Business / Marketing Strategies:- Ford Case Sudy
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Autor: anton 04 January 2011
Words: 4063 | Pages: 17
Marketing strategies varies from one market to another and from one product to another. For example the marketing strategy of Daewoo is different from Ford. The main marketing strategy of Daewoo was how to break onto the relatively mature USA market in order to become a meaningful player in a short period of time, while ford's problem was basically an internally focused one, indicating how IT influenced the organization design and global marketing strategy.
Ford Motor Company is an American multinational corporation and the world's third largest automaker based on worldwide vehicle sales.
In 1903, Ford proclaiming, "I will build a car for the great multitude." In October 1908, he did so, offering the Model T for $950. In the Model T's nineteen years of production, its price dipped as low as $280. Nearly 15,500,000 were sold in the United States alone. Ford Company the world's second-largest car company was started by Henry ford in 1903.Ford motor company is a worldwide leader in automotive and financial products and services. Ford mission is to improve their products and services to meet all the expectations of their customers and this will allow them to prosper their business and to provide a return to their stockholders.
Based in Dearborn, Michigan, a suburb of Detroit, the automaker was founded by Henry Ford and incorporated in June 16, 1903. Ford now encompasses many global brands, including Lincoln and Mercury of the US, Jaguar and Land Rover of the UK, and Volvo of Sweden. Ford also owns a one-third controlling interest in Mazda.
Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce, especially elaborately engineered manufacturing sequences typified by moving assembly lines . Henry Ford's combination of highly efficient factories, highly paid workers, and low prices revolutionized manufacturing and came to be known around the world as Fordism by 1914.
Ford in the United States of America:
For 2007, Ford is the third-ranked automaker in USA sales after General Motors and Toyota. Ford was also the seventh-ranked American-based company in the 2007 Fortune 500 list, based on global revenues of $160.1 billion. In 2006, Ford produced about 6.6 million automobiles, and employed about 283,000 employees at about 100 plants and facilities worldwide. In 2007, Ford had more quality awards from J.D Power than any other automaker.
Ford incorporated the Ford Motor Company in 1903The Model T heralds the beginning of the Motor Age; the car evolved from luxury item for the well-to-do to essential transportation for the ordinary man.
Ford in India:
Ford came to India in 1998 with its Ford Escort model, which was later replaced by locally produced Ford Ikon in 2001. It has since added Fusion, Fiesta, Mondeo and Endeavour to its product line. Ford sales in 2007 in India grew by 33 percent, thanks to the continued success of ford fiesta and the all-new Endeavour. Ford sold 116,159 vehicles last year and its market share grew 0.6 percent over 2007.
Ford competes in India against a number of global and local automakers. Along with GM, Toyota, Tata, Hyundai, Honda, Mitsubishi and Fiat all have a presence in India. There are several Indian automakers, the largest being Maruti, which operates a joint venture with Japan's Suzuki.
The investment, which takes Ford's commitments in India to more than $875 million, comes on the heels of similar moves in Thailand and China, the other markets the U.S. car maker has identified as key to its regional growth strategy. Ford, which last week named India's top vehicle maker, Tata Motors Ltd, as the preferred bidder for its luxury Jaguar and Land Rover brands, will double its capacity in India to 200,000 vehicles a year by 2010, the company said. Ford India posted a 45 per cent fiscal growth for the period April 2006-March 2007.
(1. International Business Times, India- Tuesday 22nd January 2008, http://in.ibtimes.com/articles/20080108/tata-motors-ford-jaguar-land-rover.htm)
(2. http://www.exchange4media.com/Brandspeak/brandspeak.asp?brand_id=104 )
FORD'S MAIN MARKETING OBJECTIVES INCLUDES-
1) Quality- they put the quality of their products first and foremost. Without a quality product, people will have no desire to waste their money or jeopardize their safety.
2) Customer Care- If you don't take care of the Customer, someone else will.
3) Constant Improvement- If the Ford Motor Company allowed them 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 he works. It is all about feeling that they are part of the Ford Team. They also want their employees to think like consumers and not like employees of a car company. Once they start thinking 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.
