Analysis of FORD Motor Co.: Marketing Points Essay

Introduction

Successful marketing is one of the most important processes within an organization which allows the integration of the elements of a marketing program that will best achieve the objects of a company in a given period. Today, marketing activities are influenced by globalization and internalization of business, new legal rules, and regulations, consumer values, and demands.

Company and Industry Background

The automotive industry is one of the leading industries in the world. The automotive industry aims to maintain the level of service and product quality and develop strategies to improve its products/services. Ford was established in 1903 as a converted factory. In a century, the company becomes the second-largest automaker in the USA. Today, Ford employs 283,000 employees and operates more than 100 factories around the globe. Its market share in the US auto market is about 17.7%. The market leader is General Motors with about 24.6% of the market share. Ford produces all types of passenger vehicles and trucks. A special offering involves Touring cars, Rally, Sports Cars, busses, tractors, etc. In general, Ford is well-positioned in the market to take on this important global leadership role. It has the global resources and certainly has the technological capability (Ford Home Page, 2007).

Marketing Perspectives

According to the Annual Report (2006), the company provides a successful marketing activity that allows it to earn $12,613 M (net income). From the report, it is evident that the goal of the company is to provide the opportunity to personalize purchases. In this case, the Internet and e-commerce create great opportunities for the automotive industry (and customers) to hasten the process of purchase. Ford underlines that “growth in wholesales (i.e., volume) will be greatest in emerging markets in the next decade, we expect that the mature automotive markets (e.g., North America, Western Europe, and Japan) will continue to be the source of a majority of global industry revenues” (Annual Report, 2006). An overall business strategy, potential, and capability to support high-performance environments are the key elements for the next years. The policy of safety adopted by Ford is the main strategic criteria. Technological forces generate problem-solving inventions. Ford target is on average as dependent on reliable innovations and technology as any other business (Crawford 2003).

To resist competition, Ford uses marketing to increase customer loyalty and commitment. “We expect, however, that a decline in or the inability to increase vehicle prices could be offset by the spending habits of consumers and their propensity to purchase over time higher-end, more expensive vehicles and/or vehicles with more features” (Annual Report, 2006). Ford has several options for addressing the problem of price competition. The choices are dic­tated in part by product and market competition. In North America, Ford is forced to switch to offshore sourcing of certain components to keep costs and prices competitive. In particular, the Far East and Asia are emerging as attractive markets for Ford. The specification in Ford is determined as a result of an organization’s policy. This is the process of designing quality into the service. Sales strategy is on a one-to-one basis (Kotler and Armstrong, 2005).

Marketing and Competitive Advantage

The auto market is not in maturity one, and today it offers a limited opportunity for high profits, so it sets about developing products that are both distinc­tive and could be sold at a premium price. A specialized product range necessitates a clear identification of the target market (Kotler and Armstrong 2005). The original mission of the company makes it clear that it is in the relatively unexploited ‘ sector that allows the opportunity for innovation. Ford sets out to create a range of high-quality products that are distinctive in shape and price (Ford Home Page, 2007).

Environmental Laws and their Impact on Ford

Current environmental laws and regulations become a real threat fro Ford and its market position. Many European countries and the USA require that automakers improve their technologies and reduce gas emissions. These policies force companies like Ford to spend millions of dollars on R&D and new production methods. The main research trends are hybrids or hydrogen fuel cell vehicles. For instance, the Kyoto Protocol on global warming requires ecologically safe solutions (Ford Motor Company Press Releases, 2007).

Competitive Advantage

Following M. Porter, a company creates a competitive advantage if the earnings of the company exceed their costs (Kotler and Armstrong 2005). It is possible to say that Ford has a competitive advantage in the industry introducing new products and unique services for potential consumers. New product development will open new markets for Ford and allows attract a new target audience. Ford becomes more market-focused than less successful firms in selecting opportunities for product development, and in creating products to market needs (Annual Report, 2006). It also concentrates on developing products that build on core competencies and skills. Today, Ford is good at communicating the desirability and requirements of product development internally to avoid the disruptions that new developments can bring. So, a new conceptually new car is the market need and Ford can be the first company which starts its manufacturing (Crawford, 2003).

