Begun last month and running through June from Croatia to Cracow, the world's largest maker of earthmoving machines is calling on customers with an ambitious direct marketing and personal demonstration campaign.
Providing impetus for the push is the European Union's recent decision as part of the General Agreement on Tariffs & Trade to gradually reduce to 4% the 11% tariff on construction equipment and engines until they are eliminated in the year 2000. Even though Caterpillar already had plants in several European countries, this is expected to add about $125 million to Caterpillar's annual sales almost immediately.
And, with 10 dealerships active in the region, Caterpillar officials foresee high growth potential as Western aid flows into the central Europe for infrastructure improvement projects.
Local Caterpillar dealers supported by corporate teams are meeting with potential customers to pitch the power and efficiency of the company's machines and the support and service that has made Caterpillar the worldwide heavy equipment industry leader with $11.6 billion in sales in 1993, about one-third coming from exports to Europe.
"We've had an excellent turnout so far," said Beat Ammann, the central European area manager for the company's Caterpillar Overseas subsidiary from the tour's latest stop in Budapest.
"We've done shows like this on and off in the past, but this is the first year we've grouped them all together and are going through the whole territory," he said. "It is a major selling tool for our dealers and by going directly to the customers, we get better coverage and build awareness."
While hard and local currency costs have not yet been totaled for the tour, Mr. Ammann said the bill for the bus alone could be above $150,000.
The direct marketing campaign started last year when Caterpillar was unable to find any existing publications to drive home its customer support and service message. The service claim couldn't be matched by the state subsidized manufacturers that had locked up contracts in the central planning era.
The campaign consists of a monthly 12-page magazine-style booklet, called Fation about Caterpillar products, such as how they are used and financing options. It is printed in 10 languages and sent to Caterpillar's potential customers, drawn from previous clients' sales and newcomers found through informal discussions.
Mr. Ammann noted each issue, created in-house, has space for a special report from the dealership in a given country.
Caterpillar's selling point is the expertise it provides customers, giving ideas for labor and energy saving solutions to construction projects that will bring roads and other infrastructures up to Western standards after 40 years of stagnation and neglect. Caterpillar's engineers have designed systems to measure everything from lubricant wear in hydraulic arms to the effects of grades and footing on completion times.
While local dealers use models from their stocks in the demos, the company is packing a caravan of its own with specially trained product experts and marketing mavens to help local operatives deliver the pitch. Among the trappings are monster machines and a mobile conference center, where the message of efficiency and support is reinforced after the demo sessions.
"We want to stress our dealer support capability before, during and after the sale," said Kurt Thiel, a senior Caterpillar sales director. "Domestic companies' products aren't as reliable and there is no support. But the customers here are used to that."
Mr. Ammann said some 20 manufacturers are still at work producing products for the market at prices that make Western-made dumpers and loaders 200% to 300% higher. In addition, Caterpillar is seeing growing competitive activity from other name brands such as Deere & Co. and Case from the U.S. and Japan's Komatsu, but how well each is faring is not easy to judge.
Krzysztof Jeske, operations manager of Finning Poland, said the cost of a Caterpillar machine can be as much as triple that of domestically produced goods when taxes and import duties are added on. While the company may own up to 80% of the market share for a specialty well-driller, its share may be just 2% for in another segment such as more commonly used backhoes or transport trucks.
"It is extremely hard for us to gauge market share because it takes three of those machines to work as reliably as one of ours," Mr. Ammann said, explaining why there is little competitive data.
Even the size of the market is difficult to determine. Sales this year in Central and Eastern Europe are projected to rise by 20% over the $35 million recorded in 1993, when the company sold upwards of 400 new and used machines.
Kathleen Barnes contributed to this story.