Executive Summary
This paper focuses on carrying out a new product development of Ford Motors in the UAE market. In so doing the paper will consider several issues, such as the strength of the product idea, USP, SWOT analysis, PESTEL analysis, and marketing strategy. It will also concentrate on constructing a pricing strategy, promotional strategy, financial plan for developing this new product, and on many other related issues.
Methodology
The purpose of this methodology is to provide a clear idea about the research approach, primary data, and secondary data.
Research Design
To organize this report, the author has considered the theoretical approach of Malhotra, as this process is perfect while in-depth market estimation is crucial to assess the UAE market. However, the researcher will concentrate both on quantitative and qualitative but he gave more focus on qualitative data, as SWOT, PESTEL, Porter five forces, marketing strategy, and other external factors would be based on qualitative data.
Primary Research Approach
Saunders, Thornhill, and Lewis (102) and Yin (78) expressed that primary data need to originate to serve a specific purpose, such as, concentrate on the research problem or way out to remove these issues. However, this report will collect primary data to know the UAE market environment, customer choice, behavior, and prospect of this product. This information is important to develop a new product of Ford in the UAE market; so, the researcher will prepare a questionnaire by addressing relevant factors. However, the author will also consider 50 customers to collect primary data to assess the prospect of environmentally friendly Ford products to UAE customers. Also, the author will use Microsoft Excel to originate charts from the response of the selected 50 customers.
Secondary data
Zikmund (98) and Sekaran (45) pointed out that secondary data are more useful and reliable since these data have already been processed by renowned researchers. Malhotra (112) further added that these sources have also already been approved by supervisors, universities, or general readers. As a result, the qualitative data will assist the author to recognize the strategic dilemma easily and solution to solve these problems. Also, the researcher will use secondary data to organize most of the parts of this report excluding the market survey. However, the author will consider management books, reports of yahoo finance, country profile, annual report of Ford, and other internet sources to prepare a marketing plan for a new product of Ford in the UAE market.
Strength of Concept
Strength of the Product Idea
Ford Motors will be introducing a new product in the UAE market that the company distinguishes to be one of the most innovative products in its car-making history. This new car model has fully equipped with the latest technology integration causing a groundbreaking success for Ford’s R&D department. This new Ford model, known as “F-shammoTo” possesses several distinct qualities and features – the car is environmentally friendly because it has a non-pollutant emitting internal combustion engine that lessens emissions of compounds through a technology of catalytic conversion to cleanout the pollutants after combustion; moreover, this hybrid car version utilizes bio-fuel and ethanol.
When F-shampoo is stopped from driving, the gasoline-engine will shut down automatically without generating any noise, and stay off until the accelerator is pressed; moreover, the car has a touch-screen that displays images from rear-mounted-camera to show what is directly behind it as well as displaying and controlling many functions such as the audio system, A/C, and other systems. Although the car is five seated, its amazing internal designation is fabulously user friendly allowing the highest consolation to the consumers. Because the UAE has a high per capita income, Ford developed the product as a luxury car with a wonderful outlook in terms of style, size, shape, color, and other features. The main characteristics of the car have outlined in the following figure:
USP and Product Differentiation
The pricing of F-shammoTo has set by keeping in mind several factors, such as the manufacturing cost of the car, the per capita income of the UAE residents, and most importantly, the prices charged by the competitor companies for similar types of vehicles. Even though the car has been made such that it would attract luxury car purchasers, but the charge of this innovative Ford model is reasonable enough to be afforded by middle-income earners as well.
Its price is a little higher than that of the general Ford car models, but still quite less than the hybrid cars of Toyota, BMW, Honda, etc. Initially, F-shampoo will be available at dirham 73125 (19500 dollars) to the customers. After a couple of months, Ford may increase its price by 10 percent to 15 percent depending on the demand of the market, and by analyzing the extent to which people feel appreciated about the car.
Academic Support
SWOT analysis
Being such a large business in the global automotive market, it would not be a big deal for Ford motors to develop its new product in the UAE market. It is important to note that Ford will consider developing the new product considering its strengths, weaknesses, opportunities, and threats:
Strengths
Ford Motors is renowned for manufacturing the finest automobiles including cars and other automotive vehicles; it is one of the leading manufacturers of automobiles in the world;
The company has goodwill for product superiority and consumer satisfaction and its vehicles are very dependable and fuel-efficient;
The company has provided the global industry with its product modernization; moreover, it ensures good labor associations and effectual supply chain management;
In conjunction with the distinction of car designation and improvement with expediency and console, Ford possess the capability to maintain incessant precision in engineering each vehicle to reduce consumer complaints, pollutant emissions, as well as ensuring safety measures;
The strong leadership of the company at its top management is one of the major things that would help the company with the development of its F-shampoo in the UAE market; such bold leadership provides constant help to the low-level workers to carry out their tasks more effectively.