The strategy towards a hydrogen car is the main priority of the company today to compete in the future. Conceptually new Car is the future of the industry. For Ford, consolidation in its present products presents adequate opportunities and requires a search for alternatives that build upon the company’s present knowledge and skills. In the case of product development, Ford will maintain the security of its present markets while changing prod­ucts or developing new ones (Ford Home Page 2007). Another strategy concerns existing products. In the case of Asian market development, Ford maintains the security of its present products while venturing into new market areas. Asian market development can include entering Indian and South Korean, China markets exploiting new uses for the product or spreading into new geographical areas. Of course, market development and product development may go hand in hand, since the move into a new market segment may require developments of variants to the existing product range.

“As part of our acceleration of the Way Forward plan, 70 percent of Ford, Lincoln, and Mercury products (by volume) in North America will be new or significantly upgraded by the end of 2008 compared with 2006 models; these efforts will include the expansion of our product lineup in growth segments such as crossover vehicles” (Annual Report, 2006).

Superiority over competitors is achieved through a differentiation and cost leadership strategy..Price competition supported by improved quality, is likely to feature highly as it fights for survival in markets faced with over-capacity. Within a rapidly changing environment, this kind of development ensures that a company will survive. the main priority of Ford is to satisfy consumer needs and adapt to the new competitive environment. Branding, advertising, promotion, and additional services to customers and product innovation strengthen Ford’s image. The value proposition is based on the idea that Ford’s products meet the needs of diverse customer targets proposing high quality and low cost (Annual Report, 2006)

Segmentation and Positioning

Ford chooses to position its products using a personalization strategy. This strategy helps the company to appeal to the consumers’ minds with offer­ings. Positioning of the brand can be characterized by establishing trustworthiness, confidence, and competence for customers. This strategy is supported by the buying process and the pricing. Also, the positioning strategy of Ford helps the customers to have the product within their minds. To address the target market Ford creates customers’ trust to make them willingly follow the company. Ford positions itself as ‘a save the car for the whole family. It teaches consumers that safety is the main criterion when choosing a new car. Also, it appeals to consumers with low prices and high quality of its products (Kotler and Armstrong 2005; Ford Motor Company Press Releases 2007).

To name the target group, Ford identifies groups of consumers with similar wants and needs. In general, targeting is the act of evaluating and comparing the identified groups and then selecting one or more of them as the prospect with the highest potential. A marketing mix is then devised that will pro­vide the organization with the best return on sales while simultaneously creating the maximum amount of value to consumers (Annual Report 2006). As Ford wants to penetrate an existing market, it must offer more value than competitors—better benefits and lower prices. It should utilize three basic criteria for assessing opportunity in target markets: current size of the segment and anticipated growth potential, competition, and compatibility with the company’s overall objectives, and the feasibility of successfully reaching a designated target.

Segmentation will be used to understand individual customers in the sports marketplace and to group them to form distinct segments which are identifiable, accessible, and substantial. At its simplest, a consumer segmentation may be Non-user, Competitor’s customer, Low-value customer, High-value customer (Fill 1999). From the geo-demographic, Ford is oriented on all ages and both gender. The majority of its customers belong to the low and middle classes. Its sales cover all geographical locations. Lifestyle allows determining how customers live: the core of the customer group is blue-collar workers. Ford’s customers value innovation and quality but prefer to buy a safe and ‘cheap’ car.

Porter’s 4P’s involve product, place, promotion, and price. Pricing The unique market pricing strategy is a part of deliberate attempts to reach a global market segment that is willing to buy a particular product. Ford calls its pricing strategy True Blue Pricing which allows: “better reflect final selling prices, lowering the sticker prices on most 2006 model year vehicles” (). This pricing strategy is appropriate in the introductory phase of the product life cycle when both production capacity and competition are limited. By setting a deliberately high price, demand is limited to innovators and early adopters who are willing and able to pay the price. “We’re going to sell on the strength of our products rather the amount of the incentive,” said Steve Lyons, group vice president, North American Marketing, Sales and Service. “With a strong, fresh product lineup we are best positioned to take advantage of this pricing strategy” (Hewett 2007).

