Marketing Course Work
Content
M 0 4 M K T– T – P R IN IN C I P L E S O F M A R K ET E T IN G GROUP ASSIGNMENT
ON
FORD MOTOR COMPANY UK
Submitted by:
Bhavani Jonna Ezra Kumar Karthik Shanmug Shanmugam am Sangeetha Ravikumar Saraswathi Pabbaraju
Date : 23-03-2010
2935007 3077425 2977269 3081008 3014420
Word Count : 8366 8366
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ABLE LE OF CONTENTS T AB
Introduction Organization Organizati on Orientation ------------------------------------------------------------------------- --------------------------
3 4
Corporate Organization ------------------------------------------------------------------------ -------------
4
Product Orientation Orientati on ------------------------------------------------------------------------ -----------------------
5
Competitive Competitiv e Advantage Potters Five forces analysis ----------------------------------------------------------- ------------------
6 9
Marketing Mix Product
11 Product Services and Branding Strategy -------------------------------------------------------- -------
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Product Mix ----------------------------------------------------------------------------- ---------------------------------------------------------
13
Stages in developing product and service Attributes ---------------------------- ---
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Branding ----------------------------------------------------------------------------------- ----------------------------------------------------------Market segmentation, targeting and positioning -------------------------------------------- -
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BCG Growth Share Matrix ---------------------------------------------------------------------------------- ---------------
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Ansoff Matrix Matrix --------------------------------------------------------------------------------------------------------------------------
22
New Product Development --------------------------------------------------------------------- --------------------------
23
Pricing strategy ----------------------------------------------------------------------- -----------------------------------------------------
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Price Segmentation ------------------------------------------------------------------------- ---------------------------------------
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Price
Promotion Mix Advertising Advertis ing --------------------------------------------------------------------------------------------------------------------------------
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Direct Marketing --------------------------------------------------------------------- ---------------------------------------------------
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Sales Promotion ----------------------------------------------------------------------------------- -------------------------------------
29
Internet Marketing ----------------------------------------------------------------------------- ---------------------------------------
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Personal Selling / Publicity ----------------------------------------------------------------------- ------------------------
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-------------------------------------------------------------------------- -----------------------------------------------------------------------------------------
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Impact of Marketing Mix ------------------------------------------------------------------------- -------------------------------------------------
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Swot Analysis -------------------------------------------------------------------- -------------------------------------------------------------------------------
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Pestel Analysis ------------------------------------------------------------------------- -----------------------------------------------------------------------
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Conclusions & Recommendations ------------------------------------------------------------------- ----------------------------
47
References ------------------------------------------------------------------- ---------------------------------------------------------------------------------------
48
Place
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1.INTRODUCTION “We are a globally diverse family, with a proud heritage, that’s passionately committed to providing outstanding products and services.” The mission Statement of Ford reflects the success and the fame that the company has acquired after surviving strongly in the automotive industry all these years. True they are a globally diverse family, as they have their manufacturing units all over the world. The sales figure of the company holds strong even during the times of economic downfall, all mainly because of the high standards of strategic planning by the marketing team. Ford Motor Company was founded in 1902 and the legend is popular for its exceptional achievements. The most popular of the Car coming out of Ford Motors is the Mustang, an invention in the category of phony cars, to the large scale manufacturing of using moving assembly lines show us how Ford Motors has been setting standards in the fields of innovation and quality. (Contact Magazine, Magazine, 02, 2009) Ford has also been an inspiration to the not only its home competitors but also to its competitors in the international market. In William A. Levinson’s book “Henry Ford's Lean Vision: Enduring Principles from the First Ford Motor Plant”, we can see how Japan adopted the techniques or better to say the concepts of kaizen (Continuous (Continuous improvement), poka-yoke (error proofing) and just-in-time famous. These concepts were adopted by Japan in the early twentieth century and Japan knew that it would exactly get what he called it as: proven methods of mass-producing any product or delivering any service cheaply but well
Ford CEO Mr. Allan Mullaly in a statement given to the contact magazine said that one of his for priorities in the ONE Ford plan is “accelerate development of new products our customers want and value.” This does not seem to be a surprise as now in the market lies in the customer’s hands where he would want the best of the line of products and for the cheapest price. And in this era where the growth in globalizatio globalization n is sky rocketing it is the sole aim of car manufacturers to grab customers towards their business or they might end up closing their company.
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The proof of Ford receiving the more awards from J. D. Power and Associates for the surveys in initial quality for five cars, which no other automobile manufacturer has achieved till now, shows us u s how well planned the marketing strategy of Ford Motors is.
1. 1 ORGANIZATION ORIENTATION 1.1.1 CORPORATE
ORGANIZATION
A profit of of around $1.06 $1.06 billion was achieved by the Ford Ford Europe Europe in 2008, 2008, which was
the fifth year in a row of profits. Also it was the profit in the run of year-over-year as this being the fourth with the first year of having a profit of more than $1billion since 1989. From the mid of 2008 to the beginning beginning of 2009 there was was a change change in the profit which which
was a result of economic downfall that effected the European market. The Estimated Loss was calculated to about $550 million in the first quarter of 2009. The mid of 2009 showed showed improvement improvement as there was a profit profit of $138 million million which which
increased the profit of Ford of Europe by $688 million approximately, this was a major improvement considering the difficult economic conditions. The Ford Fiesta with its new product portfolio was a major major innovation as it increased
the volume of sales in the month of August 2009 which was the third consecutive month against the industry trend. Though being being given a second position to Volkswagen in in Europe as a bestselling bestselling
brand, Ford has shown a constant increase in the market share.
Even though there is a positive effect of all all the different forms of national national vehicle vehicle
scrap-page Schemes, there is still a negative industry trend and a weak underlying market.
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To preserve preserve the highly fragile market market improvement improvement in the the recent recent months, ford has
decided not to remove the incentive schemes and keep them as long as it is possible to keep them in a practical situation; Ford is planning to phase out the schemes in a manner which would be orderly as to not disturb the demand in the market. Till the Economic Economic crisis crisis ends, National National Government Government and the EU should should give give full
support to the automotive industry to preserve the value chain with all the innovative tools available. During this time Ford will be in continuous decision making situations to have a viable
business future which would also include the reduction of structural cost in order to safeguard the product plans of the future and tune the production in accordance with the demand.’