Weaknesses
In several developing countries, consumers favor economical automobiles with high contentment in terms of longevity, but Ford is not paying enough attention to address these markets, which, in turn, is reducing the market segmentation of the company.
The company more often suffers from additional costs imposed by increasing employee turnover in some parts of its operating markets.
Opportunities
The strategy makers of the company have decided to extend its product line to include stylish luxury cars like F-shampoo in some countries outside the UAE which could be quite moneymaking;
The company has a prospect to penetrate the market of some third world countries;
It will be focusing on enhancing its IT infrastructural requirements to ensure operational effectiveness and customer gratification.
Threats
Owing to the international economic turmoil, the firm’s operations were pessimistically hampered during FY2009 as the consumer confidence decreased significantly;
The rival businesses such as General Motor, Honda, and Toyota are a major threat for Ford; other possible risks for the company are bad debts, postponements, terminations of sale orders, commotions to get competitive advantages, for instance, frozen of the credit market, unstable price of raw materials, etc.
BCG matrix
The BCG matrix is a permutated progression procedure to appraise Ford Motor’s market circumstances in context to the relative market growth rate in addition to relative market share; for a better understanding, this has demonstrated in the following figure:
Star: As a result of the high growth rate and high market share, the automotive company was in this section earlier to the global economic downturn; however its goodwill has seriously damaged during the economic crisis as it failed to stay in this section;
Cash cow: The company is currently under this section as this section indicates the low growth with high market share businesses;
Dog: Ford do not occupy this section as it shows low-growth with low-share companies that require a large investment for further advancement;
Question mark: Some rivals of Ford clutch the position of Question mark in the global economic downturn as they experienced some level of growth in several countries where the effect of the recession was not severe.
Political factors
Foreign direct investment policies of a foreign government, unfriendly governmental attitude in foreign countries like Venezuela, the unsteady atmosphere in South Asia, range of governmental incentives, e.g. tax-exclusion and tax-credit of automobile pool lanes, and so on are putting great impacts on the global automobile industry (Ford 48). However, it is notable that the governmental policies of the UAE are business-friendly and Ford operations have not hampered by its political affluence. Also, launching new products are not subjected to these factors.
Economic factors
The global automobile industry could be influenced by alterations in demand, increasing inflation rates, uneven interest rates, fluctuating exchange rates, rising taxation rates, and more recently, the global financial crisis has contributed to the lower expansion rate of the industry. According to NASDAQ (1), such unfavorable impacts of the recession were visible in the company’s revenue and consequently on its share prices; the following figure shows how the external economic environment of the industry affected the stock prices of the company from 2008 to 2009 period. Nevertheless, the share prices of the company are recovering from the very beginning of 2010 and it has expected that the company would not have any encumbrances in launching F-shampoo.
Socio-cultural factors
Ford is very much concerned about its social responsibilities; its annual CSR report includes opposing anti-social rudiments that pose a danger to society and it works jointly with the police and other correlated bodies for proper response in the UAE.
Technological factors
Ford carries out the R&D with most modern technologies making vehicles that are low-emitting, unique, and globally competitive focusing on the foremost technologies addressing ecological concerns; “F-shammoTo” is one such hi-tech car outfitted with flexible-fuel technology.
Environmental Factors
To ensure environmental safeguard, the company has strong obligations to undertake all the necessary steps for reducing emissions of poisonous gases in both its manufacturing plants and cars; to do so, the company has received numerous awards as well. It is significant that Ford’s new product F-shampoo is eco-friendly, which applies bio-ethanol and gasoline.
Legal Factors
Ford complies with all the legal and regulatory legislation of the UAE in carrying out its operations over there. These include compliance with the labor laws, environmental laws, and some other Islamic laws.
Porter five forces
Porter (3) pointed out that if the following forces are intense, almost no business organization can get attractive returns on investment, and as a result, it is important to assess current market competition:
Rivalry among Existing Firms
The global motor vehicle industry is remarkably competitive because of the subsistence of a large number of car producers along with their abundant offerings; also, Ford has to face numerous smaller and larger rivals in UAE; the potential competitors of the company are General Motors, Honda, Mitsubishi, Nissan, BMW, Volkswagen, Toyota, Skoda, Fiat, etc.
