Monday, April 4, 2011

My Project Thesis for Ford Motor Company Chapter Six.

Remember, I tried to contact Ford, but was unable, keep this in mind when reading.

Chapter Six
Summary of Results
Ford Motor Company has elected to implement their own version of their solution to increase sales with timetables and technical aspects which differ from this project. These will have to be evaluated their merits. The steps that Ford took in the past few months have been to increase sales, customer satisfaction and attract new customers from other automakers. The methodology has been predictable, and some actions have not happened yet, and some others they have done outside of recommendations. Time will tell if the latter were the right decisions. However, they did follow an important aspect and this was to eliminate redundant and slow-selling lines. Even though Ford is still not on firm financial ground, its quality and sales figures put the company in an enviable position among domestic and even some foreign automakers.
With all of their efforts, Ford has refused government loans and assistance. This has given credibility to the automaker in a time when their domestic competitors have or are going to file for bankruptcy. Chrysler has shut down all of their North American operations while in bankruptcy protection and shares of General Motors have hit a near seventy-five year low. Ford could have outperformed by public opinion alone, considering the present attitude toward “government bailouts.” However, making a conscious effort to improve their product is an added benefit to the automaker and gives them credibility. Ford has improved their product to par with Japanese automakers and their service is going above and beyond what the intervention would call for. The real question is whether or not these levels are sustainable without further eroding their financial standing.
The effort to overcome biases is to be taken into consideration and is not “over the top” considering what competitors are doing at the present time. Problems with the auto industry in the United States are deep seated and the economy was merely a test of what was already primed for failure. Since the 1970’s, the quality, credibility and market share of domestic automakers has steadily eroded. Though Ford has taken great strides to improve their quality through marketing and honest effort, the biases against the industry as a whole are staggering. Only the issues germane to Ford will be made mention of here and only those which are noteworthy.
The Ford Pinto was the most notorious example that one can give (Ford, n.d.), but the Pinto’s replacement, the Escort, was also not without problems. The engines were notorious for being ruined when the timing belts broke. The Tempo, Ford’s midsized offering in the 1980’s and 1990’s was poor in quality and reliability to the point that few lasted beyond the payment book. The Focus was also plagued with problems and was for a time, the most recalled vehicle in automotive history, a title it still holds for the 2000 model year. Ford’s answers to the minivan, the Aerostar and Windstar, were subpar in quality and reliability . The 3.8 liter engines frequently failed and the second generation Windstar was cause for Ford to get out of the minivan business. Body integrity was poor and resulted in fires while nothing was done for customers. The incidents of cruise control fires still linger to this day and have cost Ford millions in repairs and customers tens of thousands of dollars in destroyed vehicles and in some instances, homes and lives . Rumors are circulating that Ford has improved their service to the point of even repairing products out of warranty to counter bad publicity. However, these are rumors that cannot be substantiated.
What can be substantiated is that Ford has turned to aggressive marketing, promotions, and styling to sell their products. They have restyled the Fusion for 2010, changing the front fascia, taillights and the interior trim along with adding a hybrid option. At this writing, there are at least twenty 2009 Fusions on Grand Ledge Ford’s lot. The result would seem to be self defeating to try and sell the 2009’s as it was to introduce the 2009 F Series a year ago. They have also introduced the MKS as a replacement to the aging Town Car, even while there are many of the latter still sitting unsold on dealers’ lots. The Taurus is also new for 2010 and there are still more than a few 2009s unsold. Restyling costs money and with only one exception, all of the vehicles changed have not had any problems with desirability or reliability. The Fusion is one of the best-rated passenger cars that Ford has introduced since 1986 and has had rave reviews from the press and owners alike. The Focus will not get a replacement until the 2010 calendar year and Ford will not introduce the Fiesta in the United States until early 2010 as a 2011 model. All the while, even GM has at least a credible subcompact. While the styling is controversial, the fact is that consumers seem to like it (Car Connection Website, 2009).
Aggressive marketing, as mentioned earlier, is Ford’s chosen method to increase sales. They have relied heavily on the Ford Advantage Plan in recent weeks as a response to similar plans from competitors, namely Hyundai and General Motors. There is the premise that Ford Credit has plenty of money to loan and for customers who are worried about losing their income, a payment protection plan that covers vehicle payments for up to a year if these unfortunate events befall the buyer (Blue Oval News, 2009). The real question is if this marketing campaign has worked. As of March, 3rd of 2009, Ford’s sales were down 48.4% (Jalopnik, 2009). Sales in April are still down 31% from where they were in 2008. Nevertheless, they have made substantial gains in sales with their marketing .
