THE RUMORS were right. The company that became a major player in the farm equipment business by buying 21 short-line brands in 16 years announced it has streamlined its marketing and distribution. AGCO Corporation will now market under three “cornerstone” brands: Massey Ferguson, AGCO, and Challenger. Industry insiders have already nicknamed the reorganization ROY, which stands for the red, orange, and yellow color schemes these brands are known for.

Randy Hoffman, senior vice president of global sales and marketing, says the move represents a significant change in the way AGCO has done business. “AGCO is going through a transition right now,” Hoffman says. “Over the last 16 years we have built our business primarily on acquisitions. We want to grow organically in the future by spending less on buyouts and more on product development.”

Dividing markets

At its new-product introduction in August at the St. Louis convention center, AGCO divided the products into two showrooms. Its AGCO products were keptseparate from Massey Ferguson products to give journalists a sense of what future dealerships will look like. (Challenger launched its products at a separate showing earlier this year. See “Challenger Aims High,” April 2006, www.farmindustrynews.com.)

Under the new plan, all of AGCO Corporation's dealerships in North America need to evolve their local branding and marketing to focus on one brand — Massey Ferguson, AGCO, or Challenger. Then AGCO Corporation in North America will use these product brands and dealers to better focus on two market segments: the livestock producer and rural lifestyle customers on one hand and the professional ag producer on the other.

“Of the 2.1 million farmers in North America today, 175,000 of them control about 75% of the dollar production,” says Todd Stucke, vice president of marketing for the professional producer segment. “So a few producers are a producing a lot. But on the lower end are the lifestyle farmers, who don't produce as much but control over half the land.”

Stucke says the needs of those two segments vary dramatically and call for a targeted approach. Specifically, Challenger dealers will carry the most complete line of equipment geared for professional farmers who have large farms and fleets of equipment that are run 24/7. Products geared to this segment include high-horsepower tracked and articulated tractors and combines, large central-fill planters and tillage equipment, large square balers, and precision farming technologies such as auto guidance.

The AGCO product brand will be marketed to the professional farmer. Commercial farmers seeking high-horsepower row-crop tractors, Gleaner combines, White planters, Sunflower tillage equipment and Hesston big baler technology should visit dealers selling and servicing AGCO cornerstone products.

On the opposite end, the Massey Ferguson brand and dealers will offer the greatest amount of product and services targeting the rural lifestyle segment that has small farms and small-scale livestock operations. Key products will include a wide selection of small hay and tillage tools and tractors under 100 hp, including compact tractors under 25 hp.

Co-branded lines

AGCO management says the nickname ROY oversimplifies the branding strategy because each of the three dealerships will carry other colors of equipment owned by AGCO Corporation. These lines include “autumn prime” Hesston hay equipment, red Sunflower tillage equipment, and red White planters. The lines will retain their original colors but will be co-branded as AGCO, Massey Ferguson, or Challenger to establish and maintain the link to the dealership's cornerstone brand.

“For example, former Hesston products will now be Massey Ferguson-Hesston series products and AGCO-Hesston products. White planters will now be Massey Ferguson-White and AGCO-White,” explains Robert Crain, senior vice president and general manager for North America. “We clearly understand the value of these brands, and we will continue to take advantage of that.”

Combines will be marketed under three different colors: red Massey Ferguson, silver AGCO-Gleaners and yellow Challengers. The orange swath that is part of the Gleaner decal is now more prominent to show that the combine came from an AGCO dealer.

Tractors will hold true to the ROY color scheme, and each brand will have different styling and features designed to appeal to the different segments. This styling will include new sheet metal, grille badging and decals. The new look will roll out over the next 12 to 18 months on AGCO and Massey Ferguson tractors.

Styling aside, improvements that are being added to AGCO, Challenger and Massey Ferguson tractors include new front frame designs, new front lift and PTO capabilities, and new front suspension systems.

Niche tractor brands like Fendt and Valtra will be available to all the dealerships. Spraying equipment will continue to be run as a separate business. Precision farming products (AGCO Global Technologies) will be marketed as a stand-alone business.

Better service

AGCO's Hoffman says the corporation's dealerships will become bigger and more professional to better serve their unique markets. At the same time, dealer numbers are expected to drop so that those remaining will have larger sales territories that can provide a higher return on investment.

“Farm equipment is becoming much more sophisticated, and customers are going to be demanding greater service and technical support,” Hoffman says. “So we are devoting a lot of extra energy into product support and service, which quite frankly has not been a strength of the corporation over the last 14 or 15 years.”

To make sure dealers are equipped with the products their customer segment needs, AGCO will increase spending on research and development by 10% year over year. “We are serious about having the right products for our customers,” Crain says. “And what you are seeing here is just the tip of the iceberg in what we will be rolling out in the next several years.”

New from AGCO

Gleaner A85, A75, and A65 combines. Model A85 Class VIII combine: $278,319 to $335,010. Circle 206.

Gleaner R65 and R75 combines. Model R75 Class VII combine: $249,224 to $295,370. Circle 207.

HydraMaxx front suspension system (available on AGCO DT and RT series tractors with CVT): $5,009 to $7,500. Circle 208.

RT165A (165 hp): $90,349 to $154,512. Circle 209.

FL series loaders, for AGCO RT and DT series tractors. Model FL60: $7,943 to $24,247; Model FL85: $11,635 to $28,339. Circle 210.

Valtra N series tractors (101 to 150 hp). Model N91: $58,831; Model N141: $100,903. Circle 211.

ST60A compact tractor (59.1 rated engine horsepower): $26,765 to $36,977. Circle 212.

Sunflower 4213 chisel plow: $13,305 to $30,945; Model 4233 chisel plow: $30,645 to $53,930. Circle 213.

Hesston 9300 series SP windrowers. Model 9365: $77,058 to $77,915. Circle 214.

Hesston 5500 series round balers. Model 5545: $22,751 to $34,554; Model 5546: $32,803 to $45,650. Circle 215.

Hesston 9180 disc header: $33,541. Circle 216.

New from Massey Ferguson

9895 rotary combine: $275,894 to $336,624. Circle 217.

Quadlink front axle suspension: $5,009 to $7,500. Circle 218.

Dyna-VT transmission: $3,187 to $4,636. Circle 219.

Smart loaders, designed for 6400, 7400 and 8400 series tractors: $6,654 to $29,093. Circle 220.

6497 tractor (165 hp): $112,828 to $150,163. Circle 221.

3600 series utility-sized tractors (55 to 75 PTO hp): $25,626 to $52,254. Circle 222.

500 series utility tractors (44 to 85 PTO hp): $16,856 to $47,984. Circle 223.

1560 compact tractor (59.1 rated engine horsepower): $26,765 to $42,663. Circle 224.

Tier 3 engine on 9635 Hesston series SP windrower: $77,058 to $77,915. Circle 225.

9185 Hesston series disc header: $33,541. Circle 226.

Sunflower 4213 chisel plow: $13,305 to $30,945; Model 4233 chisel plow: $30,645 to $53,930. Circle 227.