Fords confidence confidence that it would emerge emerge as a stronger and a more competitive competitive business as the economic situation improves and would also sustain a good business for the future is based on the successful strategy which helped to take the decisive measures used to handle the economic crisis since it has appeared. (Fact Sheet August 2009:3-7)
1.1.2 PRODUCT ORIENTATION 2006 to 2008 has seen the the re-innovation re-innovation of every every model in Ford Ford Europe car car portfolio. portfolio.
In 2009 these new vehicles were introduced in the market to establish the Ford market again. So in 2009 Ford entered with the strongest vehicle line-up ever and the year 2008 was seen as the year of introduction of around 20 new products and derivatives. The new Ford Ford Fiesta, Fiesta, introduced introduced in autumn, and KA, introduced introduced in the the end of 2008, in in
the line of Ford ECOnetic, was the range of fuel efficient car and were smaller in size and were also perfect for the weak economic climate.
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The Ford Fiesta, Focus Focus and Mondeo are one of the Ford Ford ECOnetic ECOnetic class of vehicles
which have low fuel consumption consumption and CO2 emissions and also available at affordable prices. The new versions of the Ford Transit ECOnetic4, Ranger, Connect and Transit Transit and
the Focus RS which were released in the beginning of 2009 received an outstandingly positive media review. (Fact Sheet August 2009, page 3/7 )
The design design direction in the MAV MAV Execution for the future C-segment Fords Fords were
introduced at the iosis4MAX concept at the Geneva Motor Show. In 2010 Ford will launch the first car in the range of new-generation new-generation EcoBoost EcoBoost direct-
injection petrol engines. The 1.64litre engine will be manufactured in Bridgend and the 2.04litre engine will be manufactured in Valencia. The Craiova plant and the Cologne Engine plant in Romania will be introducing a more advanced lowerdisplacement EcoBoost engine.
2. COME COMEPETIT PETITIVE IVE ADVANTA ADVANTAGE GE Though Ford faces tough competition from the top company Volkswagen, still ford has managed to have good sales and hold on its position in the market. The sustainability of Ford is explained below. The customer customer centric attitude of Ford can can be understood understood through the high-volume high-volume
affordable solutions catering to the needs of millions of customers. Through this Ford believes that it would succeed in reducing the carbon footprint of Ford and its customers. Low-CO2 technology technology in in vehicles is the new new mantra mantra that Ford is offering as an
environmentally advanced portfolio. With the innovation and the variation increasing the ECOnetic has become a very
important part of Ford. The Ford Fiesta, Focus and Mondeo are the successful variants of the ECOnetic passenger cars. The year 2009 also saw the introduction of
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Ford Transit ECOnetic, which was the first commercial vehicle in the ECOnetic range. Ford proudly proudly says that that the ECOnetic vehicles are the best-in-class amongst-the-bestamongst-the-best-
in-class low fuel consumption/CO2 emissions. Biofuels, their supply and and production production are supported supported by Ford. So So Ford has a vehicle vehicle
range of Flexifuel Vehicles (FFVs). These Vehicles run on E85(85% bio-ethanol; 15% petrol), any mix of both in one fuel tank or only petrol, which makes it the choice of the consumer to have a choice of fuel and operation. The FFVs that ford has come up with include the variants of Focus, C4max, S4MAX, Mondeo and Galaxy. Ford also offers factory fitted CNG and LPG variant for Fiesta, Focus, Focus, C4MAX, C4MAX,
Transit and Mondeo, but this depends on the market conditions. (CNG – Compressed Natural Gas, LPG – Liquefied Petroleum Gas)
Ford plans to electrify the vehicles which would also include the diesel stop/start,
hybrid, plug-in hybrid technology and battery electric vehicles. Even the other technologies that would have the potential to deliver a positive support to the customers in future. Though Ford knows that there is no single solution but still it will keep on fighting f ighting till the end to improve its technology.
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Figure 2.0.0
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2.1 PORTER’ S FIVE FORCES A NALYSIS: COMPETITIVE RIVALRY With fierce competition between General Motors, Ford and Volkswagen (the biggest players in this industry) extreme steps are taken to attract customers. The companies offer a variety of schemes to attract customers. Though Ford has a huge production volume and very similar organization structure of GM, still it has not been able to come up to the first position and is still below Volkswagen. It can be said that this situation of Ford is because of the major loss that incurred due to poor Jaguar Marketing and the Tyre scandal. Even GM is giving a tough competition to Ford with few of its lucrative schemes such as the “GM military offer” (GM, 2005). Since the 1990s the demand for car compared to the rise in population has been declining. So the competition is becoming stronger by the day. (Muller et al. 2001)
B ARRIERS TO ENTRY To make an entry into this highly competitive industry, the company has to have a strong background, such as reputation, finances, experiences, technology and a huge product portfolio which should be in comparison with the big Giants. There is another major problem which could disturb a smooth entry. An example would explain it better; the components which had high profits in Rover were purchased by BMW and Ford, which Rover with cheap quality products and ultimately made it file for bankruptcy bankruptcy in in April, 2005(BBC, April 2005).
Due to the the deteriorating deteriorating
environmental and the improving technological factors, already existing companies can invest large sums of capital but the new companies would find it difficult.
THREAT OF SUBSTITUTES: With the public becoming more aware of environmental and health issues, the consumer is resorting to other modes of transport such as trains and buses, cars are being looked as a necessity to only those living in the outskirts of the city. Other forms of energy if not researched about for the use as fuel in vehicles it would become difficult for the survival of the industry as Diesel and petroleum is fast depleting. 9
B UYER POWER: Inflation, rise in taxes and interest rates effecting both the sale of the vehicle and the fuel charges including maintenance is again a factor that threatens the industry. However the demand has not fallen f allen for cars so a company faces tough competition in the market. These days when two products of the same line are compared to each other, we find f ind that there are very few differences. This and the incentives provided by the companies to attract customers makes it a very competitive environment. For e.g. for f ree. some of its cars Ford provides upto upto ₤2000 worth of upgrades for free.
Cars are mainly made after looking at the kind of demand coming from the customers. These days customers want a cheap vehicle which they could use for a long time.
