Caterpiller in China
Business is flourishing in China – at least in the industrial machinery market. Amidst rapid economic development, China’s revenue is expected to quadruple, from $1 to $4 billion by 2010. Economic prospects appeared bountiful for companies like Caterpillar, Cummins Inc., and Japan's Komatsu Ltd. Of all the companies vying for success, however, Caterpillar seems to have found a niche in the Chinese market.
Traditional advertising in the industrial machinery market seemed futile; Chinese construction companies seldom kept records of machine efficiency. Comparing Caterpillar’s new machine, the Wheel Tractor-Scraper, with competitors would have been fruitless. Consequently, Caterpillar decided a live demonstration was the most effective way to exhibit the power behind their product. To their surprise, relying on “word-of-mouth” advertising proved to be more successful than anticipated.
“When the project operator excitedly told reporters the scrapers could cut the work schedule by five months and bring benefits to local farmers earlier than expected, the local news station beamed a two-minute clip on its evening news about the machine's wonders.”
Word quickly spread through the country, eventually piquing the interest of China’s national broadcaster, China Central Television. Caterpillar benefited greatly – essentially getting free press, and effectively raised product awareness and visibility.
*As social psychologists say, if a consumer has a good experience with a product, they will tell an average of four people, be they an acquaintance, friend, or family member. If a consumer has a bad experience with a product, they will tell an average of nine people.
Via Erin Booth and the WSJ
Francois
