Ten years ago, then-CEO Jim McCullough explained to us CNH’s three-brand strategy regarding Case, New Holland and Kobelco. Now there are two, because CNH and Kobelco Construction Machinery agreed to let their 10-year marketing agreement expire at the end of 2012. Kobelco no longer exists as a CNH brand, but it will continue as Kobelco Construction Machinery converts and recruits U.S. dealers to market the excavator line directly from Japan. Instead of CNH yellow, Kobelco machines will carry the “true blue” coloring of its original manufacturer.
Companies spend large amounts of money strengthening, promoting and protecting their brands. Some firms, such as CocaCola, have developed physical and emotional bonds with their customers. A successful brand means something more than, in Coke’s case, a cold soft drink (skip to 1:23).
In construction equipment, a successful brand can represent high productivity at low operating cost, minimal downtime, telematics excellence, or ease of operation. The physical and emotional bonds exist, too, through generational usage, dealer loyalty, or a highly profitable business built on the use of a single machine or fleet of like-branded equipment.
A manufacturer with a strong brand can offer machines supplied by others and employ licensing agreements to keep its name on the equipment. In a merger, a supplier will rebrand the acquired line of equipment in order to take advantage of the stronger brand of the parent company. If the acquired brand is stronger, it will remain on the equipment long after the industry has forgotten the machine’s originator.
Equipment professionals wrestle with the value of one brand over another as consolidation has killed some and elevated others to star status, and brand differentiation will only become more difficult for suppliers.
Equipment distributors play an important role in building and retaining brand loyalty. We suspect, for example, that most existing dealers with strong Kobelco customer bases will quickly convert to the parent company. Users in our various online communities are excited that the Kobelco brand will stay here. They have experienced something with those machines that they want to continue.
Dealers are the face of a machine’s brand. Within the walls of those organizations, trust is built and long-term relationships are forged. Strong dealer relationships build significant brand loyalty.
Strong relationships offer asset managers opportunities to solve maintenance-management challenges. Shortly after visiting with McCullough those years ago, we heard a highly respected fleet manager tell AED Executive Forum attendees that he would gladly close up his maintenance shop given the right circumstances.
Distributors stay on top of technician training and support, and today’s telematics systems and engine technology requires a fresh evaluation of the up-to-date expertise they offer.