Ford KA - Presentation-Final3

FORD KA PRODUCT MANAGEMENT:

SPENCER BOOK | LUCY CHEN | JUSTINE FOO | SEAN GO

AGENDA

Case Overview • Company Background • Industry & Competitor Analysis • Key Issues

Product Analysis • Product Strategy • Product Characteristics • Consumer Segmentation

Recommendations • Positioning of Ford Ka • Marketing Strategy • Sample Branding/Advertisement

Implementation • Marketing Campaign • Implementation Timeline

Financials Risks & Mitigation

CASE OVERVIEW | PRODUCT ANALYSIS | RECOMMENDATIONS | IMPLEMENTATION | FINANCIALS | RISK MITIGATION

CASE OVERVIEW

COMPANY BACKGROUND

Category Description Date 1996

Location France, Europe

Old Product New Fiesta

New Product Ford Ka

History Market Share: Second largest manufacturer of cars and trucks with 7.3% unit share of the total passenger market

Vehicle Sales: $6.6 million sales Total Revenues: $110 billion Net Income: $2 billion

Context Environmental Changes: Increased road congestion, parking in cities, fuel efficiency Demographic Changes: Average household size less than 3, more working women

Competitive Problem The exceptional performance of the Renault Twingo, which changed the industry dynamic

While Ford is fairly successful in the overall passenger market, our growth in the rapidly growing B-category has stagnated and is now declining due to new competitors


CURRENT PRODUCT LINES

45.4%

1.8%

30.5%

18.7%

2.9%

% Ford Sales 140,778 units

Classic Fiesta New Fiesta Escort Mondeo Other


B Subcategory Description Basic Traditional small-car attributes

Trend

Better performance & more features

Other Luxury small car

Total Car Market 1.9 million unit sales (1995)

42.7%

Small cars (B)

INDUSTRY OVERVIEW

6%

40% 52%

2%

% Market Share of Small Car Market

A

Basic B

Trend B

Other B

MARKET BREAKDOWN B CATEGORY

Category-B small cars have become increasingly popular in past years, and most recently, have diverged into multiple subcategories to satisfy diverse consumer tastes


COMPETITOR ANALYSIS

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

1992 1993 1994 1995

% Market Share of Top Competitors

Ford Fiesta (Old + New) Renault Twingo Renault Clio Peugeot 106

In the past three years, our top Category-B competitors’ market share has increased, while ours has declined


PERCEPTION MAP

Classic Fiesta

Peugeot 106

Renault Clio

New Fiesta

Ka

Renault Twingo

Fashionable Conservative

Simple

Luxurious


KEY ISSUES

Identify target customers & correctly

position Ka

Threat of Renault Twingo

Failure of “New” Fiesta to capture significant

market share

• “New” Fiesta could not satisfy varied needs of buyers

• Fiesta brand line did not appeal to demand for urban, stylish car

• New model and strong marketing efforts needed to differentiate from competitors and expand market share

• Huge success of Twingo, gaining 8.9% market share in 1 year

• Ford needs to react quickly and offer more than basic transportation to remain competitive

• Understanding of demographics and attitudinal traits needed to target right customer segments

• Product positioning will determine marketing strategies used


PRODUCT ANALYSIS

PRODUCT CHARACTERISTICS

SIZE SPACE

LOOK POWER

Our core product characteristics (size, space, power & look) are crucial to differentiate ourselves from Ford Ka’s major competitors

Renault Clio

Renault Clio

Peugeot 106

Renault Twingo


Fire 18-23 & 70+ groups

CONSUMER DEMOGRAPHICS

7

24 25 29

8

0

5

10

15

20

25

30

35

18-23 24-35 35-50 51-70 70+

% o

f tot

al c

ar b

uyer

s

Age Group

Age Breakdown

17.7 10.3

30.7

4.3

37.0

0.05.0

10.015.020.025.030.035.040.0

Single, living alone Single, living withparents

Married, withoutchildren

Single, withchildren

Married, withchildren

% o

f tot

al b

uyer

s

Marital Status

* All data shown are average percentage of buyers of top 3 small cars

AGE GROUP

Fire small town groups

RESIDENCE

No clear preferred group

INCOME

Target married groups

MARITAL STATUS

Our segmentation strategy consists of firing the smallest demographic groups and focusing on married couples, ages 24-70, and residents of large towns, cities & rural areas


