Case 8-1

Case

Caterpillar Case

McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Objectives for Case 8:

Caterpillar

Case 8-2

To summarize the strategies in the gaps

model - a structured way to view service
strategy

To use the gaps model to analyze the

strategies and tactics of an actual firm
To see how service can be used to expand
the offerings of a goods firm

Case 8-3

Discussion Questions
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
establish standards in the Design and Standards Gap (Gap 2)?

Should they offer different CSAs to the different

segments of general construction?
What would that imply for research, standards, and
implementation?

Case 8-4

Discussion Questions
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?

How should the dealerships overcome all the Performance

Gap (Gap 3) issues that they faced in order to insure
consistent delivery?
What internal and external materials were necessary to
communicate the CSAs to salespeople and customers?
What else would be needed?

Case 8-5

Examples of Caterpillar Products

Case 8-6

The History of Caterpillar

Case 8-7

The CaterpillarDealer Relationship

Case 8-8

The Customer Gap

Case 8-9

The Service Quality Gaps Model

Case 8-10

The Importance/Performance Matrix

Case 8-11

In-class Exercise
Put yourselves in the position of the Caterpillar
LACD dealers and staff. You have the information
that is given in the case and you want to use the
gaps model of service quality to move forward.
Instructions:
Get into a group of four people. Spend 25 minutes
developing ways to close each of the four gaps.
Assign a spokesperson from your group to discuss your
framework at the end of the exercise period.

Case 8-12

Ways to Close the Listening Gap

Customer Expectations

Gap
1

Company Perceptions of
Customer Expectations

Ways to Close the Design and

Standards Gap
Customer-Driven Service
Designs and Standards

Gap
2

Management Perceptions of
Customer Expectations

Case 8-13

Case 8-14

Ways to Close the Performance Gap

Customer-Driven Service
Designs and Standards

Gap
3

Service Delivery

Case 8-15

Ways to Close the Communication Gap

Service Delivery

Gap
4

External Communications to
Customers

Case 8-16

Any industrial manufacturer that has

not awakened to the fact that it must
become a service business is in
serious peril today.
Glen Allmendinger and Ralph Lombreglia
Harvard Business Review

Case 8-17

Current Services at Caterpillar

Sales
What other
Rental
services
does or can
Repair and maintenance
Caterpillar offer?
Warranties
Parts and labor
Customer support agreements

Case 8-18

Provider Gap 1
CUSTOMER
Expected
Service
Perceived
Service
COMPANY
Gap 1:
The Listening Gap

Company
Perceptions of
Consumer
Expectations

Case 8-19

Key Factors Leading to Provider Gap 1

Types of Questions Caterpillar

Should Be Asking Customers

Case 8-20

What are the problems you face day in and day out with
your business?
In what ways could Caterpillar help you with these
problems?
What would make you more efficient in your business?
What services would help you when you purchase
equipment for general construction?
What services or assistance would help you after you
purchase equipment?
What services or equipment would help you when you buy
the product?
Can the product be updated with services?
Can customer burdens involving customization be
reduced?

Case 8-21

Transaction-based Surveys Added

21

Target Segments for Focus Group

Sessions

Case 8-22

Because the iron and lead segments offer

great potential, and because their numbers
are so large, we will develop and test CSA
concepts for them.
PLATINUM--Big and loyal
customers, capture most of
business
GOLD Smaller customers, but
we capture most of business.
More sales means growing
them as companies.

IRON Larger customers with

whom we lose a large portion of
business. Need to know what
would drive them to spend
more with Cat.

LEAD Small customers with

no brand loyalty to Cat. Low
DCAL and low number of
machines.

Case 8-23

Iron and Lead Segments

Platinum
Customers

Number
Percent
Cat Eqpmt Number
Avg.
Percent
Parts Sales/Cat Eqpmt
POPS-C
Avg. Survey Score
Top Models
Machine

Engine

Average Age

31
1%
703
23
7%
$3,485
182%
5.88
CV713
844S
D6C
3306B
3208
3304B
31

Gold
331
12%
712
2
7%
$3,384
311%
5.08
420D
D6D
D4H
3412
3208
3306B
20

Iron
145
5%
3,776
26
38%
$777
16%
6.15
D6D
120G
D6R
3306B
3126
3412
27

Lead
2,324
82%
4,766
2
48%
$579
5%
5.61
D6D
320L
D6C
3306B
3208
3306
23

Case 8-24

Customer Support Service Packages

Case 8-25

Provider Gap 2
CUSTOMER

COMPANY

Customer-Driven
Service Designs and
Standards
Gap 2: The Design and Standards
Gap
Company
Perceptions of
Consumer
Expectations

Case 8-26

Key Factors Leading to Provider Gap 2

Case 8-27

Example of a Competitors Strategy

that Leads to Service Opportunities

GreenStar AutoTrac is a
hands-free assisted
steering system. Global
Positioning System (GPS)
satellites are used along
with the StarFire receiver
to pinpoint the machine's
location and to work the
field in parallel lines.

How can Deere help the customer

with these uses of the AutoTrac?

Case 8-28

GreenStar
Field Doc
Data Collection

Track cultivation (e.g., seeding) or chemical applications, then, utilize all

data collected to prepare for the next growing season.

