Case Study: The Magic of Ford

In 1903, in a small wagon shop in Dearborn Michigan, a man by the name of Henry Ford started what is today the Ford Motor Company. It started it in 1896 when Henry Ford built his first car. It was only experimental at the time, but less than ten years later in 1908 he introduced a more updated version to the public. This became known as the Ford Model t. Once people realised what a wonderful novelty this was and how it would greatly facilitate their lives, there was a huge demand for them. In order for the company to be able to satisfy this heavy demand, ford introduced the world’s first assembly line for cars. It revolutionised the industry. By 1923 more than half of America’s vehicles were made by Ford. Today, the Ford Motor companies the number two company in its industry as well as the number two industrial corporation in the world. When the average person thinks of the Ford Company, they think of just Ford. This thinking, however, is incorrect. Ford is divided into four major components, automotive, Ford credit, Visteon and Hertz. Ford also produces vehicles under the names of Aston Martin, Ford, jaguar, Lincoln and the Mercury and Volvo brands.

Recently, Ford profits have increased significantly, for the nine months ending 30/09/06; total revenues increased 9% to 127.48 billion dollars. Net income from continuing operations decreased 10% to $4.32 bllion dollars. Results reflect increased vehicle sales offset by higher warranty and costs related to the Firestone recall. Last year’s total sales went up 13% to become 163 billion dollars and profit also rose 10% to become $7.2 billion dollars. As far as Ford Motor Company can remember, this is more than any other car company ever. Ford’s main automotive competitors are General Motors, DaimlerChrysler, Toyota, Honda, Nissan and Volkswagen.

One of the ways that ford has established its spot as the number two company in the automotive market is its focus on customer satisfaction. Ford Motor Company admits that its greatest asset is the trust and confidence earned from its consumers. When people see a Ford trademark, Ford wants them to associate that with a trust mask of certitude, quality, reliability of performance and value. Ford strives to connect with their customers as well as reach them. They try to use relationship marketing, because it is cheaper to keep an old customer rather than to attract new ones. William Clay Ford, Chairman of the the Board for Ford Motor Company says that satisfying customers goes beyond great products and services. People want to do business with companies who care about them and their environment. He realises that the best cars are socially and environmentally responsible. Chief Executive Officer, Jacques A. Nasser states, “we will be a leader in corporate citizenship if we are a well trusted company that people believe contributes positively to a society and uses its resources to create a more sustainable world.” Jim Vannier, Manager of Ford’s advertising and marketing programs admits “if you listen to your customer, if you provide the right product at the right time, you’ll get the numbers”. The above quotes make it quite obvious that the top executives of the company all concur that customer satisfaction is of the utmost importance in succeeding. If they keep the customer happy, the customer will tell the others they are satisfied, and more and more people will be wiling to consume their product.

Here and Now

The twentieth century was profoundly affected by the innovations of Henry Ford. The inventions of the automobile gave opportunities to multitudes of people. These opportunities were not just in transportation, but in occupation as well. Today, no matter where a Ford is produced, the consumer knows that they are receiving a high quality product. The reason for this is that the majority of Ford vehicles parts are designed by Ford engineers, manufactured in Ford plants and assembled in Ford product lines. When you purchase a Ford product, you are truly purchasing Ford quality. Ford is the number two manufacturer of automobiles, second only to the General Motors Corporation.

This case highlights certain strategies of this corporation that propelled it to its current number two spot in the market. There are many aspects of marketing strategies that will be discussed in this case such as, product strategies, promotion strategies, pricing strategies as well as internet marketing and other forms of product distribution. Each one of these strategies plays a key role in the success of the number two motor company in the automotive industry. Many people tend not to realise just how important the marketing of a new product can be. It plays a huge role in the success or failure of the new product. For example, many people may remember many years ago when Ford came out with a new vehicle called Edsel. The Edsel became known as one of the Ford Motor Company’s lemon. Although the thought of such an odd-looking car does not sound appealing, it is said that the look is not what caused its downfall. Surprising as it may sound, the demise of this vehicle was due to poor marketing strategies. Ford’s biggest mistake in marketing the Edsel was their failure to decide on their target market. They tried to market their product to everyone, and with such a large span of people this was next to impossible for becoming a success.

