A PROJECT REPORT ON FORD MOTORS SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION
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Submitted by: RAHUL KAUL Class : BBA 4 B Roll no : 118
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CONTENTS
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VISION
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MISSION
4
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ORGANISATIONAL STRUCTURE
5
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ABOUT THE COMPANY
8
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EXECUTIVE SUMMARY
15
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INTRO TO INDIAN AUTOMOBILE INDUSTRY
19
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FORD PRODUCTS
27
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CONCLUSION
32
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STP ANALYSIS
33
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SWOT ANALYSIS
37
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MARKETING STRATEGY OF FORD
39
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CONCLUSION
51
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RECOMENDATIONS
52
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BIBLIOGRAPHY
53
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CONTENTS
•
VISION
3
•
MISSION
4
•
ORGANISATIONAL STRUCTURE
5
•
ABOUT THE COMPANY
8
•
EXECUTIVE SUMMARY
15
•
INTRO TO INDIAN AUTOMOBILE INDUSTRY
19
•
FORD PRODUCTS
27
•
CONCLUSION
32
•
STP ANALYSIS
33
•
SWOT ANALYSIS
37
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MARKETING STRATEGY OF FORD
39
•
CONCLUSION
51
•
RECOMENDATIONS
52
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BIBLIOGRAPHY
53
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VISION Though Henry Ford was responsible for revolutionary advances in manufacturing it is not as often noted that the Ford Motor Company was an unusual leader in the establishment of American big business because of the firm's tightly-controlled and (by general big-business standards) undercapitalized nature. Ford's decision to adapt the assembly line notion to his own product met with enormous success and he was able to outstrip all his competitors very rapidly. The center of Ford's vision, however, was not the use of the assembly line but the idea that cars could belong to anyone and that he could produce and sell a practical, affordable vehicle in mass quantities. The combination of Ford's inventiveness and practicality with his own stubbornness and the skill of his colleagues made the company into a big business that did not, at first, fit the mold. The Ford company is a case study in the practicalities of manufacturing that, when combined with the opportunity to create a major new industry, made it possible to proceed in a different manner than many of the big businesses that emerged in the early part of the century. Henry Ford (1863-1947) was a trained machinist who was fascinated by the new horseless carriages. He began to experiment with car building in the early 1890s and by 1896 he had built his first car. It was only the sixth gasoline powered automobile to be built in America. Over the next six years Ford tried repeatedly to get his car into production. In which he would be able to put his own ideas to work. The Ford Motor Company was incorporated in 1903 "with an authorized capitalization of $150,000, all common stock, of which $100,000 was issued." Malcolmson guaranteed production financing up to $3,000, which was an important incentive to other investors. There were ten other subscribers, most associated with Malcolmson. The Dodge brothers, John and Horace, paid their $5,000 subscriptions with promissory notes that were later paid off by the profits from Ford business obtained by their machine shop. James Couzens paid $1,000 in cash and signed a promissory note for $1,500. In all, the new company received only $28,000 in cash and, "according to a Ford publication issued in September, 1920, this was all the cash ever paid in on its capital stock." At the beginning the new company proceeded as all car makers did. Foundries produced the castings which were then tooled into individual parts. The parts were then assembled into components (such as magnetos) and finally there was "the assembly of thousands of parts and components into the motor vehicle." The production of parts and components was a capital-intensive undertaking and demand for luxury cars tended to suffer.”
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MISSION Ford Motor Company is a worldwide leader in automotive and automotiverelated products and services as well as in newer industries such as aerospace, communications and financial services. Our mission is to improve continually our products and services to meet our customer’s needs, allowing us to prosper as a business and to provide a reasonable return for our stockholders, the owners of our business. The missions can be listed as following: Products : Our products are the end result of our efforts, efforts , and they should be
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the best in serving our customers worldwide. As our products are viewed, so are we viewed. Profits : Profits are the ultimate measure of how efficiently efficientl y we provide
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customers with the best products for their needs. Profits are required to survive and grow. Customers are the focus of everything we do. Our work must be done with
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our customers in mind, providing better products and services than our competition. Continuous improvement is essential to our success. We must strive for
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excellence in everything we do: in our products, in their safety and value, and in our services, our human relations, our competitiveness and our profitability. Employee involvement is our way of life. We are a team. We must treat
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each other with trust and respect. Dealers and suppliers are our partners. The Company must maintain
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mutually beneficial relationships with dealers, suppliers and our other business associates.
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Integrity is never compromised. The conduct of our Company worldwide
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must be pursued in a manner that is socially responsible and commands respect for its integrity and for its positive contributions to society. Our doors are open to men and women alike without discrimination and without regard to ethnic origin or personal beliefs.
ORGANISATIONAL ORGANISATIONAL STRUCTURE CEO Alan Mulally Chairman of the Board Bill Ford Director Richard Manoogian Director Kimberly Casiano Director Stephen Butler Director John Thornton Director Gerald Shaheen Director Ellen Marram Director Anthony Earley Director Edsel Ford Director
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Irvine Hockaday Director Richard Gephardt Director Homer Neal Americas Mark Fields Asia Pacific Africa John Parker CFO Lewis Booth CIO NS Legal DL Global Product Development DK Procurement Tony Brown Government & Community Relat... ZO Human Resources & Corporate... FF Marketing & Communication James Farley Ford Europe John Fleming Asia Pacific & Africa JH Quality BF Sustainability & Safety SC Customer Service Frederiek Toney Government Relations PL Mazda Motor PS Volvo Cars SO US Sales & Marketing KC Ford Motor China MWC Ford India
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MB Ford Motor China RG Ford Motor Credit Company MB Control PD Control Americas Robert Shanks Treasurer NS International Governmental A... SB Design, Creative JM North America Engineering PM Product Programs & Product D... JB Research & Advanced Engineer... Gerhard Schmidt Labor Affairs MM Communication RD Marketing Sales & Service, E... IS Manufacturing Ford Europe KM North America Manufacturing JT Powertrain Operations Barb Samardzich Customer Service FT
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ABOUT THE COMPANY COMPANY PROFILE
Type Public (NYSE: F) Founded: June 7 1903 Founder: Henry Ford Headquarters: Dearborn. Michigan. A Area served worldwide William Clay Ford. Jr - Executive Key people Chairman Alan Mulally - President. Q Industry Automotive Products Automotive goods and services Revenue 120.1 billion (31 Dec 2009) w
Operating income in us is 8.3 billion ( 31 Dec 2009)W Net income US 12.6 billion (31 Dec 2009)W Employees 283,000 (2007)121 Ford Credit Ford division Divisions Lincoln Mercury Premier Automotive Group Automotive Components Holdings Jaguar Subsidiaries Land Rover Volvo (cars only) Bold Moves Have you driven a Ford lately? Built Ford Tough Slogans: I.’
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Built for Life in Canada Feel the difference Make Everyday Exciting Website www.ford.com Ford Motor Company is an American multinational corporation_and the world’s third largest automaker based on worldwide vehicle sales. In 2006, Ford was the second-ranked automaker in the US with a 17.5% market share, behind General Motors (24.6%) but ahead of Toyota (15.4%) and DaimlerChrvsler (14.4%). Ford was also the seventh-ranked American-based company in the 2007 Fortune 500 list, based on global revenues of $160.1 billion. In 2006, Ford produced about 6.6 million automobiles, and employed about 280,000 employees at about 100 plants and facilities worldwide. In 2007, Ford had more quality awards from J.D Power than any other automaker. Based in Dearborn, Michigan, a suburb of Detroit the automaker was founded by Henry Ford and incorporated in Time 16, 1903. Ford now encompasses many global brands, including Lincoln and Mercury of the US, Jaguar and Land Rover of the ll K. and Volvo of Sweden. Ford also owns a one-third controlling interest in Mazda. [20] Ford has been one of the world’s ten largest corporations by revenue and in 1999 ranked as one of the world’s most profitable corporations, and the number two automaker worldwide. Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce, especially elaborately engineered manufacturing sequences typified by moving assembly lines. Henry Ford’s combination of highly efficient factories, highly paid workers, and low prices revolutionized manufacturing and came to be known around the world as Fordism by 1914. History Henry Ford (ca. 1919) Ford was launched in a converted factory in 1903 with $28,000 in cash from twelve investors, most notably John Francis Dodge and Horace Elgin Dodge who would later found the Dodge Brothers Motor Vehicle Company. During its early years, the company produced just a few Model T’s a day at its factory on Mack Avenue in Detroit. Michigan Groups of two or three men worked on each car from components made to order by other companies. Henry Ford was 40 years old when he founded the Ford Motor Company, which would go on to become one of the largest and most profitable companies in the world, as well as being one of the few to survive the Great Depression. The largest family9
controlled company in the world, the Ford Motor Company has been in continuous family control for over 100 years.