CONSUMER DEMOGRAPHICS

Fire 18-23 & 70+ groups

AGE GROUP

Fire small town groups

RESIDENCE

No clear preferred group

INCOME

Target married groups

MARITAL STATUS

Our segmentation strategy consists of firing the smallest demographic groups and focusing on married couples, ages 24-70, and residents of large towns, cities & rural areas

24.8

23.6 29.4

22

Income (francs)

< 100k

100-150k

150-250k

> 250k

17.7

51.0

7.3

24.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Paris/Ile de France Rural Small Town Large Town

% o

f tot

al b

uyer

s

Place of Residence

TARGET CONSUMER GROUPS Ford Ka can be successfully repositioned by identifying & targeting specific consumer groups based on attitudinal traits and needs

Weekend Getaway

Description An avid traveler, the weekend getaway wants a spacious car with an efficient engine

Core Needs • Space • Engine power • Fuel efficiency

Trendy Commuter

Description A successful career-person, the trendy commuter is interested in a blend of style and function

Core Needs • Trendy • Functional • Maneuverable

Practical Parent

Description Juggling family needs and work life, the practical parent wants high functionality on a low budget

Core Needs • Safe • Reliable • Affordable • Functional


RECOMMENDATIONS

PRODUCT STRATEGY

Simplify the Ford Ka design

Limit small cars in European market to the Ford Ka & Old Fiesta

Eliminate the New Fiesta

Create a futuristic style by eliminating the two-toned look

To distinguish Ford Ka as a unique & modern Trend B vehicle, we recommend (1) eliminating the New Fiesta and (2) simplifying the current Ford Ka design


PRODUCT POSITIONING

Weekend Getaway

• Space for luggage • Travel-friendly features • Ability to handle “off-road”

paths and long distances

Trendy Commuter

• Fuel efficiency • Stylish appearance • Small size

(maneuverability)

Practical Parent

• Space for entire family • Fuel efficiency • Balance of affordability &

functionality • Safety

Ford Ka: the modern car for your modern lifestyle

Youthful, adventurous, modern & sensible, “practical luxury”

POWER SPACE SIZE LOOK


MARKETING STRATEGY

• Recent success of Twingo • Rapidly growing small car

market need to differentiate

• Value through style

• Use demographic and attitudinal attributes to better target customers

• Create customer profiles to identify core values

• Capture consumers’ youthful spirit

• Be adventurous, modern, sleek

• Emphasize functionality (maneuverability, fuel efficiency, interior space)

Market the Ka as a trendy yet practical new model from the reliable Ford brand

DIFFERENTIATE w. STYLE TRENDY AND PRACTICAL IMPROVED SEGMENTATION


IMPLEMENTATION

SAMPLE AD


MARKETING: PRINT ADS

Use print ads in magazines & newspapers to target attitudinal consumer groups

Weekend Getaway Practical Parent Trendy Commuter


MARKETING: BILLBOARDS

Target high-traffic locations to reach consumers in cities, large towns & rural areas

CITIES LARGE TOWNS RURAL

• Central walking areas of urban downtown

• In view from office buildings and in the financial district

• Popular walking areas of city center

• Near schools & daycare facilities (esp. parking lots)

