Unearthing the truth

Editor's note: Jim Jastrzembski is president, Strategic Business Research, Inc., Chicago. Barbara Leable is project manager, marketing research at CNH Global, Racine, Wis.

Awakened at dawn, they emerge and rumble down the road to sites where they will exert enormous strength. Big yellow hydraulic wonders of engineering ingenuity moving massive amounts of soil, sand and rocks as operators build roads, homes, and shopping centers, or dig trenches for fiber optic cable and water pipelines.

There are the many types of construction equipment, without which modern construction would not be possible. The most versatile and most often purchased type is the loader backhoe.

How do engineers identify design advancements to keep the product line fresh and responsive to market needs? How do they make sure the design advancements are appropriate for the varied needs of a global marketplace? And how does marketing research pave the way for success in global construction equipment markets?

This is a case study of how one of the oldest and most successful construction equipment companies used marketing research to develop advanced designs for loader backhoes.

Wide range

Jerome Increase Case founded the Racine, Wis.-based Case Corporation in 1842. Case has been a market leader for 160 years in both the agricultural and construction machinery markets by designing a wide range of innovative machines. Early machines included steam engines and threshers to help farmers quickly harvest the nation's crops. One of Case's biggest successes was the development of the loader backhoe in 1957.

With the front end, or loader, operators lift sand, soil and gravel to fill in foundations of new homes, cover newly placed sewer pipes, or clean up after repairs to underground cables. They level and smooth the ground for shopping center parking lots. Landscapers attach forks to deliver pallets of bushes and trees. Municipal crews use the loader for demolition and removal of concrete during summer street repairs and for plowing the snow from winter storms.

The back end, or backhoe, is just as versatile. Contractors dig trenches to find underground water pipe leaks, install septic tanks and bury cables. Telephone and electric companies dig holes for their ubiquitous poles. Construction companies dig trenches for storm sewers and use the backhoe to lift the heavy cement sewer pipes and place them in the trenches. Nurseries and golf courses add special drilling attachments to allow them to dig precise holes for planting trees.

Case becomes CNH Global

Corporate mergers, acquisitions, and joint ventures have brought Case together with other famous names in construction and agricultural equipment: New Holland, International Harvester, Kobelco, Hitachi and Fiat - each brand a market success on its own. Recently these successful brands were given a new corporate identity: CNH Global. CNH Global now sells equipment in nearly every country in the world.

A frequent result of corporate mergers and acquisitions is that the newly merged corporation has multiple products competing in the same market. CNH Global is no exception. In particular, CNH Global has three strong brands competing in the global loader backhoe market.

As CNH Global plans for the future, the three loader backhoes will be differentiated in ways that create unique benefits to each brand's customers, yet preserve the historic strengths of each brand. Engineering and marketing want advanced models of each brand to result in market share growth.

To design the next series of loader backhoe models, engineers were facing several key questions:

  • How do loader backhoe operators view the various brands of loader backhoes?
  • What are the engineering performance differences of each brand - whether grounded in real engineering design or just perceived performance?
  • What changes should be made in designing models for each of the CNH Global brands of loader backhoe to both bypass competition and differentiate the CNH brands?

For answers to these questions, the global engineering team turned to marketing research.

Strategic objectives

Two strategic objectives guided both the specific research objectives as well as all the planning and design of the marketing research project. As one CNH Global senior engineer put it: "Let's do this right. The next series of loader backhoe models - a major capital investment - will stem from this research."

While quality research data was the driver for advanced design decisions, budget was not unlimited. So the challenge was to assure dependable results - strong enough to justify a major capital investment - within a reasonable budget. Accomplishing this trade-off required new ways of doing market research on construction equipment.

The other strategic objective was to identify loader backhoe design advancements desired by the worldwide market at prices the markets were willing to pay. Pursuant to this, nearly 30 executives and engineers from around the world had to agree on a marketing research design that would be effective in their respective countries. To reach this agreement, careful attention was paid to differences among countries with respect to language, loader backhoe usage, cultural variations, psychological differences related to using rating scales, and numerous other nuances that could potentially affect the outcome of marketing research.

Grueling field tests

The first step was qualitative research, but traditional interviews or focus groups would not suffice. Because of the major financial investment resting on the results of this research, we did not want comments about brands which were based on an operator's memory alone or on perceptions that may have been formed without any hands-on experience with each of the brands. Since a loader backhoe can cost at much as $100,000 it is unlikely that operators would have owned, or even operated, all the leading brands of loader backhoes. For this reason, operators could not realistically compare the brands in consumer-style interviews or focus groups.

Qualitative research was needed which obtained the same type of information as consumer-style focus groups or in-home product tests, but which also addressed the problem of operators not having experience with each brand. We chose field tests with each of five leading brands as the best way to level the playing field for brand experience. And we made the field tests grueling so that any real performance differences could be detected by operators.

The field tests were a week of 12-hour days in a remote location. Up at first light each day, operators tested all five leading brands in common but demanding loader backhoe jobs, such as digging trenches and backfilling, lifting 2,000-pound weights, maneuvering in tight spaces, and loading a dump truck with soil.