Corporate governance: Members of the board as of early 2007 are: Chief Sir John Bond, Richard Manoogian, Stephen Butler. Ellen Marram. Kimberly Casiano. Alan Mulally (President and CEO), Edsel Ford II. Homer Neal. William Clay Ford. Jr. Jorma Ollila. Irvine Hockaday. Jr., John L. Thomton.an William Clay Ford (Director Emeritus). The main corporate officers are: Lewis Booth (Executive Vice President, Chairman (PAG) and Ford of Europe), Mark Fields (Executive Vice President, President (The Americans), Donat Leclair (Executive Vice President and CFO). Mark A. Schulz (Executive Vice President, President [International Operations) and Michael E. Bannister (Group Vice President; Chairman & CEO Ford Motor Pau1Magcaflagi (Americas Product Development) Ford started its innings with the Mahindra-Ford joint venture formed in 1994, which produced the Escort out of M&M Nashik plant. After meeting initial success, sales of the Escort was finally replaced by the Ikon in 1999. The Icon marked a new beginning for Ford in India. It rolled out of the Marajmalaingar plant near Chennai and by now, the company had parted ways with M&M and was renamed Ford India Ltd in 1998. The Thon was the first model by a multinational to be developed specifically for India. Though it was based on the Fiesta, it had a unique body style and was offered and was offered with an option of three engines, including a diesel. The car was a big hit. The Ikon underwent several face-lifts and price cuts to keep demand high. However, fresher competition and a reputation for high-maintenance saw sales gradually decline. After the arrival of the modem and highly-capable Fiesta, another made- for-India car, with state-of-the-art engines, the Ikon has been marginalized. The Fiesta has picked up where the Ikon left and is selling well. Though the Ikon and Fiesta have been the mainstays of Ford’s production in India, the company has had limited success with other models. The Mondeo,
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launched in 2001, was a very talented car by was simply not suited to Indian conditions and earned a reputation for being exorbitant to maintain. The Endeavour SUV was launched in early 2004 and has sold well for its niche. The Endeavour has recently been upgraded in 2007 and this has boosted the appeal of the big SUV. In 2004, Ford launched the Fusion, which has received a lukewarm response though the recent diesel variant has perked up sales. Is an authorized dealer for Ford India Limited, who are one of the leading manufacturers of top quality cars in India, with many variants in the offering. ‘Fortune Ford is a 50:50% Joint Venture - up between two well known and reputed families in India Hyderabad, the Mantis and the Babu Khans. Fortune Ford is a blend of experience and youth. The experience and good will that Mr. Misbahuddin Babu Khan and Mr. Pramod Modi enjoy blend very well with the youth and energy of the youngsters Bashir, Ashish, Nirav and Siraj to make Fortune Ford a truly world class Ford Dealership. Fortune Ford markets and services the recently launched truly European Ford Fiesta, the ever-popular Ford I/con Flair, the No non-sense car Ford Fusion and the macho SUV the Ford Endeavour through its sales and service outlets at Hyderabad. The sales outlet is located strategically at Somajiguda next to Eanadu. We have two service centers, one at Chapel Road, Abids opposite Stanley College and other one at Fathebagh, Santhnagar. These centrally located outlets provide convenient and easy access to both the proud owners as well as prospective buyers. The workforce at Fortune Ford is committed to excellence in serving all esteemed customers. The Sales Team is made up of dedicated showroom and field executives who are professionally trained by Ford India Limited. They are adept at guiding the customer through the entire sales process right from assisting in the choice of model, colour and features to lending a helping hand in providing attractive buyback options and also arranging finance at competitive rates. V—1.
The Service Centre is armed with the state-of the art equipment and is in-line with Ford’s exacting Global standards. The service team is technically qualified and trained to analyze and provide solutions adhering to Quality Care, in order to satisfy even the most demanding customers. 11
The Fortune Ford dealership maintains a high standard of excellence in sales and services by sending its personnel for training on a regular basis to Ford India Limited, to update them with the latest technological advances in the automotive sphere. SHOWROOM We have 5000 sft centrally air conditioned showroom, located in the heart of the city in Somajiguda, adjacent to Eenadu office and just opp. to Khairtabad RTA. This makes convenient for almost every one residing in and around Hyderabad and Secunderabad. The facilities offered from the showroom are: 1. Very easy finance facility with in-house finance team to cater to your every car finance requirements. All the leading finance counters are available like ICICI, HDFC, KOTAK, SUNDARAM, SB!, etc. 2. Exchange offer for any of your used car. Free spot evaluation for any used car. 3. Professionally trained and courteous sales staff to take care of every relevant need of the customers. 4. Ford preferred insurance for cashless transactions in the event of claims. Special offers on Insurance renewals. You can also renew your insurance by just making call to our Service marketing help line 9848885962. Showroom @ Somajiguda 5. Full range of Ford cars with all colors and models to choose from. 6. A good stock of Ford genuine accessories to make your Ford ownership more delightful and safe. 7. A well maintained fleet of test drive cars to give you the feel and experience the drive dynamics on actual driving conditions before take the purchase decisions. You can call our sales help line for test drive or fill the on-line test drive requisition form. • The first Indian built Ford Escort rolled off the assembly line in 1996. • The Company was able to deliver Ford Escorts in seven major cities simultaneously, in just a month after booking. • The Special Value Pack program was launched in 1997, with commemorative ‘Freedom’, followed by the petrol and diesel driven ‘Anniversary’. Recent SVPs have included the Orion, Alpha and Sport - E. • Ford Escort won the J D Power Award in India Quality Survey in 1997. • Ford topped the Customer Satisfaction Index (CSI) ratings in 1997 and 1998, in the Customer Satisfaction Survey. • QualityCare, Ford’s branded service initiative, provides car owners with superior services at its dealership countrywide. • The new, integrated manufacturing plant was dedicated in March 1999, where 12
FORD IKON is manufactured. • Ford India launched Ford Assured on April 24 2000, a new initiative to buy and sell used cars of all makes.
• On September 11, 2000. Ford India launched the Ford IKON SXi — the stylish josh’ machine • Ford India has started exporting Ford IKON 2001 Ford India launched the Ford Mondeo. 2002 • Ford India show cases a wide spectrum of exciting cars at the Auto Expo • Ford India Limited announced a strategic partnership with Hindustan Motors Limited (HML). • Certified QS 9000: 1998, 3i•IL edition on March 21, 2002 Ford India received the QS 9000 award from TOy Süddeutschland. • New Ikon Variant 1.6 EXi was launched . 2003: • The New Ford Ikon NXT launched - The Next Level of Josh. • Adding Refinement to Josh- Ford India launches Ikon NXT Finesse.’ • Ford Celebrates Centennial in India. • Ford India launches Ikon NXT SXi. • Ford India Ranks Highest in J.D. Power India Sales Satisfaction Study. • Ford launches Ikon Flair at Rs. 4.95 Lakhs. 2004: Autocar SUV of the Year — Winner Ford Endeavour. 2007: • FORD Motor Company of Southern Africa achieves three wins and two seconds on this year total economy run • DOE AWARDS FORD two grants for vehicle fuel efficiency research. • FORD MONDEO is AUTO EXPRESS car of the year • LAND ROVER DISCOVERY 3 scoops catego1 win at TOWCAR AWARDS 2007 • FORD MONDEO is the Caravan Club TOWCAR of the year 2008.
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ARVIND MATHEW — Managing Director and President Arvind Mathew is the Managing Director and President of Ford India. He took this position in August 2005.
LUCY MILLAR — Vice President, Finance & IT Lucy is the Vice President of Finance and IT at Ford India. She took up this position in May 2005. She reports to Arvind Mathew, President and Managing Director, Ford India.
SCOTT McCORMACK — Vice President, Marketing, Sales & Service Scott McCormack is the Vice President, Marketing, Sales and Service at Ford India. He took this position in July 2006. Scott reports to Arvind Mathew, President and Managing Director, Ford India.
NANCY REISIG — Vice President, Human Resources Nancy Reisig is Vice President, Human Resources at Ford India. She took this position in March 2005. Nancy reports to Arvind Mathew, President and Managing Director, Ford India.
