What’s Behind Cat’s New Portable Gen-Sets

Caterpillar Inc. has launched its first-ever line of portable gasoline generator sets, and along with it comes a completely new business unit.  The recently announced deployment of the new RP Series gen-sets for commercial and consumer use will be via Cat’s newly formed Omni Channel organization. All of which heralds a major new strategic initiative that will take the Peoria, Ill., manufacturer into the consumer outdoor power equipment markets — and beyond.

The public debut of the Omni Channel organization comes after a two-year gestation period that resulted in September’s launch of the RP Series of portable generators.  But the gen-sets are apparently only a starting point.

According to Tony McAllister, channel development manager, in 2017 Omni Channel will unveil other product lines to broaden the home and outdoor power space.

And, after that, stay tuned, as there is apparently more — maybe a lot more — to come.

“There will be an expansion in this category of products and channels from Caterpillar going forward and that is what Omni Channel was created to do,” McAllister said.

Part of Caterpillar’s newly formed Marketing & Digital Division, Omni Channel also brings a new distribution model to Cat for these new and future products.  Apparently the name was not chosen by accident.

“Omni Channel is a new organizational designation within Caterpillar,” McAllister said.  ”It comes from the development of this project where we have developed a strategy of using multiple channels to take these consumer-type products to customers.  We are developing Omni channels for specific products for Caterpillar, starting with the portable generator sets.

“The strategy here is about the product,” he said.  “Caterpillar obviously builds generator sets for the industrial and commercial markets, so this is an adjacent space we’re entering.  It’s a natural fit.

“Many of the customers we already know, rental fleets, building contractors, contractors in general.  A large portion of the buyers of portable gen-sets in the two areas we are targeting initially, North America (U.S., Canada and Puerto Rico in this case) and Europe, are already customers of the type of products Caterpillar provides and are well aware of Caterpillar.”

McAllister said the distribution model starts with Caterpillar dealers who can choose to sell or service the line of outdoor power products, depending on specific territory needs.

But the other half of the customer equation is the general public, and it’s here where the Omni Channel approach gets interesting.  McAllister said that while many of the contracts for additional distribution channels are still being negotiated, they are all retail based and would fall under terms like ‘big box,’ as well as contractors, wholesalers, and ‘etailers.’

“There are prime product channel sales and there will also be an authorized service network where they may not be selling products, but will be able to offer aftermarket service.”

As part of all this, Caterpillar is announcing a new brand known as ‘Cat Home & Outdoor Power’ that Cat said establishes a new distribution identity for  businesses that join the new service network.  The new trademark will be rolled out on in-store signage, displays, clothing and service trucks to identify authorized sales & service centers that provide maintenance and repairs for the new outdoor power products.

“In some cases the seller of the product will not be providing service and in some cases the service provider will not be selling the original product,” McAllister said.  The approach of sales versus service locations will be based on the strengths and capabilities of the channel partner, which is different from Caterpillar’s typical approach to its markets.

As far as the details of the RP Series of gen-sets, there are four models in the initial US and Canadian offering — 3.6, 5.5, 6.5 and 7.5 kW — with a 12 kW model to follow in early 2017.  European 50 Hz markets will see the three smaller generators in 2017.  The model designations reflect the running power output – RP3600, RP5500, RP6500 E (“E” for electric start), RP7500 E and soon the RP12000 E.  For Europe, three models will introduced under the same RP Series name at 2.5 kW, 3.1 kW, and 4.4 kW.  Eventually the portable generator line will be extended into other series of product.

The sets were designed by a team of Caterpillar engineers and industrial designers based in Mossville, Ill., and Belfast, Northern Ireland.  The sets will be contract manufactured by Rato Power Manufacturing Co. in China.  “We did a lot of research and visited a number of companies in China,” McAllister said.  “Rato wasn’t necessarily the lowest cost manufacturer, but it’s the one we felt best mirrored our design and quality assurance philosophies, as well as quality production standards that matched Caterpillar standards.

“It’s not just a supplier agreement — they are a manufacturing and design partner.”

The new portable gen-set line was designed by dedicated Cat teams in Mossville, Ill., and Belfast, Northern Ireland, and will be manufactured by Rato Power Manufacturing Co. in China.

McAllister said a huge amount of research went into not only the product design, but into the total customer experience, pre-sales through aftersales.  “A lot of work has gone into determining the right product features to go into the product, because we see consumers and contractors as equal opportunities,” McAllister said.  “Plus, we have a very good pre-sales and aftersales setup for the residential customer experience, combined with our connection to the contractors.”