Yield
Monitoring and
Mapping

Yield and moisture data is collected as you harvest. Meanwhile, a

position receiver uses Global Positioning System (GPS) satellites to
determine your combine's exact location; a processor matches this
position to the yield/moisture data and records it all on a PCMCIA Data
Storage Card.

Map-Based
Seeding

First, use previously collected data from the field to develop a seeding
prescription for any field and enter the planting rates that will be used
across the field (on a PC). At planting, insert the PC Data Card and
KeyCard into the mobile processor. As you drive across the field, the
StarFire receiver sends position information to the processor, which
instructs your planter's variable-rate drive to plant according to the plan
you created.

CropTracer

Tracks seed size, seed treatment etc.

Case 8-29

Opportunities for Services based on

the Customers Product Life Cycle
Which of these are opportunities?
Determining requirements
and justifying purchase of
the product
Finding a product supplier
Financing the purchase
Installing the product
Modifying other products to
work with the product
Adapting the product to its
environment or to a specific
use

Maintaining the product

and replacing parts
Replenishing materials
(e.g., paper and toner)
Training personnel to
use the product
Using the product
Upgrading the product
Disposing of product
waste
Disposing of the product

Case 8-30

Identification of Moments of Truth

Service Encounters Customer Expectations Customer-Defined Standards
Sell CSA w/Product

Schedule Service

Service Perform Service & TA-1

Quality Inspection, CM Consultation

Quote Backlog

Perform Backlog Service

Renew/Resell CSA

IIASA Service
Blueprint

Desviacin entre el da y la
hora que se ofreci el
servicio vs. el momento que
fue realizado

Customer Defined
Standards

Mecnicos bien
uniformados, camiones
bien equipados

Physical Evidence

Reporte de
programacin de MCS

Customer Actions

Cliente solicita
servicio/Cliente entrega
SMU

Cliente acuerda con el da de

visita y proporciona
ubicacin del equipo

Cliente propone una

solucin de crdito

Cliente confirma visita y

ubicacin del equipo

Solicitar datos al
cliente/Solicitar SMU

Confirmar fecha de visita

y ubicacin del equipo
con cliente y/o clientes

De ser negado
verificar motivos y
contactar al cliente

Se llama a clientes a
confirmar visita y
ubicacin de equipos

Line of interaction

Backstage Contact
Employee Action

Negado

Line of visibility

Introducir SMU en MCS

Revisar visitas en MCS
Verificar disponibilidad,
determinar posibles
clientes a visitar

Abrir orden de
trabajo, buscar
contrato, llenar
solicitud y entregar al
asistente

Verificar clientes para la

ruta. Crear ruta econmica
de visita

Asistente abre
solicitud

Line of internal interaction

Support Processes

Solicitar
crdito

se retiran repuestos de la
bodega y se firma el
shipping

Aprobado

Onstage Contact
Employee Action

se imprime
aprobacin, se
cambia status de
orden a open y se
crea segmentos

Se revisa contrato
para ver repuestos, se
llena e ingresa
requisicin en el
sistema

Das que el cliente recibe el

informe despus de haber sido
realizado el mantenimiento

Desviacin entre las horas

que se hizo el servicio y las
horas que se debi haber
echo

Supervisor
despacha
mecnico

Se elabora gua de
salida, se habilita
orden de trabajo

Hoja de campo (hoja de

visita)

Reporte incluye:
SOS, CTS, Walk around
Presupuesto, Factura

Cliente recibe y
firma hoja de campo

cliente recibe
informe

Mecnico realiza
mantenimiento,
inspecciones y toma
muestras de aceite

Se entrega reporte
para ser llevado al
cliente

Se llena hoja
de campo, walk
around

Recibe hoja de
campo walk around
CTS y evala
novedades

Se entregan muestras
de aceite y solicitud de
SOS, se entrega
soporte de gastos de
viaje

Se elabora
presupuesto de ser
necesario

Se elabora listado de
repuestos
Se cotizan repuestos
Se cotiza mano de obra

Se revisa carpeta
para facturar y se
cuadra con contrato

Se ingresa datos de
hoja de campo :tiempos,
gastos, SOS. Se carga
aceites. despus de
revisada se factura

Se elabora informe

Se recibe informe
de SOS

Case 8-33

CSA Portfolio for CAT Customers

Option 1

Option 2

Option 3

CAT
Customers

Who are:
Independent
Value-minded

Who are:
Efficient
Flexible

Who are:
Focus
Strategic

Point of
Difference

Empowerment
The right parts & skills
To manage your own
Service needs

Partnership
Shared responsibilities
That maximizes both
CATs and Customers
Service capabilities

Tranquility
All technical and
service
Requirements are
Managed by CAT

Reason
Why

CSA Provides:
CAT Parts
CAT Info
CAT Training

CSA Provides:
CAT Parts
CAT Info
CAT Training
Technical Service
Personnel Support

CSA Provides:
EVERYTHING
CAT Parts
CAT Info
Technical Service
Personnel Support

Case 8-34

Provider Gap 3
CUSTOMER

COMPANY

Service Delivery
Gap 3: The Performance Gap

Customer-Driven
Service Designs and
Standards

Case 8-35

Key Factors Leading to Provider Gap 3

Case 8-36

Provider Gap 4
CUSTOMER

COMPANY

Gap 4: The Communication

Gap
External
Service Delivery
Communications
to Customers

Case 8-37

Key Factors Leading to Provider Gap 4

Case 8-38

Gaps Model of Service Quality