Objective of the Company

The mission of the Ford Motor Company is very basic. Ford sees their customers as one of the most important things; they know their customer satisfaction also plays a gigantic role in their success. “[their] mission is to improve continually [their] products and services to meet [their] consumer’s needs, allowing [them] to prosper as a business and to provide a reasonable return for [their] stockholders, the owners of the business. Their mission shows their devotion to constantly improve and while improving, accommodate their customer’s needs. Ford’s five main principals include, 1) Quality: they put the quality of their products first and foremost. Without a quality product, people have no desire to waste their money or jeopardise their safety. 2) Customer Care: of you don’t take care of the Customer, someone else will. 3) Constant Improvement: if the Ford Motor Company allowed themselves to remain stagnant in their environment, their competition would eventually have a huge advantage over them, because they would have newer and better product lines to offer. 4)  Employee Involvement: Ford wants each and every employee to be involved in their company. The happier the employee, the better they work. It is all about feeling that they are a part of the Ford team. They also want their employee to think like a consumer, they can cater more to the needs of their actual consumers because they will know what the consumers want. 5) They consider dealers and suppliers to be their partners: without the dealers and suppliers Ford would not be able to manufacture the things they need alone and therefore would not be able to produce as many vehicles as there would be a demand for or even be able to distribute them all to people.

The Arena

Ford has many competitors. Since Ford is ranked the number two companies, its main competitor is quite obviously the number one company, General Motors Corporation. General Motors, also an American Company holds 29.4% of the automotive market share while following close behind them the Ford Motor Corporation holds 25.1% of the top 5 best selling cars in 1999, Ford Taurus appears as number three and Ford Escort appears as number five in a recent survey. The automotive industry has fierce rivalry among its competitors. In the past years the following mergers have occurred- Daimler Benz acquired Chrysler and Ford bought Volvo in order to be able to properly compete with General Motors, this way Ford is not allowing General Motors to become too much larger than they already are. If General Motors develops a new feature or automobile, Ford must be right behind them with their most innovative invention, and vice-versa.

Ford has 25.1% of the market share presently. This is quite impressive considering that the number one automotive company, General Motors, also an American company has 29.4%. This means that the top two companies hold more than 50% of the market share. This is quite extraordinary. The total market value of the Ford Motor Company is approximately $56 Billion Dollars and their profits are well over $7 Billion. In 2005 Ford sales raised up to $163 billion dollars. This was a thirteen-percent increase from the previous year.

The Catch

A car, if not properly assembled, maintained, and operated can become a deadly weapon. The United States government regulates many aspects of the auto motive industry. Among these regulations are seatbelts, airbags and shatter proof windshields. The government has also made inspection and maintenance programs more expanded, in order to include more areas and allow for more stringent tests. In 1990 the government amended the Clean Air Act. The main focus of the act was to cut down on all the urban smog, carbon monoxide and particular emissions from Diesel engines and to help decrease acid rain and toxins that motor vehicles contribute to. The amended act demands that polluted cities must sell improved gasoline that helps to reduce ozone forming Hydrocarbons and Carbon Monoxide. Once inside an automobile, the operator of the vehicle is responsible for obeying many regulations as well. It has become extremely important, for instance, to wear your sea belt. Primary enforcement eat belt laws allow police to stop and ticket a driver for not wearing a seat belt, just like any other traffic violation. Seventeen states and the District of Columbia have enacted these laws. The remaining 32 states have secondary laws that allow law enforcement to ticket a driver for not belting up only after the person has been stopped, or ticketed, for another violation, and one state does not have any seat belt law. Obviously, safety best laws work, and the public overwhelmingly supports them. Three out of four Americans supports safety belt laws, according to a recent public opinion survey. Stronger safety belt and child passenger safety laws, and stepped up enforcement of those laws, are the most effective steps we can take to save lives.

Corporate Responsibility Towards Society

Ford Motor Company sponsors many programs to better the community and their safety. For example in the Detroit area, ford organised a weekend clinic in which the automotive safety office educated fifty-five people and their children on the proper use and installation of child safety seats. They demonstrated this in the consumer’s actual vehicles. Ford is also committed to environment cleanliness. They sponsor programs to educate our children on environmental cleanliness and responsibility. They also sponsor company-wide recycling, cleaner operating vehicles, recyclable components, cleaner manufacturing, and employee involvement in environmental activities. Ford do not do these things because they have to, they do it because it is the right thing to do. The Ford Motor Company not only is social active, but culturally as well. Ford provides financial support at many historically black colleges such as Tuskegee University in Albama, this is where the famous black inventor George Washington Carver performed many of his experiments. Ford Motor Company, as of 1999 has 23.2 percent of its employees as minorities. This is up 1% from 1998. Diversity makes the business world go round and no one knows this better than the Ford Motor Company.

