How Daimler Trucks knew it was time to change Freightliner, Western Star market strategies

Behind the brands: How DTNA decided it was time for a market strategy change

“They’re going to know that a major change is coming.”

That thought nagged the minds of Daimler Trucks North America’s (DTNA) executives last August as David Carson, then president of Western Star, stood between a gleaming red Western Star 4700 chassis and a Freightliner EM2 upfitted for utility applications, and addressed the North American trucking media about the renewed focus DTNA would bring to vocational applications.

“Our leadership in the on-highway segment is undisputed, but we understand from a customer perspective that we can’t take a one-size-fits-all approach,” Carson said, foreshadowing the announcement that was made this week. “Vocational customers have extremely unique requirements, demands and expectations as it relates to product and that means we have to approach that differently.”

At the time, it was a fun brand talking point, but Carson, Stephan Kurschner, DTNA senior vice president of aftermarket, and Richard Howard, Daimler Trucks senior vice president of sales and marketing, knew that a big vocational announcement was on the horizon, as soon as they answered a few lingering questions.

“We want to change our entire business structure to go from a brand-oriented company to a segment-orientated company,” Carson said. Kurschner and Howard nodded in focused agreement as the three sat in a meeting room to talk vocational market strategy.

“Today,” Carson continued, “we’re very specifically organized around the Freightliner brand, which has both on-highway and vocational product and customers. And the Western Star brand has both on-highway and vocational customers. And we are pretty much mutually exclusive. We’re almost two separate businesses.”

“If we want to take our customer experience to a completely new level,” Howard said, “the inhibitors are within the way we’re organized. Some of the complaints from customers are that they’d like to see more is more speed from our organization – more focus, better dedication. We need to make a significant and meaningful structural change in the way we look at business today.”

This wasn’t just talk. It wasn’t the development of another customer-first marketing bullet point. This meant wholesale changes within DTNA, fundamentally changing not just their day-to-day responsibilities but how the organization as a whole operates within the market. And they knew it need to be done. But how to do it?

“We would have two leaders,” Carson said. “One for on-highway and one for vocational applications. Richard would have responsibility for the Cascadia, M2 on-highway, and Western Star 5700, and I would have Western Star 4700, 4900, 6900 and then the M2 vocational applications.”
“And the aftermarket would be the enabling structure beneath it,” Kurschner said, “supporting both functions and building specific approaches for specific applications.”

With the three in agreement and the full support of Roger Neilsen, DTNA president and chief executive officer, they now had to answer the tough questions, starting with:

What does this mean for the Freightliner and Western Star brands?

There’s silent, serious consideration before Carson stepped in to shoulder the weight of responsibility that his future title would hold.

“We have two very strong brands that exist today, and we will maintain two very strong brands,” he said. “So we will not dilute either Freightliner or Western Star by shifting to a Daimler Trucks branding in the marketplace. But we want to leverage, as Stefan said, enabling functions that can and should be brand and segment agnostic. The Detroit powertrain and technology can also be brand and segment agnostic”

Stefan leaned back thoughtfully in his chair and worked the hinges of his glasses as if he was testing the flexibility of his aftermarket operation.

“Richard is covering a massive customer population today under the Freightliner umbrella,” Carson continued. “If he is able to solely focus on on-highway applications, then he can dedicate himself to those customers and serve their needs with either the Cascadia or 5700.”

“The Freightliner brand is about 34% of the total market,” Howard said working through the strategy. “And David you’re spot on: We want to be an undisputed market leader in all segments. With a more intense focus comes a better understanding of the segment and customer needs for sure, and then an increase in the speed of reaction to market and customer needs.”

“And that’s why Detroit and aftermarket support is the enabling foundation, because it’s the process of how customers interact with us,” Kurschner said. “Aftermarket support should be a seamless, easy process. You cannot create brand recognition by how you handle a warranty claim. It should be a standardized process. There is no brand equity in that.”

“It’s not just a sales and marketing transformation, as David mentioned, in terms of engineering support for key segments,” Howard agrees. “It is truly an enterprise transformation.”

What does that mean for customers?

The answers are coming quicker now as the working solution solidifies.

“When we go work with customers today, they might see a quote or a proposal from Western Star and then one from Freightliner, and those things are disconnected,” Carson said, noting that most of the truck brands in the market have a similar structure and challenge. “But we have a dealer network that is unique because a good portion of our network is dual-branded, which means we don’t have two separate distribution channels between Freightliner and Western Star.”

“So our dealers are already positioned to better support the segments,” Howard finished the thought.

