Effectiveness of Strategic Marketing and Recommendations for Ford Company - Research Paper Example

FORD Company The Ford Motor Company was founded in 1903 by Henry Ford, who envisioned cars as being an affordable item rather than a luxury. The key to the company’s success was its revolutionary strategy of mass production, technological advances, supply chain design, and most importantly the changes in lifestyle. The company is imbued with Henry’s personal motto, “Help the Other Fellow” (Giardina, et al., 2012). Mission One Team: “People working together as a lean, global enterprise for automotive leadership, as measured by: Customer, Employee, Dealer, Investor, Supplier, Union/Council, and Community Satisfaction” One Plan: Aggressively restructure to operate profitably at the current demand and changing model mix Accelerate development of new products our customers want and value Finance our plan and improve our balance sheet Work together effectively as one team One Goal: “An exciting viable Ford delivering profitable growth for all.” Vision Expected Behaviours Ford Functional and Technical Excellence Know and have a passion for our business and our customers Demonstrate and build functional and technical excellence Ensure process discipline Have a continuous improvement philosophy and practice Own Working Together Believe in skilled and motivated people working together Include everyone; respect, listen to, help and appreciate others Build strong relationships; be a team player; develop ourselves and others Communicate clearly, concisely and candidly Role Model Ford Values Show initiative, courage, integrity and good corporate citizenship Improve quality, safety and sustainability Have a can do, find a way attitude and emotional resilience Enjoy the journey and each other; have fun – never at others’ expense Deliver results Deal positively with our business realities; develop compelling and comprehensive plans while keeping an enterprise view. Set high expectations and inspire others. Make sound decisions using facts and data Hold ourselves and others responsible and accountable for delivering results and satisfying our customers. Business objectives Nonfinancial Goals 1. Retain spot as global market leader with over 100 plants and 280,000 employees worldwide. 2. Sustain profitability and rank as Number 1 US auto company. 3. Introduce 2013 Hybrid Edge into Chinese, European and US markets 4. Enter and increase manufacturing in India to lower plant costs 5. Build efficiency through better logistics, distribution and control 6. Succeed at all implementation factors 7. Build awareness and increase sales of all Ford Hybrid automobiles Financial Goals 1. Increase market share from 16.7% of the market to 20% by 2013 2. By 2013 Ford hybrid sales should increase over 100% (in 2009, Ford hybrid sales increased 73%) 3. Sustain 50% increase of new car sales through 2013 (Ford increased new car sales of 40% on April 1, 2010) 4. Push industry hybrid sales to increase 10% annually 5. Ford Hybrid Edge and Fusion to see sales of 100,000 vehicles in each market by 2013. External and market analysis Porter’s 5 Forces Analysis Supplier Power – Medium Mass production – high volume No forward integration High cost compared to total purchase in industry Low/no switching costs Buyer Power – Medium Consumer has some bargaining leverage Available substitutes Price sensitivity is common for Ford (no price sensitivity for BMW and high end brands) Low volume; cars are investments; people don’t usually buy multiples Barriers to Entry – Medium Difficulty entering into established industry Currently numerous options for automobile customers Threat of Substitutes – High Plenty of options in the car industry Dependent on price performance Dependent on customer loyalty Rivalry – High Brand identity and equity Differentiation between competitors Hybrid market growing Industry is at maturity Company’s strategic marketing SWOT Analysis Strengths Wide geographic presence Brand reputation Strong portfolio of quality products Weaknesses Product recall Declining operating margin Declining market share in the sector Huge debts Opportunities Large potential in the emerging markets Consumers seeking more American products Strong outlook for hybrid and electronic vehicles Increased demand for fuel efficient vehicles Restructured operations Growing business abroad Threats US economic slowdown discouraging people from buying cars Rising manpower costs Layoffs due to lower production levels keep raising concerns among employees about their job security Intense competition Reorganized Chrysler and GM For will have tough time pleasing investors. Segmentation analysis Ford Company produces and markets transportation vehicles. It segments its products principally according to three types: SUV (sports utility vehicle), trucks, and cars. Marketing objectives The company intends to capitalize on safety and efficiency and provide global market awareness, particularly in the trial and purchase of their new hybrid models. This is expected to result in increased global and market share and brand equity, thereby increasing revenues and leveraging against Toyota’s hybrid thrust. Marketing tactics Product strategy: Combine sophisticated safety system with sleek, sporty look. Pricing