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Marketing Plan of Ford Motor Report (Assessment)


Executive Summary

The main objective of this assessment is to accomplish a detailed marketing plan of the Ford Motor Company within the perspective of the international automotive industry. In doing so, the paper would focus on epitomizing an appropriate company profile of Ford Motor, considering the financial overview of the company, formulating a SWOT Analysis, reviewing the current marketing situation of Ford along with a BCG matrix, and creating a comprehensive competitive review of the industry.

Furthermore, the paper would illustrate the potential marketing strategies of the company with consideration of the marketing research, brand positioning strategy, brand-positioning map, target market, and marketing mix. To conclude, the appraisal shall focus on assembling applicable recommendations together with an apposite conclusion.

Introduction

Presently, globalization has transformed the pace of the entire global commercial structure and the business environment influencing every sphere of the international trading issues both optimistically and pessimistically. The positive affects of globalization include the fact that together with many other industries, the automobile industry has also become open to the whole world and this has resulted in the business of Ford Motor to reach the market to a far-reaching level.

Widely extensive international market means increasing sales and consecutively, higher annual profit margins for the motor company. However, despite of so many benefits that Ford Motor is receiving, a major issue that remains with the impact of globalization on the company is that the firm now requires a quite high amount of expenditure on carrying out its marketing activities.

Company Profile

Bloomberg Businessweek suggested that Ford Motor Company, one of the globe’s biggest vehicle manufacturers, started its journey in the twentieth century with brands that comprise of Ford, Lincoln, and Mercury (1).

It is important to note that Ford runs in two main parts, namely, Automotive and Financial Services – the Automotive sector consist operations of North America, South America, Europe, Asia Pacific Africa and Volvo; on the other hand, the Financial services consist operations of Ford Motor Credit Company and Other Financial Services.

Ford is a multibillion-dollar automobile manufacturing business based in the United States with excellent trends as one of the largest industry players, which provides quality products and services to customers all throughout the globe; the company has over 5,000 Dealer Communication Network, such as FordStar, a largest interactive distance-training network in the world.

Financial Overview

Being such a giant player in the global automotive industry, Ford Motors possess a strong financial position enough well built to compete with the market leaders of the industry.

According to Bloomberg Businessweek (1), year over year, Ford Motor has observed revenues shrivel from $129.2 billion to $105.9 billion, although it was capable to raise net income from $2.7 billion to $14.8 billion; reduction in percentage of sales, general, and administrative costs from 16.58-12.46 percent was a key-component in the bottom line growth in the face of falling revenues.

The following table shows the five years financial review of the motor company for a better understanding of the Ford’s financial position:

Determinants of Financial Position FY 2006 FY 2007 FY

2008

FY

2009

FY 2010
Revenues $143,249 $154,379 $129,165 $105,893 $27,592
Total Revenues $160,065 $170,572 $145,114 $118,308 $29,893
Cost of Goods-Sold $145,066 $142,667 $121,737 $99,934 $24,233
Gross-Profit $6,970 $20,431 $14,908 $12,583 $4,750
Total General-sales and Admin-Expenses $19,148 $21,132 $21,414 $13,194 $2,654
Other Operating-Expenses $19,148 $21,132 $21,414 $13,194 $2,654
Operating-Income $-12,178 $-701 $-6,506 $-611 $2,096
Net Interest-Expense $414 $-650 $-1,110 $-1,306 $-344
Earnings of Discontinued-Operations $16 $41 $9 $5 _

 

Net-Income -$12,613 -$2,795 -$14,7660 $2,717 $1,687

Table 1: Financial Overview of Ford Motors.

Source: Self-generated from Bloomberg Businessweek (1).

On the other hand, increasing rates of oil and gasoline prices, taxation rates, fluctuated global demand for manufactured car, and rising competitive pressure through domestic production intensity, recession’s effects, and the economic conditions of the automotive industry as a whole are notable to put external impacts over the financial position of Ford Motors.