SUPPLIER POWER: The supplier power in this industry remains low as compared to other industries mainly because almost all the companies companies manufacture their own vehicle parts. However companies are ordering for bulk supplies and reducing the number of suppliers. This is a good plan for the company though as they need not depend on the supplier in situations of emergency. (BBC, September 2005). This step taken by the t he companies has affected the suppliers too, the competition has increased and the prices are reduced with the supplier himself. This competition is benefiting both the company and the supplier. The company is getting goods for lesser price and the supplier is getting more profit with bigger bulk sales.
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3. MARKETING MIX Marketing mix is set of Price, Product, Promotion and Place of an organization. Some have suggested other P’s and that is called Extended Marketing Mix. The other P’s are People, Physical Evidence and Process."Marketing Mix is set of correlated tools that work together to achieve company’s objectives, they are: product, price, promotion, and place” (Kotler and Armstrong, 2004).
Place
Product
Marketing Mix
Promotion
Price
Figure 3.0.0
3.1 PRODUCT, SERVICES AND BRANDING STRATEGY
3.1.1 PRODUCT Product is anything that can be offered to a market for attention, acquisition, use, or consumption, which might satisfy a want or need (Kotler et al 2004). Products can be tangible and non-tangible. Non- tangible products are the services offered by the organization. Today, companies are creating and managing customer experiences experiences with their products.
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L EVELS OF PRODUCTS:
Product Planners need to think on three levels:
1. Core Product: It is the base requirement of the customer. The organization must specify the benefits offered by the product which is asked by the customer. (Kotler et al 2004).
Core Product Actual Product Augmented Product
Figure 3.1.1 (Kotler 2007) 2. Ac Actu tu al Pr Prod oduc uc t: The requirements of the customers are taken into the shape of the product. All features of the product are taken into account and also the services needed to provide for the customer (Kotler and Armstrong 2004). 3. Augmented Product: The product and the services are aligned to offer more benefits to the customer (Kotler and Armstong 2004).
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3.1.2 Product Mix
A product mix consists of product width, length, depth and the consistency of the products within an organization. It indicates the product line the company has and the kind of products the company manufacture. Ford carries many brands within each line. Thus, Ford’s Fusion comes in three different d ifferent models and specifications (Kotler and Armstrong 2004).
Ford Products Commercial Commercia l Vehicles
Cars
PRODUCT PROD UCT MIX BREADTH A AND ND LENGTH Product Line Length Cars
Product Line
Commercial Ve Vehicl hicl es
Ka
Panel Vans
Fiesta
People Movers
Fusion
Chassis Cab/OSS
C-Max
Pick-Ups
Focus
Double Cab-in Vans
Auto mobi les Pa Parts rts
Ford
Catalytic
Converter Ford Front Window Regulator Ford Headlamp Ford Corner Light
Mondeo Ford Rear View Mirror
Breadth
S-Max Kuga
Ford
Timing
Belt
Cover
Focus Coupé-Cabriolet Figure 3.1.3(Ford
Galaxy
2010)
Focus RS
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PRODUCT DEPTH COMMERCIAL VEHICLES
Panel Vans New Fiesta Van
People Movers New Tourneo Connect
Chassis Cab/OSS
Chassis Cab Chassis Double Cab
New Transit Connect
Pick-Ups
New Ranger regular Cab
Dpuble Cabin-- Va in Vans ns Transit Double Cabin-Van
New Ranger Super Cab
Tourneo One-Stop Dropside Transit Van
Transit Minibus
New Ranger Double Cab
One-Sto One -Stopp- 1way 1way Tripper
New Ranger Tripper
One-Stop-3way Tripper
ig 3.1.4 3.1.4 (Ford 2010)
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CONSISTENCY Ford products lines are consistent as they all are related to each other and they all go through the same distribution channels.
3.1.3 STAGES IN DEVELOPING PRODUCT AND SERVICE ATTRIBUTES A TTRIBUTES
Time Figure 3.1.6 (Jobber 2007)
Product Development Development Stage: The organization plans to develop a new product. It
aims at gaining profits for the company and retain the market place (Kotler and Armstrong, 2004).
Introduction Stage: Sales grow slowly at the introduction stage when a product is
new on the market and there is only a limited awareness of its existence. (The Times 2010).
Growth Stage: Stage: Rapid changes in the product, entering to new markets, adding new
features, improving quality and substantial profit improvement (The Times 2010).
Maturity Stage: In this stage the competitors enter the market and promote their own
products. This will reduce the rate of growth of sales (The Times 2010).
Decline Stage: The market becomes saturated as there are too many firms
competing for customers. Organization will compete in a variety of ways and some will drop out of the market. The sales come down and profits erode (The Times 2010). 16
Ford Fusion, Focus and Fiesta are in between the growth and the Maturity stage.
PRODUCT A TTRIBUTES
Product Quality
Product Design
Product Features (Luiz et al 2010).
SERVICES:
Maintenance Maintenan ce and vehicle repair services
Financial services
Retail financing
Wholesale financing
Third-party claim management management services (Luiz et al 2010).
3.1.4 BRANDING “ A Brand Brand is: name, term, sign, symb symbol, ol, design, or combination combination of these intended intended to identify identify
the good or service, and differentiate them from those of competitors” (Kotler 2004).
FORD B RANDS
Ford Motor Company uses many Brand names manufacturing the automobiles like Mercury, Lincoln, Volvo, and Mercury. This has major manufacturing operations Worldwide in countries like United Kingdom, Canada, etc. Branding depends on Public relations, scholarships, clubs, factory visits, trade shows, event marketing, press release, social cause, founder or a celebrity personality, personality, mobile phone marketing, etc, (Ahmed et al 2009).
B RAND STRATEGY The Ford classified the brand names of midsize cars and SUVs by research techniques. Ford uses Umbrella branding which determines price and value (Ahmed et al 2009).
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MARKET SEGMENTATION, TARGETING AND POSITIONING Identify basis for f or segmenting market
Market Segmentation Developing profile of resulting segments Develop measures measures of segment attractiveness
Market Targeting Select the target segment(s segment(s))
Develop positioning for each segement
Market Positioning Develop marketing mix for each segment
Figure 3.1.7 (Kotler 2007) The Organisation’s first phase is choosing the value, the strategist "proceeds to segment the market, select the appropriate market target, and develop the offer's value positioning. The formula - segmentation, targeting, positioning (STP) - is the essence of strategic marketing." (Kotler 2007).
