Why is a dealer network important for Deere?
Deere & Company (DE) markets its products mostly through independent retailers spread across North America. These retailers (XRT) understand the local market conditions and know customers on a more personal basis.
Customers tend to be extremely loyal to local dealers, as they are capable of fixing what they sell, a key requirement during equipment breakdown. Retailers are therefore capable of marketing products more effectively compared to large corporations such as Deere.
Deere’s competitive advantage: An expansive dealer network
Deere & Company’s dealer network in North America is extensive compared to its competitors’ networks. A vast dealer network is important in the farm (DBA) equipment business due to the time-sensitive nature of farm operations in the plantation and harvesting seasons.
A farmer generally needs farm equipment to run for only a few weeks in the year to serve specialized operational needs in the farm cycle such as seeding or harvesting. Imagine an equipment breakdown during such a time. A dealer can quickly source parts, complete repairs, and get equipment up and running in a short amount of time.
Without access to an expansive dealer network, customers would have to travel long distances to reach the nearest dealer to fix malfunctioning equipment. The absence of a quick fix could be catastrophic for a farmer.
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