During the global financial downturn, the company suffered a loss of $6.3bn, and carried out 2600 job cuts; the company cut salaried employment costs by 10 percent by lowering compensations of the white-collar employees and sold off Jaguar and Land Rover for $2.bn to Tata Motors.

According to NASDAQ (1), such adverse impacts of the recession were clearly visible in the company’s revenue and consequently on its share prices; the following figure (a five years stock price graph) gives an apparent idea of how the external economic environment of the industry affected the stock prices of the company in 2008 to 2009 period:

Five Years Stock Price of Ford Motors.
Figure 1: Five Years Stock Price of Ford Motors.

SWOT Analysis of Ford Motors

A brief account of the SWOT analysis of this automotive company has illustrated in figure 1:

Strengths:

  • Brand awareness
  • Financial capability
  • Experience
  • Promotion
  • Leadership
  • Diversified product line

Weaknesses:

  • Increase production and operating costs
  • Lack of experience in new market
  • Rules and regulation

Opportunities:

  • To be market leader in automobile industry
  • Increase Interest
  • Development of e-commerce

Threat:

  • Global financial Crisis
  • Competitors
  • Similar innovative idea
  • Cultural background

Strengths

Ford (4) suggests that as response to the environmental awareness, Ford Motors has introduced safe, green, and quality vehicles to compete in the market, which is a major strength of the company.

This effort has resulted in the company to achieve the Eco-efficiency Award 2007 for its Dagenham-Engine-Plant for lowering ecological influence of current business-operations and creating an innovative engine-design through the finest in-class environmental-footprint, which cut waste-outputs and saved £3,385,600; the following figure shows the entire process through which Ford succeeded to be eco-efficient:

Eco-Efficiency Achievement Project.
Figure 3: Eco-Efficient Dagenham-Engine-Plant Process.

Eco-Efficiency Achievement Project

  • Ford has contributed the automobile industry with its product innovation; fuel efficiency, labour relations, and supply chain management are most imperative factors to reformation and ensuring future success of the company;
  • To ensure customers enhanced loyalty and to retain them, Ford has involved keeping its effort on fuel-efficient vehicles by R&D incentives with $12 billion annually and as consequence Ford has including Aston Martin, Jaguar, Land Rover, Volvo in its brand portfolio to capture the after market business in difficult global business environment;
  • Along with the excellence of product design and development with convenience and comfort, Ford has now available in excellent vehicles ranges all over the globe while it maintaining continuous improvements in engineering efficiency to meet up complexity in engines, transmissions, vehicle platforms as well as security measures;
  • Ford has derived to achieving leadership in quality and fuel efficiency to public by providing safe testing, comfort design and improved technology and at the same time it has aliened to improving customer care by using web based tools and devices and direct telephone calls according to customers’ expectations.

Weaknesses

  • Due to absence of well-structured roads and fuel efficiencies in the less developed countries, Ford has been proving lower quality vehicles for those countries but such strategies are hampering the image of Ford in international market;
  • In the less developed countries, customers prefer low cost carrier with high local content, but Ford is refusing to address the needs of such market with their local design, reluctant attitude to the market is reducing the market area of the company.

Opportunities

  • According to Ford (63), it has enough financial capabilities to joint venture with other renowned automobile companies to expand its business operation all over the world;
  • Financial report of the company forecasted the last five year’s financial data, which demonstrates that its annual profit has improved from the last fiscal years;
  • Ford has the opportunity to become highly diversified company by introducing new products in this competitive market.

Threats

  • Ford motor has faced macro economic challenges because of global financial meltdown and the business operation negatively influenced last fiscal year as the purchasing power of the customer has decreased. According the annual report of Ford Motor, this company lost its market leading position for the first time since 1979 for the global recession though Ford would be able to rescue its business from further influence by adopting proper marketing plan;
  • Competitors like Toyota, General Motor, and Honda are the major threat for the Ford Motor;
  • Other possible risks for the company are higher receivable delinquencies and bad debts, delays, or cancellations of sale orders;
  • Furthermore, other external aspects create disturbance to get competitive advantages, for example, frozen of credit market, investment, interest rate, and cyclical needs in market, and volatile price of raw materials.
  • In addition, some multinational companies (Enron, WorldCom, and Kelong) have collapsed because of corruption involving internal management; so, it is a major challenging issue for Ford to maintain good corporate governance system.

