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FORD KA PRODUCT MANAGEMENT: SPENCER BOOK | LUCY CHEN | JUSTINE FOO | SEAN GO

Ford KA - Presentation-Final3

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  • 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

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

  • 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

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

  • 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

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

  • 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

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

  • PERCEPTION MAP

    Classic Fiesta

    Peugeot 106

    Renault Clio

    New Fiesta

    Ka

    Renault Twingo

    Fashionable Conservative

    Simple

    Luxurious

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

  • 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

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

  • PRODUCT ANALYSIS

  • PRODUCT CHARACTERISTICS

    SIZE SPACE

    LOOK POWER

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

    Renault Clio

    Renault Clio

    Peugeot 106

    Renault Twingo

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

  • 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

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

  • 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

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

  • 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

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

  • 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

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

  • 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

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

  • IMPLEMENTATION

  • SAMPLE AD

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

  • MARKETING: PRINT ADS

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

    Weekend Getaway Practical Parent Trendy Commuter

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

  • 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

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

  • 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

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

  • 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

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

  • 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

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

  • 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

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

  • 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

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

  • 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

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

  • 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 mans car

    RISKS MITIGATIONS

    Difficult to target different consumer needs & maintain brand consistency

    Take advantage of need overlaps and emphasize characteristics highest in demand

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

  • 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

    FORD KAAGENDACASE OVERVIEWCOMPANY BACKGROUNDCURRENT PRODUCT LINESINDUSTRY OVERVIEWCOMPETITOR ANALYSISPERCEPTION MAPKEY ISSUESPRODUCT ANALYSISSlide Number 11CONSUMER DEMOGRAPHICSCONSUMER DEMOGRAPHICSTARGET CONSUMER GROUPSRECOMMENDATIONSPRODUCT STRATEGYPRODUCT POSITIONINGMARKETING STRATEGYIMPLEMENTATIONSAMPLE ADMARKETING: PRINT ADSMARKETING: BILLBOARDSMARKETING: TV COMMERCIALSMARKETING: PARIS MOTOR SHOWIMPACT ANALYSISIMPLEMENTATION TIMELINEFINANCIALSMARKETING BUDGETFINANCIAL ANALYSISRISKSRISKS & MITIGATIONQ&AQ&A