Businessmodel of John Deere

Customer Segments

John Deere sells its products to a broad range of customers, spanning the following sectors:

• Industrial, comprising industrial operators such as construction, engineering, contracting, waste management, and oil and gas companies;
• Agricultural, comprising farming and crop producing businesses;
• Marine, including commercial marine companies and recreational marine customers;
• Retail and Distribution, comprising distributors, dealerships and independent sales agents; and
• Consumers, comprising individual members of the general public. John Deere includes among its customers Reinauer Transportation, Midland Machinery, Midwest Machinery, Monsanto, and HP Briggs.

John Deere’s principal markets are the US and Canada, which account for the largest portion of the Company’s sales. The Company, however, has a global customer base, including customers across Australia, Brazil, Finland, Ireland, New Zealand, Russia, Singapore, Argentina, China, Mexico, South Africa, Sweden and the UK.

Value Propositions

John Deere provides value to its customers in the following ways:

• Its brand recognition and standing, with the Company being one of the most recognisable brands of agricultural and industrial equipment in the world, counting among its customers a number of large, high-profile companies;
• Its track record for supplying quality and reliable products, with its products designed to be long-lasting, reliable, efficient, and safe for its customers;
• Its global sales and marketing reach, with the Company serving a broad spectrum of customers across the Americas, Europe, Asia, and Africa;
• Accessibility and ease of use, with the Company making sales through a broad network of dealerships, as well as online, and with its products being east for consumers to manage and operate. ### Channels

Deer and Company operates a website at www.deere.com, through which it provides information on its various products and services. The Company also makes select equipment and products available for sale online through its e-commerce portal www.e-marketing.deere.com.

John Deere’s products and services are marketed primarily through a network of independent retail dealerships and major retail outlets, which deal directly with the Company’s own in-house sales teams. In the US and Canada, equipment and products are distributed through agriculture and turf equipment sales and administration offices in Olathe, Kansas and Cary, North Carolina and one sales branch in Grimsby, Ontario, as well as one construction, earthmoving, material handling and forestry equipment sales and administration office in Moline, Illinois. These U facilities, John Deere market products to approximately 2,381 dealer locations, the majority of which are independently owned and operated.

Outside the US and Canada, John Deere’s equipment and products is sold to distributors and dealers for resale in more than 100 countries. The Company has sales and administrative offices in Argentina, Australia, Brazil, China, Finland, France, Germany, India, Ireland, Italy, Mexico, the Netherlands, New Zealand, Poland, Russia, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, Ukraine and the UK, and an administrative office is located in Kenya.

Customer Relationships

John Deere sells a selection of its products to customers on a self-service basis through its online store, which enables customers to purchase and organise delivery of products without interacting with members of the John Deere sales teams.

Much of John Deere’s sales are made to dealerships and distributors with which the Company maintains ongoing relationships and establishes multi-year sales agreements. The Company also cooperates with dealerships in providing financing solutions and support.

John Deere provides ongoing support services to customers, in the form of maintenance and protection plans, servicing and parts, and safety and training assistance, as well through a range of online resources such as manuals, FAQs, and recall information. Customers are able to contact the Company directly and receive personalised assistance over the phone or via email.

John Deere additionally operates several social media accounts – including with Facebook, Twitter, YouTube, LinkedIn, and Instagram – through which it can interact directly with customers.

Key Activities

John Deere is principally engaged in the manufacture and distribution of agricultural and industrial equipment, as well as ancillary financial services.

The Company operates through three core business segments: Agriculture and Turf, which primarily manufactures and distributes a full suite of agriculture and turf equipment, as well as related service parts; Construction and Forestry, which principally manufactures and distributes machinery and service parts used in construction, earthmoving, material handling and timber harvesting; and Financial Services, which provides credit services and commercial leasing in relation to new and used agriculture and turf equipment and construction and forestry equipment.

Key Partners

John Deere partners with a range of companies throughout the process of designing, manufacturing and distributing its products and parts. These partners can be broadly categorised as follows:

• Channel Partners, comprising distributors and independent sales agents that assist in extending the Company’s sales and marketing reach, particularly in operating jurisdictions outside of the US and Canada where it is not well-represented;
• Supplier Partners, comprising suppliers of tools, resources and services that assist in the processes of developing and manufacturing the Company’s various products and parts; and
• Strategic and Alliance Partners, comprising a range of companies, often industrial and technology companies, that collaborate share resources with the Company and collaborate on joint projects. Deer and Company has recently partnered with DN2K to develop a cloud software platform for agricultural retailers, and with Cree to develop more efficient agricultural machines.

Key Resources

John Deere’s key resources are its intellectual properties, its manufacturing facilities, its logistics and distribution infrastructure, its sales and marketing channels, its partners, and its personnel.

John Deere owns a significant number of patents, trade secrets, licenses and trademarks related to John Deere products and services that it considers to be material to its ongoing operations. Searches of records published by the US Patent and Trademark Office identified two patent applications filed in the names of John Deere Forestry and John Deere Fabriek Horst, including applications entitled ‘Trailed agricultural implement pump with hydraulic flow rate control’ and ‘Control of a boom construction and a tool articulated thereto’.

John Deere owns or leases nine facilities, comprising a centralised parts distribution centre and eight regional parts depots and distribution centres, throughout the US and Canada. Outside the US and Canada, the equipment operations also own or lease four centralized parts distribution centres in Brazil, Germany, India and Russia and regional parts depots and distribution centers in Argentina, Australia, China, Mexico, South Africa, Sweden and the UK.

Cost Structure

John Deere incurs costs in relation to the design and development of its products, the manufacture and distribution of its products, the operation of logistics and storage infrastructure, the management of its partnerships, the operation of its sales channels, and the retention of its personnel.

In 2015 the Company research and development costs amounted to $1.43 billion, while its selling, administrative and general expenses – including the payment of salaries and benefits to its international workforce of 57,200 full-time employees – totalled $2.87 billion.

Revenue Streams

John Deere derives its revenue through the sale of agricultural and industrial equipment and parts, as well as from various charges and fees associated with its provision of financial services.

In 2015 John Deere generated $28.86 billion in annual revenue, down around 20% on the $36.07 billion recorded by the Company in 2014. Sales by the Company’s Agriculture and Turf segment accounted for the majority of the Company’s revenue, with the segment recording $19.81 billion in sales for the year. The Construction and Forestry segment generated annual revenue of $5.96 billion, while the Company’s Financial Services segment generated $2.59 billion.