BCG Matrix

The BCG matrix is a portfolio planning process to measure Ford’s market situation in terms of relative market growth rate as well as relative market share –

  • Star: Due to high- growth and high- share, Ford occupied this segment before global financial crisis but it failed to hold its reputation;
  • Cash cow: ford is in this segment as this area point out the low growth with high- share business; this has illustrated in figure 4 below;
  • Dog: Ford do not occupy this segment as it demonstrates low- growth with low- share of business and that requires large investment for further development;
BCG matrix for Ford Motors.
Figure 4: BCG matrix for Ford Motors.
  • Question mark: the competitors of Ford hold the position of Question mark in global economic downturn as they experienced favorable growth rate in few countries of the world.

Current Marketing Situation of Ford

Currently, the market situation of the company is not at all in a very good position; this has occurred as Ford Motors suffered significantly from the recession throughout the FY 2009; according to the company’s annual report, the company is at present implementing several deliberated policies to recover from the financial losses in order to improve its current market situation.

This deliberated policies and the methods to execute them have outlined below with the intention of finding out the possible ways through which the firm can recover and enhance its market situation:

Deliberate Policies of Ford Motor Methods of Accomplishing the Policies
Speeding up the enhancement-procedure of new motor vehicles that the loyal clients of the company demands the most Serving all geographic markets with a range of product-portfolio, which have most superior designation, excellence, ecological-safety, and smart-features; continue to construct vehicle-momentum; piercing one of the most productive periods of new product and technology introductions in Europe; and improve quality through a renewed commitment that touches every aspect of the vehicle process
Enhancing the supplier base Reinforce its supply-base in US that make-up eighty-percent of its North American purchases; as a part of this, it is lowering total number of suppliers of new-product sourcing from 3,300 in FY2004 to 1,600 in FY2009 and 1,500 in FY2010; it identified plans that will take it to about 850 suppliers by mid-term with further reduction to about 750 suppliers
Support the policies and schemes of the company by means of adequate finance and enhance its income statement Decreasing automobile debt by $10.1bn; utilizing $2.6bn in automobile, Ford Credit cash, and 468 million shares of Ford Common Stock through a number of separate but related transactions; inducing exchange offer; raising $1.6bn of equity in an underwritten public offering; raising $565 million with the conclusion of an equity distribution program, and so on
Merging up the efforts professionally as a single team in order to lift-up its international assets Applying a well-organized business plan to reassess business-environment, risks/opportunities, and strategies/plans; identifying areas of arrangements that need particular consideration; encouraging frankness, leadership, dependability, accountability, decision-making, cooperation, and driving continuous enhancement
Revenue inducement through reformation at the present demand and through altering model-mix Closing 3 Ford-plants and 1 ACH-plant in FY2010 to FY2011; lowering the total number of production suppliers entitled for new product-sourcing; working with dealers in efforts to cut-back, unite and reshuffle Ford, Lincoln, and Mercury network; rearrange Ford Credit plans to diminish staffing by approximately 1,000 positions to develop its cost structure, etc
Develop Product Quality Making significant strides to improve quality through a renewed commitment that touches every aspect of the vehicle process so that the products are eco-friendly; these efforts have paid off with best-in-class initial quality in the US according to internal and external quality surveys; additionally Ford have established a global set of disciplined, standardized processes for being world’s leader in automotive-quality

Table 2: Deliberated Policies to Improve Current Market Situation.