They have improved durability over competitors’ cars by making bumpers stronger and vehicles more reparable after a crash. In addition, Ford has reduced the price on many of its collision parts, reducing insurance premiums . This lends further credibility to the company’s renewed commitment to quality and owner satisfaction, something that would have been out of the question only a year ago. On the other hand, these efforts have cost the company money to increase their market share. While it may be money well-spent and even ethical to address issues of vehicle durability. Payment protection, interest free-financing, rebates and all other present efforts should only be for the short-term.
Once the promotions end in June, is Ford going to have to extend them to keep their sales up? Or are they going to have to turn to more marketing to keep a dwindling customer base interested. This involves a substantial amount of money spent on a service that will not provide lasting value to either the company or its customers. Advertizing is expensive and unfortunately, will not hold customer impact more than the thirty seconds it takes to air a television commercial. They will have to invest more into it have the same effect and while it is tax deductable, it will only get customers into the lot, not increase sales. Another issue with this is if the value for the customer is not there, or Ford does not have the product that people want, they will not buy anyway.
Recaps of the Objectives from Chapter Five are included for review in this chapter.
Objective One. This is to increase car sales by ten percent and overall vehicle sales by fifteen percent or more. This is important in several ways. The added revenue is one aspect that will undoubtedly help Ford’s financial standing. However, it will also show that the company is a better investment than competitors.
Hypothesis 1. Motor Company can sell more cars and trucks by scaling back on equipment that adds cost to the vehicle as opposed to value. This means not including options that customers do not want from dealer stock models, yet still allowing of dealer-installed equipment on all new cars. This gives the customer choices on which options he or she really wants .
Hypothesis 2. Ford can sell at least ten percent more units of the Focus model by introducing the international version of the car to the United States and Canada. The U.S. and Canadian model is outdated and pedestrian when compared to the international version. In addition, the company can save money on tooling costs with a world car.
Hypothesis 3. Car sales can also be increased if Ford reintroduces the Fiesta, one of the most successful models to date, to the United States and Canada. At the present time, Ford does not have a subcompact model for sale in the United States and Canadian market. Even Ford’s competitor, General Motors, has the Daewoo-based Aveo. The Fiesta is far less offensive looking and will have a much broader market appeal than the Aveo, if Ford can introduce it in time.
Objective Two. The second is to improve customer satisfaction and retention.
Hypothesis 1. Customer retention would improve if Ford responded objectively to warranty claims; hiring an outside firm to evaluate such claims. This would help render Ford harmless, legally and morally when a claim is rejected. Hiring an outside firm will insulate the automaker from frivolous claims and bad publicity.
Hypothesis 2. Ford’s customers would be more willing to buy their products again if they would evaluate designs of vehicle parts that fail at a higher rate than what is industry standard, even if the part is not under warranty, or the customers’ fault.
Objective Three. It is not enough to retain customers for Ford; they need to add new ones. Although there are new drivers, few can afford a brand-new car. This means that the present market in the United States and Canada is saturated. They will have to woo former GM, Chrysler, Toyota, Honda and even customers who buy European imports to buy Fords.
Hypothesis 1. Ford can attract more new customers by improving warranty service to present customers. Word of mouth including via the internet travels fast. When someone has a good experience, they will tell people about. However, if they have a bad experience, they will tell at least eleven others the experience.
Hypothesis 2. Providing more choices, by selling lower end vehicles on dealers’ lots, and making more options dealer installed and making the higher end vehicles special order, time and space on the lot permitting, will attract new customers because they have more vehicles to choose from, rather than just what is on the lot.
Hypothesis 3. Providing more choices in car lines and less in the line of trucks will attract more value-conscious and environment-conscious consumers back to Ford.

The larger, more expensive vehicles that Ford sells are getting restyled first, while the Focus, the only small car they have for sale in the United States and Canada, with its spotty reliability record; still has a platform that is nearly a decade old. They have a hybrid, which may or may not be a good investment for the practical consumer. What is worse is that Ford does not have a high-mileage conventional power train vehicle for sale in the United States or Canada, yet sells it all over Europe. This is something that will be covered in Chapter Seven.

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