Deere & Company

Industrial Equipment Operations

Group 6
PGP/22/197 Rashi Mittal
PGP/22/209 Ravi Prasanth
PGP/22/342 Akshay Kanchan
PGP/22/384 Siddharth Saraswat
PGP/22/426 Vikrant Garg
 JOHN DEERE : CURRENT

SCENARIO
Market leader in crawlers under 100 hp with a 50-60% market share
 Deere made substantial penetration into the small graders and gained 30% market share which was
dominated by Caterpillar
 Industrial sales had 80% contribution from the United States compared to 43% of Caterpillar’s
 Deere had three different agreements with its dealers: utility, construction and forestry
 Maintained a strong distribution network of 433 dealers operating a total of 437 outlets
 Prepared for the launch of JD 750 and 755 in the construction company
 Aimed to enter a market by providing superior benefits based on technological innovation
 Competitors included Caterpillar, Case and International Harvester
SWOT ANALYSIS OF JOHN DEERE

Strengths
Reputation for engineering excellence
Strong distribution network with 433 dealers
Market leader in farming machine and small
construction segment
Reliable and Known Brand
Weaknesses
80% of industrial sales from US and very less
diversicfiation geographically
Non exclusive parts which leads to battle with will-fitters
Little patent protection
Compared to Caterpillar, it’s a smaller company

Threats
Opportunities
The small machine market is the fastest growing market Stiff competition from competitors
Diversifying their product portfolio can help them tap new Entrance of big players into small machine segment can
markets hurt their sales
PRODUCT - JD 750 BULLDOZER

 Aimed to enter market by providing superior customer benefits based on

technological innovation
 First unique product with fully automatic dual-path hydrostatic drive
 Increased traction, maneuverability and travel speeds
 The advancements in transmission lead to a 10% - 15% higher productivity
compared to the rivals
 Field results showed that the performance of JD 750 surpassed Caterpillar D-5
and met the results of D-6
 Pricing Selected-Competition Based
Items JD750 Bulldozer D5
Purchase Price 45,138.00 48,893.60
Service and Parts Proportion 0.90 0.90
 Competition Based pricing Service and Parts Cost 40,624.20 44,004.24
Fuel 0.35 0.35
 Caterpillar D-5 is sold for $61,117 Fuel and parts Cost 56,422.50 17,112.76
Total Operating Hours 10,000.00 10,000.00
 JD750 will have a 10-15% enhanced productivity
Operator Charges in US in 1975 (in dollars) 5.00 5.00
 Conservative Cost Saving in 4 years are $6676 Total Operating Charges 50,000.00 50,000.00
Productivity Increase 0.10 0.00
 Price the product at a premium and lead the marketing Savings because of productivity increase
campaign based on the cost and time savings to the Savings in Fuel and parts 5,642.25 0.00
sophisticated customers Savings in Operator Cost 5,000.00 0.00
Total Savings 10,642.25 0.00
Price 55,780.25 48,893.60
 JD has been in the industry since 1837 and has a strong and List Price Discount 0.20 0.20
credible brand in smaller category. Leverage that credibility List Price 73,881.13 61,117.00
to sell a better product like JD750 at a premium Volume Discount 0.05 0.00
Final Price 70,556.48 61,117.00
Cost 36,110.00
Horsepower 110.00 105.00
Weights 28,985.00
min max
Operating hours 3,000.00 7,200.00
savings per year 3,192.68 7,662.42
Microsoft Excel
Worksheet Present value (including operator wages) 7,926.77 19,024.24
Present value 6,676.77 16,024.24
Cost Strategies considered and rejected ?

Cost-Plus Pricing: This strategy does not take into consideration the competition and their market share
based on which pricing decision has to be taken

Customer Value-Perceived Pricing: The customer has an anchor biased and already has some product
benchmarked based on which they have certain expectation.
Also, we are not known so much in the heavy machinery segment so that customer will perceive our value to
the extent that we want them to perceive.
When we sell our product at premium wrt the CAT crawlers than Customers will be forced to perceive the
better value we are offering

Value Pricing : John Deere does not have a cost advantage. This will only lead to a price war and diminishing
profits. Also JD’s product has tangible benefits and should be priced at premium.
Thank You