Competitive Review

The international motor vehicle industry is exceedingly competitive owing to the existence of a large a number of car producers along with their plentiful offerings; in addition, Ford has to confront numerous smaller and larger rivals at both national and international levels; nonetheless, potential competitors of the company are General Motors, Honda, Mitsubishi, Nissan, BMW, Volkswagen, Toyota, Skoda, Fiat, etc. The table below outlines the major competitors of the industry as well as their country of origin:

Major Competitors of the Global Automotive Industry Home Country
Ford Motor Company United States
Toyota Motor Corporation Japan
General Motors Corporation United States
Honda Motor Co, Ltd Japan
Chrysler Group LLC United States
Hyundai Motor South Korea
Volkswagen Germany
BMW Germany
Nissan Japan
Mazda Japan
Mitsubishi Japan
Fiat Italy
Mercedes Germany
Skoda Czech Republic

Table 3: Major Competitors of the Automotive Industry.

Threats from new entrants are quite low in the 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. In recent times, Ford motors are facing some threats from the emerging markets under its worldwide operations from some new entrants; this is especially from the densely populated markets like China and India- the company is experiencing huge competitive pressure from new domestic car producers because of governmental preferences to safeguard infant industries and the incentives provided to them.

Due to the presence of innumerable automobile producers, the switching costs of the buyers are relatively high than any other industry sectors; moreover, the customer loyalty is also not significantly noticeable.

Companies like Ford, Toyota, Nissan, Honda, Fiat, etc offers the cars comparatively at the same prices for which it gets easier for the customers to select their desired piece of product from any one of them. However, the bargaining power of the customers seem to diminish when it comes to price considerations of cars of companies like BMW or Mercedes as their prices are quite higher than others.

Therefore, the preferences of the middle-income earners remain with companies like Ford. Individual consumers, corporations, rental car organizations, and government fleet combine the buyers group; after the financial downturn, the purchasers seemed to be influencing the car industry at a higher pace as most of the customer of Ford concentrated more on price rather than quality.

The vehicles of Ford requires to contend with several s with similar qualities from the rival firms; for instance, the substitutes of Ford Taurus and Volvo are Toyota Avalon, Acura RL, Lincoln MKS, etc; Ford Fusion faces competition from Honda Accord, Mercedes C Class, and BMW 3-Series (4-door).

On the other hand, the substitutes of the midsize convertibles of Ford, like VolvoC70 are Saab 9-3 and Volkswagen Eos; the substitutes of midsize SUVs like Ford Edge, Ford Flex, Ford Taurus X, and Volvo XC90 are Acura RDX, BMW X3, BMW X5, Honda Pilot, Hyundai Santa Fe, Hyundai Veracruz, Mercedes M Class, Nissan Murano, and Toyota FJ Cruiser.

The existence of so many substitutes create practical difficulties for Ford; in comparison between the sale of Ford’s hybrid-cars, the hybrid-cars of other companies like Toyota-Prius, Toyota-Camry, Lexus RX-400h, Honda-Civic, and Honda-Accord seemed to be selling more than Ford Escape or Mercury-mariner; in October 2006, at US, Toyota’s hybrid sales were 77%, Honda’s were 14%, and Ford’s were merely 9%:

US Sales Percentage of hybrid cars in October 2006.
Figure 5: US Sales Percentage of hybrid cars in October 2006.

Alternative products create a big difficulty for Ford ensuing to lower annual sales; the figure below shows the yearly sales statistics of hybrid cars in the US market from 1999 to 2006 period; it is perceptible that the sale of Ford Escape is far below its competitors:

Annual Hybrid Sales from 1999 to 2006.
Figure 6: – Annual Hybrid Sales from 1999 to 2006.

Apart from different motor vehicles from other direct competitors, Ford has to face stiff competition from some other alternative transportations like public transports, buses, railways, bicycles etc; these types of substitutes are often chosen by people because of their easy accessibility and cheapness.

The customers now prefer these transports rather than private transportations because they are still observing lower levels of income from the recession period onwards. However, public income has expected to be recovering along with the recovery of the economic downturn.