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SANDIP SANYAL — Vice President, Supply and Total Value Management Sandip Sanyal is the Vice President, Supply and Total Value Management (TVM) at Ford India. He took this position in September 2005. Sandip reports to Arvind Mathew, President and Managing Director, Ford India. STEVE BRIVLAN -- Country Manager, Ford Credit
Executive Summary Ford Motor Company is currently trying to increase its global market share in automobile sales while facing slumping market share numbers in the United States. This report examines the Ford company characteristics and how the company uses information systems in the business climate. Ford believes that having solid relationships with their employees, dealers, suppliers, and stakeholders allows them to have an advantage over their competitors. Healthy professional relationships are helpful to a company’s success but being able to attract customers to your products will increase sales. Ford has recently introduced new vehicle architecture to try and attract new buyers. The largest innovation for Ford has been the introduction of their Hybrid cars. Ford reported an October sales drop of 23.5 percent as compared to a year ago. The new measures Ford is taking with their automobile design are expected to help those numbers reverse in the future. Ford sales have also under performed in the global markets although the company is taking steps to increase sales while reducing costs. Ford has recently entered new markets, most of which are located in the Asian-Pacific region. To reduce costs and increase knowledge of a region Ford uses small ERP systems that are less expensive and faster to implement than the larger ERP systems. Failure to obtain a larger market share in foreign markets has hurt the company. Ford got a late start entering the automobile market
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in China, compared to competitors, and now controls less than one percent of the market share. To add to the situation the Chinese government has high taxes on automobiles that can increase the price up to 100 percent or more. The future of Ford is headed towards a reported implementation of SAP throughout its North America organization. The proper use of information systems by Ford will increase their ability to maintain a successful business in future years locally and globally. The Ford Motor Company is an ever-changing business that tries to stay ahead of its competitors in America and at the global level. Ford’s mission is to build great products, strong business and a better world. To accomplish that mission the Ford Company believes that not just quality and cost awareness are the only things that matter, but also a solid relationship with their employees, dealers, suppliers, and every Ford stakeholder (Ford motor company, 2004). With these ideals Ford is proud to be a company with family-based values that allows Ford to have a competitive advantage over its competitors. With this competitive advantage Ford believes that everything they do affects the people they serve from quality and safety of their products to the social and environmental impact on their customers every day lives. The strategy for Ford will be to continue to deliver exciting new products, improve quality and customer satisfaction, improve market share and revenue in all regions, and improve results at all automotive operations. To accomplish this strategy Ford has put pressure on senior leaders to develop a true family culture. To do that the Ford company will have to cultivate a workplace that: attracts and retains the best people, allow them to work at full potential, encourage continuous development and mutual benefit, and promote teamwork while embracing differences and diversity. The keys to Ford’s strength are the products. There were forty new products in one year, because of their new realigned vehicle architecture. This allows Ford to produce a greater variety of attractive and competitive vehicles with more shared components and less complexity (Ford motor company, 2004). But the biggest innovation for Ford is the hybrid. Ford can take advantage of this because they have their own patented hybrid technology and proprietary drive system and electronic controls. Many competitors have not even considered hybrids and when they do Ford will already be a step ahead of them. Currently, Ford offers the Escape Hybrid which has seventy-five percent better fuel economies, especially in the city. Plus, the Escape Hybrid can do anything the regular Escape can do and has the same features. In the next three years Ford plans on releasing four more hybrids. Ford also has a service for their customers, the Ford Motor Credit Company, which offers many competitive ways for their customers to own Ford vehicles. It’s the only 16
product that does not have wheels and it’s the finishing piece to Ford’s core businesses. (Ford motor company, 2004) Ford North America holds half of Ford’s volume worldwide, but their market share was down from 20.5% in 2003 to 19.3% in 2004. Ford is committed in the year 2005 to raise the market share in Europe, South America, and Asia. To do this Ford must still be focused on America and Europe, and start to set up markets in other countries like China that are just starting to make an impact on the world market. Right now North America and Europe account for two-thirds of today’s market, but by 2014 it will only account for half of the world markets (Ford motor company, 2004). Ford has made gains in other areas as well; net income where Ford had an improvement of $2.992 billion from 2003, total sales and revenue were up $7.3 billion from 2003, also worldwide vehicle unit sales and European market share were up from 2003 (Ford motor company, 2004). Technology and information systems are very important to the Ford Company. Because of Ford’s global scale, information needs to be timely so managers can make important decisions. With the addition of technology, Ford can make better products at a cheaper price; meanwhile it makes the infrastructure of Ford that much more complicated. Ford tries to introduce new technologies so that environmental and safety features can be added to vehicles before law requires them. One way technology and information systems are helping Ford is in the manufacturing of the vehicles. In established markets such as Europe, North America and Japan, Ford has plants with flexible manufacturing, that allows Ford to produce a number of different vehicles in a single location. It enables Ford to add a vehicle line or change over to a new model by reprogramming, rather than retooling, the vast machinery involved (Ford motor company, 2004). Ford continues to be a leader in automotive technology and information systems, and will continue to forge ahead to create better quality products. As the World’s second largest vehicle maker and the World’s largest truck producer Ford Motor Company must be able to maintain global market share while keeping the global company connected through company intranets and extranets. Ford Motor Company recently reported a drop in automobile sales of 23 percent. If Ford is going to turn in better numbers in car sales it will have to be an increase in sales not only in America but globally. While operating a business over multiple continents, in multiple languages, and across multiple time zones Ford is trying to keep the company focused on delivering greater value to its customers. To keep the organization and its employees connected over large distances Ford is using a system called eRoom. This technology allows Ford teams to work collaboratively over 17
the Web to connect resources and people. The result of Ford using this system has lead to cost savings in the following areas: time savings, reduced IT costs, and reduced co-location costs. Time is saved using eRoom through increased data sharing and the ability to access documents faster. Replacing many Ford departmental websites with eRoom will reduce IT costs by doing away with IT overhead associated with building and maintaining those websites. Reduced co-location costs will be made through reduced travel costs, video-conferencing costs, and reduced information transmission costs. These reduced costs and the increase in information accessibility are the result of one of the key ways Ford is continuing to compete globally. Ford is also implementing smaller ERP systems in regions where they have just recently entered the market. Ford China’s IT infrastructure is based on a small ERP from QAD Inc. called Mfg/Pro. This ERP is Ford’s standard program for all new markets. Extensions to the standard ERP software make it possible for Ford to comply with foreign practices and government mandated financial statements. Each time a system is deployed in a new market the company gains valuable experience and knowledge that helps the company in future deployments in other new markets. The implementation of a smaller ERP results in quick installation, lower costs than a large ERP, and quick knowledge into the new market. This small ERP system is another factor for Ford’s global success. No matter what measures any company that competes globally uses to increase its competitiveness there are also factors that present problems. A couple such factors lie in the Asian market that is expected to have an increase in the global automobile market share. Problems with Ford entering this market share include China’s recently flat market for automobiles, a focus on the development in housing instead of roads, and government vehicle taxes. The vehicle taxes are so high that they can raise the price of an automobile 100% or more. Any shift in priorities or lift of government constraint is labeled as an educated guess. Although Ford is now competing in the Chinese market their late start, compared to other competitors already in the market, has left the company with less one percent of the market share. The recent drop in sales of 23 percent reported in October of 2005 as compared to a year ago is, in part, a result of increased gasoline prices. The price increase has pushed new car buyers towards buying more fuel-efficient cars. November sales are expected to drop as much as 15 percent which would imply that more recent drops in fuel prices have apparently failed to turn around Ford’s sales numbers. On the other side of the equation the reducing market share for Ford has been offset by an increase of U.S. market share by Toyota. The future of Ford Motor Company’s success strongly relies on the 18
company increasing market share globally while keeping their sales consistent in the U.S. There are many determining factors when it comes to running a successful company. Those factors are production, management, office, and sales/marketing. You need efficient information and knowledge to keep these elements of the company running smoothly. It is very important to have departments that concentrate heavily on a daily basis to improving the output to lead to better production and marketing strategies. Sales marketing is all about how you present your product and will it reach the public with a positive influence. This is the key to keeping your company running and continuing to excel and compete against others. You need knowledge and information about what the people want to get your product out there so it will be known. People need to be aware of the product so they have an urgency to buy it. Information is power and is the key to running the best possible company that you can run. With loads of information gives you an edge on the competition. Production, management, office, and sales marketing go hand in hand you need specific and current information to keep these departments running smoothly. Knowledge is the key with the right information you can keep all of your departments on the right path.
