Using Service Marketing To Develop And Deliver Integrated Solutions At Caterpillar In Latin America Case Solution

In the process of the pilot program, Caterpillar has identified certain gaps in service quality and customer care. The task at hand is to identify the gaps and try to rectify the situation for the company so that its customers can be serviced in the best possible manner. The important players in the rectification process for the company are dealers, top management, and sales force. Hence, the case solution would revolve around all these characters that are the important components in solving this case and problem for the company. However, understanding first of the main problem is essential and is presented below:

2. Problem Identification

As identified in the case, the current dilemma for the company is what measures to take as per the research findings. The research has pointed out certain gaps which have been presented as a model for service. The problem or dilemma arises when a company has to pick and choose among the research findings as it has limited resources in the shape of dollar amount and time to invest. Hence, the main problem for Caterpillar is identified as which programs to focus upon as per the research findings, to improve service levels and delivery. Should speedy service remain a focus or a good enough warranty time? Should we as a company give more importance to immediate service provision or invest more in the long term and sustainable solutions for our customers? The real problems for the company seem many, but they revolve around what decision Caterpillar has to take now in its given circumstances.      

3. Gap 1: The Listening Gap: Customer Needs and Expectations

What Caterpillar’s Latin America Commercial Division (LACD) has been focused on for all these years is a product orientation as opposed to a customer orientation or a customer focus. Hence, the listening gap (Gap 1), which can also be described as customer needs and expectations has been pronounced. All four identified gaps are, in a way, linked to the company’s product orientation strategy for a long period of time. In these times of rising competition, including competition among dealers, it becomes essential to address all four gaps for improved service quality and for a more pronounced service orientation.

To fulfill the listening gap and develop the Customer Service Agreements (CSAs) accordingly, more reliable customer research needs to be conducted. Since the company’s management is already aware of the fact that most of the surveys are filled and conducted haphazardly, an extensive research with reliable surveyors and correct target audience needs to be employed. Unless the LACD listens to the customer requirements and the problems they are facing, LACD will not be in a position to develop service quality as per customer requirements. Listening means closely observing the needs and wants of customers and not under delivering on the promises. Good listening in this case is likely to come from useful and extensive research.

i. Customization to Fill the Listening Gap

Moreover, due to the complex nature of this industry where buying of heavy machinery is involved, service customization becomes increasingly important. Service customization is at its best when suppliers (or service providers) such as Caterpillar and Volvo are able to customize their offerings for every single business customer. To fill the listening gap particularly, the content of the Customer Support Agreements should be developed as per the wishes of the customers. Such development would not be possible and successful without proper research into customer requirements. However, the initial pilot stage pointed to certain customer requirements which should be made a part of the CSAs. These include the following: warranty time periods, free service, regular checkups and performance monitoring, skills of technicians, distribution networks, and speed of service.

The pilot and the subsequent findings depicted that responsiveness was crucial for customers as a measure of service quality. However, Caterpillar cannot achieve good responsiveness without trained technicians who are on the go and able to solve customer problems and queries in due time. Moreover, what customers also value and expect in the CSA is regular maintenance and performance monitoring of the machinery. Hence, this should also be an integral part of the CSA. It must also be noted that customer needs and expectations are diverse based on the specific business requirements. Hence, the sales force needs to stay vigilant about changing market conditions and respond accordingly to fulfill customer requirements.

4. Gap 2: The Service Designs and Standards Gap

Gap 2 which relates to the service designs and standards gap is closely related to the company’s relationship with its dealers. The question here also is that what all the service providers need to know to establish standards. In a given industry where heavy machinery is manufactured and used in mining and construction work, the role of dealers is crucial in making the products (machines) available to the business customers at the right place, at the right time, right price and the right quantity. Dealers are not only responsible for making the machinery available, but also conduct promotion and provide relevant information to the customers. As a matter of fact, dealers conveniently become the first point of contact for the end customer.

Therefore, Gap 2 needs to be fulfilled by having service designs as close to the service standards or benchmark. Service design means what are the crucial elements of service for this industry which will be critical when developing the service in the form of CSAs. Dealerships need to be increasingly involved in the learning environment to develop a knowledge base for the dealers who are an important ingredient in service provision.   

i. Setting Standards and Protocols

Another important question in this gap analysis is that where do we derive the standards for a useful service design. The standards come from best practices in quality services. Such a study can be conducted by Caterpillar’s Latin America Commercial Division (LACD) to point out the best service practices in the industry and develop their service designs accordingly. The management needs to know quite a lot about the various segments of general construction to come up with tailor made CSAs for the various segments of general construction.