STRATEGIC MARKET MARK ET SEGMENTATION SEGMENTATION
Market Segmentation is “dividing up a market into distinct groups that (1) Have common needs and (2) will respond similarly to a marketing action” (Roger (Roger et al 2005).
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The various types of segmentations are Geographic segmentation
Demographic segmentation segmentat ion
Psychographic segmentation segmentation
Behavioral segmentation segmentation
Ford has mainly segmented the UK automobile market on various basis which are the parts of above mentioned factors.
SEGMENTATION BASED ON AREAS/CITIES: Ford is mainly concentrating on the major cities like
London, Birmingham, etc. SEGMENTATION BASED ON AGE: Ford segmented the market based on the youth as it did in
designing the cars for the youth and middle aged people. SEGMENTATION BASED ON INCOME: Ford segmented based on the customer’s income .Fiesta
and Focus is segmented for the upper middle class. SEGMENTATION BASED ON BENEFITS PROVIDED: Distinctive benefits which will differentiate it
from the competitors (Charles 2010). M ARKET T ARGETING
Selecting the segments by evaluating the market segment attractiveness . T ARGET M ARKETING
The segment with similar tastes and needs and company aims at providing the services on a profit base. Ford is not just limited to one segment; it covers all segments through different models of cars. For example, Ford Fusion is mainly for Youth and society class people (Denise 2004). M ARKET POSITIONING
Place where a product occupies in the t he market relative to tthe he competitive product.
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PRODUCT POSITION
How the customers define the product attributes relative to the competitors products. Ford positioned the different cars in different places to attract the customers from all parts. Ford could not position the Mondeo in a proper way that’s the reason the sales are less for that product. P ACKA GING
Cars are generally not packed as they don’t have much importance. Cars usually don’t get packed in a box, only if someone wants to gift it. Ford does not use packaging. L AB ABELING ELING
Labeling will be a small brochure about the Car parts specifications, so that they can see how exactly the car works, and what and from where the parts are.
WARRANTIES The warranty offered by Ford lasts for 1-10 years or 60,000-1, 00,000kms depending on the model (Ford 2010).
BCG Grow Grow th Sha Share re Ma Matrix trix
Figure 3.1.8 (Kotler 2007:149) QUESTION M ARKS : Market share will be high but the business share units will be less.
Need lots of cash to hold share of Market Managerial Manageria l decisions need to be M Made ade on whether to drop or build up
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Ford genuine parts and its its brand come under this this quadrant.
DOGS: Degrade in business, market share and the products sales will also be less.
May be self sustaining cash sources
Not good bet on large cash sources STARS: Market share and business grows as well as sales.
Heavily financed (loans; stocks; bonds) (Drummond 2004).
Ford motor motor crediting and finance comes under this quadrant.
C ASH COWS: Company does not progress well though they is rise in sales and market share.
Less investment investment to hold market share…thereby share…thereby producing lots of cash cash
TOTAL ASSET COMPARISON: “ Last avail y ear - 11 11 comp anies (100% = 13,759,7 13,759,770th 70th GBP) Peer group: Closest 10 companies for the Industry group based on Turnover for the last available
year.”
Ford Company Limited
5.05 9.85
22.25
Jaguar Cars Limited Limi ted (UK) General motors UK
10.05 8.56
BMW (UK) Manufacturing Limited Toyota Motor Manufacturing(UK) Limited
Figure 3.1.9 (Fame 2009)
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ANSOFF MATRIX MA TRIX The Ansoff Matrix is a tool that helps businesses decides their product and market growth strategy. Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets (Lynch, 2003).
Figure 3.1.10 (CSS3 2010) Market Ma rket Penetration: Penetration: Stepping into new markets with the existing products (John 1999).
Product Development: The strategy here is to modify the existing e xisting products and develo develop p the
new products (John 1999).
Market Development: Moving the products to the new market (John 1999).
Diversification: Putting new products into new markets , organization may have risk at the
earlier but later it proves better to get diversified d iversified (John 1999)
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NEW PRODUCT DEVELOPMENT Idea generation
New Product strategy
For new ideas and innovation, many companies use the Brain storming technique. And other ways
Idea Generation
of idea generation taken place through internal
Screening
resources or external resources. Internal resources
Concept Testing
are like Scientists, Engineers, Marketers, Sales people and Designers. Designers. External resources resources are like like Competitive products, Distributors, Customers, suppliers (Rainey 2005). Screening
Business Analysis Product Development Market Testing Commercialization
This stage includes evaluating developed ideas in order Figure 3.1.11(Kotler 2004) to estimate the t he commercial value, how it helps to achieve organization goals and successive competitiveness. Few companies use predefined checklist for screening to make sure nothing can be missed from overlooking (Rainey 2005). Concept Testing
Accepted new product ideas are tested with potential customers so that at the initial stage organization can detect the customer perspective issues (Rainey 2005). Business analysis: This is the stage where we can estimate the sales, costs and profit.
This will sense the target market and its size, acceptance of new product over the years. Companies uses break even analysis for financial feasibility verification (Rainey 2005). Product development: Here actual product will be developed and Product attributes
discussed earlier like quality, features, style, and design are taken in to consideration (Luiz et al 2010, Rainey 2005). Market Ma rket Testing: Testing: Testing for customer acceptance. Released to test market and ask for test
drives and ensure that customers experience and as per the feedback, rectifying the minor issues if any and get the final product ready (Rainey (Rainey 2005). Commercialization:-In This stage, product will be launched and taken marketing mix price,
promotion and place decisions. Companies predict their sales and profit (Rainey 2005). 23
3.2 PRICE It is the value set for a product or a service offered by an organization (Kotler 2004, Lazer 1971). Customers check the price and the services offered by the organization to buy a product. They just don’t respond to the price alone. Both internal and external factors are to be considered when setting the prices. Internal Factor Factor s:
Marketing Objectives
Market positioning
Survival
Current profit maximization
Market share leadership
Product quality leadership leadership
Marketing Mix Strategy Target Costing
Non price position
Costs
Organizational Organizational considerations considerations
External factors
The Market and Demand Different types of market
o
Consumer perceptions of price and value
o
The price demand relationship relationship
o
Competitor’s costs, price and offers
o
Other factors (Economic, Government, Government, etc.)
o
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PRICING STRATEGY
Penetration pricing
Skimming pricing
Competition pricing
Product Line Pricing
Bundle Pricing
Psychological pricing
Premium pricing
Optiona Optionall pricing
Ford follows different pricing strategy for its different product types, normally a new product launched is priced in a higher segment and gradually its price reduced depending upon the market position of the product. p roduct. Mondeo failed in some parts because of the higher price.
