Ch. 7 - Business Marketing

CAT INC. sells business products; because their products/machines are built for construction purposes they can't be considered consumer products. CAT INC. produces major equipment such as large/expensive machines, and generators. CAT INC. uses business-to-business electronic commerce to communicate with their customers/potential customers (big businesses/organizations) by providing information on their products through their homepage. Given that CAT INC.'s information about their products are all on their website the stickiness is  good. The amount of time people spend on their website is relatively high given the amount of information there, and about the only time people leave the website is to look for reviews or etc. that can't be found on their website.

CAT INC. products can be considered processed materials. Some businesses/organizations use CAT INC. products/machinery to aid with the production process although they aren't incorporated into the actual product(s) itself, just the process. An example would be the use of the BRODERSON | IC-25 crane truck in some businesses/organizations.

Two items typically found in a joint demand for CAT INC. are the actual product/machine and the CAT Financial service that comes along with the purchase.

CAT INC. products/machines aren't only used by big businesses/organizations to expand their practices (buildings/sectors/etc.) but also to collect raw materials such as coal, metals, and so on.

Ch. 8 - Segmenting and Targeting Markets

Because this chapter talks a lot about types of market segmentation this blog post may be a little shorter solely because of CAT INC.'S industry.

CAT INC.'s target market/market segment revolves around small contractors, big organizations, and construction companies. CAT INC. practices geographic segmentation in areas where there are large amounts of natural resources (coal, metals, etc.) like China. Depending on the regional market of the world/country CAT INC. may have more or less institutions/buildings there. For example, compared to China, England does not have as many coal mines so the marketing practices there will reflect upon that.

As discussed in a earlier blog post, because CAT INC.'s machinery costs more than their competitors machines they are usually viewed as a last resort by people wishing to save money, aka optimizers. The position CAT INC. has in their market is that of #1 due to their product differentiation and services.

Ch. 11 - Developing and Managing Products

CAT INC. does not introduce as many new products as other industries but rather modifications/differentiations of their pre-existing machinery/trucks/etc., or in other words, different models. Most of CAT INC.'s idea generation comes from their customers and consultants because they know more about the actual use and practice of machinery in a construction environment, meaning they know first hand what is missing and what would make things easier for x, y, and z.

During the business analysis stage CAT INC. figures out the demand, cost, sales, and profitability for the new idea, which in most cases are rather simple. Given the costs of normal machinery/trucks/products of their industry, new ideas will most likely profit. The profitability of new ideas within CAT INC. and their industry depends on the demand of said new idea(s). Many factors such as the economy, and economic trends, decide the success or failure of new ideas.

During the development stage, CAT INC. creates computer models to validate the design and concept of new ideas. Using computer models before creating the actual prototype helps the product development team(s) identify any issues in the early stages of design.

After the development stage CAT INC. usually unveils their prototypes/new ideas to the public through test marketing with conventions, company mixers, and etc.. When their prototype/new idea is unveiled they are able to gather new incite and suggestions from the public/customers which helps them make additional changes and tweaks, improving the overall design.

Ch. 16 - Promotional Planning for Competitive Advantage

Most of this chapter doesn't apply much to CAT INC. because their industry doesn't follow these practices.

Like I've discussed countless times before in previous blog posts, although CAT INC. is the best in their industry they don't use as much practices as other businesses/companies to put themselves out, this is because the nature of their industry address's this differently than the typical business/company.

Most of the time where there is interpersonal communication between CAT INC. and their target market is when they're holding a convention/meeting/mixer where there are some models/machines along with a presentation about the company and/or the models/machines present. The two main ways in which CAT INC. receives feedback is during these conventions/meetings/mixers as well as through routine check-ups on machines purchased by customers.

When public information about CAT INC. appears in the mass media as a news item it is usually through their company website, http://www.caterpillar.com/, where all their company information is available to the general public. Their public information may also appear time to time in newspapers or editorials when they receive rewards/certificates for outstanding practices or etc.. Other than these two channels there isn't much communication through mass media.