Innovation or Death

The Ford Motor Company values their product Analysts. [Their analysts develop product cycle plans that help forecasters determine [their] approach to different markets. The people who start the product cycle are called the research, Design Packaging and Financial analysts. The researchers find out what type of things that consumers would like their vehicles to be occupied with. The Design packagers are the people who decide the most appealing way to package the final product. The financial analysts put the numbers together to figure out exactly how much money all if the above will cost. Next, designers and engineers along with testers actually create the vehicles. They create vehicles according to the specifications of the Research, Design Packaging and Financial Analysts. This way they are producing what the market wants. The research and Advanced technology Teams then decide which technologies should be used in the new products. Ford is constantly trying to improve their product development and expand their innovations. Currently, Ford is working on a new line of intelligent vehicles. These vehicles will enable the driver, through voice activation, to connect to the internet. The voice activation will also be implemented into the navigation system, heating and air-conditioning, cell phones, audio systems, and other electronic things inside the automobile. Ford is adapting to each change in order to be able to bring their customers the most innovative and convenient products possible. As son as new technology becomes available, Ford Motor Company is among the first few to try to implement it into their vehicles.

Product Targeting

Ford motor company has different types of cars, which are each targeted towards many different markets of people. As the company learned the hard way with the Edsel, the importance of a target market is extremely high. Loss of a target marketing focus usually means loss in sales. Ford has a different car targeted towards different age groups, personalities, genders and economic standing and more. The ford Mustang, for example, is targeted mainly at the middle aged. This is exhibited by its slogan of it is what it was and more. This implies that the target consumer would be old enough to remember what the mustang was when it first came out in the 1960’s.

Another example is ford trucks. Their slogan is “Built Ford Tough”. The toughness implies a target towards rugged men. Because of the fact that the word “tough” is used, it seems that it would be very unlikely that the ford motor company would be using that to attract women. When the word tough is thought of, women are generally not the first thing that comes to mind. The third and final example is the ford Taurus. Its slogan is “ford makes it smart to buy American.” The target market for a ford Taurus is a family. The Taurus station wagon for instance is a great family car with tons of room, yet it handles like a sports car. The above three examples are only a small sampling of what ford offers. Ford motor company manufactures sedans, SUVs, trucks, luxury cars and more. If you are looking for it, the odds are that ford will satisfy you.

Product Mix

The Ford Motor Company has such a wide selection of vehicles in order to satisfy every different type of potential consumer. They offer small cars, sports car, midsize cars, luxury cars, vehicles, convertibles, wagons, minivans, vans, trucks, commercial trucks, and even environmentally efficient cars. Each of Ford’s different types of vehicles have many different options that came along with them the 2001 Explorer for example, runs to roughly $25,715 dollars, without any extras. However, should the consumer decide that he or she would like to add perks, there would be many choices. For instance, in the convenience group of options, you can add anything from a cargo cover to speed control. In the XLS sports group anything from chrome steal wheels to wheel mouldings. There is even a trailer tow prep package, which includes a wiring harness and an H.D. Flasher for only $355 dollars extra. After that the consumer has the option to add even more options. They can customize the engine, transmission, drive, rear axle, wheel type, tire type, seat equipment and much more. The company also offers the Explorer in 10 different colours for the exterior. With the plethora of the above options, how could anyone not find what they are looking for? Each one of the 24 cars manufactured under the Ford name has many options as the Explorer, if not more.

Services Offered

When you own a Ford vehicle, you can register for Owner’s Services. This includes reminders of when your vehicle needs to be services, tips for vehicle safety, maintenance information, does it yourself pointers and online manuals. It also includes warranty guides, offers and discounts exclusive to people registered for the service, online shopping, private communications, and links to Ford Company Specialists. Ford, Lincoln, and mercury dealerships specialize in the servicing of their own vehicles. The dealership is a wonderful place to go to have your breaks served, shocks replaced and batteries as well. The company also offers Extended Service Plans(ESP). With the extended Warranty Plan and the factory unlimited Warranty; you are able to choose a plan that suits your needs. The way the plan works is, you pay a small deductible anywhere from $0-$100. The ford ESP cost protects the consumer from increasing prices in labor and increased prices in parts. Other services that are offered by Ford Motor Company area Customer Assistance Centres, Collision Assistance, Roadside Assistance, Technical Service Information and their website. The web site includes links to safety tips and Frequently Asked Questions.

Promotional Strategies

The current promotions that are offered by the Ford Motor Company are Radiator Service, Brake service, and Batteries. All of the above promotions are wonderful for the upcoming winter months. The radiator service includes, top of all fluids and a free 12pt all weather check of hoses, clamps, belt and more. This promotion and all of the above promotions appeal to people who are thinking ahead to cold winter months. This winter in New York has been predicted to be one of the worst we have seen in a while. A radiator is not actually something you would want to break down in the middle of a snowstorm. The battery promotion is offering a Motorcraft tested, though series battery. They are also offering a Silver Series Battery for only$20 dollars more. Each promotion for a new battery comes with over an 83-month warranty. It is a good idea to replace your battery before a new winter season. When it is freezing outside, trying to find a Good Samaritan who is willing to give you a jump is a rarity. The Brake Promotion comes with the Motorcraft brake service. This promotion includes replacement of brake pads or shoes, front or rear turn rotators and drums. This promotion will also check the brake’s hydraulic system and repair, if necessary. This once again appeals to the person(s) who is preparing for the harsh winter to come. Being that, a bad winter generally means a lot of snow and ice. With weather conditions like that, who needs to worry about brake failure?