The threat of New Entrants
Threats from new entrants are quite low in the UAE industry because of various barriers to enter the market; new entrants more often lack adequate finances, proficiency, satisfactory knowledge about specialized car manufacturing methods, and skilled personnel. Furthermore, once established, it gets hard for the new players to sustain in the highly competitive business environment and to join in price competitions with the industry giants. Besides, the legal barriers and regulations pose adverse impacts for newcomers as well.
Bargaining Power of Buyers
Because of the presence of countless vehicle producers in UAE, the switching costs of the buyers are relatively high than any other industry sector; moreover, customer loyalty is also not significantly noticeable. Companies like Ford, Toyota, Nissan, Honda, Fiat, etc offer the cars relatively at the same prices for which it gets easier for the customers to select their desired piece of product from any one of them.
Bargaining Power of Suppliers
The bargaining powers of suppliers are average in the UAE because their numbers are high. These suppliers of raw materials more often compete with each other in terms of price and quality providing a good prospect for Ford to flourish in the UAE market with its new product items.
The Threat of Substitute Products
The existence of so many substitutes create practical difficulties for F-shampoo in the UAE market; this is because some other eco-friendly cars are present in the industry, like Toyota-Prius, Toyota-Camry, Lexus RX-400h, Honda-Civic, and Honda-Accord; nevertheless, it is important to note that F-Shimamoto possesses some unique features that are not present in any other substitute motor vehicles.
Market segmentation
Kotler and Armstrong (89) pointed out that market segmentation is the process of separating a market into distinct groups of target customers by taking into account their age, gender, diverse requirements, characters, or income structures. It is noteworthy that F-shampoo is a luxury car, fully equipped with all the special and distinct features, latest technologies along with fuel-efficiency and environmentally safe characteristics, ensuring the highest comforts of the user.
Even being such an exclusive model, the market of the car has been segmented by keeping in mind the income levels of all customers. The stylish features of the car will attract people from all age groups in the UAE and its eco-friendly traits will focus on engaging conscious and knowledgeable customers to buy the car.
Target market
The following groups will be the target market of F-Shimamoto:
- High-income earner seeking for comfort – Ford’s new product is a super deluxe that guarantees the highest ease and comfort;
- People from all ages – Besides attracting people who value comfort over everything, F-shammoTo will also be a prime choice of the young residents of UAE because of its attractive outlook;
- Conscious people – This car will also target those well-informed UAE citizens who have a good knowledge of the environmental pollutions caused by conventional car models, and who strive to cut down the rates of emissions.
- Middle-income earners – The price of the car is not excessively high; its price has set keeping in mind the price of any other general Ford models so that it can target a mass market.
Market Position
After launching the product for the first time, F-shampoo will occupy a small part of the market. However, the company expects to capture a large part of the UAE’s market share with this car within a very short time. The figure below shows the positioning of F-shampoo in the market; it is apparent that this car is of high quality and is available at comparability lower price than BMW ActiveHyb and Toyota Prius:
Customer Choice
Kotler and Armstrong (105) suggest that consumer choices are generated when the external aspects such as marketing motivations and other stimulus transfers in the black box of the buyer where it goes through buyer characteristics and buyer’s decision-making process and finally transform into the consumer’s response in making up the choices:
Just in the way the consumer’s decision-making process is subjected to numerous inducements, this choice-making procedure in turn influences several factors as illustrated in the figure:
Business plan
Marketing Strategy
Competitive Advantage and differentiation
Ford invests a large amount of money for R&D to introduce F-shampoo that strives for eco-friendly, inventive, and distinct qualities by developed technology; this increased budget for research is more responsive in meeting customer demand, as the market is too competitive in terms of product, service, innovation, development cycle, loyalty, safety, price, and fuel economy. Ford has integrated SAP software, which facilitates the company to acquire a comprehensive and consistent view of every customer providing it with competitive advantages; in context, Ford maintains privacy policy and data protection system, the procedure for sales, complaint management, marketing campaign management, after-sales service, and facilitates the sharing of knowledge and encourages collaboration.
Pricing Strategy
Ford will build up the pricing strategy of F-shammoTo by keeping in mind all the necessary factors like the financial conditions of the UAE-based customers and the prices charged by its competitors for similar types of cars.