INTRODUCTION TO INDIAN AUTOMOBILE INDUSTRY One of the fastest growing industries in the world is automobile industry. This automobile industry even has its influence on the Indian market. Probably automobile industries occupy a large market share in the worlds market as well as in the Indian market. Nearly 18% of the total national income is being incurred from the automobile industry. From this we can estimate how important the automobile industry in the improvement of GDP of a country is. In India automobile industry has a growth rate is at the average of 10- 12%. Its fascinating drive through history, which begins as a story of isolation and missed opportunities to one of huge potential and phenomenal growth. India’s fixation with socialism and planned economies had a crippling impact on the automotive industry in its formative years. The goal at that time for independent India was self-sufficiency. Issues like quality and efficiency were simply not considered. Dependence of foreign technology was banned and manufacturers were forced
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to localize their products; import substitution became the order of the day. Though we learnt to localize, the cars we made were all outdated designs with little or not improvements for decades. The automotive industry stagnated under the government’s stifling restrictions and the Indian car buyer was saddled with cars of appalling quality and even then there was a waiting list that at one point stretched to eight years! This attempt at self-reliance failed miserably because of the industry’s isolation from the best technology. The Japanese and later Korean auto industries were also highly protected in their formative years but they never shut the door on technology. Instead, they relentlessly tapped the best talent pools in the world to absorb the know-how to produce good cars. One of the most important chapters in the Indian automotive industry’s history was written by Maruti. It marked the Indian government getting into the far business in the early 1980’s, a radical shift in thinking after decades of treating cars with disdain. The Maruti 800 went on to become the staple car of India and put a nation on wheels. This little car set a benchmark for price, size and quality and structured India as small car market. It wasn’t till 1993 that things really started to change for the Indian car buyer. With the liberalization of the economy, a host of international carmakers rushed in. But most of them were in for a shock as Indian customers rejected their product. Indian customers refused to allow the glitter of prestigious brands blind them to the outdated and overpriced products they were offered. The Indian consumer wanted super value, and rewarded the brands that delivered it, handsomely. Hyundai and Maruti delivered, and profited. The period also saw the emergence of the Indian players like Tata Motors and Mahindra & Mahindra. They rose to the challenge of the MNC’s and responded brilliantly with the Indica and the Scorpio. This was ironically due to the license raj that forced Indian car makers to be innovative and develop products frugally. India’s frugal engineering skill has now caught the world’s imagination, and an increasing number of carmakers are preparing to setup major capacities here. India is changing. And changing fast. It’s moving forward. India’s largestselling car is not its cheapest car, the 800. It is the Alto. People’s aspirations are rising and so are their mistakes, have got their finger on the pulse of the market. Get the right product and the rewards are handsome. The Indian auto industry is today bubbling with promise and confidence. It’s been a long journey but to see where the Indian car industry is going. We have to see where it has been. AUTOMOBILE INDUSTRY IN PRE-INDEPENDENCE: The first motorcar on the streets of India was seen in 1898, Bombay had it first 20
taxicabs by the turn of the century. In 1903, an American company began a public taxi service with a fleet of 50 cars. For about 50 years after car arrived in India, cars were directly imported. Before World War I, around 40,000 motor vehicles were imported. During the years between the wars, a small start for an automobile industry was made when assembly plant were established in Bombay, Calcutta and Madras. The import/assembly of vehicles grew consistently after the 1920s, crossing 30,000 units by 1930. It was during the end of the war that the importance of establishing an indigenous automobile in India was realized. Premier Motors, Hindustan Motors and Mahindra & Mahindra set up factories in the 1 940s for progressive manufacture rather than assembly from imported components. The cars they chose to make were the latest in the world when they were introduced in India in the formative years of the industry. POST- INDEPENDENCE: The government clamped down on imports and foreign investments. Companies like GM and Ford packed their bags and left. India’s clock, thereafter, stood still while the world raced on ahead. It would take nearly 50 years before the Indian auto industry could catch up with the rest of the world again. BROAD BANDING ERA: In January 1985, the government announced it’s famous ‘broad banding’ policy which gave new licenses to broad groups of automotive products such as two and four-wheeled vehicles. Through a liberal move, the licensing system was very much intact. A manufacturer had to submit a phased-manufacturing programme to the Ministry of Industry specifying the indigenization progress and allowing for almost complete indigenization within five to seven years. The biggest hurdle was the foreign-exchange clearance required for these projects. Except for MUL, which had direct access to policy-makers, every other manufacturer still faced a series of obstacles. Several new products were launched during this period. All three traditional carmakers added new models to their ranges — Standard Motors returned to the car business after 10 years, when in 1985 it introduced the Standard 2000, a Rover SD1 body with the old two-litre Vanguard engine. HM bought in a 1972 Vauxhall Victor in 1985, transplanted its ageing Ambassador engine into it and the Contessa was born. THE BIRTH OF THE AMBASSADOR: In 1957, a small tail fin was added on either side of the rear fenders, along with a new, dimpled hood, and the car was re-christened the Ambassador Mark L The car cost Rs.17,000. In 1963, it underwent a frontal facelift with a closely checkered grille and was named the Ambassador Mark IL It would be another 21
12 years before the Ambassador got a facelift. In 1975, another minor facelift to the same grille and a much bigger frontal facelift turned out as the Mark III. The Mark IV, launched in 1979, was the last of the Mark cars. The Ambassador Nova was launched in 1990, followed by Ambassador 1800 ISZ three years later. The Nova was the last Ambassador powered by the 1489cc petrol engine. In 2004, HM launched the cosmetically-revised Ambassador under the Avigo name. Designed by Mavendra Singh, the retro look Avigo had classic touch internals like a centrally mounted console, beigecolored seats and wood finish interiors. THE CONTESSA YEARS: The Hindustan Contessa, launched in 1982, was one of the few luxury cars manufactured in the country in the 1980s and 1990s. It was based on the 1970s vintage Vauxhall victor. While it was initially launched with the 1489cc engine found in the Ambassador, the Contessa was soon given the Isuzu engines. There were three versions of this car - 1.8GLX (Isuzu petrol), 2.ODLX (Isuzu diesel) and the rare 2.OT (Isuzu diesel, turbo). The last Contessa rolled out in 2002, phased out by the demand for cheap Japanese cars. Some of the leading Indian auto players in Indian automobile industry are: Premier, Tata Mahindra and Mahindra Maruti Hindustan motors the story of premier is the story of one mans vision, Seth Walchand Hirachand. He not only give India its first car factory but also the country’s first aircraft factory — Hindustan Aeronautics Limited and the country’s first modem ship yard, Hindustan Shipyard Limited Building India’s first auto factory Seth Walchand Hirachand has first started the trails to establish an Indian car manufacturing plant in Indian for which he went to U.S.A. where three largest car manufacturing companies are located. He wants Indian company to be completely independent, with Indian management capital and employees, paying royalty or technology transfer payment to western countries. After approaching General Motors they insisted on part ownership. Seth Walchand then moved to second largest automaker Ford; Henry agreed, but delegated the project to Ford of Canada, which refused. Finally the third largest automaker Chrysler agreed and singed in an agreement in Bombay in 1940. 22
The arrival of FIAT: In 1951, PAL singed up with Fiat to assemble the Fiat 500 in India. In 1952, the tariff commission spelled out future for the auto industry — indigenize or get out. Companies like Ford and GM, which had assembly operations in India, packed their bags and went home. But fiat decided to stick it out and committed itself full-fledged manufacture of the Millicentoin 1954. In Sep 1964, PAL and FIAT launched the Fiat 1100 DELITE in India. The biggest customers for s were Bombay’s taxi drivers. The Padminies were easy for maintenance in terms of spares and labour cost, low on running cost, easy to drive and reasonably tough. It was everything that a taxi driver wants. Established in 1945, Telco or the Tata Engineering and Locomotive Company, as its full name suggests, started out making steam locomotives for the Indian Railways. Telco’s tryst with vehicle manufacture came in 1945 when it signed a 15-year agreement with Daimler-Benz AG of Germany to manufacture commercial vehicle. The director in charge from the Tata side was Sumant Moolgaonkar. This period was a shared birthing time for the Indian commercial vehicle industry — Premier Automobiles in league with Chrysler, Hindustan Motors with General Motors and Ashok Leyland with British Leyland — which all started truck production around the same time. Telco’s biggest triumph came in 1985 in the LCV segment. The Tata 407, a brand new product from bumper to tail-light, was designed and marketed by Telco to take on the technically superior Japanese products. The 407 immediately captured 70 per cent of the market. The TATA SUMO, launched in 1994, turned out to be the success story of the decade. The Sumo was conceptually a brilliant vehicle. And it was also a product of the government’s eccentric excise duty regulations at that time. 1998 was a landmark year for Tata — it launched the Tata Safiri. Unlike the Sierra, Estate and Sumo that were designed and developed using rudimentary manual methods, the Safari was made with modem manufacturing and design processes to ensure new-found levels of quality and to take the company a step closer to its ambition of becoming a global carmaker. Yet, the most important landmark of 1998 was not the Safari. On 30 December 1998, Tata officially launched the much-awaited Indica. 2001 also saw the company exit its joint venture with Daimler-Benz. In 2002, Tata launched the Indigo saloon, based on the Indica platform. On 29 July 2003, J R D Tata’s birth anniversary, the company was renamed Tata Motors Limited. The Tata juggernaut continued to roll across the Indian auto industry with the launch of the Indigo Marina in 2004. 23