PRICE SEGEMENTATION
Company
Economy
Mid-size
Luxury Segment Super
Luxury
Segment MSRP Segment MSRP MSRP in £
Segment MSRP
in £
in £
in £
17,700
27,950
27,678
27,575
Toyota Motor Ltd. 19,595
29,245
26,400
39,770
General Motors
24,250
31,740
42,080
61,345
Honda
15,655
19,110
26,800
36,780
Ford Motor Ltd.
Fig 3.2.2 (Ford 2010, Toyota 2010, GM 2010, Honda 2010)
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Ford adopted a competitive pricing strategy. Prices were fixed on the basis of the norms prevailing in the international market. Also the prices offered by ttheir heir competitors like Toyota, Honda, Nissan, were kept in mind while deciding the prices. Ford uses Value Pricing in which price is set in accordance with customer perceptions about the value of the product/service.
PROMOTION MIX This is a key component of marketing mix, is a concept of communicating with customers for business. Communication involves various approaches like Advertising, Direct marketing, sales promotion, internet internet marketing, personal personal selling, selling, Public Relations. Relations. Combination of of all these key approaches called called as promotion mix. Ruskin-Brown Ruskin-Brown (2006:136) defined this as “A “A number of promotional methods used in combination combination to promote a particular product through communicating with individuals, groups and organizations”. organizations”.
Advertising
Personal Selling
Direct
Promotion Mix
Public
Marketing
Relations
Internet Marketing
Sales Promotion
Figure 3.3.1 The main objectives of promotion are:
To bring bring the Product or service awareness to customers and persuade persuade them to buy
To build/improve build/imp rove credibility
To successful successful launch a new product in existing market/promoting a existing existing product product
in a new market To increase the sales 26
Over the years, Ford continues to maintain their marketing edge over the competitors through different promotional strategies. Ford 2007, Ford is one of the top 20’s of highest media spend companies list. Due to recession and cost cutting factors, ford reduced their promotional budget and canceled all UK advertising until the conclusion of ’08. In 2009, recovery has been shown. To sustain a leading position, ford initiated many campaigns and tied up with long lasting sponsorships and periodically conducted sport events. Along with all these, advertisements and logos with attractive strap lines, its fabulous designs and ads are giving an edge over competitor’s promotional activities. Ford promotional strategy covers all of Europe and used both classifications of promotion – above the line promotion and below the line promotion. Above the line promotion are like mass and direct paid for like television, news papers, radio etc. below-the-line promotions are forms of non media advertising like sponsorships, exhibitions, discounts to dealers, sales promotion activities etc. UEFA sponsorship is a mix of both above and below promotions and throughout the game - Ads reinforced the Ford Brand. (The Times News paper, 2010)
ADVERTISING The main concept of the advertising is to promote, to remind, to p provide rovide support for the sales force, to compete, to persuade of a product to the public. It plays a vital role in order to promote the brand or service and to improve the corporate image and sales. As Evans points out, apart from direct response ads, “Advertising cannot in and of itself cause sales. It can only help or contribute towards sales success” (Evans 1988:6). In 2005, Ford started advertising with strap line ‘Feel the difference’ in order to create a brand for Ford of Europe. Later years conducted model-specific campaigns and different eye-catching ads with latest technologies and graphics. Ford Ad wins ‘Nielsen’s Auto Ad Of The Year Award 2009’ (Jimme, 2009). Ford also succeeded in The UEFA Champions League final break ads. This league was the most-watched annual sporting event in 2009. Ford advertises through attractive television ads, unique pictures in news papers, Design elevating model specific strap lines and logos, eye-catching posters in dealer show rooms and hoardings.
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The Ford Britain Trust handles charitable requests received by the Company. This bags the customers soft corner and credibility. (Marketing magazine 2009)
Ford latest ad for Ford Focus: “The TV, print and outdoor campaign, by Ogilvy Advertising, continues Ford's ongoing theme of ‘kinetic design' and the suggestion that Ford vehicles look as though they are in motion even when stationary” (Marketing magazine 2009)
Fig 3.3.2
“Ford promotes Focus with interactive giant plasma ball” (Fiona Ramsay 2009)
Fig 3.3.3 Fig 3.3.3
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Direct Marketing This is aimed to establish the direct relationship with the organization target market customers. This can be a form of post, mail order, email, telephone calls and etc. Through this marketing strategy, Organization can obtain a long lasting customer relationship. In Sep ’2009, Director said that Ford recovered from the economic downturn mainly through direct marketing events. This includes of ‘mix of mails’ – Car information in mails and ‘world of urls’ – URLs for various cars to see and online ordering. Ford uses the selective customer’s repository for direct marketing, where company send the direct mails to customers with the new vehicle or additional services information (Deliver magazine 2009). Ford devised devised off with a book – ‘Generations’ ‘Generations’ in which they captured captured more than 43,000 existing customers customer s fondest fondes t Ford memories (Williams 2010). 2010). The below picture was a direct marketing mail of ford in 2009 which shows about where they stand on in 2010 and along with the mail, order instructions supplied on so that d directly irectly customer can buy.