Ch. 10 - Product Concepts

One could say CAT INC. sells both business products (industrial products) and consumer products, however it really depends on the pretext in which it is viewed. Although CAT INC.'s customers are usually big businesses/organizations it doesn't mean that individuals purchase or rent out their machines as well. Because CAT INC. machines and services are more expensive than their competitors, to a certain degree, they are also viewed as heterogeneous shopping products. CAT INC. machines being recognized universally for their outstanding performance are viewed as heterogeneous shopping products because what their machines do can't be imitated  by others. CAT INC. has various product lines with varying differences. For example, CAT INC. may have various models for a certain truck or excavator but in the end the structures of each of them are pretty much identical with few to many distinguishing features (aka product modification). And like I've discussed in previous blog posts, when a CAT INC. machine/product is purchased they receive monthly check ups on the machine/product which is a variation of a warranty.

Every machine that CAT INC. produces has engines in them, and because they have engines in them they use greenwashing to a certain extent to increase sales as well as their image. Although CAT INC. doesn't boast about their technological advances in green marketing they do put it out in the open in annual reports and on their websites.

Ch. 18 - Sales Promotion and Personal Selling

Because CAT INC. doesn't rely entirely on the promotion/putting out of their services/products, they aren't as obligated as other companies/organizations to practice it.

CAT INC. focuses on three types of buyers; loyal customers, competitor's customers, and brand switchers. CAT INC. focuses on these types of buyers because of various factors, everyone of them being specific to their corresponding group.

Loyal Customers
Recognized as #1 in their industry, CAT INC. holds dear to their customers. The industry in which CAT INC. operates requires each and every corporation/organization to encourage, provide, and appeal to customers, all while meeting organizational goals. As discussed in previous blog posts, because CAT INC. is #1 in their industry, their pricing and services are expected to be the same, meaning that they're viewed as a last resort among some/most customers. In order to live up to the expectations brought upon the company/organization, CAT INC. must provide accordingly. When you purchase a CAT INC. machine or vehicle you will always be offered a premium; the premium given to you are certain services derived from their Financial sector which provides frequent checkups on the machine(s)/vehicle(s) you've purchased along with special payment plans and other benefits (loyalty marketing program and/or relationship selling).

Competitor's Customers and Brand Switchers
Like I've discussed in the previous blog post, Ch. 17, various types of advertisements exist in CAT INC. in order to increase sales and customers. Although CAT INC. is the best in their industry they still occasionally have to influence/persuade others into purchasing their products. One way in which CAT INC. helps with the transition of another product to theirs is by showing the potential customer(s) the capabilities of their product(s) firsthand (aka sampling), point-of-purchase display, and other practices.

Ch. 17 - Advertising and Public Relations

CAT INC.'s promotion/advertising doesn't occur much in their Machinery sector but more in their Financial sector. Big businesses/organizations don't usually have promotion sales because their income relies entirely on the sale and pricing of their products, but because CAT INC. isn't confined to one area of business (three sectors) they have more flexibility to use any practices required to keep themselves at the top of their industry.

CAT INC. focuses on two advertising practices; product advertising, and sometimes comparative advertising. Like any other business/organization product advertisement plays a important role. If you were to throw out a new product out of nowhere without describing the purpose of it, then the product would just sit there in the open and rot. CAT INC. rarely practices product advertisement because of their industry standing, however it doesn't mean that they are bad at it, merely that they don't have to rely on it as much as other businesses/organizations. An example of when CAT INC. practiced product advertisement would be the Brazilian quarry market, 2010. I've discussed this before in Ch. 2 - Strategic Planning for Competitive Advantage, but for those who haven't read it here is a recap. In 2010 CAT INC. noticed that they had a lack of sales in the Brazilian quarry market and later found out that it was because they were purchasing Brazilian company trucks which costed half the price of their trucks. CAT INC. then came up with a plan to increase sales in the Brazilian quarry market by demonstrating the capabilities of their trucks backed up with supporting data and so on. They also communicated with the quarry market the benefits of purchasing/using CAT INC. trucks compared to the Brazilian company trucks (CAT Financial sector, etc.). Product advertisement occurred when CAT INC. devised a plan to increase their sales and image in the Brazilian quarry market because they were publicizing/promoting their trucks.  Comparative advertisement was present as well because there was comparison amongst the trucks, Caterpillar and Brazilian.

