Agco's Strategy for New Brands

AGCO's strategy to date has been to buy up major and short line manufacturers - lots of them. In fact, AGCO now has so many brands under its corporate umbrella, many of us have lost track of all the names and paint colors. It's been a wild ride, but AGCO has enjoyed steady growth. Formed in 1990, annual revenue for the company has grown from $200 million to $5.5 billion.

It's fair to say that the multi-brand approach has left some farmers confused. After all, most industry watchers have assumed that at some point, the number of brands would be rationalized. And for a farmer putting down serious money to buy a tractor, planter or combine, it's a valid concern whether the brand is here to stay or gone tomorrow. Discontinued brands just don't hold their value.

In an effort to clarify the strategy, AGCO summoned its dealers and the farm media to St. Louis in August. The message was that AGCO was naming Massey Ferguson, Challenger and AGCO as cornerstone brands. These brands will identify the dealer's focus. Other brands such as White Planters, Sunflower, Hesston and Gleaner will be referred to as "historical" brands. Using the example of a White Planter, if you buy one from an AGCO dealer, it will have decals that identify it as an AGCO White Planter. Buy the same planter from a Challenger dealer and the stickers will indicate that it is a Challenger White Planter. All existing brands will maintain their paint color, but over time, the connection to cornerstone brands will be strengthened. On the combine front, Gleaner will be primarily affiliated with the AGCO brand.

What about the rest of the "supporting" brands that includes names like Fendt, Valtra, Farmhand, New Idea, Tye and Willmar? Doug Griffin, AGCO vice-president of marketing for North America, explains that in the short term, these brands will continue to be sold through the existing dealer network. Those dealers with a successful track record will retain the supporting brands. Fendt and Valtra tractors will continue to be sold at dealers dedicated to these brands. In future, these brands will shift to cornerstone dealers. Interestingly, Fendt has its own research and development department and will continue to drive innovation in other AGCO brands. Fendt's innovative CVT transmission has already found a home in many AGCO brand tractors.

As one dealer at the meeting remarked, "most years, we attend these meetings to find out about the new lines of equipment we will be selling. This year we learned more about the long-term plan. It's helpful for us on the front lines to know that the company has a strategy for dealing with all these different brands as we move forward into the future."

Bob Craine is senior vice-president and general manager for AGCO North America. With the company for about 7 months, Craine was previously an executive with Case New Holland. In a candid interview with ag media, Craine pointed out that clarifying brand priorities is only part of the change underway with the company. Rationalization of dealers is also on the agenda. Following the path taken by other major farm equipment manufacturers, Craine sees fewer, larger and more professional dealers in AGCO's future.

The first step is to eliminate situations where there is an AGCO and Massey Ferguson dealer literally across the street from each other. There are currently about 1,600 AGCO dealers across North America. The next step, according to Griffin, is to develop a dealer network that is able to sell and service equipment to 2 distinct target markets. AGCO will target the larger commercial farmer who requires high-productivity combines, tractors and planting equipment. The second focus is the lifestyle or "acreage" market.

"In the past, much of our growth has come from acquisitions like the Fendt and Caterpillar tracked tractor lines. In future, our growth will rely more on research and development and more aggressive product development," says Griffin.

In addition to announcing this new brand and dealer strategy, AGCO unveiled the largest one-time offering of new equipment. This includes new precision farming components, hay equipment, tillage implements and tractor models. There are also major additions and enhancements to the Gleaner and Massey Ferguson combine lineup. We'll cover some of these new releases in upcoming installments of Machinery News.

Source: agcanada.com