Individual Case Write-Up #7
Alberto Lugo
Student Number: 1008253328
Lecture Section 3
University of Toronto Scarborough
MGMB01: Marketing Management
Instructor: Tarun Dewan
Due date: March 25th, 2025
Introduction:
When you look at the blue oval Ford logo, you often associate it with vehicles of all
kinds, from affordable to luxurious. Ford Motor Company pioneered the automotive industry
by popularizing the mass production of affordable vehicles and introducing the moving
assembly line, which dramatically reduced the time and cost of producing a single car. This
drive to innovate and appeal to a public seeking a comfortable and reliable vehicle has led
the company to dominate the American automobile market alongside giants like Chrysler and
General Motors.
However, the company's market share gradually declined in the mid-1970s with the
introduction of imported cars, which were more fuel-efficient and economical than those
offered by domestic manufacturers at the time. To illustrate the impact this had on the market,
Exhibit 2 shows that, between 1990 and 2005, Ford's market share decreased by 28%, while
Toyota's increased by 70%. Furthermore, as its market share declined, so did its profits. As
Exhibit 5 shows, Ford went from $5.4 million in 2000 to a loss of $3.8 million in 2005.
To address this problem, in 2006 the company adopted a plan called "The Way
Forward," which consisted of restructuring the positioning of its luxury car line called
Lincoln and its line of more affordable vehicles. Furthermore, to improve the company's
profitability, the company strengthened its U.S. dealership network by eliminating
unprofitable or unviable locations and allowing other Ford and Lincoln dealerships to benefit
from the closures to generate more profits.
However, the implementation of this plan was hampered when the automotive
industry was severely hit by the 2008 financial crisis, leading to a drastic drop in car and
truck sales. Despite this setback, a net profit of $6.6 billion was recorded for Ford in 2010,
compared to a net profit of $1.2 billion in 2009 and a net loss of $12 billion in 2008.
Furthermore, with the reduction in the number of dealerships, average Ford dealer profits
were at historically high levels.
With all this in mind, we can consider this an evaluation case, and throughout this
analysis, we will attempt to assess the next steps to take with the future dealer network to
maximize its customer base for the Ford and Lincoln brands, considering its segmentation,
targeting, and distribution strategies.
SWOT Analysis:
Strengths
Weaknesses
•
•
•
Ford is an easily recognizable and globally
renowned known for being one of the pioneers
advantages in terms of broad market coverage, it
in the American automotive industry and for
poses challenges in maintaining consistent
producing reliable and high-quality cars.
standards and customer satisfaction at each of its
Another strength is Ford's ability to manage its
locations.
financial health, which has allowed it to achieve
•
While Ford's extensive dealer network offers
•
Ford had too tight a grip on franchise agreements,
a solid financial position. According to the data
resulting in the formation of dealer unions like the
presented in the case, in 2008, Ford suffered
National
losses of more than $11 billion, but by 2010,
(NADA), which gained significant bargaining
Ford's automotive operations recorded a net
power over the manufacturer and the freedom to
income of $6.6 billion, representing a 281%
add more fuel-efficient brands to dealers'
increase in profits.
portfolios.
The company offers a wide range of vehicles for
all preferences and budgets. These range from
•
Automobile
Dealers
Association
The high production costs of Ford vehicles pose
a problem for the company, as they erode profit
•
cars like the Mustang, Taurus, and Crown
margins and hinder the company's ability to offer
Victoria to trucks and SUVs like the Explorer,
competitive
Expedition, and its F-Series pickup trucks.
consumers to seek out more affordable options,
The company has a robust distribution and sales
such as Toyota, Honda, and Nissan.
prices.
Furthermore,
it
forces
network, encompassing numerous authorized
dealerships
and
sales
channels,
allowing
customers to conveniently and efficiently access
Ford vehicles in both urban and rural areas.
•
Ford fosters a culture of creativity and
innovation through teamwork and collaboration.
Its workforce is known for its commitment to
excellence and deep knowledge and experience
in the automotive industry, enabling them to
tackle
complex
problems
and
develop
innovative solutions.
Opportunities
•
Considering one of the key points of the "One
Threats
•
One from Ford is its overdependence on the
Way Forward" plan, which is the renewed
North American market, which leaves it
commitment to design, safety, and technological
vulnerable to economic downturns and changes
innovation, Ford can begin investing in eco-
in consumer demand specific to the region,
friendly, affordable, and fuel-efficient vehicles
affecting its sales and profitability.
to increase its brand's global reach and appeal to
•
•
The presence of major domestic competitors,
more environmentally conscious customers.
such as GM and Chrysler, as well as foreign
According to the case, luxury buyers are looking
manufacturers such as Volkswagen and Toyota,
for more eco-friendly vehicles that were not
may contribute to Ford's decline in market share.
considered traditional luxury brands, so Ford
can invest in this class of vehicles to gain greater
market share.
•
Ford should start producing vehicles for global
markets, rather than just the U.S. market, to
maintain its competitive advantage over other
manufacturers like BMW and Toyota, which
have also done the same.
STP Analysis:
Ford Motor Company segments the market geographically, demographically, and
psychographically, allowing it to develop marketing strategies for each of its vehicles and
easily identify the needs of its consumers. From a demographic and psychographic
perspective, we can say that the most important segments are the following:
•
Truck enthusiasts looking for a high-performance vehicle for demanding jobs.