Competitive advertisement isn't practiced as much in CAT INC. compared to other businesses/organizations because they are at the top of their industry with a great lead amongst their competitors. Like I've discussed in Ch. 6 - Consumer Decision Making, CAT INC. machines are viewed by businesses/organizations as a last resort because of pricing and other factors. The last resort itself is a form competitive advertisement. When someone compares or makes a derogatory statement about a product such as "x is better than this product because of y", or "why am I having this problem with x, I've never had this problem before with y", that is where competitive advertisement exists. This can't be said for every business/organization out there, but this is how it works for CAT INC..

Public relations/product placement is practiced with ease for CAT INC. because of their overwhelming amount of publicity and awards. All CAT INC. has to do in order to increase their public relations/product placement is to attend their award ceremony/party or etc., and just accept said award; simple as that. Most of CAT INC.'s awards are all the same, which is for Superior Quality Excellence Process, but even that alone helps them increase their public relations/product placement because it shows that they're doing something right. Another award that is usually given to CAT INC. is for Green Technology/Practices if I'm correct, and that to helps increase their public relations/product placement because it gives off a good image/feel to others, showing that they're reliable.

Ch. 15 - Retailing

Place visited: McDonalds

McDonalds being a franchise, offers almost the same product and services as any other McDonalds all depending on their location. For example, the way one product or service is practiced in one McDonalds may be different than others because of regional differences. Boasting a whopping 33,000+ restaurants around the world in 118 countries, McDonalds is one of the leading franchises. Being a restaurant type franchise, McDonalds doesn't use many retailing practices and relies solely on commercials and other picture orientated advertisements/retailing to help persuade people to buy the product. Along with most McDonald advertisements/retailing they usually talk about the prices being low and tend to over-exaggerate things when in reality the product you get is nothing like the pictures portrayed in the advertisement/retailing.

Although McDonalds does tend to disappoint people/customers when new products are released (mostly the burgers), they do have a good enough retailing mix to keep them coming back. Promotion of their products is a very important role to McDonalds because it will determine whether or not that product will sell or not. If they introduced a new product without promoting it beforehand then no one would know that such a product even existed. Along with promotion comes presentation and pricing. Like I discussed earlier, McDonalds relies heavily on picture orientated advertisements/retailing which are meant to give off a "delicious" or "worth the money" image. If all of McDonald's burgers were shown in their advertisements/retailing as the way they "really are/look like" then they would most definitely see a drop in sales because they don't give off much appeal. Same thing can be said about the pricing; if a product sells for $5, then by all means it better be worth $5. Lets use an example; the double cheeseburger:

What the product really looks like

What the product looks like in their advertisment

Because the double cheeseburger practically replaced the regular cheeseburger on the dollar menu (roughly $1.20 at most McDonalds), people don't care about the appearance of the product, they mostly care about the price. If the double cheeseburger wasn't on the dollar menu and costed lets say $3.00 instead of $1.00, the burger might actually still sell, however that would only happen if the product "looked the same as it did in the advertisement". If the double cheeseburger didn't sell for $3.00 McDonalds wouldn't be in much trouble because of the wide variety and mix of products being offered to the customers/consumers (diversity). Atmosphere also plays a important role in day to day McDonalds operations because it influences the mood of customers and employees. Ask yourself "would I want to sit down and eat here again if I had a choice?", if you answer yes then that means that particular venue (it can be any restaurant or etc.) has a good atmosphere. If a McDonalds looked like a run down restaurant with dust, cobwebs, and etc., it would give off a bad impression and vice versa. If a McDonalds restaurant looked classy, clean, and sophisticated, then it would give off a good impression which in turn would bring in more re-occurring customers.

Ch. 6 - Consumer Decision Making

Recognition

CAT INC. is recognized as #1 in their industry, providing not only machinery but diversified plans and services to back it up. Usually when big companies or organizations construct new buildings/firms they use Caterpillar machinery, which shows that their machines are very dependable and worth the investment/money. Of course not every company or organization may use Caterpillar, maybe to save money or some other reason, but CAT INC.'s machinery are viewed by those companies and/or organizations as a last resort.