Promotion Strategy
The promotional activities of Ford are configured below:
Table 1: Promotional Tools of F-shammoTo. Source: Self-generated.
Distribution Strategy
To carry out the distribution process, F-shampoo will be available to the customers through Ford’s showrooms in the UAE, or through the local car dealers.
Financial plan
The financial plan for Ford to develop F-shampoo in the UAE market has been outlined below.
Important Assumptions
Key financial indicators: –
Table 2: Key financial indicators. Source: Self-generated.
Projected Profit and Loss
Table 3: Projected Profit and Loss. Source: Self-generated.
Projected Cash Flow
Pro-forma balance sheet: – For the year 2011.
Table 4: Pro-forma balance sheet for 2011. Source: Self-generated.
For the year 2012
Table 5: Pro-forma balance sheet for 2012. Source: Self-generated.
For the year 2013.
Table 5: Pro-forma balance sheet for 2013. Source: Self-generated.
For the year 2014.
Table 6: Pro-forma balance sheet for 2014. Source: Self-generated.
For the year 2015.
Table 7: Pro-forma balance sheet for 2015. Source: Self-generated.
Projected Balance Sheet
Table 8: Projected Balance Sheet. Source: Self-generated.
Break-even Analysis
As the Pro-forma income statement suggests, Ford will be able to reach the break-even point for the development of its new product within the first year of its commencement in the market. This is the stage where the revenue generated from F-shampoo will be AED14292500, which is equal to the total cost of AED14292500, indicating the break-even point that has graphically represented as the following:
Milestone Schedule
Timing and objectives
By the end of 2010 Ford will survey the market to find out what is the prospect of launching F-shampoo in the UAE;
Ford will introduce F-shampoo in 2011; therefore it would be allocating the total capital within the first quarter of 2011;
Immediately after launching the new product in the second quarter of 2011, the company will start advertising it on the television, print, and other forms of mediums;
The company expects to observe profit from F-Shimamoto’s sales from the very beginning of 2012.
Also, the following table will show more elaborately the work detail and the milestone scheduling for the new product development.
Deadline and milestone
Table 9: Milestone Scheduling for F-shammoTo. Source: Self-generated.
Findings and Result
Can eco-friendly cars for lower down pollutions:
Amongst 50 respondents, 70% of customers believe that eco-friendly cars can lower pollutions, whereas 30% disagree with this.
Is driving comfort more essential than an interior decoration
About 58% of customers appreciate comfort to be the most important thing whilst the rest 34% emphasized on decoration. However, 2% of respondents do not comment on anything on this.
Making large investments for a stylish outlook
For 52% of customers, a stylish outlook is more important than price, but the rest 48% is not ready to pay high for a good outlook.
Can fuel-efficiency lower down fuel consumption rates?
About 80% of people agreed to the fact that fuel efficiency lessens fuel consumption rate; conversely, 16% of people disagreed and the rest 4% have not commented anything on this.
Do higher prices ensure better quality?
More than 62% of respondents think that higher prices can ensure better quality whereas 38% denied this fact.
Works Cited
Ford. Annual Report 2009: One Ford. Web.
Kotler, Philip, and Armstrong Gary. Principles of Marketing. New Delhi: Prentice-Hall, 2006. Print.
Malhotra, Naresh. Marketing Research- An Applied Orientation. London: Prentice-Hall, 2009. Print.
NASDAQ. Ford Motor Credit Company (F) Stock Charts. 2010. Web.
Saunders, Mark. Thornhill Adrian, and Lewis Philip. Research Methods for Business Students. London: FT Prentice Hall, 2006. Print.
Sekaran, Uma. Research Method for Business. London: John Wiley & Sons, 2006. Print.
Yin, Robert. Case Study Research: Design and Methods. Beverly Hills, CA: Sage, 2003. Print.
Zikmund, William. Business Research Methods. Orlando: Harcourt Publishers. 2006. Print.
Appendix
Questionnaire
- To what extent do you agree that it is important to use eco-friendly cars for lowering pollutions?
- [Yes]
- [No]
- [No-comments]
- Do you appreciate that driving comfort is more essential than interior decoration?
- [Yes]
- [No]
- [No-comments]
- Are you interested to make large investments for a stylish outlook?
- [Yes]
- [No]
- [No-comments]
- Can fuel efficiency lower down the rate of fuel consumption by car engines?
- [Yes]
- [No]
- [No-comments]
- Do you think that higher car prices ensure better quality?
- [Yes]
- [No]
- [No-comments].