Case Study 3

Why is it so important for Caterpillar to develop new products on a regular basis:

It is important for caterpillar to develop new products on regular basis for multiple reasons. Caterpillar was originally started by two innovators by the name of Benjamin Holt and Daniel Best, both whom worked in the agriculture industry. Working in the agriculture field these two men combined their knowledge and talents and “were among the first to introduce steam and gasoline powered farm equipment,” (Caterpillar) Their intuitive minds and hard work is what created the company Caterpillar. After forming the company Caterpillar together they were the first to market diesel-powered tracker types. These two men set the high standards for Caterpillar early on and developed their products to meet their consumer’s business needs and to be the best in their industry. So with the first products introduced into the market being a success, it was important for founder’s reputation to live on through the future successes of the company.
From the company starting in 1925 selling farm and agriculture equipment the company has broadened it’s products line and is now “engaged in the manufacturing of construction & mining equipment, diesel & natural gas engines, industrial gas turbines and diesel-electric locomotives” (Forbes) With expanding their product line to meet the needs of other segments than Agriculture ,is one of the reasons why Caterpillar today is known as a “global leader is size and scope“(Caterpillar)
With a broadened target market including these types of industries is one of the reasons why caterpillar is coming up with new designs and technological advances in their products line, keeping up with the expansion and growth of the industries in their target market keeps their customers loyal and help guarantee a profit. Caterpillar has a high reputation meeting the supply demand of their target market and with their past successes and their successful product market they will continue to take advantage of future opportunities in the global market.

Why is Caterpillar so careful to test Market its products prior to commercialization?
When it comes to the products created by Caterpillar quality is everything. “Creating high-quality products is embedded in Caterpillar’s Code of Conduct as one of its highest values.” (Pride)Caterpillars uses a six step quality control process to detect, correct, and reduce problems with their products before these products are released, this six step quality control process they use is known as the Six Sigma. Once Caterpillar develops a product they then test their product on a “limited scale.”(Pride) The limited scale is a trial test, to see how their products will do on a national and global scale, to see if their product is proving to be favorable in these markets before they release their product on what they refer to as a “massive scale.” Testing products on limited scale gives Caterpillar the feedback of customers and allows it to find any problems that need to be fixed before it is released on the massive scale. Quality being vital in Caterpillars production line is why they take these steps in testing their products before releasing them for global commercialization; making sure to release satisfactory products keeps Caterpillar a head of their competitors.

What are some benefits and risk of caterpillar’s line extensions?
“Caterpillar has extended its product line into several different areas.”(Pride) In Caterpillars extended product line the company now sells apparel, watches, toys and jackets.” (Pride) With product line extensions comes benefits and risk. “When the product line extension has little to do with the core product the extension could fail, or even worse, contaminate the brand.” (Pride) For the beneficial side, line extensions can allow companies to branch out into other areas and increase brand awareness and broaden their target market. With adding this product