• Along major highways • Near scenic views &

entrance to national parks

• Next to hotels & tourist destinations


MARKETING: TV COMMERCIALS

Run commercials on specific channels to target attitudinal consumer groups

CHILDREN & FAMILY PROGRAMMING

ACTION & ADVENTURE FASHION-CONSCIOUS

Weekend Getaway Practical Parent Trendy Commuter


MARKETING: PARIS MOTOR SHOW

Event Details • Sept – Oct 1996 • Grand Palais, Paris • Venue for new production automobiles &

design concepts

Purpose • To generate buzz & excitement for

upcoming Ford Ka launch

Potential Impact • 18 days of visibility • Attracts 13,000 journalists from 103

countries

Create industry buzz immediately before launch with a Paris Motor Show exhibit


Notes: Calculations In France, small cars accounted for 43.7% of the 1.9million new cars sold in 1995, which means total cars sold was 4.35 million meaning this is the size of the total buyers in France. We are assuming that each new car sold is tied to one person and that the aggregate of all the cars sold = the number of buyers which may not be the case because there are people who already own cars for example. Small car market accounted for 32.2% of the 12 million new cars sold in Europe, so 37.5 million total cars sold in Europe.

Target Segment Weekend Getaway

Practical Parent

Trendy Commuter

Closest Demographic Approximation

Single, Living Alone

Married with children

Married without children

% of Total Buyers in France 17.7% 30.7% 37%

Total Sales (1995) 4.35M

Sales Per Category (1995)

0.177 x 4.35M = 0.769M

0.307 x 4.35M = 1.335M

0.37 x 4.35M = 1.609M

Total Market Outreach 3.713M

Total Car Buyers In France In Europe

37.5 Million Cars Sold -> 12 M Small Cars

IMPACT ANALYSIS

Using our attitudinal segmentation strategy, Ford can reach up to 3.7M people


1996 FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Development & Production

Targeting strategies Eliminate new Fiesta

Launch of Ka Paris Motor Show

Billboard ads TV commercials

Print media advertisements

IMPLEMENTATION TIMELINE


FINANCIALS

MARKETING BUDGET

Budget for Ford Ka (1996) All numbers in US$(million)

Development costs of Ka 250 Design changes 2 Marketing:

Paris Motor Show 0.5 Billboard advertisements 0.52 TV commercials 50.4 Print media advertisements 2 Total 305.42


FINANCIAL ANALYSIS

Ford France All numbers in US$(millions)

Operating Assumptions Sales Growth 10.60% COGS/Sales 97.50% Exchange rate 0.20

1995 1996E 1997E 1998E 1999E 2000E Sales 3540.0 3915.2 4330.2 4789.2 5296.9 5858.3 Total Costs 3484.0 3817.3 4221.9 4669.4 5164.3 5711.7 Net income 56.0 98.0 108.4 119.8 132.5 146.6

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

1995 1996E 1997E 1998E 1999E 2000E

Net Income (Ford France) US$ millions

Year


RISKS

RISKS & MITIGATION

Cannibalization by current Ford products

Small car market over-saturated with many competitors

Ka potentially seen as Twingo duplicate

Elimination of New Fiesta allows Ford Ka to occupy the Trend-B category by itself

Demand for small cars in France is growing at an exponential rate due to changes in demographics and customer preferences

Ka better addresses needs of a niche market, while the Twingo is an “every man’s” car

RISKS MITIGATIONS

Difficult to target different consumer needs & maintain brand consistency

Take advantage of “need overlaps” and emphasize characteristics highest in demand


Q&A

Q&A

Case Overview • Company Background • Current Product Lines • Industry Overview • Competitor Analysis • Perception Map • Key Issues

Product Analysis • Product Characteristics • Customer Demographics 1 • Consumer Demographics 2 • Target Consumer Groups

Recommendations • Product Strategy • Product Positioning • Marketing Strategy

Implementation • Sample Branding/Advertisement • Marketing: Print Ads • Marketing: Billboards • Marketing: TV Commercials • Marketing: Paris Motor Show • Impact Analysis • Implementation Timeline

Financials • Marketing Budget • Financial Analysis

Risks • Risks & Mitigation

Documents

Ford KA - Presentation-Final3