As far as the features of the new RP generator sets, Nick Kelsch, Omni Channel marketing manager, said ease of use, safety and noise were the top three things they heard about from customers.  This led the design team to put everything a user actually touches on the gen-set in one place.

“The controls, the plugs, the digital display are all in one place on one side of the unit,” Kelsch said.  “In our user testing we watched people spend a lot of time figuring out where the choke was, where the starter was, where the oil fill was.  So our industrial design team paid a lot of attention to those touchpoints.”

Other RP series features include all-steel roll cage construction and a hinged handle to move the generator, which is mounted on two wheels.  The gen-sets use Lithium-ion batteries on the electric start models, and have an LED light for night operation.  There is integrated battery charging, a 7.9 gal. fuel tank (4.5 gal. on the RP3600), what Cat called a premium exhaust muffler and sound attenuating side panels.

All of the wiring is fully protected to prevent snags and accidents and all products incorporate snap-fit weatherproof socket covers. The full line has a three-year limited consumer warranty.  The standard consumer warranty is two years with a third year of warranty coverage offered at no charge when a customer registers their serial number online within 30 days of purchase.

Prabhat Mittal, product portfolio manager, said the gasoline engines powering the generator sets are overhead valve designs, producing their rated horsepower at 3600 rpm with splash type lubrication and automatic voltage regulation.

He said the North American engine line includes variations that meet all U.S. and Canadian requirements.  For the European versions, certification to CE and all relevant European standards are also included.

“Each portable generator model offers an EPA version for the 49 U.S. states (excluding California), a California CARB version and a version specifically designed for Canadian standards,” Mittal said.  The base product is the same for all, with fumes recovery to meet California and CSA requirements respectively.

“When we launch our European series for 50Hz markets, we will offer a U.K. version, as well as one for the rest of the EU, McAllister said.

As McAllister said the product development included customer support process development to ensure customer needs are met before, during and after the sale.  For example, Caterpillar has incorporated the use of a QR code on the generator that when scanned with a smartphone takes the owner directly to a new support site on Cat.com.  “We put an awful lot of development into making them user-friendly and very intuitive, McAllister said.  “Scanning the QR code provides parts guides and technical troubleshooting among other things.”

McAllister added that “One thing we are particularly proud of is that the QR code allows a user to connect directly to a multi-lingual customer support center that is operated by Caterpillar and staffed by Caterpillar employees.

“What we think we bring to the market is this holistic approach right from ‘I need a gen-set’ through to ‘I need support. That’s what we really designed, an end-to-end offering.  Because our research tells us that particularly home owners don’t really want a complex product, so we need to make it as simple for them as possible. That’s what we designed for.

“On the other side, we did want a person that owns a Caterpillar portable gen-set to see that they own a piece of Cat equipment.  Some might use Cat equipment in their business lives, so we wanted them to have the same experience in their home life.”

Distribution of the new portable gen-sets will be through the new Omni Channel organization, a new distribution model for Cat that includes its own dealers, along with “big box” outlets, contractors, wholesalers and ‘etailers.’  

One obvious question is why Caterpillar chose to go through this kind of massive effort, creating an entirely new business unit, for what are essentially lower priced products, especially compared to Cat dozers, excavators or loaders.

“We’ve been asked, ‘why not just license these?’ ” Kelsch said. “We wanted to own the process from pre-sales to support.  We spent a year building an entirely new experience on Cat.com that is geared toward how consumers want to learn, shop, and buy products online.  We carefully designed accessories such as cables, covers, and maintenance kits that will be plug-and-play and easy for consumers to use.  In the end, these are power products that resonate much closer to our core.  We wanted to build it as a retail business, but one that looks and feels like Caterpillar.”

When McAllister was asked about Caterpillar’s comfort level moving much more deeply into the consumer-based markets he said, “We are not unaware of the consumer markets as we sell many Cat brand licensed products today.  Our research told us even in the outdoor power equipment space, that when customers looked for what brands to buy for home use, that Cat was a brand they sought out even though we were not really in those markets.

“Our decision to go into this was that we spotted a growing market, an important market, with customers becoming more and more dependent on reliable power.  “We came to the conclusion that the core capabilities to succeed in the residential markets were very similar to the core competencies we already had within Caterpillar.  It was a natural extension of what we do today, providing localized gen-set packages.”

http://www.cat.com/homeandoutdoorpower