•
Eco-conscious drivers who prioritize sustainability.
•
Buyers of spacious, safe, and comfortable family SUVs.
•
Sports car lovers looking for a fast vehicle with classic style.
•
Senior executives and entrepreneurs living the American dream and looking for an
elegant, luxurious vehicle.
Moving toward geographic segmentation, Ford offers cars suitable for various geographic
locations. In colder regions, durable and reliable vehicles are prioritized, while in urban areas,
small and eco-friendly cars are preferred. With that said, consumer needs have changed over
time, demanding smaller, more fuel-efficient vehicles. This is because demand for cars is
closely tied to the price of gasoline. Furthermore, consumers needed additional information
about the vehicles they were purchasing.
Regarding Ford's targeting strategy, it should focus primarily on its SUV/CUV vehicles,
as well as small and midsize vehicles. According to the data in Exhibit 3, these represented
29%, 22%, and 16% of vehicle sales in the United States in 2010, respectively. Furthermore,
the company is targeting the hybrid car market, appealing to consumers with an average
salary of $100,000 and a high level of education, as case studies show that they are more
likely to purchase a vehicle with this type of vehicle.
In terms of positioning, the Ford brand is presented as a line of affordable and reliable
vehicles, made in the United States for Americans. Given that patriotism is deeply rooted in
the American identity, Ford emphasizes this to demonstrate its support for the American
automotive industry and to showcase the features and benefits of its vehicles.
Competition:
Within the automotive industry, Ford faces strong competition from domestic and
international rivals. Key competitors domestically are Chrysler and General Motors, the latter
offering a range of popular brands that compete directly with Ford's lineup. Competitive
forces outside the U.S. include Toyota, which had established itself by manufacturing more
fuel-efficient cars than those offered by domestic manufacturers at the time, as well as
Volkswagen and Hyundai, which also offer well-equipped and affordable vehicles.
Despite this, Ford has a competitive advantage: its focus on innovation and sustainability
initiatives. Furthermore, under its Way Forward plan, the company is committed to
strengthening its global presence through its C-car platform, which can allow it to tap into
diverse markets and adapt to changing economic conditions in each region, as other
manufacturers such as BMW and Toyota have done.
Pricing Strategy:
Regarding its pricing tactics, Ford offers competitive prices to help it gain ground in the
automotive market, as well as premium prices for special models of its vehicles to attract
buyers willing to pay for high-performance features.
For its part, the company has facilitated financing and leasing options so consumers can
access its wide range of vehicles. This balanced pricing strategy makes Ford affordable
without sacrificing its reputation for quality.
Promotional Strategy:
Under the Integrated Marketing Communication (IMC) approach, Ford can communicate
to customers the value of their brand through various channels. For example, as an American
brand, the company emphasizes this heritage by including trucks on rural roads and farms
which helps tap into the working class's sense of national pride and community.
Furthermore, the company also uses direct marketing by including backdrops of rural
America for vehicles such as its F-Series, which helps reinforce the values of hard work and
resilience that characterize the people of these regions and drives the theme of American-
made reliability. This careful targeting of consumers has allowed the company to transcend
generations from just being car manufacturers but as an indispensable piece of American
history.
Distribution Strategy:
To sell its vehicles, Ford created a franchise model, initially establishing agreements with
dealerships in different cities and regions responsible for selling Ford and Lincoln cars. This
network consisted of multi-point markets, in which more than one dealership represented the
Ford or Lincoln-Mercury brands, in addition to markets in urban and rural areas. The biggest
problem with this network was that the company's multi-point dealerships had low
profitability. According to the information provided by the case, 35% of these dealerships
were unprofitable, while for those located in rural markets, the profitability was only 39%.
To address this problem, it was decided to strengthen its dealership network by
eliminating unprofitable locations and allowing the remaining locations to increase their Ford
and Lincoln sales. Furthermore, it was decided to combine the Ford and Lincoln-Mercury
franchises, regardless of whether they were owned by the same dealer or not. To ensure the
success of this plan, the company decided to carry out its consolidation and duplication
process in metropolitan areas to ensure improved long-term performance.
Recommendations:
Based on the details given in the case, Ford’s line of cars and trucks must be at the
forefront of its future dealership network, including the launch of their C-cars. The reason is
that, while Ford is a multinational company, its international branches run semiautonomously, so the marketing team needs to conduct extensive research about the different
countries in which it operates to get acquainted to the consumer needs and demand of each
region.
Another priority for the company should be concentrating on the Ford and Lincoln brands
by adding hybrid and electric cars into their portfolio to align with changing consumer
demands. Finally, to enhance its financial performance, Ford should implement cost-effective
measures so that their vehicles are more affordable not only for the American market, but for
other overseas markets, considering the average income of their priority consumers which
include families and people who perform jobs like highway and street construction.
Conclusion:
In conclusion, thanks to sound planning and efficiency in improving its financial
health, as well as its global focus, the company managed to achieve profits and recover from
its debt in 2008. However, if Ford wants to continue cultivating its legacy in the coming
years, it is important to continue investing in its flagship brands like Lincoln, but also in more
modern and sustainable vehicles. It should also invest in the F-150 pickup truck, which is the
best-selling in its entire portfolio and an important part of American culture. By committing
to these initiatives, Ford can continue to grow and evolve within the automotive industry.