Unique product design and image attract millions of consumers and help the company to create its brand image. All its products have a perceived uniqueness in a broad mar­ket. This is an extremely effec­tive strategy for defending market position and obtaining above-average finan­cial returns; unique products often command a premium price. This marketing strategy helps to deliver customer value in a way that clearly distinguishes the product from its competitors. The recent new products are Lincoln MKX, Ford Expedition, and Lincoln Navigator in North America; Ford S-MAX, Ford Galaxy, and Ford Transit in Europe; Jaguar XK, Land Rover Freelander 2/LR2, Volvo S80, and Volvo C30, and Mazda CX-9 (Annual report 2006). Place Ford sells its products through dealers. This channel offers variety but it is focused on a marketing mix aimed at all target markets. Promotion Using a mar­ket development strategy, Ford captures a larger share of a market for current products through market saturation and market pene­tration. The aim is to seek to create committed customers, not customers who are ‘locked in’. To develop a strong brand image and appeal to consumers, Ford uses service-based loyalty, incentive programs, and customer loyalty programs. Incentive programs involve immediate benefit promotions when the consumer reward for purchasing is immediate, and, as with most incentives, the sooner the reward can be expected and received after the qualifying action, the greater will be the positive effects of that incentive in stimulating purchase action. Included in this promotion category are price reductions; gifts. Customer loyalty programs include a rewards program for healthcare centers buying 10 phones for their patients. Marketing Communication strategy is based on online and offline advertising and promotion. The informative website is the top priority for Ford. On the one hand, it helps the company to sustain its brand image and deliver better services to customers (Crawford, 2003).

Demographics

The appointment of the new CEO, Allan Mulally, in 2006 has marked a new era in the company’s growth. Allan Mulally plans to develop a new market of plug-in hybrids. In 2007, the company launches a new campaign aimed to investigate the market position. Rationalization may include selecting new intermediaries, assigning new responsi­bilities to old intermediaries, or establishing direct marketing operations. Strategic moves are made towards new technology achievements and safety (Fill, 1999). In general, Ford has a great impact on the world’s auto market creating a new culture of low-cost safe vehicles affordable for millions of people. The goal of the company is “to build more of the products that people really want and value. Exciting new products that reflect the needs of today’s and tomorrow’s customers, with striking designs that are safer, more fuel efficient and offer even greater value” (Annual Report 2006). Ford’s strategy processes satisfy the requirements of diverse customer groups. Thus, the company is criticized for its current strategies and policies. “The Advertising Standards Agency (ASA) deemed the ad for the Focus Zetec “misleading” through its use of footage from the film, which featured the manufacturer’s Mondeo model” (Ford Motors Criticized, 2007). Also, Ford is often criticized for its great cultural impact and cultural change in Asian and African countries (Ford Motor Company Press Releases, 2007).

Through its local production facilities, Ford makes an impact on the economy as most countries feel a lack of equal access to the world’s material assets, including technological resources, and there is less linkage between urbanization and industry – an informal economy often predominates, and the spatial segregation is overlaid by ethnicity, caste, religion, and language. Meanwhile, a dispersal of pro­ductive wealth is underway as global corporations establish operations in key developing countries like Brazil and China. Many economists agree that this dis­persal will narrow the gap between poor and rich nations. Back in the industrialized nations, however, there is an increasing sense of social distress as work­ers see their plants close and jobs shipped out of the country (Ford Motor Company Press Releases, 2007). In addition, the globalization of industries such as steel, automobiles, and consumer electronics has cre­ated surplus production capacity on a massive scale. The existence and importance of large players with room for strategic decisions about trade, FDI, foreign production, and technology transfers must be accounted for in analyses of economic globalization.

References

1. Annual Report Ford (2006).
2. Crawford C. Merle. (2003). New Products Management. Irwin-McGraw Hill. 7th edn.
3. Ford Motors Criticized Over Casino Royale Car Model (2007).
4. Ford Home Page (2007).
5. Ford Motor Company Press Releases. Ford Media (2007).
6. Fill, C. (1999). Marketing Communication: Contexts, Contents, and Strategies 2 edn. Upper Saddle River, NJ: Prentice Hall.
7. Hewett, J. True Blue Pricing Lowers Most MSRPs for 2006 Vehicles.
8. Kotler, Ph, Armstrong, G. (2005). Principles of Marketing. Prentice Hall; 11th edition.