Fig 3.3.4 29
SALES PROMOTION
This is specific to short term period and improves the sales of a product by providing special offers to attract customers, dealers (Terence, 1993). Special offers related to customers are discounts, price price deals, deals, premium offers etc. As part of Sales promotion, promotion, dealers or merchandisers will get different promotional offers such as point-of-sale displays, leaflets and product literature. These offers ensure that merchandisers display the products in proper way which means in in attractive and easily accessible accessible manner (Pickton, 2005) . Ford follows a very successful way of sales promotional methods for immediate market penetration of new products or products for which sales to be improved. Ford categorizes the customers in different segments in order to achieve sales objectives and provide promotional offers to them as shown in the Table 3.3.1. Car Promotions
Retail Customers: Retail
Promotions Who maintain car for personal Accessory Promotions usage
Service Promotions Insurance Promotions Best buy offers
Mobility Customers:
who are ready to buy cars with the acceptance of mobility scheme in which conditions are amended any moment. Business
and
Commercial
vehicle users
Car promotions Commercial vehicle promotions Contract hire promotions Less market price
Larger Fleet Fleet Customers:
who operate more number of vehicles
Table 3.3.1 30
INTERNET MARKETING
Internet marketing is the best and cheapest way to attract the customers. Internet is the only place where the global exposure can be achieved easily. This can defined as: “Achieving marketing objectives through applying digital technologies” (Chaffey et. Al, 2006). Ford provides interactive access over the web and it offers customers to choose their vehicles with variety of flexible options. Ford utilizes contests, blogs, social networking websites like face book, twitter and orkut etc for internet ads. Ford official website is well designed for vehicle customization and obtaining features, latest news, offers and also includes inspiring pictures and movies. Customers will receive an email with advertisements, new offers as soon as they get registered in Ford website. website. The below picture picture is about new ford G-series.
Fig 3.3.5
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PERSONAL SELLING
This is an approach to maintain a good rapport with customers for purpose of making sales. Personal selling will be dealt by the sales team on behalf of an Organization. Personal selling is very useful for the products which are complicated to self analyse and understand. Ford products do not have any difficulties to reach the customers and bring them to live about product. In Ford, There are sales and marketing marketing teams who take care of product and offers promoting activities. act ivities.
PUBLIC RELATIONS RELA TIONS / PUBLICITY “Public relations is the art and social science of analysing trends, predicting their consequences, counselling organisation leaders and implementing planned programmes of action which will serve both the organisation’s organisation’s and the publi public c interest” (Wilcox et al. al . 2003:6).
Ford boost up their sales through publicity with sponsorship Activities, Events and contests. SPONSERSHIP
Ford company’s sponsors carefully with selected brand for long lasting relationship. “Edinburgh Tattoo”, ”Talk Sport”, “Sky Sports”, “Disneyland Paris” are the current sponsorships of Ford. Ford. Ford has three years journey with official supplier to the Edinburgh Tattoo. They sponsor tickets in affordable prices in order to sustain the shows towering standards and also to upholding the show for upcoming generations. generations. As Ford is an official dealer to Disneyland Resort Paris, it plies support vehicles to to the theme park, in revisit ford provides a lots of extraordinary packages, which they often offer missing in price draws & competitions. competitions. Sponsorship with UEFA champions association, Ford is also a title sponsors to Talksport’s for the football shows holding on Tuesday and Wednesday. Ford is sustaining 15 years rapport with Sky Sports, as they are much interested in the football show. Indeed, Ford launched both new models Mondeo and Kuga in the final show of the UEFA champions League, through the advertisement break. (Ford 2010) 32
Press Releases:
Press releases help to improve credibility and bring the awareness to public about the current activities and future prospects of an organization. Ford recent press release about novel low carbon vehicle project bagged the financial support from government and successfully grabbed the public attention. Also government chains Ford's main travel to low carbon vehicles. “Government to support with £360 million in loan guarantees, Six projects worth more than £1.5 billion across four Ford sites, Investment to safeguard around 2,800 skilled workers” (Energy Saving Trust 2010). Predominantly Ford Company gets benefits from advertising and sales promotions. The current promotional strategy enables Ford to stand on their leading position in UK market. Brand name and buzz marketing word of mouth are giving little push into recent Ford sales.
3.4 PLACE This is one of the traditional traditional elements o off marketing mix. Place is all about about how the product reach the customers at right location at right time (Brassington and Pettitt, 2006:519). Place or Distribution is very essential essential in order to meet the sales objec objectives. tives. The barrier between between production and consumption is called as Distribution channel. There are different Layers in distribution channel which perform a different activity to bring the product to final customer. Each layer is called as channel level. level. The intermediaries intermediaries (channel levels) levels) are AGENTS AND AND BROKERS: BROKERS: People People who who own own the authority in legal legal from the producer. producer.
WHOLESALERS: WHOLESALERS : People Peop le who interacts with retailers.
DISTRIBUTORS DISTRIBUTORS AND DEALERS: People People who who interact with customers customers and may
provide additional benefits. RETAILERS: People who communicates to customer directly.
In Business, the main distribution channels are Business to consumer (B2C) distribution for consumer goods, Business to Business (B2B) distribution for business goods and business to consumer or business for service goods.
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B2C Distribution channel – Consumer Goods
Figure 3.4.1
As mentioned in above figure 3.4.1, channel 1 represents direct marketing channel. Remaining channels represent indirect marketing channels. In channel 1, there is no intermediary level exist. exist. Producer directly sells goods to
customer. Channel 2 is the one which is curr currently ently ford is following. following. Vehicles that are are
manufactured at manufacturing units of Ford are distributed to dealers through road or train transportation. Consumers can buy the cars directly from the dealer’s show room. Channel 3 and 4 are about the distribution distribution through through wholesaler wholesaler and/or retailer. This This
approach followed in Retail industry. Apart from this, Ford is following different distribution channels for Ford Fleet - Automotive Remarketing Services (ARS) - which are internet auctions and on the ground auctions. At each auction, there are full time employees from the Ford motor company and they helped in auction and providing utmost support to ARS customers. These customers will be benefited with less market price which is due to company doesn’t have any documentation and administration costs. Since this is an auction process and takes immediate handover of vehicle, Ford provides all verification systems are readily available at auction place.
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B2B distri bution c hanne hannell – Business Goods Business to business communication channel doesn’t consist of retailer intermediary level and final products reaches for business clients. Channel levels appeared as in the mentioned below diagram.
Figure 3.4.2
Distributi on channel for Service G Goods oods This distribution channel represents service providers to consumer in order to deliver their services or goods. goods. Ford fleet offers services services for remarketing remarketing vehicles which which is using the the below distribution channel channel 2. Where agents have the rights rights to issue their affordable servi services ces to clients and ensuring they are holding the flow of customers.
