and design, financial products, and training.

Caterpillar is well known for its product support capability, and an extensive network ensures that Cat dealers are able to deliver parts when and where they are needed. A manufacturing and transportation logistics network supports the needs of internal Caterpillar customers, while Caterpillar Logistics Services Inc. builds on the global distribution expertise of the parent company to provide customized distribution solutions for nearly 50 external clients. Cat Logistics operates more than 95 offices and facilities in 25 countries on six continents.