Marketing Strategy

Branding and Brand Positioning Strategy

Brand positioning is a crucial feature of a company’s strategy, which shows its main advantages in association with competitive offerings.

Possible value proposition for Ford Motors.
Figure 7: – Possible value proposition for Ford Motors.

Owing to its well-built brand awareness, Ford Motor will trail for “more for more” or “more for same” strategy because it is undeniably a quite prominent firm with strong financial position and large organizational structure. The company has been following this strategy for a long period of time through which it has served billions of people worldwide and has gained wonderful customer feedback and satisfaction.

Brand Positioning Map of Ford Motor

Ford Motors is one of the major players of the international automotive industry; consequently, the brand positioning of the company will look quite impressive like the once illustrated in figure 8. Even though there are many established brands in the entire industry, the brand-positioning map of Ford would still occupy one of the foremost parts of the market.

In the middle of some other car manufacturers positioned in the market, Toyota Motor Corporation, General Motors Corporation, Honda Motor Co, Ltd, Chrysler Group LLC, Hyundai Motor, Volkswagen, BMW, Nissan, Mazda, Mitsubishi, Fiat, Mercedes, and Skoda are significant ones.

Brand positioning map of Ford Motor.
Figure 8: – Brand positioning map of Ford Motor,

Marketing Research

Ford carries out its marketing research through internet or through crucial research from public by refining and creating new data gathering processes that influence product development and marketing campaigns; the firm engages customers through moderated clinics and through one-on-one interviews before automobiles reach market; it mines the internet for consumer comments in auto sites, chat rooms, and blogs.

Marketing decisions at Ford usually drives more by substantial cost diminutions; however, this practice is changing gradually and the transformation has been tremendously positive as per the top management of the company; Ford executives argue that they are truly interested in consumer feedback, and the evidence is in the car-models shown at Showrooms.

Ford goes through consumer engagement events and expends time with consumers in their residences to recognize how they use their cars; this allows the company to identify the consumer needs; in addition, as automobile sections get smaller and more assorted, Ford uses marketing research and sees how far to push design concepts and distinctive features.

Marketing Mix

  • Product: One of the key competencies of Ford is that it possesses a widely diversified product line of automobiles that helps the company to reach a large part of the global automotive sector by generating good revenues; to support this fact; the following table outlines a brief account of the company’s most popular product ranges:
Type of Motor Vehicle Examples of Some Products
Car-models The company usually launches different cars in different countries; Ford-Taunus, Ford-Scorpio, Ford-Sierra, Ford-Fiesta, Ford-Festiva, Ford-Figo, Ford-Focus, Ford-Fusion, Ford-LTD-II, Ford-LTD (Crown-Victoria), Ford-Mainline, Ford-Marauder, and Ford-Maverick are significant among those
Van-models Most well known ones are Ford-Aerostar, Ford-E-Series, Ford-Econovan, Ford-Endeavour, Ford-Freestar, Ford-I-MAX, Ford-Thames-300E, Ford-Thames-400E, Ford-Transit, and Ford-Windstar
SUV-models The company has considered Ford-Bronco, Ford-Edge, Ford-Escape, Ford-Everest, Ford-Excursion, Ford-Expedition, Ford-Explorer, Ford-Fiera, Ford-Flex, Ford-Freestyle, Ford-Fusion, Ford-Taurus, and Ford-Territory to be the best SUV-models
Truck-models Ford has launched countless truck-model throughout its history, which includes Ford-Mainlin, Ford-N-Series, Ford-Panel-truck, Ford-R-Series, Ford-Ranchero, Ford-Ranchero, Ford-Ranger, Ford-Ranger-EV, Ford-Super-Duty, and many more
Tractor-models Ford-600-Series Tractors and Ford-Workmaster are one of the company’s renowned tractor-models; some other types comprise of Ford-Powermaster, TW10, TW20, TW30, TW15, TW25, TW35, and so on
Bus-models Ford Motor’s buses has manufactured for a number of purposes, for instance, for school-transport, public transport, and for industrial uses; Ford-Transit bus/van, Ford-E 450 Super-Duty minibus, Ford-B Series, Type-C-conventional-bus, Ford MB-IV100, Ford-MBC-IV 200, Ford Specialty-Trolley, Transit-Suburban Bus, Ford-G 99 7, Ford-R-Series, Ford-rader, Ford-Hawke, Ford-ET7, Ford 19B-29B, Ford-7 2B, and Ford-ET 7-Aqualina are most widely used throughout the world

