Dealers Will Bring Toyota Back

I had a very transforming conversation with a CAT product manager a number of years ago.  She and I were talking about value and she indicated that CAT was going through somewhat of a change in their thinking – at least some of the people at CAT were.  We were about to initiate a project we called “From Peoria to Perth” that looked at the movement of product and information from the U.S. to Perth through Caterpillar of Australia.  The idea was to identify how to improve the movement of product, reduce costs and to streamline information flows.

In some preliminary conversations with product managers in Peoria we dug into the role that dealers play in the CAT system.  An interesting and enlightening point was made regarding how the role of value creation and delivery was changing.  According to the product manager, there was a time when value was embedded within the product itself.  The idea was, “If you want value buy yellow!”  Over time this view of value had changed.  As technology reduced the gap between CAT products and those of their competitors, value creation and delivery was moving down the distribution chain.  According to the product manager, “All we can do in Peoria is to keep us in the game with good solid product.  The game is being won at the dealer level – that’s where the value is being created.”

This represents a revelation for many companies who have a real product focus.  They believe that all value is embedded within the product itself and that value at the point of production equates into value at the point of consumption.  I don’t think they could be more wrong.

Virtually all value models that I have created based on how the market defines value are heavily loaded with dealer, product support, sales, and repair elements.  These elements are not performed by the manufacturer but buy the dealer.

This takes us back to the point I want to make – it will be the Toyota dealers that bring back Toyota.  How they handle the recall will, at the very least, be a determining factor.  That is where the value is now being created and delivered.   Industry pundits are questioning the loyalty of Toyota owners – will they continue to repurchase the Toyota brand? The future behavior of Toyota owners will be greatly impacted by how the dealers respond to the recall issues and treat the current owners.

Six Sigma Marketing is driven by the market’s definition of value – one that encompasses the entire value stream from production to sales to post sale service.  It recognizes a comprehensive view of value creation and delivery.  In Six Sigma Marketing, value at the point of production does not equate to value at the point of consumption.  Value is a flow that traverses the distribution system and responds to the needs of the market.  The companies that really understand the tenets of Six Sigma Marketing will be in the best position to become best in market.

The conventional wisdom dies a slow and truculent death.  The vestiges of a product orientation, especially in manufacturing organizations, live on.  Why wait for a situation that has catastrophic consequences to begin to begin to understand how the market defines value or quality?  Why wait to mobilize systems that will be necessary to deal with the problem?  Why not have these systems in place ready to go?  This is the power of Six Sigma Marketing.  Because it understands the flows of value creation and delivery, SSM puts into place the necessary product and information flows that move not only down the distribution system but also up the distribution system.  Moreover, SSM deals with the most difficult element to change, the mindset of people who will have to deal with the problem.  Absent this market focused mindset, solutions to the problem may wander on the wrong elements.  For companies that rely on an internal definition of value, this change can waste valuable response time in setting up the proper systems and flows.

Toyota’s recall problem will be solved at the dealer level.  This does not mean that the Toyota engineers will not be important but it is at the dealer level where customers actually meet and understand Toyota.  This is where the actual value will be created and loyalty re-won or preserved.

For a complimentary copy of my new book Best in Market: The New Imperative for U.S. Manufacturing go to www.6sigmarketing.com and download it from the contact page.