INDIA ford motors operating general marketing objectives as profitable growth and focusing on the right brand, product and distribution strategy, which will also give them a respectable market share. Ford India posted a 45 percent fiscal growth for the period April 2006-March 2007 Endeavour has maintained a significant share and has been comfortably leading the premium SUV category. With the New Endeavour, the response has been outstanding and they are gearing to match their supplies to the demand. Since the New Endeavour launch, it has grown companyÐ²Ð‚â„¢s volume by more than 45 per cent over the same period last year, and market share improving as they go forward. The success of Fiesta has contributed largely to Ford India sales, where it close to 20 per cent of the total market share of the B, B+ multi-activity vehicle or MAV segment in India. Michael E. Porter, author of the book Ð²Ð‚Ñšcompetitive strategy: techniques for analyzing industries and competitorsÐ²Ð‚Ñœ has categorized strategies into few generic types, which are: Overall cost leadership Here the business works hard to achieve the lowest costs of production and distribution so it can price lower than its competitors and win a large market share. Differentiation Here the business concentrates on achieving superior performance in some important customer benefit area valued by the market as a whole. It can strive to be the service leader, the quality leader, the style leader, the technology leader, etc. INDIA ford motors operating general marketing objectives as profitable growth and focusing on the right brand, product and distribution strategy, which will also give them a respectable market share. Ford India posted a 45 per cent fiscal growth for the period April 2006-March 2007 Endeavour has maintained a significant share and has been comfortably leading the premium SUV category. With the New Endeavour, the response has been outstanding and they are gearing to match their supplies to the demand. Since the New Endeavour launch, it has grown companyÐ²Ð‚â„¢s volume by more than 45 per cent over the same period last year, and market share improving as they go forward. The success of Fiesta has contributed largely to Ford India sales, where it close to 20 per cent of the total market share of the B, B+ multi-activity vehicle or MAV segment in India. Michael E. Porter, author of the book Ð²Ð‚Ñšcompetitive strategy: techniques for analyzing industries and competitorsÐ²Ð‚Ñœ has categorized strategies into few generic types, which are: Overall cost leadership Here the business works hard to achieve the lowest costs of production and distribution so it can price lower than its competitors and win a large market share. Differentiation Here the business concentrates on achieving superior performance in some important customer benefit area valued by the market as a whole. It can strive to be the service leader, the quality leader, the style leader, the technology leader, etc.
PEST ANALYSIS AS PER INDIA AND THE US:-
PEST analysis gives more ideas for industry to focus more on selecting the appropriate market and segments
Through analyzing political factors, company can get idea about the political stability and government regulations about taxes and tariffs. A car, if not properly assembled, maintained, and operated can become a deadly weapon. The United States government regulates many aspects of the automotive industry. Among these regulations are seatbelts, airbags, shatter proof windshields and clean air act to cut down on all the urban smog, carbon monoxide and particulate emissions from Diesel engines and to help decrease acid rain and toxins that motor vehicles contribute to. The government has also made inspection and maintenance programs more expanded, in order to include more areas and allow for more stringent tests (www.epa.gov). 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 seat belt. 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.
Whereas in India, the Automobile Regulatory Board runs the manufactures according to their norms. This board emphasize more on protecting the environment by controlling the pollution by ticketing the drivers using adulterated fuel in their vehicles. It has also been seen against the use of cooking LPG in the cars. As high duty is imposed on imported cars the manufactures hesitate to introduce the better models into the Indian market. High tax imposed on the import of the cars which will lead to the increase in its price in the domestic market.
Ford's economic environment in US is doing quite well. As US is a developed nation, their GDP and per-capita incomes are high. So the manufactures can decide their product class. This is quite impressive considering that the number one automotive company, General Motors, an American company has 29.4% of total market share. This means that the top two companies hold more than 50% of the market share. This is quite extra ordinary. The Total market value of the Ford Motor Company is approximately $56 Billion dollars and their profits are well over $7 billion.
In the recent years, the purchasing power of Indian consumers has increased rapidly due to the economic growth, Ford is targeting to set their market in India as India is a developing economy as it is growing at a rate of 10% per annum. Ford Motor Co plans to invest $500 million in India to double manufacturing capacity by 2010.
(International Business Times)
SOCIAL AND CULTURAL ENVIRONMENT:
In US, Ford Motor Company sponsors many programs to better the community and their safety. For example in the Detroit area Ford organized a weekend clinic in which the automotive safety office educated fifty-five people and their children on proper use and installation of child safety seats. They demonstrated this in the consumer's actual vehicles. Ford also is committed to environmental 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. The Ford Motor Company not only is socially active, but culturally as well. Ford provides financial support at many historically black colleges such as the Tuskegee University in Alabama.