Certificate of Supplier Quality Excellence Process

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Information Search, Evaluation of Alternatives, and Purchase

Recognition and Information Search goes hand in hand because they both rely on each other. When a company, organization, or individual wishes to purchase a CAT INC. machine they usually do research beforehand to determine whether or not the machine/product is for them which brings up a important question, "Is this something that I want or is this the something that I need?"  When you research a product online (it can be any product) you will most likely find a evaluation page or something similar to it where people rate the product(s). People who have previously bought or used said product will give their review on it for others to see, it can be good or bad depending on the product. Good reviews/ratings will provide the company, organization, or individual who is researching a product more incentive to make a purchase because it has been given the appraisal of others; also vice versa, if the product has bad reviews/rating then they will have less incentive to make a purchase because it has been judged as a horrible product by others.

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Post Purchase Behavior

Because CAT INC. is at the top of their industry, they always meet or exceed customer expectations. When customer expectations are met they will be more prone to give good reviews for the product as well as the brand which will in turn boost incentive for others to purchase goods from CAT INC..

Ch. 5 - Developing a Global Vision

Because CAT INC. has a great global vision, they excel in their industry (#1 in their industry). Many people think that CAT INC. only operates within the United States but the truth is they operate anywhere there are big businesses and corporations; of course with some exceptions such as North Korea or any other country outside of the general jurisdiction. CAT INC. has various firms stationed in other big countries such as China and the United Kingdom showing that their machinery is wanted and needed; they also export their goods to other countries who order through the internet. A positive note to CAT INC. would be that because their business operates all around the world they're deeply connected to various markets, domestic and international markets. On the downside because their business is spread throughout the world their source of income, marketing strategies, and other activities tend to fluctuate depending on various factors. Example; a country where one of CAT INC.'s firms are stationed has experienced economic problems and because of it big businesses and corporations would stop growing. Because of the country's economic problems CAT INC. would be negatively affected and would have to change their course of actions in order to stabilize the situation. Even though CAT INC. is affected by many factors worldwide it helps them grow as a business/company specifically through trial and error. Whenever they are faced with a problem concerning one of their firms stationed in another country they'll know what to do because they've been through it all before, maybe not in that specific country/area but they have the knowledge and experience needed in order to solve any problem.

Ch. 4 - The Marketing Environment

How CAT INC. operated in the past is different than how they operate now because the external environment was different. Back in 1925 when CAT INC. was first founded, their initiative was to make it big as a tractor type company but as time passed their initiative changed accordingly to fit the time period's demands. Because CAT INC.'s target market is fixed on big businesses and corporations wishing to build new firms, buildings, and so on; their view is more broad than say a toy company who's target market is children. How CAT INC. operates depends on how well the economy is, the generation they are in, whether  or not there are resources available, and whether or not their practices are in accordance to the law(s).

A example of how CAT INC. changed their practices to fit the marketing environment would be when they shut down some of their factories. Like I've discussed in a previous blog post, CAT INC. saw where the economy was going and decided that temporarily shutting down some factories would be beneficial to them in the long run. If the economy had not took a fatal blow during that time period CAT INC. would have done the opposite and would have built more factories or keep all their factories up and running.

A good example of whether or not CAT INC.'s practices were in accordance of the law would be Caterpillar, Inc. v. Lewis (1996).  James David Lewis who was injured while operating a CAT INC. bulldozer filed a lawsuit against CAT INC. claiming product liability which included failure to warn and breach of warranty.

Ch. 3 - Ethics & Social Responsibility

According to CAT INC. they follow a very strict code of ethics, which have characteristics of social responsibility, that involves Integrity, Excellence, Teamwork and Commitment, which in my opinion is something to be expected in every business however seems to work exceptionally well for them.

(Note: I only chose a select few characteristics of Integrity, Excellence, Teamwork and Commitment defined by CAT INC. to discuss about)

Integrity

The ability to avoid and manage conflicts and potential conflicts of interest.

