Browsing by Subject "Product differentiation"

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Potential and prospects of a brand differentiation in the agricultural engineering, using the example of the multi-brand company CNH Industrial
(2023) Münd, Benjamin; Köller, Karlheinz
CNH Industrial unites three agricultural brands, Case IH, Steyr and New Holland. With miscellaneous mergers in the past, these former independent manufacturers of agricultural equipment were combined in one company. A lot of synergies were used and are still being used to maximize the profit of the parent company CNH Industrial and to reduce complexity. Through this harmonization process, the tractor models of the three brands became more and more similar with less distinctive features which leads to a high comparability of the brands Case IH, Steyr and New Holland and its tractor product line up above 55 hp. This results in a strong competition between these brands because in most countries the dealer network is separated for New Holland and Case IH/Steyr and every distribution partner is independent and strives for their own profitability. Due to this, the internal competition prevents external competition with tractors from other manufacturers, which generates cannibalization effects and reduces the profit of the three brands, CNH Industrial and the dealers. Structural changes in the European agriculture led to bigger farms with in total less tractor registrations per year what intensifies additionally the competition for tractor manufacturers. A survey with farmers and contractors from Germany, UK and France showed, that a brand and product differentiation would make sense and would bring a sustainable benefit for all three brands and their parent company CNH Industrial. Because of the history of all three brands and loyal long-term customers, a merger to one CNH Industrial brand is not efficient and expedient. It is important to identify the right customer group for each brand, to know the customers’ requirements and to offer the appropriate products and technical solutions. The network of distribution partners (dealers) is the key factor for an efficient market development. The professionalism of the dealers is mainly determining the success of a brand and its products in the market and the perception of the farmers and contractors. The professionalization of the dealer and collaboration between manufacturing company and dealer is essential. Also, the country of production of the tractors has a significant impact on the customer perception and appreciation. “Made in Germany” is still a quality characteristic and explains partially the high appreciation of Fendt and John Deere as premium tractors for professional farmers and contractors. Steyr as one brand of CNH Industrial AG which only produces tractors has a valid potential to establish to a premium tractor brand in Europe. Due to little negative connotations of customers and a straightforward history the brand has a good base for this development purpose. Bottom line, there are manifold possibilities to achieve a differentiation that is perceived by the customers as such. However, several actions are only feasible mid- or long-term. A product differentiation makes sense to reach a broad base of customers. Certainly, it is undisputed that a product differentiation is connected to high investment. If it is economically viable for the CNH Industrial group remains to be evaluated.