In India, Ford Motor Company is committed to equality of opportunity, fairness, work life balance, respect and dignity at work for all. Ford values differences of culture, ethnicity, race, gender, nationality, age, religion, disability, marital status, sexual orientation, education, life experiences, opinions and beliefs. Diversity adds a clear value to Ford's employees, business, customers, the company, shareholders and the communities in which Ford operates. Ford believes valuing difference is not just a 'good cause' - it is a business imperative.
In Us, Ford has placed more than 5 million vehicles in service capable of running on renewably produced ethanol fuel. They are promoting the development of infrastructure in North America and Europe that will expand the use of these bio-fuels and help reduce our dependence on oil. We have built 4 million vehicles globally with electronic stability control systems. More than 1 million of those vehicles feature FordÐ²Ð‚â„¢s industry-exclusive Advance Track with Roll Stability Control.
While in India, New safety features have helped drivers avoid collisions through technologies like lane departure warnings and assisted braking. Technologies in development also include the Escape Hybrid E85 applied in Ford Endeavour, which combines hybrid technology with Flexi fuel capability. This fleet joins test fleets of vehicles that run on hydrogen fuel cells and hydrogen internal-combustion engines.
(Isobel Doole and Robin Lowe, 2004)
MICHAEL PORTERÐ²Ð‚â„¢S FIVE FORCES IN Ð²Ð‚?COMPETITION FRAMEWORKÐ²Ð‚â„¢.
Bargaining power of suppliers
Threat of Threat of
New entrants Substitutes
Bargaining power of buyers
PORTERÐ²Ð‚â„¢S FIVE FORCES OF COMPETITIONS
Ð¿Ñ“? Industry Competitors- The new company entering into the market will have to face competition with the existing companies.
Ð¿Ñ“? Potential Entrants- A huge amount of capital is required to enter into the market to face the competition with the existing companies such as Toyota, General motors, Honda etc. The company will have to face entry barriers. This will incur them high capital investment expecting less profit with high expenses.
Ð¿Ñ“? Suppliers- The structure of industries can be changed by the bargaining power of the common suppliers. As the suppliers in this market are huge in numbers, and small- medium companies, it is easy for the manufactures to switch.
Ð¿Ñ“? Buyers- The bargaining power of consumers. The bargaining power of the consumer in automotive market is not based just on a single consumer. As this market is not dealing with consumer goods as the price of the car is high the demand grows rather slowly.
Ð¿Ñ“? Substitutes- These are the products or services, which may destroy the whole industry, and not just the existing structure. Substitutes are particularly important elements of competition, since they normally appear from directions where a challenge is not expected. In the case of cars the public transport system acts as a substitute to the consumers.
PRODUCT MIX -
In USA, 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, SUVs, trucks, commercial trucks, and even environmentally efficient cars. Each of FordÐ²Ð‚â„¢s different types of vehicles has many different options that come along with them. The 2001 Explorer for example, runs roughly $25,715 dollars, with out any extras. However, should the consumer decide that he or she would like to add perks, there would be many choices. In India as well as in US, the customers are provided with the freedom to customize the engine, transmission, drive, rear axle, wheel type, tire type, seat type, seat equipment and much more. The company also offers the vehicles in different colours for the exterior. Ford targets towards different age groups, personalities, gender, economic standing and more. In US, product line stretching is adopted, which is increasing the product line by lengthening it beyond its current range. For example, Ford introduced small, lower- priced model Ford focus starting at $14,300. Focus is the innovative brand for the sub-A segment in the Ford group. Similarly in India, product line filling is adopted which means increasing the product line by adding more items within the present range of the line. For example, Ford introduced Fiesta with its own different versions within its present line.
When you own a Ford vehicle, you can register for OwnerÐ²Ð‚â„¢s Services. This includes reminders of when your vehicle need to be serviced, tips for vehicle safety, maintenance information. Further Services that are offered by Ford Motor Company in USA and in India are Customer Assistance Centres, Collision Assistance, Roadside Assistance, Technical Service Information and their web site.
PRICING STRATEGIES IN USA AND INDIA-
In US when Ford was first introduced, they were the monopoly sellers so they followed Price- skimming strategy. And with the emerging competitors into the market in the past decades they had to bring the price down in-order to compete in the market. Whereas in India, when Ford entered the market with its Ford Escort in 1998, there were competitors, so they had to enter the market with the Market Pricing strategy. In India, as there are only assembling parts in India, the parts have to be imported from other parts of the world which has a value for cross border taxation purposes. So this is the cause for the increase in the price of car in India when compared to other parts of the world.