strategy: Upper mid-range, more expensive than economy because of the hybrid technology, but lower than luxury. Placement strategy: Through local Ford dealerships in areas easily accessible and recognizable Promotion strategy: Common worldwide marketing theme to be called “Edgy Situations” for consistency in market strategy across different countries and cultures. These will consist of universal situations people everywhere can relate to, to convey the idea that the customer can relate to the Edge as a solution to difficult situations at hand. Media to be used are TV, radio, print, outdoors, and events. People strategy: Office people to be staffed with experts on the culture, rules, regulation, and customs on the countries Ford intends to expand into; must possess interpersonal skills, attitudes, and service knowledge. Process strategy: Trial incentives (i.e., in media vehicle ‘events’) is crucial to introduce the Edge and familiarize customers with it. When the decision to purchase is made, retention services must be sustained. Physical evidence strategy: Includes the car itself, the proof of purchase (receipt), the car manual, warranty information, and the car keys. Competitive assessment Based on year-to-year percentage change, Ford recorded the highest annual growth from 2009 to 2010, and retains the second-highest market share next to GM, but higher than Toyota. Ranking Automaker Jan 2010 Sales Jan 2009 Sales Year to year % change (unadjusted) Year to year % change (adjusted) Jan. 2010 Market Share 1 GM 146,825 129,227 +13.6 +23.1 20.9 % 2 Ford 112,406 90,596 +24.1 +34.4 16.7 % 3 Toyota 98,796 117,287 -15.8 -8.7 14.1 % 4 Honda 67,479 71,031 -5.0 +2.9 9.6 % 5 Nissan 62,572 53,884 +16.1 +25.8 9.0 % 6 Chrysler 57,143 62,157 -8.1 -0.4 8.1 % 7 Hyundai Group 52,626 46,608 +22.5 +12.9 7.6 % Marketing positioning (per brand) Ford American icon Different model vehicle for every price, style, efficiency, work load, gas mileage or muscle Typically priced for middle class customer Target age: 18-50 Target income: $30-$100 K Mercury More luxurious than Ford brand Smooth driving Target Age: 35-50 Target Income $60-$100 K Volvo Geared toward safety conscious consumer Family vehicle Offer solidity and reliability Target Income: $60-$100 K Lincoln Sophistication and comfort The brand Ford has a host of successfully marketed brands, but will push its new 2013 Hybrid Edge Effectiveness of strategic marketing The strategic marketing of Ford has its strengths. It combines cost-effective production knowhow, Ford’s core competence, with advanced and sustainable technological design and an understanding of consumer tastes and culture. However, Ford’s advancement in rank from third to second was largely due to the drop in Toyota sales as a result of product recalls. If Toyota recovers, Ford should have already established its new products such as the Hybrid Edge, to truly gain an edge on the basis of product superiority and popularity. Ford’s marketing tactics are in alignment with their overall business, thus they may be said to be market-driven. Market focus is evident in the specific distinctions being made among the cultures of its major markets, in particular China, UK/Italy/Germany, and the United States. However, the market effort appears to lack in aggressiveness, both in penetrating new markets as well as establishing and defending a stronger foothold in its current markets. Ford does not appear to focus specifically on the emerging markets where its presence is very low compared to Toyota, relying instead on a generic promotions and product strategy. For its present markets, instead of adopting a more dynamic approach, Ford chooses to rely on the traditional channels for car sales. Recommendation If Ford is to maintain its current position in the industry, it must adopt a more dynamic and innovative strategy to complement its highly innovative technology. Instead of relying on the more traditional promotion channels, Ford could personalize its marketing effort through the online and social media channels to target the young, higher-income individuals, most likely with young families, who could afford the higher price tag of the Hybrid Edge and who would put a premium on safety, style, sustainability, and fun (the key selling points of the Edge). Ford should also explore push the line that in a few years, most vehicles will be compelled to comply with regulations on much more stringent emission standards, so purchasing a Hybrid Edge now would give the consumers a head start. They will do better buying a slightly more expensive hybrid than purchasing a lower price gasoline burner, so they will not be caught in the rush to convert their cars or buy new cars that are compliant with the future regulations. References: Datamonitor 2011 “Ford Motor Company SWOT Analysis.” Ford Motor Company., Jun 2011, p1-11 “Ford On Fuels.” Corporate Knights Magazine, Feb 2008, Vol. 6 Issue 3, p34 Giardina, J; Mowbray, C; Bakhtiari, M; Solano, N; Keast, C; & How, E 2012 Ford Marketing Plan 2013. Accessed 8 March 2012 from http://www.slideshare.net/crmowbray/ford-marketing-plan-2013 Research and Markets: Ford Motor Cormpany - Key Strategies, Plans, SWOT, Trends & Outlook for 2012. Research and Markets. Business Wire (English), 01/10/2012 Read More