• I believe for a company like Caterpillar to practice this type of ethic they must be very cautious and strict on the decisions they make, which is a good thing because it shows just how much they care about themselves as a company and the world. In order to be very cautious and strict on their decisions they would need a lot of time to think thoroughly about it which would be considered very bothersome and annoying but CAT INC. takes time out of their agenda to do it for the greater good.    

Compete fairly.

• Even though CAT INC. stands at the top of their industry they still practice fair competition which shows that they're a good sport with their competitors, which is rare to find in companies/businesses. They aren't out to destroy other companies/businesses in their field but rather use their competition to help provide motivation for future business activities.

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Excellence 

Accept nothing but the best quality in products and services and focus on delivering the highest value to customers, always with a sense of urgency.

• Whenever someone buys a Caterpillar machine the company provides them with a variety of services to accompany it in order to provide a excellent experience; basically a form of customer service.

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Teamwork

Treat others with respect and refuse to tolerate intimidation or harassment and treat people fairly and prohibit discrimination.

• Because CAT INC. heavily depends on communication and interactions among their employees/workers they practice this type of ethic. It seems to be a given fact that within any business/company this type of ethic should be practiced however because CAT INC. builds the foundation of respect and non-toleration of intimidation or harassment amongst everyone of its employees/workers, the company prospers.

Build outstanding relationships with dealers and distribution channel members.

• Although some companies/businesses may care only about selling their products, CAT INC. builds relationships with its dealers and distribution channel members, which in my opinion is a genius idea. Since CAT INC. builds its relationship with almost everyone, they automatically become a power to be reckoned with because they are backed up by other entities (having connections), so if they were to ever be in a pinch their "friends" would help them. 

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Commitment 

Support environmental responsibility through sustainable development.

• Like I discussed in a previous blog post, CAT INC. took a break from their usual practices (tactical retreat in a way) because of how the economy was doing. They figured that the demand of their products would not be needed for a while until the economy kicked back up so they decided to invest in research for the mean time. For CAT INC. to do research out of all the options out there while the demand of their machines were down, is a smart move in my opinion. Research would help them accomplish what they stated in their mission statement by improving their machines and making sure that they provide more bang for your buck which would reduce their impact on their environment and the world.

Take personal responsibility

• Similar to what I discussed in Excellence.

Make responsible ownership and investment decisions and to participate in public matters in a appropriate manner.

• CAT INC.'s mission statement has a lot to do with these two ethics because they both involve sustainability. CAT INC. practices green marketing which helps them stand out among their competition and at the same time helps the environment, and because they practice green marketing along with other activities they gain good publicity which in turn helps them continue their business while helping the environment.

Ch. 2 - Strategic Planning for Competitive Advantage -WI Students Begin Marketing Plan

Before you come up with a strategy to help you gain the upper hand in the market or any situation for a matter of fact, you must first know your enemy. Your enemy is not limited to a person, it can be a school exam, a riddle or even trivial matters, what matters if that you know your enemy and plan accordingly to ensure you emerge victorious. The reason as to why CAT INC. is at the top of their industry is because they constantly observe their competitors, market and the world so that they know what to work on later in the near future to help themselves as a company achieve the upper hand. CAT INC. plans things beforehand and that helps them prepare for problems faced ahead which would normally injure them significantly had they decided to wing it.

Given the size of CAT INC. there are a large amount of high ranking people each divided into their respected departments. When CAT INC. goes over their company goals for the year or in general, they hold a meeting. Every officer sits down with their management teams, and then as a group, and talks with everyone and assesses their long-term potential/goal. The CEO or even the founder of CAT INC. can not decide what the company should or will do because they lack perspective. In order to make the right decisions one must consult with others and gain their perspectives on the problem at hand.