The story starts some time in the 1940’s. Pandit Nehru has a dream of building a modern, industrially advanced nation. And inspired by Nehru’s vision are two brothers, Kailash Chandra Mahindra and Jagadish Chandra Mahindra. K.C.Mahindra during his tenure in the United States had met Berney Roos. Roos was the inventor of rugged General Purpose’ vehicle or the Jeep. The Jeep had earned reputation in the battle fields of World War II. On October 2nil 1945, the Mahindra brothers joined hands with Ghulam Mohammed to set up a company to assemble American Willys Jeeps in India. The collaboration between M&M and its original partner Kaiser Jeep Corporation and later American Motor Corporation is for the phased manufacture of CJ3B Jeep. The company is named Mahindra and Mohammed. But after Independence Ghulam Mohammed migrates to Pakistan. With his departure Mahindra & Mohammed is renamed by Mahindra & Mahindra in 13January 1948. The first vehicles are assembled in Mazaogaon in Bombay. The first M&M built Willys Overland Jeep rolled out of the Mazaogaon plant on 3 June 1949. Five years later, in 1954, the first completely indigenous Jeep rolled out of the factory floor. At one point 70 per cent of the sales were assured by army and government. Vehicle model Year of launching Mahindra MM 340 1985 Commander 1991 Mahindra Armada 1993 Voyager van 1996 Escort (M&M-ford) 1996 Bolero 1996 Scorpio 2002 Scorpio launched in 2002, a completely indigenous product that took Mahindra & Mahindra 6 long years to design and develop. The Scorpio has played a critical role in changing the perception and brand image of the country. The 2.6 litre turbo-diesel engine developed 109bhp. The Scorpio has been the vehicle of M&M’s change, from a utility vehicle-maker to a lifestyle SUV manufacturer. It began with the promise of being the ‘People’s Car’. The car never went into production and the company went belly-up in 1977. Six years later, it rose like a phoenix from the ashes and changed the Indian automotive sector forever. The company — Maruti Udyog Limited. The story of Maruti dates back to the 1970’s. Indira Gandhi was the prime minister of India. Her son, Sanjay Gandhi, 24
envisioned the manufactured of an indigenous cost-effective, low-maintenance compact car for the Indian middle-class. The Cabinet passed a unanimous resolution for the development and production of a ‘People’s Car’. The name of the car was chosen as ‘Maruti’. The Car that changed India: The Maruti 800 was essentially a Suzuki SS80, which was called the Fronte in Japan and A/tom most of the other markets. The 796cc, in-line, three-cylinder power plant produced 39.5bhp at 5500rpm. Maruti marked the beginning of a revolution in the Indian automobile industry. The Maruti 800, with its compact size, nimble handling and perky engine, offered the Indian motorist a cheaper, friendlier alternative. On l4LhDecember 1983, Harpal Singh became Maruti’s first customer as he received the keys of his Maruti 800 car from Prime Minister Indira Gandhi. The car cost Rs.48,000. The new Maruti, launched in June 1986, cost approximately Rs 15,000 more than the outgoing model. The new Maruti: In 2005, Maruti launched the Swift, for the first time in its 20-year history. The Swift signaled the importance of the Indian market in the world. A team of engineers from Maruti worked on the design of the Swift in Hamamatsu, Suzuki’s headquarters in Japan. Model Year of launching Maruti 800 1983 Maruti Omni 1984 Maruti Gypsy 1985 Maruti 1000 1990 Maruti Zen 1993 Maruti Esteem 1994 Maruti Baleno 1999 MarutiWagon R 1999 Maruti Alto 2000 Maruti Versa 2001 Maruti Swift 2005 Maruti Zen Estilo 2006 Maruti 5X4 2007 Maruti Suzuki Grand Vitara 2007 The other cars which have their share in the Indian Auto Mobile industry are: The Indian auto industry has exploded in the last 14 years. And car markers are
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learning some very hard truths. While the economic reforms process was kicked of finance. 1991, it was only in 1993 that the automobile industry was finally delicensed and the restrictions were removed. Between 1993 and 95, government regulations limited a foreign company’s stake to a maximum of 51 percent of the equity. Hence the only method of entry for an MNC then was through a joint venture with a local partner. The most preferred partner was an existing automaker. In 1994-95 saw the announcement of quite a few JV’s. Premier and Peugeot to form PAL-Peugeot. GM and CK Birla to form GM India. Mercedes-Benz and Tata Motors. M&M and Ford to form Mahindra-Ford India. In 1995, the government announced its decision to allow foreign auto companies to enter with a 100% stake or wholly-owned subsidiaries. This changed the dynamics of joint ventures in India. The other automobile industries which play a crucial role in the Indian automobile industry are: Daewoo Motors India. General Motors India Mercedes-Benz Hyundai Motors Honda SIEL Toyota Skoda India
FORD PRODUCTS 26
FORD IKON
SPECIFICATIONS Engine
Ikon 1.3 Rocam
Ikon 1.4 DuraTorq TDCi
4-In-line
4 in-Line
Fuel System
SEFI
TDCi common rail
Displacement (cc)
1297
1399
Compression Ratio
10.2 : 1
18.0 : 1
Max. Power (ps/rpm)
70PS/5500
68PS/4000
Max. Torque (nm/rpm)
105/2500
160/2000
Emission Stage
Bharat stage III
Bharat stage III
Transmission type
5 Speed manual
5 Speed manual
Type
FORD ENDEAVOUR
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Engine
Endeavour 3.0L 4x4 Endeavour 2.5L 4x2
Type
3.0 Litre TDCi with 2.5 Litre TDCi with Variable Geometry Variable Geometry Turbocharger (VGT) Turbocharger (VGT)
Displacement (cc)
2953
2499
Max. Power (ps/rpm)
156 PS (115 Kw) @ 143 PS (105 Kw) @ 3200rpm 3500rpm
Max. Torque (nm/rpm)
380 Nm (38.7 kgm) 330 Nm (33.7 kgm) @ 2500rpm @ 1800rpm
Valve Fuel System
Transmission
DOHC, 16 Valves
DOHC, 16 Valves
Direct injection common rail
Direct injection common rail
Endeavour 3.0L 4x4Endeavour 2.5L 4x2
Transmission
5 speed Automatic
5 speed manual
4x4 Transfer
Electric Shift on Fly
N/A
FORD FIESTA
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SUSPENSION 1.6 Duratec Fiesta 1.6 1.6 Duratec 1.6 Duratec Exi Duratec Exi Zxi Sxi Limited
Front
Rear
Independent Independent Independent Independent McPherson McPherson McPherson McPherson struts with struts with struts with struts with offset coil offset coil offset coil offset coil spring / twin spring / twin spring / twin spring / twin tube gas tube gas tube gas tube gas damper units damper units damper units damper units & lower L- & lower L- & lower L- & lower Larms with arms with arms with arms with optimised optimised optimised optimised bushes bushes bushes bushes mounted on mounted on mounted on mounted on seperate seperate seperate seperate cross-member cross-member cross-member cross-member with stabiliser with stabiliser with stabiliser with stabiliser bar. Dual bar. Dual bar. Dual bar. Dual path body path body path body path body mounts. mounts. mounts. mounts. SemiSemiSemiSemiindependent independent independent independent heavy duty heavy duty heavy duty heavy duty twist-beam twist-beam twist-beam twist-beam with low with low with low with low package package package package height coil height coil height coil height coil
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springs & springs & springs & springs & seperate twin seperate twin seperate twin seperate twin tube dampers. tube dampers. tube dampers. tube dampers. Dual-path Dual-path Dual-path Dual-path body mounts. body mounts. body mounts. body mounts. Shock absorbers (Front & Rear)
Gas Filled
Gas Filled
Gas Filled
Gas Filled
BRAKES 1.6 Duratec Fiesta 1.6 1.6 Duratec 1.6 Duratec Exi Duratec Exi Zxi Sxi Limited
Front
Ventilated Discs
Ventilated Discs
Ventilated Discs
Ventilated Discs
Rear
Self Adjusting Drums
Self Adjusting Drums
Self Adjusting Drums
Self Adjusting Drums
FORD FIGO
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ENGINE
Displacement (cc) Type Fuel system
1.2 1.2 1.2 1.2 Duratec Duratec Duratec Duratec Petrol Petrol LXI Petrol EXI Petrol ZXI Titanium
1196
1196
1196
1196
16V DOHC 16V DOHC 16V DOHC 16V DOHC SEFI
SEFI
SEFI
SEFI
Max. power 71 (52.4) @ 71 (52.4) @ 71 (52.4) @ 71 (52.4) @ (ps(kw)/rpm) 6,250 6,250 6,250 6,250 Max. torque (nm(kgm)/rpm)
102(10.4) @ 4,000
102(10.4) @ 4,000
102(10.4) 102(10.4) @ @ 4,000 4,000
SUSPENSION 1.2 Duratec 1.2 Duratec 1.2 Duratec 1.2 Duratec Petrol LXI Petrol EXI Petrol ZXI Petrol Titanium
Front
Rear
Independent Independent Independent Independent McPherson McPherson McPherson McPherson strut with strut with strut with strut with dual path dual path dual path dual path mounts mounts mounts mounts SemiSemiSemiSemiIndependent Independent Independent Independent twist beam, twist beam, twist beam, twist beam,
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Coil springs Coil springs Coil springs Coil springs Steering
Hydraulic power assisted
Hydraulic power assisted
Hydraulic power assisted
Hydraulic power assisted
BRAKES 1.2 Duratec 1.2 Duratec 1.2 Duratec 1.2 Duratec Petrol LXI Petrol EXI Petrol ZXI Petrol Titanium
Front
Ventilated Disc
Ventilated Disc
Ventilated Disc
Ventilated Disc
Rear
Drum
Drum
Drum
Drum
CONCLUSION FORD HAS PROVIDES A WIDE RANGE OF CARS IN THE INDIAN MARKETS AS MENTIONED ABOVE, IT HAS TARGETTED THE INDIAN MARKET WITH A PURCHASING POWER OF APPROX. 4.75 LAKHS. CONSIDERING THE INDIAN MARKET TYPE WHERE THE CONSUMERS CAN BE SUB- DIVIDED IN VARIOUS CATEGORIES DEPENDING ON THEIR INCOME BRACKETS STARTING ROM APPROX 1 LAKH TO ANY AMOUNT. BUT THE CONSUMERS ARE MAINLY CONCENTRATED IN THE 2.75 TO 20 LAKHS BRACKET WHICH HAS BEEN PAID A SERIOUS AMOUNT OF ATTENTION BY THE FORD MARKETING TEAM THUS, FOCUSING ON THE CUSTOMER’S DESIRED WANTS AND RELATED PRODUCTS IN THE INDIAN MARKET SCENARIO.