Another of FordÐ²Ð‚â„¢ pricing strategies is the fact that they try to help the consumer finance a Ford vehicle. Ford offers its consumers many plans to choose from in order to find the financing option that best fits their needs. Some of the financing options provided are Red Carpet Lease, Mobility Financing etc.
Distribution involves activities that make products available to customers when and where they want to purchase them. It is sometimes referred to as the PLACE element in the marketing mix of Ð²Ð‚ÑšPÐ²Ð‚â„¢sÐ²Ð‚Ñœ. The distribution starts from the manufacturer and ends with the ultimate customer. This process includes further sub-processes like assembling and the supplier. The product is first manufactured in the warehouses. This product is transferred to the authorised dealers and finally supplied to the customers. In USA the manufacturing and assembling is performed in the same plant, then transferred to dealers and then to their customers, whereas in India as there are no manufacturing plants, the parts are imported from other part of the world which are later assembled in two of its assembling plants- Delhi and Chennai, from where it is transferred the customers through authorized dealers all over the country. In US, the US department of commerce or its equivalent in other countries helps to find a good distributor. The Local Chamber of Commerce in a country can also provide lists, as can local trade associations. They also follows JITS (Just-In-Time), by which customers are able to order their choices from the suppliers and getting them delivered it on time in the right condition avoiding holding cost altogether. FordÐ²Ð‚â„¢s newest web site for division cars and trucks is www.Fordvehicles.com . The new web site allows perspective customers 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.
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 winter months. The radiator service includes, top of all fluids and a free 12 pt all weather check of hoses, clamps, belts and more. All of the above promotions appeal to people who are thinking ahead to the cold winter months. This winter in New York, USA has been predicted to be one of the worst. The battery promotion comes with over an 82-month warranty. The Brake promotion comes with Motor craft brake service. The promotion includes replacement of brake pads or shoes, front or rear turn rotators and drums. In India, with varied climate throughout the country, especially the states like Tamil nadu, Rajasthan, Delhi(in summer) etc where the climate is hot, Ford provides aluminium chase extra cooling engines. The other promotions include, club cards to vehicle owners, foreign trip vouchers, free services, finance etc.
Radio is one of the most widely used media for advertising, and is exploring it to a great extent. Radio does constitute a major part of its advertising. It recently launched theÐ²Ð‚â„¢Ð²Ð‚?5 minutes mein FidaÐ²Ð‚â„¢ [campaign was all about how one needs just five minutes to witness FiestaÐ²Ð‚â„¢s excellence in performance, and thereby fall in love with the car.] campaign on the radio, as well as on television.
Ford undertake a lot of below-the-line activities. The Vodafone Delhi Half Marathon was Ð²Ð‚?Driven by FordÐ²Ð‚â„¢ Ð²Ð‚â€œwe were the transport partners for the event, with the New Endeavour and Fiesta as the lead cars of the marathon. They also do a lot of events with our customers. They also recently conducted a Ð²Ð‚?Ford Treasure Hunt DriveÐ²Ð‚â„¢ for our existing customers in Ahmedabad, and a contest Ð²Ð‚?HT War in WindiesÐ²Ð‚â„¢ in collaboration with Hindustan Times. The contest winners, one each from Delhi and Mumbai, won Fiestas as the grand prize.
EVALUATION AND SUGGESTIONS-
In the fast growing market for the automobile industries in developing country like India, The Ford has achieved a satisfactory level of success and are planning to invest $500 million in the Indian market. Even though there had been a loss in sale in the previous year in the US market, Ford has managed to cover that loss by covering it in the Asian markets. Ford India posted a 45 per cent fiscal growth for the period April 2006-March 2007.
The sale can be increased by the cost-cut-down policy i.e. cutting down price in order to attract more customers and thereby increasing the volume of sale. The sale volume can be also increased by applying value-for-money schemes i.e. providing benefits of higher version cars in the lower ones. For example, providing spoilers or sunroof or music system as in the higher models to the lower ones without an increase in its price. The dealers can be appreciated to achieve sales target by offering more commission or allowances.
The Ford Motor Company has come a very long way, since it was first established by Henry Ford. They went from a little wagon shop to the second leader in automotive sales. They have been around for almost a century. I firmly believe that with FordÐ²Ð‚â„¢s experience and high understanding of, and ambition for the satisfaction of the customer, that they may one day be the number one automotive company, beating out the General Motors Corporation. Ford base their communication on consumer driven insights to enable a stronger connects with the consumers, and to ensure the communication resonates with the target customer.
4) International Marketing Strategy,4th Edition by Isobel Doole and Robin Lowe,2004 ,Pg-7
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