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Ford Market Segmentation Report

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Updated: Jul 22nd, 2021

Introduction

The Ford Motor Company, often referred to simply as “Ford”, is a US-based multinational automaker headquartered in Dearborn, Michigan, a suburb of Detroit. In 2018, Ford’s market share amounted to 6.3% with 61 factories operating globally, 32 – domestically, and 6.6 million vehicles sold (Smith, 2020). According to the business analytics dashboard provided by the New York Times, Ford is an absolute leader among the world’s auto and truck manufacturers with a market capitalization of $35 billion (“Auto & truck manufacturers,” 2020).

Despite these impressive statistics, a closer look at Ford’s performance reveals some concerning tendencies. For instance, in 2018, Ford’s net income has been the lowest since 2010 (Smith, 2020). Overcoming this difficulty might require discovering new market segments or emphasizing those already targeted by the company. This essay explains how environmentally aware customers and status seekers might be the best market segments to pay attention to for Ford.

Segment: Environmentally Aware

A brand new era of sustainability is on the rise, and big manufacturers cannot ignore it any longer. The World Health Organization (n.d.) reports that around 12.6 million people die each year of environmental issues; the latter is also accountable for up to 25% of the global burden of disease. The negative impact of environmental issues is becoming common knowledge and a cause for concern for many customers. 81% state that they care whether a company whose products or services they are choosing is environmentally friendly (“Global consumers seek companies that care about environmental issues,” 2018). The level of care and awareness ranges depending on the generation: while only 65% of the Silent generation supported the cause, 80-85% of Millennials and Gen-Zs express their concerns.

A new market segment consists of young people living in urban areas in developed countries (Moser, 2015). In the United States, 21% of the population, or 44 million people are adults between the ages of 19 and 35; 85% of them, or 37 million of them are potentially environmentally concerned.

They prefer to make well-informed decisions and uphold their own ethical standards (Moser, 2015). This implies that before making a purchase, they are likely to research a company’s background and compare alternatives. One downside of targeting this market segment is that the customers may not be exactly financially stable (Moser, 2015). For the most part, they cannot afford environmentally friendly vehicles from the luxury segments.

Lately, one of Ford’s objectives has been investing into green initiatives and reducing its environmental impact,. As Dearborn (2019) reports, the Carbon Disclosure Project (CDP), a nonprofit organization specializing in environmental reporting, has given the Ford Motor Company an A grade for its water security efforts. Ford’s endeavors to slow down climate change have been recognized too: the company received an A- grade for the third year in a row.

Water management has earned Ford an A from the CDP for the fourth year in a row. As one may readily imagine, acting on these values must have helped Ford to build a certain reputation that should be attractive for the discussed market segment. However, Thompson (2015) argues that the company’s intentions to invest more into electric vehicles are somewhat belated. When it comes to actual environmentally production, Ford might be lagging behind its contenders.

Segment: Status Seeking

Many purchases that people make are not just practical: they signal a certain status that the consumer seeks to attain. As Siu, Kwan, and Zeng (2016) put it, accumulation, possession, and spending money become the forces driving the modern market. Making purchases transcends the physical and becomes psychological, especially when it comes to emerging markets. For instance, in South East Asia, the public sentiment is slowly turning to accepting the Western values – hedonism and individualism. Siu, Kwan, and Zeng (2016) add another dimension to the status seeking market segment: they argue that face-saving, one of the main characteristics of Asian culture, makes consumers take into account social beliefs.

To sum this up, it is safe to say that the status-seeking segment resides primarily in developing countries such as China and Malaysia. They are young adults in their mid to late twenties and early thirties. Together, they constitute the first generation that has not seen the deficit and that has grown up in relative abundance of goods and services. Consumers belonging to this market segment want their purchases to be indicative of their ambition and desired social image.

At the same time, this individualism is moderated by the need to take into account peers’ opinions. Entering the Asian market and targeting this exact segment for Ford opens a lot of opportunities. First and foremost, the Chinese market is the largest in the world, and Chinese economy has been on a steady rise since the beginning of the 2010s. Between 2013 and 2017, the growth was fluctuating between 6 and 8% (Amadeo, 2019). Another telling metric is the observable significant growth of the purchasing power in China (Index-Mundi, 2017).

Ford is known for its luxury vehicles – it has an entire brand, Lincoln, launching upscale models. Besides, Ford is a company with a history spanning for over a century, and older models are attractive to those collecting them and the fans of vintage cars. Interestingly enough, Ford makes sure that its luxury line stays in line with modern trends and meets customers’ changing tastes and preferences.

For instance, as Valdes-Dapena (2020) reports, the US-based company has been investing into Rivian, a Michigan startup that develops electric vehicles. The result of their collaboration will be a luxury plug-in hybrid, which is expected to find its market fit with environmentally aware, affluent customers. Rosevear (2018) attributes current low sales numbers to the American company’s inability to strike an emotional connection with the Chinese customers. It seems that new models that target the status seeking segment might solve Ford’s problems in China at least partly.

Recommendations

Ford might want to consolidate its efforts and resources to gain an edge in the competition. Firstly, it should appeal to the environmentally aware market segment consisting primarily of young people who wish to make conscientious choices and also purchase affordable products. This is especially important when Ford’s main contenders such as GM and Volkswagen are launching electric and hybrid vehicles at prices comparable to those for regular cars. The second recommendation would be to appeal to the Asian segment characterized by status-seeking consumption. To meet their needs, Ford might want to promote luxury models as well as those that fall in line with current trends.

Conclusion

Ford is an American car company that is an absolute leader in market capitalization in the automotive industry and one of the most recognizable brands in the world. In recent years, Ford has seen declining net income and sales numbers in particular regions. Apparently, to face the new challenges and overcome them the company might need to reach out to new market segments. Firstly, it might want to consider those who are environmentally aware and strive to make ethical choices.

Their needs might be met by offering them affordable, “green” products while maintaining a good reputation. Another potential market segment is the status seekers of East Asia: they like to signal that they can afford luxury and also save face before their peers. They might be attracted to both luxury car models as well as those that are in line with current tendencies such as environmentalism.

References

Amadeo, K. (2019). . Web.

Auto & truck manufacturers. (2020). Web.

Dearborn, M. (2019). . Web.

Global consumers seek companies that care about environmental issues. (2018). Web.

Index-Mundi. (2017). . Web.

Moser, A. K. (2015). Thinking green, buying green? Drivers of pro-environmental purchasing behavior. Journal of Consumer Marketing, vol. 33, no. 4, pp. 245-256.

Rosevear, J. (2018). This is why Ford Is fading in China. Web.

Siu, N. Y. M., Kwan, H. Y., & Zeng, C. Y. (2016). The role of brand equity and face saving in Chinese luxury consumption. Journal of Consumer Marketing.

Smith, S. (2020). . Web.

The World Health Organization. (n.d.). Quantifying environmental health impacts. Web

Thompson, C. (2015). . Web.

Valdes-Dapena, P. (2020). . Web.

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"Ford Market Segmentation." IvyPanda, 22 July 2021, ivypanda.com/essays/ford-market-segmentation/.

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IvyPanda. "Ford Market Segmentation." July 22, 2021. https://ivypanda.com/essays/ford-market-segmentation/.

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IvyPanda. 2021. "Ford Market Segmentation." July 22, 2021. https://ivypanda.com/essays/ford-market-segmentation/.

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IvyPanda. (2021) 'Ford Market Segmentation'. 22 July.

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