Figure 3.4.3
35
Channel membership – Ma Market rket c overage: There are three categories of distribution options - Intensive, selective and exclusive distribution. Intensive distribution :
Through this, as many many as possible possible outlets can can be placed placed for a
product. Since Ford aimed for medium segment market, it follows intensive distribution.( Ford, 2010) Selective Distribution: In a particular geographical geographical area, area, distribution distribution through a selective selective
set of outlets rather than everywhere. Exclusive Distribution: Distribution throug through h a single single outlet for a particular geographical
area. In the UK, FORD is the market leader over the last 25 years. It is operating with around seven locations and over 500 dealerships. And also it is having several large plants where it manufactures vehicles, engines and transmissions and also parts and components. Ford in Britain, in total 35000 people employed in its dealers like product development, manufacturing, service roles, sales and marketing. As part of supply chain management, management, Ford follows efficient approaches like Just in Time (JIT) – “which is aimed to obtain low-cost high quality products and on-time production as well as eliminating waste and stagnant stock” (Svensson, 2001). Through JIT, Ford is achieving the highest efficiency in car manufacturing industry. Ford mainly using roads and trains transportation for distribution of manufactured vehicles to its dealers. Since dealers have the locality specific strengths to obtain customers, ford is using dealers as an intermediary for the distribution. Ford follows the distribution channel as shown in the below figure 3.4.4.
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Figure 3.4.4 : Ford Distribution Channel
IMPACT OF MARKETING MIX ON THE ORGANISATION
Sales from Existing Customer Retention
Customers Sales from New Customers
Marketing Mix Impacts on... Customer Acquisition
Sales from lost Customers Sales from Lost Customers
Own Sales
Competitor’s Sales
Fig 3.5.0 (Douchlas 2010, Relchheld 2010) 37
Customer will have lifelong tie with the organization. Organizations maintains its reputation not just by giving good services and products, it deals with how the customers. The organization should give more than what the customers expect from them not only in the form of services and products. The customers more attract to the brand name of the Ford and they are maintain that standards throughout the year (Douglas 2010). Organization aims at expanding the profits they get from customers to gain the business units (Reichheld 1996). Ford’s product mix strategy involves in introducing new or modified products in the market this is resulting in a positive way to some extent by providing profit to the company. Ford got competitive advantage and has gained the market share. Ford’s prices the products based the segments and also take products specifications into consideration. This is illustrated in the Price category Fig 3.2.2. But compared with competitor’s products, ford has priced high to some segment products.
Ford is promoting well and by sponsoring to the events, it is gaining more and more attention. It associates its brands with these kinds of activities to promote their products. Ford has very strong placement strategy. This has its presence globally; it manufactures and distributes automobiles across six continents with 90 plants worldwide. It is place well to get a positive impact.
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4.0 SWOT ANALYSIS TRENGTHS
S
• Ford admits greater amount of customer loyalty, and all its individual brands have been enjoying the benefits of the good reputation that they have through the quality makes and services. They have brands and models of cars to appeal to every kind of demographic group, and simply cater for the needs and wants of consumers. • Ford uses a unique concept of virtual assembly lines in their models through which they were able to re-use the same spare in their diversified model of cars. This enables ford to lessen cost on production of new spares and compete market price. • European market share of ford remained constant over the last five years averaging over 10 per cent, ford UK’s share recently increased by 1.2 percent, compared with March 2008 of 15.5 per cent. Ford's growing popularity among private buyers drove total car share to 16.7. • Ford outsold 142,285 sales in February compared with GM’s 141,951 this was the first month that Ford achieved such a rival since 1998 (BBC News 2008)
WEAKNESSES • Ford does not have an effective cost management system and have not taken considerable efforts to overcome since they believed paying premiums in single supplier model. • Ford does not concentrate and invest much for design phase and eventually lacking in innovative design structures on their new paddle of cars. • Quality assurance of ford seems to be not in control which resulted in recalling thousands of cars and expensive repair operations, stating to that in 2002, Ford and Bridgestone experienced a faulty tyre scandal which caused a two t wo billion dollar loss (BBC, January 2002) • Ford has kept increasing the productivity, while on the other decreasing the cost and simultaneously counting the No of employees’ exit, which lessons the employee loyalty towards the company.
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OPPORTUNITIES •
Ford producing vehicles that runs on different forms of energy other
than petrol and diesel can help the company to become pioneers in the industry.
•
Nowadays replacing replacing the old cars for the new ones in the market is
increasing in number, knowing the customers up to date data and consistent follow up of owners’ minutiae would enable the company to maintain customer cycle. •
Women’s Demand for cars is mounting year by year and so as the
overall demand for cars is mounting which turns to be a positive sign not on only ly for Ford, the automobile company company but for f or the entire automotive industry.
•
Ford to expand electric and hybrid range of cars to
Europe
from
2011.Ford has big plans for electrification of its fleet over the
next decade,
and while most of the emphasis has been on North America
so far, Europe
will be joining on in near 2011 (Green (Green Automotive 2010)
THREATS •
carbon dioxide emissions from the burning of oil and gas causes severe effects on
climate change and threatens virtually every segment of the biosphere and human society, further increase in gasoline prices keeps the automotive industry uncertain of future innovations and its success. •
Ford has implemented its manufacturing manufactur ing plant in the Asian market that has
considerable growth and expectation for the future which is a great threat for export market of “ford in UK”. Increase in demand for the Japanese cars also on the rise unless ford hard try to overcome these weaknesses, ford may lose its market share to the growing automotive firms.
40
• Although global warming turning out to be a greatest threat and individual use of automotive vehicles increases the risk further, the cars and other private vehicles are a part of basic necessity on a common man’s view. Therefore it is believed that no real threat of substitutes exists today, but it is believed that choosing other forms of transport such as bicycles, public transport’s and sharing mobility would soon be imported in to the minds of people.
STRENGTHS
WEAKNESS
OPPORTUNITIES
THREATS
Weakness -> Strength Figure 4.1 SWOT ANAYSIS OF FORD
Weakness -> Strengths Ford is lacking lacking in new design and innovative innovative structures structures which can be resolved by
investing more funds in to design phase, recruiting and training design engineers and thus ford can overcome their weakness to achieve greatest of strengths. Quality assurance assurance of ford needs to be more intact and must be consistently
monitored with pre-meant standards to make certain no future faults and thereby attaining customer satisfaction.