I'll give a recent example of CAT INC. strategically planning for their competitive advantage. In 2010 CAT INC. noticed that they had a lack of sales in the Brazilian quarry market. Apparently the customers' perception of CAT trucks sold in Brazil costed too much and weren't worth the money so CAT INC. responded with a plan to prove that the trucks were worth the money. CAT INC. had to study their competitor in the Brazilian quarry market which were Brazilian companies whose trucks costed half of the CAT trucks, and then they planned accordingly to help them prove that their trucks would have a higher output/payload per truck compared to the trucks that costed half of theirs. The team in Brazil simulated activities in the quarry and gathered data to produce a report that showed that the CAT truck offered more output/payload capacity, traveled at greater speeds and offered operators of the trucks greater comfort, visibility and safety than the other truck. They also offered financing through their Financial sector (CAT Financial) and promised follow up visits every 500 hours or whenever needed to make sure that their CAT trucks were operating  properly. The financing and followed up visits may seem like customer service and nothing more but it is part of CAT INC. strategy. It is part of their strategy because it helps them build reputation in Brazil where they demonstrated the capabilities of their trucks and ultimately sold their trucks. CAT INC.'s strategy was great because they thought about and planned how they could convince the Brazilian quarry market that their trucks were a must have. If they had tried to sell their trucks that costed twice the amount of the Brazilian company trucks without any evidence to back up their claims then they would most likely not have been able to sell any trucks at all to the quarry market.

CAT 770/772 truck being sold in the Brazilian quarry market

The size of the CAT truck affects the cost-per-ton value

Another good example of CAT INC. strategically planning for a competitive advantage would the recent closing of a couple CAT factories do to the economy's recent fall a couple years back. The reason as to why this is a "good" strategy played out by CAT INC. is because they knew they had to cut back on production. If the economy is bad then the amount of CAT machinery being bought will be affected as well. Creating products and having them ready to be shipped out to the next customer is great and all but even when it sits in the storage waiting to be sold it will cost you money to have it stored there. Because CAT INC. saw the direction in which the economy was going at the time they closed down some of their factories to help cut down on production and other expenses which is important to help them keep their other sectors up and operational in their dire time (remember that CAT INC. has three sectors and isn't just confined to construction and mining machinery), as well as change some of their prices to help keep a steady flow of income. Using aggressive sales techniques might help the company grow but you must always keep in mind whether or not it would benefit the company as a whole or not, in which this case CAT INC. went smart and decided that for the time being they would halt certain areas of the company and come back to them at a later time when the economy is able to support it. Sometimes it is better to take it easy rather than seriously because if you're focused too much on making money even in tough times then your reputation will be affected negatively.

Caterpillar factory

Ch. 1 - Overview of Marketing (Brief History and Mission Statement)

MISSION STATEMENT

To enable economic growth through infrastructure and energy development and to provide solutions that protect people and preserves the planet.

Brief Summary of CAT

Caterpillar Inc. manufactures construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company provides technology for construction, transportation, mining, forestry, energy, logistics, electronics  financing and electric power generation. Caterpillar operates in three lines of business. Machinery, Engines, and Financial Products. What the Machinery line of business does is design, manufacture, market and sell the machines used for construction, mining and forestry. What the Engines line of business does is design, manufacture, market and sell  engines for CATERPILLAR machinery; electric power generation systems; marine, petroleum, construction  industrial, agricultural and other related parts; this means that the Engines line of business helps supply for the Machinery line. And what the Financial Product line of business does is provide a wide range of financing alternatives to customers and dealers for CATERPILLAR machinery, engines, solar gas turbines, as well has other equipment.

Brief History of CAT

CATERPILLAR INC. was founded in 1925 and is headquartered in Peoria, Illinois. CAT was formerly known as CATERPILLAR Tractor Co. but was changed to the CATERPILLAR INC. in 1986. 

In year 1905 CAT Tractor Co. had their first time in the spotlight when they used their Holt steam traction engine to work on the construction of a section of San Francisco's cable car system. In years 1908 to 1913, CAT Tractor Co. had already developed Holt Caterpillar track type tractors and were sent to work on the Los Angeles Aqueduct Project giving them some more spotlight and exposure to the growing world. 

Holt Steam Tractor

And in years 1921 to 1992 CAT Tractor Co., soon to be changed to CAT INC., many Holt tractors and hundreds of other Caterpillar machines helped construct the Rhine-Main-Dunabue Waterway. Basically as time went on CAT INC. has improved their machinery as well as their research practices which ultimately made them who they are today, standing at the top of the scale as the world's leading maker of construction vehicles and machinery.

Rhine-Main-Dunabue Waterway