STP – Segmentation, Targeting, Positioning
Segmentation
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The main reason why we have Segmentation is because we have so many types of customers. The reason why Segmentation has become important in teaching and learning about marketing is because these groups of different customers have: 1. become more numerous, we have many more types of segments 2. The differences among groups have become more distinct 3. The groups have become large in number
Criteria for Segmentation - things you have to think about in order to decide if a potential group is worthwhile being considered a "segment"
1. Homogenous - are the people in the proposed segment all similar without too many differences - you could say right handed people is a segment, but.... if half the right handed people were women, and half were men, then this might not work if the gender also was an issue. 2. Heterogeneous - the people between the segments should be very different - right handed and left handed might not be worthwhile if you are talking about a market segment for a product like pull-on boots 3. Substantial - the people in the segment should be large enough in number to be worthwhile - right handed men might be a large enough segment - right handed men, who wear glasses, and speak Spanish and right motorcycles might be too small - the group has to be large enough to "generate sufficient sales volume at a low enough cost to result in a profit " says Sommers 10th Ed. 4. Competition
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Sommers 10th Ed. suggests that a company should target segments "where the number of competitors and their size are such that the firm is able to compete effectively" example - some people buy trucks, some SUVs and some cars and some mini-vans - some companies have a product segment devoted to truck buyers, like Ford - car companies, like Nissan and Toyota might be advised to avoid selling trucks in North America because the competition is intense and they might not make a profit. 5. Resources Sommers 10th Ed. suggests that a company should make sure the segment relates to the resources of the company. If the company can mfg. variations to fit its key demographics, great, but it should not take on additional demographics if it does not have the capability example - a lingerie company taking on plus sizes - which would mean reconfiguring the fabric pattern cut-out which would effect fabric cost, waste amounts, etc.
.
Targeting
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Ford Motor Company President and CEO Alan Mulally revealed the much-anticipated new car to be produced in India. Called the new Ford Figo, the car was unveiled at a press event in Delhi as a major addition to the Ford India brand portfolio. Mulally’s visit underscores the strategic importance of India in Ford’s future plans. He stated the new Ford Figo is designed and engineered to compete in the heart of the domestic India car market. The new Ford Figo will be manufactured at Ford’s expanded integrated manufacturing facility near Chennai, which is undergoing a $500 million transformation to become a regional centre of excellence for Ford small car production. The importance of Ford Figo extends beyond India’s borders. Ford’s investment in its Chennai plant gears it for eco-friendly volume production and positions Ford India to become a major export producer. DELHI, India, Sept. 23, 2009 – India’s role as an important player in the future of Ford Motor Company’s international strategy was underscored today when the company’s President and CEO, Alan Mulally, unveiled an all-new car targeting the heart of the Indian car market – the new Ford Figo. •
•
•
•
The Ford Figo, a new nameplate and a fresh face on the Indian market, signals Ford’s intention to compete in India’s largest and most important small car market segment. Ford Figo is the result of a significant Ford investment commitment to expand its plant near Chennai for volume production as a small-car centre of excellence regionally. Ford’s $500 million investment has doubled the plant’s production capacity to 200,000 units per year and introduces major advances in highquality automation and innovative, eco-friendly production techniques. “Our exciting new Ford Figo shows how serious we are about India,” Mulally said. “It reflects our commitment to compete with great products in all segments of this car market. We are confident the Ford Figo will be a product that Indian consumers really want and value.” Ford Figo is designed and engineered to compete in India’s small car segment, which accounts for more than 70 percent of the new vehicle market. It leverages Ford’s small-car platform architecture, sharing underlying technology with the
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Ford Fiesta, already familiar to Indian drivers.
Positioning
Ford unveiled its 2010 product lineup, which includes the return of the Taurus sedan, a restyled Ford Flex crossover with its patented EcoBoost engine, a high-performance version of its popular F-150 pickup truck, and restyled Lincoln MKS and MKT vehicles. On his blog, www.autoextremist.com, Detroit-based automotive industry analyst Peter DeLorenzo wrote about Ford’s unveiling of its product mix to a group of automotive journalists. “It became quickly apparent to everyone that this company is more than just on the move, they are aggressively boosting their presence in the market with an array of impressive products that will transform the company,” DeLorenzo wrote. “Over the next 18 months, Ford will have the freshest, most contemporary lineup in the business and the newest fleet of vehicles — in terms of age — on the road.” That product lineup “is going to pay off big-time” for Ford, DeLorenzo wrote. They also have scaled back manufacturing operations to align supply with demand and have taken steps to create a global manufacturing platform that will allow the company to use common technology and suppliers for vehicle offerings worldwide.
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Ford reported that it had a profit of $2.3 billion in the second quarter, compared with a loss of $8.7 billion a year earlier. Revenue for the period declined 40 percent, to $27.2 billion from $41.1 billion a year earlier. Ford and its competitors must aim at a moving target in trying to figure out what will sell. Consumer demands shift continuously, depending on the state of the economy and changes in fuel prices. “The days of selling 400,000 or 500,000 units of any vehicle, except maybe the F-150, are over,” Hinrichs said. “Now we need to figure out how to make the same money selling lower volumes. The best way to do that is to go after a number of smaller niches.” “Ford’s in a pretty good position, both from a product standpoint and a reputation standpoint,”
SWOT ANALYSIS Strengths -4th on the Fortune 500 List (U.S. only) -4th on the Global 500 List -39th on the Best Companies for Minorities List -One of world’s best known brands -Their Web strategy has cut car build costs by as much as $380 per car -Have already invested heavily in alternate fuel sources -Ford are seen as supportive eg - Gave Generously after the September 11 Attacks - Give Generously to Help Fight Breast Cancer - Support Racing Teams, NASCAR, Formula One Etc
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Weaknesses -Firestone Tire recalls caused Stock Price to Suffer--$14.70, Lowest In Years -CEO Jacques Nasser and Chairman Bill Ford Jr. could not get along Leading to Bill Ford taking over as CEO -Cash Reserves Have Sunk to $4.1 Billion -$13 Billion on Acquisitions -$3.5 Billion to Cover Tire Recalls -Sometimes seen as "safe", "boring"
Opportunities -Have a chance to become more environmentally friendly with cleaner engine emissions and by working with environmental groups to help clean the environment -Ford have already started investing in Solar Power ,and have a chance to become a market leader -They can use their Web strategy to cut costs further -They can take advantage of their perceived generosity by giving to more charities and using the fact in their targeted advertising.
Threats
-Competition is huge. -Internal strife will hurt the company. -Threat of substitute products such as Natural gas, Electricity, Ethanol, Vegetable oil, Sunlight, Water -Intensity of Rivalry among competitors worldwide -Worldwide markets threatened due to the "War on Terrorism"
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MARKETING STRATEGY OF FORD
A marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. Any organization that wants to exchange its products or services in the market place successfully should have a Strategic Marketing plan to guide the allocation of its resources. A strategic marketing plan usually evolves from an organization’s overall corporate strategy and serves as a guide for specific marketing programs and policies. Marketing strategy is based on a situation analysis- a detailed assessment of the current marketing conditions facing the company, its product lines, or its individual brands. From this situation analysis, a firm develops an understanding of the market and the various opportunities it oilers, the competition and the market segments or target markets the company wishes to pursue. Marketing strategy is the complete and unbeatable plan, designed specifically for attaining the marketing objectives of the firm/business unit. The marketing objectives indicate what the firm wants to achieve; the marketing strategy provides the design for achieving them. For example, if the marketing objectives of a business unit stipulate that next year, it should achieve a sales revenue of Rs. 1,000 crore and a net profit of 15 percent of sales revenue, it is the job of marketing strategy to indicate how and wherefrom this sale and profit will come, which product lines/products/brands will accomplish this task and how. Marketing strategy forms an integral part of marketing planning. A marketing strategy is most effective when it is an integral component of corporate strategy, defining how the organization will successfully engage customers, prospects, and competitors in the market arena. It is partially derived from broader corporate strategies, corporate missions, and corporate goals. As the customer constitutes the source of a company’s revenue, marketing strategy is closely linked with sales. A key component of marketing strategy is often to keep marketing in line with a company’s overarching mission statement.
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PROCESS MARKETING AND PROMOTIONS MODEL: Development of marketing program requires an in-depth analysis of the market. This analysis may make extensive use of market research as an input into the planning process. Marketing Strategy and Target marketing Market planning analysis process program development target market 1. Identifying markets 2.Market segmentation 3. Target marketing 4. Positioning through marketing strategies 5. Pricing decisions 6.distributi on promotion to final This input, in mm, provides the basis for the development of marketing strategies in regard to product, pricing, distribution and promotion decisions. Each of these steps requires a detailed analysis, since this plan serves as the road map to follow in achieving marketing goals. Once the detailed market analysis has been completed and marketing objectives have been established, each element in the market mix must contribute to a comprehensive integrated marketing program. Of course, the promotional program element must be combined with all other program elements in such a way as to achieve maximum impact. 7. Product Opportunity 8.Competitive analysis 9.Target marketing 10. Buyer 11. Ultimate consumer 12.Consumers Businesses 13. Channel 14. Promotional decisions 15.Advertising 16.Direct marketing 17.Interactive marketing 18.Sales promotion 19.Public relations 20.Personal Purchase 21.Promotion to trade Resellers
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Formulating the marketing strategy: Basically, formulation of marketing strategy consists of three main tasks: 1. Selecting the target market, 2. Positioning the offer, 3. Assembling the marketing mix. This implies that the essence of the marketing strategy of a firm for a given product or brand can be grasped from the target market chosen, the way it is positioned and how the marketing mix is organized. The target market shows to whom the unit intends to sell the products; positioning and marketing mix together show how and using what uniqueness or distinction, the unit intends to sell. The three together constitute the marketing strategy platform of the given product.
