Two former construction equipment executives with service within the global organizations of Volvo Construction Equipment and CNH Industrial—Carl-Gustaf Goransson and Alan Berger—suggest construction equipment brands are on their way to losing traditional elements of customer loyalty, and becoming commoditized. The two appear in an interview provided by Callum Sarsfield, founding partner of Pullman Goldman, an executive search firm.
Manufacturers have improved product quality to such a high level, says Goransson, that the risk of switching brands is low enough to drive down brand loyalty. “If all products are good, then all products are the same,” he says. Prices, therefore, will level off and lead to commoditization.
Technology, which they say may be a differentiating factor today, will actually speed up this trend to commoditization. Machine performance will be tied to productivity improvements similar to what factories have done, says Berger.
“How to develop and build digital services will be one of the keys to success,” he says. “It will also move the sector from today’s largely ‘break it-fix it’ approach to a service offering based on data defined in the R&D process.”
The result will be a shift from owning equipment to a full-scale rental or pay-per-use model, Goransson suggests.
“[A]lthough brand loyalties will still be important in the future, we expect the combination of commoditization and new ownership models to loosen established brands’ hold on consumer loyalty, leading to a fiercely competitive market landscape. The packaging of new machine sales with future services based on digitalized platforms will define success, both for value and premium brands, largely driven by customer demand for more insightful data.”
Source: Pullman Goldman
