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