SELECTING THE TARGET MARKET: To say that target market selection is a part of marketing strategy development is just stating the obvious. It does not fully bring out the import of the inseparable linkage between the two. When the selection of the target market is over, an important part of the marketing strategy of the product is determined, defined and expressed. Marketing targeting simply means choosing one’s target market. It needs to be clarified at the outset that market targeting is not synonymous with market segmentation. Segmentation is actually tee prelude to target market selection. One has to carry out several tasks besides segmentation before choosing the target market. Through segmentation, a firm divides the market into many segments. But all these segments need not form its target market. Target market signifies only those segments that it wants to adopt as its market. A selection is thus involved in it. Marketing segmentation is a process that throws up not one but several market segments. There may be segments that are sizeable and the ones that are not so sizeable. There may be segments assuring immediate profits and the ones that call for heavy investments in market development. There may also be segments that show great potential, but display tough barriers to entry. As such, the question, which segment/segments, the firm should select as its target market, assumes crucial importance.
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STRATEGIC MARKET SEGMENTATION: Market Segmentation is “dividing up a market into distinct groups that (1) have common needs and (2) will respond similarly to a marketing action”, which was said by Eric N Berkowitz, Roger A.Kerin, and William Redulius. The Segmentation process involves five distinct steps: Finding ways to group consumers according to their needs. Finding ways to group the marketing actions — usually the products offered — available to the organization. 1.Developing a market-product grid to relate the market segments to the firm’s products or actions. 2.Selecting the target segments toward which the firm directs its marketing actions. 3.Taking marketing actions to reach target segments. Markets can be segmented using several relevant bases. For example, demographic characteristics of consumers, such as age, sex, income/purchasing capacity, education level etc, form one base for segmentation. Geographic characteristics constitute another; and buying behavior of the consumers forms yet another base. The various types of segmentations are • Geographic segmentation • Demographic segmentation • Psychographic segmentation • Buyer behavior • Benefits segmentation • Volume of purchase segmentation Positioning is a platform for the brand. It facilitates the brand to get through to the target consumers. It is defined as “the art and science of fitting the product or service to one or more segments of the broad market in such a way as to set it meaningfully apart from competition.” Positioning is the act of fixing the locus of the product offer in the minds of the target consumers. In positioning, the firm decides how and around what parameters, the product offer has to be placed before the target consumers. The significance of product positioning can be easily understood from David Ogilvy’s words: “The results of your campaign depends less on how we write your advertising than on how your product is positioned”.
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Definitions of product positioning: Sengupta, in his book Brand Positioning says, “The aim of product positioning is to create a perception for our brand in the prospect’s mind so that it stands apart from competing brands... we must cover that space in the consumer’s mind as if we had won a long-term lease. We must find a strong position in that mind and sit on it....” Michael Rothschild, in his book Marketing Communications — From Fundamentals to Strategies says, “Positioning refers to the place a brand occupies in the mind in relation to a given product class. This place was originally a product-related concept.... Concerning market structure. The concept now refers to the place that the brand holds in the consumer’s mind related to perceptions and preferences”.
Developing a Positioning Strategy: To create a position for a product or service, Trout and Ries suggest that managers ask them selves six basic questions. 1. What position, if any, do we already have in the prospect’s mind? 2. What position do we want to own? 3. What companies must be outgunned if we are to establish that position? 4. Do we have enough marketing money to occupy and hold the position? 5. Do we have the guts to stick with one consistent positioning strategy? 6. Does our creative approach match our positioning strategy?
PRODUCT POSITIONING AND BRAND POSITIONING: It is essential to understand the relationship between products positioning and brand positioning. Though in discussions, the two terms are synonymously and interchangeable used, technically they are different. Product positioning denotes the specific product category/product class in which the given product is opting to compete. And brand positioning denotes the positioning of the brand viz-a viz the competing brands in the chosen product category. It is evident that for any product, before entering the market it has to sequentially carry out the two exercises, product positioning and brand positioning. In the first step, the product category where the new entrant should enter and compete, i.e. against what all products it has to compete, has to be decided. In this step, it is the broad function that the product is trying to serve
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that matters. This choice of product category will decide the nature of the competition the product is going to face. Once product category positioning is decided, the position for the new entrant against competing brands in the chosen product category has to be analyzed and fixed.
ISSUES IN PRODUCT POSITIONING: Where is the new offer going to compete? - Which product function/customer need is it trying to meet? -What other product categories serve this need? In other words, what are the substitute products that serve the same need? -Where is the real gap, where is such a new offer most welcome and wanted by the market? -What are company’s competencies to fight here?
ISSUES IN BRAND POSITIONING: In deciding the Brand positioning, the issues are: - Which are the competing brands in the chosen product category? What are the unique claims/strengths of the various brands? - What position do they enjoy in consumer’s evaluation and perception? What is the most favoured position...? And yet vacant? - Can the new brand claim the needed distinction and take the position and satisfy the need? The major dimension of marketing strategy relates to positioning of the offer. The firm has already selected the target market and decided its basic offer. Now, what is the conjunction between these two entities? How do they get connected? What is the interface? In other words. What is the locus the firm seeks among the customers in the chosen target market with its offering? How would the firm want the consumer to view and receive the offer? These are the issues the firm has to grapple with in positioning. And, while formulating the marketing mix too, the firm will agitate over these issues. The Product Differentiation and Positioning discusses the multifarious issues involved in the subject.
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PRODUCT REPOSITIONING: Products do undergo ‘repositioning’ as they go along their life cycle. In some cases, even products that are fairing well are repositioned. This is done mainly to enlarge the reach of the product offer and to increase the sale of the product by appealing to a wider target market. The product is provided with some new features or it is associated with some new target segments.
PROMOTIONAL DECISIONS: Promotion has been defined as the coordination of all seller initiated efforts to set up channels of information and persuasion in order to sell goods and services or promote an idea. While implicit communication occurs through the various elements of the marketing mix, most of an organization’s communications with the market The basic tools used to Accomplish an organization’s communication objectives are often referred to as the Promotional mix. The promotional mix Advertise in Direct Interactive Sales Publicity/ marketing promotion Public • internet facilities
Advertising: Personal selling Advertising is defined as any paid form of non personal communication about an organization, product, service, or idea by an identified sponsor. The paid aspect of this definition reflects the fact that the space or time for an advertising message generally must be bought. An occasional exception to this is the public service announcement, whose advertising space or time is donated by the media. Advertising is the best-known and most widely discussed form of promotion, probab ly because of its pervasiveness. It is also very important promotional tool, particularly for companies, whose products and services are targeted at mass consumer markets. It is a very cost-effective method for communicating with large au diences. It can be used to create brand images and symbolic appeals for a company or brand.
Direct Marketing: One of the fastest-growing sectors of the U.S. economy is direct marketing, in which organizations communicate directly with target customers to generate a response and a transaction. It has become such an integral part of the IMC
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program of many organizations and often involves separate objectives, budgets, and strategies, we view direct marketing as a component of the promotional mix. Direct Marketing is much more than direct mail and mail order catalogs. It involves a variety of activities, including database management, direct selling, telemarketing and direct response ads through direct mail, the Internet, and various broadcast and print media. One of the major tools of direct marketing is direct response advertising, whereby a product is promoted through an ad that encourages the consumer to purchase directly from the manufacturer.
Interactive/Internet Marketing: Interactive media allow for the back-and-forth flow of information whereby users can participate in and modify the form and content of the information they receive in real time. Unlike traditional forms of marketing communications such as advertising, which are one-way in nature, the new media allow users to perform a variety of functions such as receive and alter information and images, make inquiries, respond to questions and of course make purchases. In addition to the Internet, other forms of interactive media include CD ROMs, Kiosks, and interactive television.
Sales Promotion: The next variable in the promotional mix is sales promotion, which is generally defined as those marketing activities that provide extra value or incentives to the sales force, the distributors, or the ultimate consumer and can stimulate immediate sales, sales promotion is generally broken into two major categories: Consumer-oriented and Trade-oriented activities Consumer-oriented sales promotion is targeted to the ultimate user of a product or service and includes couponing, sampling, premiums, rebates, contests, sweepstakes, and various point-of-purchase materials. Trade-oriented sales promotions are targeted towards marketing intermediaries such as wholesalers, distributors and retailers.
Publicity/Public Relations: Publicity refers to non personal communications regarding an organization, product, service, or idea not directly paid for or run under identified sponsorship. It usually comes in the form of a news story, editorial or announcement about an organization and its products and services. Like advertising, publicity is not directly paid for by the company.
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An advantage of publicity over other forms of promotion is its credibility. Another advantage of publicity is its low cost, since the company is not paying its time or space in a mass medium such as TV, radio or newspapers. Public relations are defined as “the management function which evaluates public attitudes, identifies the policies and procedures of an individual or organization with the public interests and executes a program of action to earn public understanding and acceptance”. Public relations generally have a broader objective than publicity, as its purpose is to establish and maintain a positive image of the company among its various publics.
