John Deere Analysis
John Deere
Problem Statement
In 1976, Deere & Company was among the world’s leaders of farm and industrial equipment. The majority of Deere’s success was attributed to the light crawler tractor market with over 50% market share. It was at that time Deere earned a reputation for manufacturing reliable small tractor equipment. Deere evolved into producing and manufacturing the larger industrial equipment in phases, beginning in small forestry operations. As farmers and smaller operators sought to diversify their businesses, Deere offered newly innovative attachments and crawlers, and was now seeking to integrate into the large tractor market in phase five. In this phase, Deere introduced the JD750 bulldozer, a heavy contracting machine that would compete directly with Caterpillar, who maintained 50% market share in the large tractor market.
Robert Gerstenberger, vice president for worldwide Industrial Equipment Operations at Deere was faced with questions that needed to be answered as Deere introduced the large tractors, which if launched successfully, could position Deere as the market leader in both the small and large tractor market. The challenge included a successful introduction of this new product, and an increase in Deere’s market share in the large tractor market. The most notable concern would prove to be Deere’s pricing structure and strategy. What pricing strategy should Deere & Company employ for these new models to effectively compete as it enters this new market segmentation? What value added features and parts should be included to maximize consumer demand? This analysis will answer those questions by evaluating the various steps in setting price as it pertains to the implementation of the JD750, price adaptation strategies, and product mix pricing. And after thoroughly evaluating the alternatives, this case will conclude with an analysis of pricing strategy recommendations that Deere and Company should consider.
Analyzing Market Demand
Problem Statement
In 1976, Deere & Company was among the world’s leaders of farm and industrial equipment. The majority of Deere’s success was attributed to the light crawler tractor market with over 50% market share. It was at that time Deere earned a reputation for manufacturing reliable small tractor equipment. Deere evolved into producing and manufacturing the larger industrial equipment in phases, beginning in small forestry operations. As farmers and smaller operators sought to diversify their businesses, Deere offered newly innovative attachments and crawlers, and was now seeking to integrate into the large tractor market in phase five. In this phase, Deere introduced the JD750 bulldozer, a heavy contracting machine that would compete directly with Caterpillar, who maintained 50% market share in the large tractor market.
Robert Gerstenberger, vice president for worldwide Industrial Equipment Operations at Deere was faced with questions that needed to be answered as Deere introduced the large tractors, which if launched successfully, could position Deere as the market leader in both the small and large tractor market. The challenge included a successful introduction of this new product, and an increase in Deere’s market share in the large tractor market. The most notable concern would prove to be Deere’s pricing structure and strategy. What pricing strategy should Deere & Company employ for these new models to effectively compete as it enters this new market segmentation? What value added features and parts should be included to maximize consumer demand? This analysis will answer those questions by evaluating the various steps in setting price as it pertains to the implementation of the JD750, price adaptation strategies, and product mix pricing. And after thoroughly evaluating the alternatives, this case will conclude with an analysis of pricing strategy recommendations that Deere and Company should consider.
Analyzing Market Demand
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