41
Threats -> Opportunities Opportunities
The price of gas and oil is increasing day by day and remains to be in the state of uncertainty and therefore electric drive vehicles will be in high demand. Ford can build cars that run on electricity and other forms of energy to promote and adopt to the future opportunities that will arise.
Figure 4.2 (High Gear 2010)
4.1 PESTE PESTEL L ANALYSIS ANAL YSIS POLITICAL F ACTORS •
Automotive funds and concessions concessions have been reduced to recent heavy recession hit
the world economy from which the European economy is still hard trying to recover (MSNBC 2010). •
The economic recession and financial crisis in Europe 2008 adversely affected and
recorded the least automotive sales year in UK; Ford posted a $129 million loss in the third quarter and said since the last 25 years. Further ford eliminated another 2,260 jobs and burnt through $7.7 billion in cash (Ford Media 2008). 42
ECONOMIC F ACTORS
Ford’s improved fuel economy vehicles will be approximately increased by 20
percent through the end of 2010 compared to 2005, and the same will be increased by 35 percent by 2015(MSNBC 2010) •
Rising petrol prices make it more expensive for consumers to drive petrol fuelled cars
which consequently means that consumers are inclined to change their cars which operate using diesel. (The Guardian 2005)
Ford being one of the biggest automation manufacturers in Europe reduced the
production of cars due to financial crisis engulfed the continent. In spite of the global economic recession ford does not anticipate a liquidity liquidity crisis in 2009. •
Ford’s SUV’s (Sport Utility Vehicle) and heavy trucks sales declined substantially substantially due
to steep increase fuel prices, in order to that the share price of Ford has also realized a downfall (Reuters 2005). •
Steady rise in demand for the cars manufactured manufactured in Asian market led the ford to fight
against their selling price by reducing cost involved in production and sustain their brand name by offering the ideal quality and customer satisfaction.
Ford deploys 850 job cuts in UK in an attempt to save the cash flow due to
intensifying economic crisis by holding up the launch of its new transit (Feb 6 th 2009, By: Matt Brogan).
SOCIAL F ACTORS •
Cars are viewed as a status symbol by people around the world. A person’s influence
and political status is reviewed by vehicle brands they hold. Ford produces a range of business class cars to captivate the Hi-End business society UK market.
Ford intended to produce luxury cars due
to growing demand on its brand and due to the increasing celebrities and other delicates with in UK.
43
Ford has competitive edge over attracting the women for the cars designed
specifically for women by women designers in stereotypical view points (Ford 2007).
TECHNOLOGICAL F ACTORS
Industry-leading levels of new technologies technologies and convenience safety features are at
its best in Ford’s 2010 paddle of cars.
Technological advancements are inevitable for automotive industry in order to
compete the competitors and to become pioneers in the industry by enriching new technologies
According to studies on environmental environmental factors fuel in the world is expected to
evaporate due to excessive burning of fuel and oil through vehicles and on usage of industrial machines, automotive firms like ford needs to concentrate on technologies technologies that use other forms of energy (BBC June 2004).
Ford’s new and improved 2.0-liter, 4-cylinder EcoBoost engine to be launched to
drive the upcoming year.
Ford to introduce 30 new powertrain actions globally globally in 2010.
Ford strives to improve quality with virtual technology in their vehicles that provides
real benefits including reduction in injuries, improving quality and thus helping the company to become pioneers.
44
Ford Focus BEV Prototype Technical Data Battery Technology Technology Lithium Ion Battery Capacity
23 kWh
Charging time
6-8 hours (230 V grid)
Electric motor
Permanent-magnet Permanent-magnet motor
Max Power
100 kW
Max Torque
320 Nm
Top speed
136 km/h (85 mph)
Range
120 km (75 miles)
Ford of Europe puts second European battery electric vehicle test fleet on the road (Ford Press Releases 2010).
ENVIRONMENTAL F ACTORS
Ford based in UK dealing with a powertrains project in
which Ford will provide ten Ford Transits into which UK-based Smith Electric Vehicles (SEV) will install their pure battery-electric powertrains. SEV to market these vehicles as the Smith Edison for UK and European operators since 2007
Ford and and SEV together will be building building seven seven transit panel vans and two transit buses for shuttle services, Ford will remain to be the primary maintenance, service vendor and will transits will be
mostly used in rural areas through the project period.
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Ford concentrates on The Focus BEV prototypes prototyp es which are to be used for the UK
program is based on the current European Ford Focus and will use a new all-electric powertrain, provided by strategic supplier Magna.
The all electric powertrain technology is based on development development for Ford's next-
generation global C-car architecture and the same will be launched as the Focus Electric in North America in 2011 (Ford news 2010). L EGAL F ACTORS
In order to increase the production with considerable reduction in cost and to be competitive in the industry, automobile companies have started implementing robotic machines to build cars, which resulted in drastic decrease of human force and salary cuts. However trade unions in EU made it difficult for car firms to dismiss their employees, in order to protect themselves from such a setback individual firms like Ford and GM have started making deals with trade unions in order o rder to protect themselves.
46
CONCLUSIONS Ford has been the pioneer in the automotive industry in order to sustain their leadership and to match the requirements of the future needs and updated technologies with eco friendly approach, ford has planned to manufacture and promote electric cars on a large scale in EU, though the concept of electric cars is eco-friendly and being encouraged by the people, it has a major drawback of charging the battery on the go. Following are the conclusions drawn from the marketing mix. Ford is spending more on advertising as a result sales came down in 2008. Prices mounted up by Ford because of recession and the competitors products. Ford fusion and Focus sales increased gradually. Ford is a massive success for its kinetic design. Ford’s sale jumped 43% ahead of GM this month. Government sanctioned the amount of £2.3billion for Ford its low carbon vehicle strategy. Geneva motor show got a good response for C-Max and Grand C-Max.
RECOMMENDATIONS Ford should focus more on its designs by encouraging its designers and rewarding them to come up with newer efficient models. They should Ford should be able to sustain its customers by marketing in wider range. They could link up with T.V. shows and advertise on their upcoming models. To overcome the above mentioned drawback and to run a profitable business, Ford could possibly start a project p roject of charging stations similar to petrol stations which would facilitate their customers to utilize the station for charging their car batteries for free and other company cars for a price. This project would be both profitable and eco-friendly.
47
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