Personal Selling: It is a form of person-to-person communication in which a seller attempts to assist and persuade prospective buyers to purchase the company’s product or service or to act on an idea. Unlike advertising, personal selling involves direct contact between buyer and seller, either face-to-face or through some form of telecommunications such as telephone sales. Personal selling involves more immediate and precise feedback because the impact of the sales presentation can generally be assessed from the customer’s reactions. Assembling the marketing mix means assembling the four Ps of marketing in the best possible combination. Involved in this process are the choice of the appropriate marketing activities and the allocation of the appropriate marketing effort/resources to each one of them. The firm has to find out how it can generate the targeted sales and profit. It considers different marketing mixes with varying levels of expenditure on each marketing activity and tries to figure out the effectiveness of different combinations in terms of the possible sales and profits. It then chooses the combination/mix of products, price, place and promotion that is best according to its judgment. Since marketing is essentially an interaction between the marketing mix and environmental variable, and since the latter and non-controllable, marketing becomes synonymous with assembling and managing the marketing mix. Of course, while assembling the marketing mix, the marketing manager will take due note of the environmental variables. Not only will he take due note of them, he will ensure that his marketing mix suits the environmental variables. And, it’s factors that renders that task much more complex.
MARKEGING MIX: THE SOLE VEHICLE FOR CREATING AND DELIVERING CONSUMER VALUE The four elements mentioned above- product, distribution, promotion and pricing constitute the marketing mix of the firm. The marketing mix is the sole vehicle for creating and delivering customer value.
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It can be easily seen that all activities and programmes, which a marketer designs and caries out in his effort at winning customers, relate to one or the other of the above four elements- product, place, promotion and pricing. It can also be seen that in each of these elements, there are several sub-elements. For example, packaging is one of the sub-elements of product and warehousing is one of the sub-elements of distribution.
The Four Ps of Marketing: It was James Culliton, a noted marketing expert, who coined the expression marketing mix and described the marketing manager as a mixer of ingredients. To quote him, ‘The marketing man is a decider and an artist — a mixer of ingredients, who sometimes follows a recipe, developed by others and sometimes prepares his own recipe. And, sometimes he adapts his recipe to the ingredients that are readily available and sometimes invents some new ingredients, or, experiments with ingredients as no one else has tried before. Subsequently, Niel H. Borden, another noted marketing expert, popularized the concept of marketing mix. It was Jerome McCarthy, the well-known American professor of marketing, who first described the marketing mix in terms of the four Ps. He classified the marketing mix variables under four heads, each beginning with the alphabet “P”. • Product • Place • Price • Promotion McCarthyhas provided an easy-to-remember description of the marketing mix variables. Over the years, the terms — Marketing mix and Four Ps of marketing have come to be used synonymously. Assembling and managing the marketing mix is the crux of the marketing task. And, it is through the marketing mix that the marketing manager achieves the marketing objectives.
MARKETING STRATEGIES FALL UNDER TWO CATEGORIES: We have seen that target market selection, positioning and marketing mix formulation together constitute marketing strategy. We have also seen that a firm can assemble the marketing mix elements in many different ways, depending on the relative weightage it assigns to the different elements. The scope to carve out different combinations is, in fact immense. As a result, business firms are able to employ an abundance of strategies and strategy stances in their relentless race to stay ahead of competition. However, a close
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scrutiny will reveal that all these strategies can be fitted into two broad categories 1. PRICE ORIENTED MARKETING STRATEGY 2. DIFFERENTIATION ORIENTED MARKETING STRATEGY In other words; there are only two broad routes available for forging marketing strategies: any strategy has to be ultimately either a price-oriented strategy or a differentiation-oriented strategy. Firms taking to the price route in marketing strategy compete on the strength of pricing. They use price as their competitive lever. They juggle the price of their product to suit the prevailing competitive reality. They can afford to offer lower prices and still make the targeted profits, they elbow out competition with the cushion they enjoy in the matter of pricing. Price route requires cost leadership; evidently, a firm opting for the price route will have to have a substantial cost advantage in their operations. It should be enjoying an overall cost leadership in the given industry and its lower cost should enable it to secure above average returns in spite of strong competition. The cost advantage can emanate from different factors like, scale economies, early entry, a large market share built over a period of time, locational advantage, or synergy among the different businesses. The firms whole strategy, in fact will revolve around building such cost advantage. To successfully practice a price-led strategy, a firm should have consciously taken to the idea sufficiently early in its evolutionary process and prepared itself for adopting such a strategy. The differentiation route of strategy revolves around aspects other than price. It works on the principle that a firm can make its offer distinctive from all competing offers and win through the distinctiveness. And, a firm adopting such route can price its product on the perceived value of the attributes of the offer and not necessarily on competition-parity basis. Maximum scope for exploiting differentiation remains with the product. While all the 4Ps of marketing are important elements from the point of view of strategy, the other Ps normally go as elaborations of the offer, while the product forms its core. Product differentiation is of vital importance in product management and has great potential in forgoing successful marketing strategies. The product can be differentiated along two major planks: 1. Tangible product attributes and functions, 2. Intangible characteristics and emotional associations. The tangible product attributes and functions are
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Differentiation based on ingredients, Differentiation based on functional value, Differentiation based on additional features, Packaging contributing to differentiation, n Differentiation based on Quality, Operational Efficiency, Technology, and Service. Digital Marketing is the practice of promoting products and services using digital distribution channels to reach consumers in a timely, relevant, personal and cost-effective manner. Whilst digital marketing does include many of the techniques and practices contained within the category of Internet Marketing, it extends beyond this by including other channels with which to reach people that do not require the use of The Internet. As a result of this non-reliance on the Internet, the field of digital marketing includes a whole host of elements such as mobile phones, sms/mms, display / banner ads and digital outdoor. Word of mouth, is a reference to the passing of information by verbal means, especially recommendations, but also general information, in an informal, person-to-person manner. Word of mouth is typically considered a face-to-face spoken communication, although phone conversations, text messages sent via SMS and web dialogue, such as online profile pages, blog posts, message board threads, instant messages and emails are often now included in the definition of word of mouth. There is some overlap in meaning between word of mouth and the following: rumor, gossip, innuendo, and hearsay; however word of mouth is more commonly used to describe positive information being spread rather than negative, although this is not always the case. Word-of-mouth promotion, also known as buzz marketing and viral advertising, is highly valued by advertisers. It is believed that this form of communication has valuable source credibility. Research points to individuals being more inclined to b elieve WOMM than more formal forms of promotion methods; the receiver of word-of-mouth referrals tends to believe that the communicator is speaking honestly and is unlikely to have an ulterior motive (i.e. they are not receiving an incentive for their referrals). In order to Promote and manage word-of mouth communications, marketers use publicity techniques as well as viral marketing methods to achieve desired behavioral response. Influencer marketing is increasingly used to seed WOMM by targeting key individuals that have authority and a high number of personal connections. It is an advanced form of word of mouth marketing (WOMM) in which companies develop customers who believe so strongly in a particular product or service that they freely try to convince others to buy and use it. The customers become voluntary advocates, actively spreading the word on behalf of the company. Evangelism literally comes from the three words of ‘bringing good news’ and the marketing term justly draws from the religious sense, as consumers are literally driven by their beliefs in a product or service, which they preach in an attempt to convert others. Sales promotion consists of diverse collection of incentive tools mostly short term, designed to stimulate quicker and greater purchase of particular products of services by the consumer. Sales promotion is the only method that makes use of incentives to complete the push-pull
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promotional strategy of motivating the sale force, the dealer and the consumer in transacting a sale. Price-off offers refers to offering the product at lower than the no rmal price. This encourages immediate sales, attracts non-users, induces product trail and counters competition. Premium refers to the offer of an article of merchandise as an incentive in or to sell the product.
CONCLUSION
Although Ford Motor Company is one of the largest companies in the world, we can still attribute accounting trends to some of the key events in Ford's history. In 1990, Ford acquired Jaguar Cars, Ltd. Jaguar was a company suffering terrible loses due to poor quality, and lack of sales. Jaguar has been in the black since Ford purchased them until 1994. It is important to note that Ford's net income trend from 1991 to 1995 illustrates this. In 1992, the Ford Taurus became the number one selling car in the United States, which helped increase 1992 net earnings, and in 1994 the Ford Falcon was the top selling car in Australia, helping maintain the trend of increasing net income. It is important to note that Ford's net income has increased from 1991 to 1994, and then
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decreased in 1995. There are several possible causes for this change in the trend. In 1995, Ford acquired 20% equity in a major Chinese truck manufacturer, and launched several new vehicles; including the Ford Contour, Ford Mondeo, Mercury Mystique, Ford F-150, and Ford Taurus. These additional investments and expenses help explain the decrease in net income in 1995. Overall, the company has done well, and with reorganization in 1996 to decrease spending and increase efficiency, Ford is striving for future periods of growth.
RECOMENDATIONS
We found that promotion greatly affect the market, so in my opinion company should promote its product regularly by making new and people attracting promotional strategies to increase its sale. As well as there should be a careful allotment of funds in the current recession scenario as the risk element tends to be very high. Take over aspects aspects should not be considered as it will lead to a very high potential tax liability.
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