Operators were carefully recruited from all over the U.S. to provide a balance of: brands of loader backhoes owned, geographical location, small and large companies, range of ages, and varied primary use of the loader backhoe. The purpose of this was to give no brand an advantage in the field tests. And the field tests were conducted by Chicago-based Strategic Business Research, which implemented a large number of security precautions so that no operator could determine the sponsoring company.

Operators put each loader backhoe brand through the field test for a long enough period of time to effectively evaluate the actual operating performance of each brand. Following each test, operators rated the brand on an extensive list of performance attributes, and then took notes on the reasons for their ratings. Operators used their notes later in the day during in-depth discussions led by a moderator from Strategic Business Research.

During these talks, operators detailed the reasoning behind each brand's ratings. Strategic Business Research further explored additional areas that were experienced but not part of any field test such as: cab and seat comfort, loader backhoe lighting on the job area, gauges, dealer service, and reasons for brand selected in the most recently purchased loader backhoe.

Scale surprises

The field tests also were used to customize and pre-test scales for later use in the quantitative stage of the marketing research. The intent was to develop scales that reflect the way operators think about loader backhoe performance. Researchers who routinely use symmetrical 7- or 9-point scales in their research may be surprised by our findings.

Operators clearly discerned four levels of satisfaction with loader backhoe performance attributes. They did not discern four levels of dissatisfaction. So the symmetrical satisfaction scale commonly used in marketing research was inappropriate for subsequent quantitative research.

We also found that use of the word extremely, as in "extremely satisfied," was inappropriate. While operators frequently said that more than one brand would be very effective for their job needs, they did not perceive anything "extremely" and never used a scale point with that adjective. So if we had presented a 7-point scale with the anchor points "extremely satisfied" and "extremely dissatisfied," as is common in marketing research, we really would have been presenting a 5-point scale from the operator's perspective.

We eventually determined that the scale which most effectively reflects the way operators think about their loader backhoes has four levels of satisfaction, a neutral point, and one level of dissatisfaction - a 6-point asymmetrical scale. (Subsequently, we learned that this applies to other construction equipment also.)

A larger scale would have introduced "noise" into the responses. Similarly, insisting that there be an equal number of levels of both satisfaction and dissatisfaction points would have clouded over subtle differences in operator responses.

Worldwide brand comparisons

Following the field tests and in-depth discussions, quantitative surveys were developed for the countries with the highest-volume loader backhoe markets. A number of procedural safeguards were used to assure dependable data in each country.

Three translators were used in each country to assure the questionnaire was effectively worded, meant the same thing in each country, and reflected the way operators actually talk about equipment. Researchers who use one translator when doing international research might be surprised to learn how long and difficult it is to get three bilingual people to agree on translations of simple questions and scales.

Both CNH Global and Strategic Business Research personally participated in the instruction sessions for the international interviewers. Although we are not bilingual ourselves, it was very clear from observing interviews and from interviewer feedback that taking an active role in the instruction sessions resulted in better-informed interviewers and higher-quality interviews. And we gained a stronger appreciation of the cultural and linguistic differences among countries that can impact responses to seemingly simple questions.

Of course, we pre-tested the questionnaires in each language. More importantly we statistically examined the distribution of responses to questions in each country. That the distributions (but not necessarily the scale results) were similar reinforced our confidence that the translated questionnaires were working effectively.

Global implications

The results are having a huge impact on advancing the engineering design of CNH loader backhoes. This was expected. Operators indicated clear differences in performance among the five brands. These findings are being used not only to better differentiate CNH brands from competitors but also to differentiate among the CNH brands.

Not expected, however, was the finding that non-performance attributes play a much bigger role in brand selection than was widely believed. There was a time when the loader backhoe brand with the best engineering and job performance would garner brand share. The market is more complicated and operators are more demanding now. In many ways operators now mirror the demanding purchasing behaviors of consumer product customers.

Today's loader backhoe market has evolved to the point where operators now expect excellent engineering and high performance from all brands. They then make purchase decisions in part on non-engineering factors such as after-purchase service, loyalty to a dealer, convenience features like easy-to-use controls, and in some countries, in response to aggressive marketing campaigns.

As the loader backhoe market has taken on some of the dynamics of a consumer product, many more teams within CNH Global beyond engineering have been impacted by the research results. Marketing and sales, after-purchase parts support and service, financing and credit, strategic planning, marketing research, and other areas are digesting results and planning for the future. Increases in market share will result from integrated product development programs involving all these areas of CNH Global in many varied countries.

The other broad implication of this research to CNH Global is for planning future marketing research. Immense benefit was gained from designing research that fit the way operators think - customized scale questions, use of three translators to capture language nuances, field tests conducted by someone outside of CNH Global, etc. Using standard off-the-shelf questions and procedures would not have revealed the subtleties and richness of detail in this market. One size clearly does not fit all when unearthing construction equipment advancements through marketing research.