While Agco’s official brand strategy for North America will make Massey Ferguson and Challenger the “foundation” brands for the machinery company, its other brands “are not going away.”
Following about two months of semi-official reports, the Duluth, Georgia-based farm equipment maker on Thursday officially laid out its North American brand strategy for 2010 and onward.
“Our North American strategy is based on two simple ideas that will improve our overall competitiveness,” Robert Crain, the company’s senior vice-president and general manager for North America said in a release.
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“First, by focusing our resources behind fewer brands we can bring more innovation and technology to our customers in key areas,” he said, adding that “fewer brands allow us to achieve greater brand impact and help our full-line dealers better support our valued customers.”
Challenger and Massey Ferguson will thus become Agco’s foundation brands within North America, Agco said. However, Crain added, “brands such as Hesston, Sunflower, Gleaner, White Planters, SpraCoupe, Fendt and others offer unique customer benefits within the marketplace and are not going away.”
Those brands, he said, “will be leveraged via co-branding strategies as appropriate,” citing the rebranding of Hesston equipment as “Hesston by Massey Ferguson” as an example.
That said, Agco’s marketing plan does include phasing out the Agco brand of equipment, “including its line of orange tractors, which are expected to be marketed into 2011,” Crain said.
News of Agco’s marketing plans has been trickling to the public since November, when its dealers received letters about the planned changes. The North American Equipment Dealers Association made the notice public — with Agco’s approval, the group said.
Agco was formed in 1990 through a management buyout of Deutz Allis from Kloeckner-Humboldt-Deutz AG. The new company began making and distributing farm equipment under the Agco Allis and Gleaner brand names.
The company went on to acquire a long list of other noteworthy names in farm machinery, among them Hesston, White (1991), Massey Ferguson (1993-94), Glencoe, Tye, Farmhand (1995), Fendt (1997), Spra-Coupe, Willmar (1998), Ag-Chem (2001), Challenger (2002), Valtra and Sisu Diesel (2004).
“Costly”
But where Agco has previously said its multi-brand strategy “maintains brand value,” the company said Thursday that “in today’s market environment it is costly to support multiple brands.”
Agco’s third-quarter financial results, released in October, showed a drop of about 33 per cent in net sales to $1.4 billion (all figures US$), with its profit dropping to $11.1 million from $99 million in the year-earlier period.
Net sales had declined across all major products in Agco’s North American region during the first nine months of 2009 compared to the year-earlier period. Combines, it said, were the exception.
Crain stressed that a “strong dealer network representing full-line brands” is a key part of the company’s strategy to boost its North American market share.
“To make certain we preserve our customers’ access to exceptional product support, we will work with all Agco tractor dealers on an individual basis to seek the best ongoing solution in their market,” he said.
“Options may include them continuing as a dealer for Massey Ferguson products. We are confident all our customers will continue to receive the level of support they’ve come to expect throughout the years.”
Crain also acknowledged Thursday that “there have been questions in the marketplace about the future of the Gleaner brand, as it is so often linked to the orange tractors.”
Agco, he said, “is committed to the Gleaner brand moving forward. The innovative transverse technology in our silver combines sets us apart, and we anticipate market share growth in this segment. In fact, there are exciting new enhancements for Gleaner in the not-too-distant future.”
