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Guide Business: The value plan

What's next for John Deere? Vice-president Luke Gakstatter talks strategy, marketing, and why he thinks you'll buy green

It takes belief to get into senior management at Deere and Co. But of course, Deere focuses on belief at every level. Belief is the very essence of its marketing plan, which is to get farmers to believe that sitting at the controls in a green cab is exactly where they deserve to be.

Now, that belief is at the core of a new marketing campaign that you’re going to hear a lot about.

“We’re continuing to invest in solutions that will strengthen our position in all customer segments,” said Luke Gakstatter, John Deere’s sales and marketing vice-president for ag and turf as he addressed dealers at the company’s recent new-product launch in Columbus, Ohio.

“Differentiation has been fundamental to our success, and this will continue,” Gakstatter says. “Moving forward, delivering distinctive value must continue because that’s what wins customers. And here’s the critical piece: distinctive value is what lifts us above pure price competition.”

To keep the green brand uniquely attractive in its customers’ eyes, and also to allow the company to minimize the dent that any lower-priced or lowertechnology competition can make on its bottom line, the theme for the new equipment and products introduced in Columbus centred on the tag line, “Delivering distinctive value.”

Skeptics may think this is code for using marketing hype to create a perception of being a premium product in order to justify higher price tags. Not so, asserts Gakstatter. He says Deere can’t just ride the reputation of the leaping deer on its emblem to higher profits through higher-priced products. Instead, executives at Deere’s worldwide headquarters believe the firm can put superior machines on dealers’ lots, match them with proprietary in-house technology solutions, and thereby offer better value to farmers for their machinery dollar, making any extra expense simply a good investment with a payback.

“We add a distinctive value through integrated technology,” Gakstatter says.

Looking to provide equipment that allows producers to farm smarter — and more profitably — rather than beefing up the high end of their tractor’s horsepower has been at the heart of Deere’s market strategy for a couple of years now. The in-house FarmSight digital products are central to that.

“Not only have we revamped our entire product line,” Gakstatter says, “we’ve added capabilities to our machines and the way we support them. We really have positioned ourselves for delivering distinctive value.”

One of those new capabilities is the addition of wireless data transfer. Deere’s Wireless Data Transfer feature enables wireless communication between the brand’s GreenStar 3 2630 display in a machine and MyJohnDeere.com or a producer’s farm management information system.

“John Deere has a simple position when it comes to data management,” says Kathy Michael, product manager at John Deere’s Intelligent Solutions Group in a press release. “We want our new data technology to provide value to the customer, we want to be transparent with customers on data usage, and we want the customer to be in control of their data choices.

“Packaging that (technology) up in a way that can truly benefit our producers is a direction John Deere has been on for some time,” says Gakstatter. “It’s a direction we’re going to continue to move towards.”

From the Grainews website: John Deere unveils new equipment in Columbus, Ohio

Farmers have been telling everyone who will listen that their farms are producing huge amounts of data, but no one seems to be out there helping them put all that data to work, Gakstatter says. “That’s what this is all about. How do we make that (data) valuable? How do we take that technology and put it into real solutions that make things easy for the producer?”

And it isn’t just farmers in North America that Deere believes will need easy, high-tech solutions. The company expects demand for advanced technology to soon grow even in parts of the globe that haven’t fully mechanized yet.

After spending three years as Deere’s former president of operations in China, Gakstatter has personally seen a trend toward hyper-mechanization there, too.

Gakstatter says he has had a front-row seat on the rise of the middle class in China, and he has seen the revolution that’s happening there. “In some cases it’s just the adoption of mechanization,” he says. “But in others, it’s the adoption of new technology and really using some advanced technology. It’s just amazing to watch how quickly things are changing in agriculture across China today.”

But continuing to provide products that keep advancing the state of technology in agriculture, no matter where it’s done, is expensive. “We continue to spend a significant amount of dollars day in and day out on research and development,” Gakstatter says. “I think the current number is around US$3 million, every day.”

Even with the development and introduction of new equipment that offers opportunities for producers to realize extra value, Gakstatter makes it clear company management realizes it can’t provide that added benefit to customers completely on its own. “It can only be done through the power of our partnership with our dealers.”

But Gakstatter believes corporate direction also makes a real-world difference. “There are three value drivers we always keep in mind,” he says. “These are performance, uptime and cost of operation. If you think about the products and solutions we’re introducing, I truly do believe they embody those values. We’re bringing these products to market with more integrated technology. And there’s the cost of operation; they’re more efficient. That’s really important for us.

“Dealers continue to ask, what does the future hold in terms of new products?” Gakstatter says, responding to a question from a reporter. “What’s coming? What can we expect to see in 2014, 2015 and 2016? I think dealers are always interested in what’s coming in the future and in the overall state of the (ag equipment) business.”

But management at Deere isn’t always all that eager to spill the beans on planned new equipment introductions, or to talk candidly about long-term corporate expectations.

“The bottom line is we’ve had a very good first nine months of the fiscal year (2013). The last quarter we just reported results on record earnings,” Gakstatter says. “We’re going to finish the year strong. It’s going to be a record year for John Deere. That’s what we have to say about 2013. Stay tuned for 2014.”

“Overall when you take a look at agriculture long-term, when you grow from seven billion to nine billion people (globally), we’re looking at a pretty healthy business for the next few years,” added Barry Nelson, Deere’s media manager.

But the main message Gakstatter and his staff wanted to get out during the Columbus event was the company will continue to position the green brand as a leader in the industry. It will do that by pursuing what it sees as a unique perspective on farm productivity with its equipment and technology offerings, giving farmers a reason to look beyond just the sticker price of machines and services.

Says Gakstatter: “We look at this as an opportunity to continue to add value to our producers’ operations, with hard iron solutions, with technology and the use of data, to truly provide distinctive value.”

— Scott Garvey is machinery editor for Country Guide.

 

 

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Scott Garvey

Scott Garvey is a freelance writer and video producer. He is also the former machinery editor for Country Guide.

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