Paccar - More than Shiny Trucks
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Paccar makes two of the most recognizable names in trucking-Kenworth and Peterbilt. These trucks represent the premium end of the over-the-road (OTR) truck market. They sell and lease their products to a large array of businesses with varying needs, wants, and resources. The truck industry is considered a commodity market for the most part, with prices generally topping the list of buying criteria. In this market, Paccar and its trucks stand out. They have created a strong brand image for premium trucks, high quality, technology, and intense brand loyality. Consider the following:
Herbert J. Schmidt is a truck guy, but not just any truck. It’s Kenworth or nothing. For the past 20 years, Contract Freighters Inc. has bought only Kenworth rigs, and the chief executive of the Joplin (Mo.) trucking company intends to stick with Kenworth… with plans to order at least 700 new trucks, sure, these 10-wheel diesels cost 10% more than rivals’ trucks. But when Schmidt factors in everything else-reliability, trade-in value, even the plush interiors that attract better drivers-he says they’re worth it. “It’s not the price,” he says, “It’s the wuality.”
Paccar’s success can be attributed to a number of factors:
- Quality. In a commodity market, these trucks are premium quality, luxury products. Freight hauling companies love them because of their quality, reliability, and trade-in values. Drivers love them because of the plush and comfortable interiors among other things (consider OTA drivers spend days on end in their trucks and often sleep in them). Both Kenworth and Peterbilt trucks recently won J.D. Power and Associates awards.
- Benchmarking. Paccar is unusual in that it doesn’t benchmark its products only against other truck brands. It specifically picks the leader in each area of concern and benchmarks against them. So, in IT it’s Microsoft, in custom manufacturing it’s Dell.
- Technology. Paccar actually considers itself a technology company as much as a trucking company. More accurately, it applies technological expertise to the trucking industry to remain a leader. Examples include its Electronic Fleet Management System, which is a computerized module that can be installed in the trucks and integrated into an owner’s IT system to increase efficiency, help with regulatory compliance, and reduce paperwork.
- Customization. No “off-the-lot” purchases necessary here. With its custom manufacturing process, Paccar can offer buyers the opportunity to select from thousands of options and within six to eight weeks take delivery of their custom-built truck.
- Industry reputation. Paccar and it’s trucks are recognized throughout the industry as a leader in quality (J.D. Powers), technology (National Medal of Technology), and computing (Computer World Honors). These awards help further solidify an already strong reputation.
- Lease options. If you are buying 700 trucks like Herbert Schmidt, you have the technology, capital, and human resources to manage and operate your own fleet. However, smaller carriers have problems in these areas. A growing business for Paccar is its leasing operation, which provides services such as truck maintenance, which eliminates the need for the carrier to maintain a staff of trained technicians-a huge overhead expense.
Finally, in response to environmental issues and rising fuel prices, Paccar is taking the lead with Hybrid trucks. It is starting with medium-size trucks and is working on full-size models.
- Define loyalty as you understand it from the text. Does Paccar with its Kenworth and Peterbilt trucks create loyalty? Explain.
- What type of buying process (straight rebuy, modified rebuy, new task) is the decision to buy Kenworth for Herbert Schmidt? Would the buying process be the same for all carriers? Explain.
- Using all the possible sources of information, including the case, the internet, OTR truck dealers, develop what you think the decision-making unit looks like for a truck purchase. Does its size depend on the size of the company or other factors? Explain.
- Using all possible sources of information, including the case, the internet, OTR truck dealers, complete the following information in Table A. What implications does this have for Paccar and other truck companies in terms of their marketing efforts?
- Explain the role of reference groups for Paccar and its trucks.
- Describe the differences you would expect between a company that owned their own trucks versus those that lease. Relate these to internal and external influences shown in Figure 19-1.
- How does Paccar’s hybrid offering fit into its current brand image?