Table 4: – Diversified Product Line of Ford Motor

Price: Ford set the prices of the products by keeping in mind about the quality and production costs of the cars. It also considers the income levels of its targeted customers.

Place: Ford has hundreds of showrooms throughout the world where it does its placements.

Promotion: This vehicle-manufacturing firm is recently undertaking several strategic approaches to increase its sales-configuration; its advertising strategies are now concentrating on gratifying and impressing the people who put across abhorrence over Ford’s cars.

Its latest shove for inducing the customers has designed for its critics; the firm provided hundred customers a car for a period of 6 months and requested them to accomplish diverse journeys every month; at the journeys, “agents” used their Fiestas to distribute Meals on Wheels along with many other offering for the customers like treats to the National Guard.

The customers quested for exiting-adventures, or even for mere entertainment within the activities; in addition, after all these, Ford marketed the stories of those missions on You Tube, Flickr, Facebook, and Twitter that contributed significantly over Ford’s marketing activities.The promotional strategy of the Ford varies accordingly with changing consumer trends, demands, and other external circumstances.

The company plans the promotional packages depending on the factors such as different seasons, New Year festivals, Christmas Eve, occasions like Valentines Day, Easter Sunday, Mother’s Day, Father’s Day, Halloween, etc. The reason for these strategies lies behind the fact that most of the customer groups of Ford will be having a fluctuation in demand of the products offered by the company depending on these specific periods of the year. The customers more often like to buy more private-cars during festive events.

During New Year, Christmas, Mother’s day, Father’s Day the number of people visiting the Ford Showroom raises for which reason depending on the type of festival or occasion, Ford sets special offers; for instance, special promotional packages that include discount-vouchers, money-off coupon codes for great discounts, and many other packages for clients as well.

These offers will help the company to gain competitive advantage over the competitors by augmenting sales during these special periods of the year. This strategy benefits the company by generating an interest among the new Ford customers for being loyal in order to gain full advantage of the promotional packages, which in turn, would raise the profit margins of the company together with the advertising campaigns.

Recommendation

As the car manufacturing companies are showing positive attitude to save the world from global warming, they are producing environment friendly products. The competition is becoming high day-by-day among the companies; therefore, Ford Motor should launch new environment friendly brands considering purchasing power and attitude of the customer.

To hold its existing global market share, the company needs to amplify its annual budget for R&D to introduce quality products and develop technology. The rationale of this recommendation is the competitors of Ford offer differentiated environment friendly products at comparatively low price.

As Ford has corporate social responsibility, it should consider safety issue more carefully; otherwise, brand image of the company would be destroyed. As a result, Ford always should remember the consequence of Ford Pinto the oldest model of the company, which was the cause of the accidental death of several people. That model also collapsed only for the safety problem; so, it should offer quality products to protect the passenger from accidents, save the money of customers, and reduce other problems.

Conclusion

Being one of the most popular brands in world, Ford has always concentrated on serving its customers with highest level of satisfaction. In so doing, it has undertaken countless marketing strategies throughout its history. Additionally, during recession, due to financial-losses, it fell behind in terms of marketing activities. However, Ford is recovering from this by undertaking numerous development-policies through which it has expected to lead the market in future.

Works Cited

Bloomberg Businessweek. FORD MOTOR CO (F:New York). 2010. Web.

Ford. Annual Report 2009: One Ford. (2009). Web.

NASDAQ. Ford Motor Credit Company (F) Stock Charts. 2010. Web.

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