“Let’s say we have a small fleet customer of 250 trucks that run on the West Coast and they’re buying Cascadias,” Carson continued, his words fueled by the energy that comes from creating something you know is going to work. “Right now, customers are interfacing with a district sales manager that works in Richard’s organization who is not only fielding and handling calls from that individual, but he’s also working with a five-truck concrete mixer business. He’s working with a refuse customer. He’s sort of scattered across the Freightliner brand covering customers in both segments.

“We need that salesperson to have a focus for the on-highway customer, and like customers, so that he or she is focused on those needs and topics. Then that salesperson has access to not just Cascadia, but the Western Star 5700, adding another dimension or layer of tools in the toolbox to help the customers solve their needs to run their business.”

“The salesperson is controlling the whole customer experience ultimately,” Howard agreed. “A balancing of resources within our organization would enable us to truly reach the full potential for those segments, as well as from an after sales point of view.”

“It’s important that this transformation process actually builds on the strength of the brand as well,” Kuschner stressed. “Remember: This is not amalgamating two brands together because then interests become ‘DTNA’ or something artificial. The brands will be a very strong attribute of this business transformation because they will be driven segment-specifics; the brand approach to the market is unique, but the segment’s specific needs are the commonality.

“If we look at Class 8, the Freigthliner-brand share in the vocational market is 14%, which is not acceptable,” he continued. “If we look below Class 8 on the Freightliner side, it’s nearly 85%. So from a medium-duty vocational standpoint, we are absolute rock stars. Then we look at Class 8, heavy-duty, between Freightliner and Western Star, and we’re underperforming.”

“If we don’t change to this segment approach, we have this co-vision between those two things,” Carson said, highlighting the danger of continuing to do things the way they’ve always been done. “What we really want to do is leverage that expertise that allowed us to get to such a high share on the medium-duty side and bring that into Class 8 heavy-duty.”

What does this mean for the products, present and future?

For the first time in the conversation, all three executives were speechless. Then Carson said what needed to be said.

“We’re not fully prepared to answer that,” he acknowledged, “but we can’t execute this without a significant move on the product side.”

Fast forward to nine months later

That significant move was teased in the form of a silhouette: A brand new Western Star truck; the first product built within DTNA’s segment-centric strategy. While Carson couldn’t share product details, he could share strategy details. The first big difference? Addressing the divide between Freightliner’s technology and product feature and Western Star’s.

“We’ll close that gap completely,” Carson said during a conference call after the unveiling. “We’re completely modernizing the Western Star offering. We’ll have equivalent level of capabilities from a technology standpoint. If we think about it within the context of current Western Star product portfolio for vocational, we have the 4700 and 4900.

“Now look at our how our vocational products stack up: We have a predominantly M2-based medium-duty vocational offering from Freightliner, ranging from the 106 M2 to the 114 SDs that can be in the Class 8 range. Then we have Western Star with 4700, 4900 very much in the Class 8 segment. Going forward, we want to be much more deliberate about differentiating things like engine horsepower and displacement with Western Star focused on Class 8 vocational and Freightliner focused on Class 6, 7 and partially into 8.”

It takes a moment to wrap your head around the strategy, but where you’ll likely see the impact soonest is in the quoting and warranty claim processes.

“Some of the confusion in the market for us was trying to quote both brands in a deal when each brand had a different value proposition,” Carson explained. “In the past, we were sometimes disconnected in terms of pricing information. We operated independently within the brands. Going forward, we’re going to operate much smarter in defending and protecting our current business, while also supporting conquest-oriented business goals.”

Kuschner followed that up with how the strategy will stay consistent well after the sale.

“Before, if a customer went into a dealership and looked at who was processing the claims, there was one person in the dealership working on a Western Star warranty claim and submitting that; then working on the Freightliner warranty claim and submitting it. So it would come to us through two different routes. That is not ‘ease of doing business.’”

“That was not working for us,” Howard agreed. “So we listened carefully to the market and our customers, and asked ourselves: How do we get to that world-class customer experience?”

“We’ve invested in extensive sales and service training for our products, as well as continued sales training scheduled for dealer personnel,” Carson answered. “In the background, we’re communizing our processes that have traditionally been different between Western Star and Freightliner, and internally within our entire organization we spent a tremendous amount of time in workshops this past December and January with employees that are impacted by the change and yes, change is difficult, but we’re working individually and within groups to make sure that our people are comfortable with the direction that we’re heading and our message about this opportunity was: We’re extremely successful as a business in total, but we have other opportunities that we would like to take advantage of.”

A tectonic shift in the way Freightliner and Western Star go to market doesn’t happen overnight, and as the new Western Star truck tease shows, there’s plenty more to talk about.

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