Pricing strategies

One of ford’ pricing strategies is the fact that they try to help the consumer finance a ford vehicle. Ford offers its consumer many plans to choose from in order to find the financing option that best fits their needs. The following are only a few of ford’s financing options. The first is the Red Carpet Lease: the consumer is offered flexibility for payment; there are advance payment plans and Additional payment programs, depending on which one is best for you. The second financing plan is mobility financing: mobility financing offers flexible and convenient financing terms for their physically challenged consumers who need adaptive equipment in their vehicles. The finance rate is based on your credit and the terms of the transaction. Ford credit has earned a top ranking place in the world of automotive finance by providing loans and leases that are convenient and affordable. They also specialize in service such as commercial lending and municipal financing.

The municipal financing is so convenient that it can be calculate on the internet. All that needs to be done in order to do this is, select a vehicle, model, make, and product line. The online calculator will give the consumer an estimated lease and retail payment. Ford financing company provides a verity of products and services to both, the dealers and the consumers. Ford credit also has a commercial lending operation, which caters to light truck fleets and heavy trucks. Ford wants to make it as easy as possible for consumer to be able to drive a ford. There are so many different financing options that are offered, that finding a plan that is right for you has become easier than ever.  If buying a new vehicle is not financially possible, then ford also offers a whole line of pre-owned vehicles, which are backed by Ford Motor Company with a 100 point inspection.

Distribution internet marketing

Ford’s newest web site for ford division cars and trucks is www.fordvehicles.com . the new web site allows perspective customer to compare ford vehicles to other cars made by other manufacturers. They are the first company to give consumers the option of product comparison. The section of product comparison on the web site comes complete with photographs, feature description, safety options, competitive pricing, financing and warranty information. Ford division internet coordinator, Trisha Habucke states, “With our new design we incorporated new technologies that deliver more visually exciting content.” The web site is so user friendly that consumers can just go right from one ford vehicle to the next with out any trouble. Ford is committed to brining their customers total brand experience.

For example, ford knows that people with certain types of personalities are attracted to certain types of cars. Explorer drivers, for example are rugged, the “No Boundaries-ford outfitters” slogan appeals to them. When ford began their internet market, they did the most extensive research even conducted by a car company. Their advertising agency, J.Walter Thomson found that 210 test participants concurred that the Ford website deserved a high rating for its complete content. Ford attributes a fair amount of the success to the internet. The internet is a way reach millions of people. The company realizes that is has been a powerful tool is the internet. Erin Hughes, who is a ford employee since 1999, admits that her greatest tool is the internet. Erin’s Regional Manager realized that if they had one person whose sole job was to be dedicated to the internet, the company would proper.

Erin later became the first internet customer satisfaction coordinator. In addition, Hughes started the first internet club for ford dealers. Since the position of internet coordinator so now more common at ford motor companies, once per month all of the internets coordinators get together to share their most recent e-commerce news and best practices. Hughes says “my job is to provide our dealers with the resources and technology needed to help them sell more vehicles on Main Street and E-street”. Advertising also plays a large role in the distribution of ford motor company’s products. Ford advertises on television quite often and also on the radio. Previous slogans that ford had etched in everyone’s minds include things like “Have you Driven a Ford Lately?” with a catchy little tune along with it. Ford also has their slogans and products photographs on major highway billboards a cross the county as well as scoreboards at sporting events such as during commercial breaks where the broadcaster will say something along the lines of sponsored by Ford Motor Company.

The ford motor company has come a very long way, since Henry Ford first established it. They went from a little wagon shop to the second leader in automotive sales. They have been around for almost a century. Ford has elaborative marketing strategies as well as distribution strategies. Their web site was extremely easy and fun to use. Ford is also a very well rounded company in that they are very environmentally concerned. It is nice to see that people realized, if we don’t save our planet now there will be nothing left for future generations. With Ford’s experience and high understanding of, and ambition for the satisfaction of the customer, can they some day be the number one automobile company, beating out the General Motor Corporation?

Questions

Q1. Asses the reasons for the growth of the Ford Company.

Q2. Interpolate from the case the clout that the company has in the world economy.

Q3. Assess from the consumer’s perspective the performance of the company’s product.

Source: Docstoc.com

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