Product Management Library of Knowledge
Ford's Attempt To Regain Touch With The MarketFORD'S ATTEMPT TO REGAIN TOUCH WITH THE MARKET
By Peter P. Roosen & Tatsuya Nakagawa
Ford has big problems – with marketing shortfalls being at the root of much of the company's current woes. Ford's marketing needs improvement. Marketing is defined not in the traditional sense of advertising and other sales related and supportive activities, but rather as the process of anticipating, identifying and satisfying customer requirements profitably. In short, Ford has lost touch with the market and needs to come up with well-priced products that many people will be happy to buy. Costs need to kept in line with this.
Ford's current campaigns support the current view among consumers that the company is in trouble and is appealing to the buying public to help the company solve its problems. This won't work as well as putting out some price competitive winning products will, like Ford has done at various times in the past century.
What needs to be looked at is the stuff that is rarely talked about in terms of the marketing strategy. This includes ensuring that sufficient resources are allocated and the correct processes are in place to gather actionable market intelligence covering all aspects of defining its product offerings: making adjustments to current product lines, determining next year's models (which brands and models to kill, shelve, support or create) and forecasting and preparing the market for future offerings 5 to 10 years ahead. Company leaders need to be able to execute decisively based on their confidence in the market intelligence and processes. The product research and development area is an obvious one for consideration. R&D efforts that lead to gross profit margin improvements in the various product lines should receive substantial support. The amount of research and development being targeted at identifying customer needs years ahead of time as well as for the next quarter is also an important aspect of marketing and needs to be carefully considered and well led.
Few companies are currently doing a great job aligning product research and development activities with core marketing strategy, often because there is no core marketing strategy or marketing center from which the R&D activities are led. Ford is no exception. Microsoft however has it figured out. Microsoft Chairman Bill Gates stepped down as CEO in January 2000 and took a more valuable role as Chief Software Architect. Microsoft is the world's largest R&D spender and the company is operating in a very tough marketplace with a clock marked in nanoseconds relating to changes in market dynamics. Microsoft continues to hold its industry leadership position and a key part of this is having the R&D activities and initiatives led and managed by the industry's top people including extremely market-savvy Gates himself.
Bill Ford Jr. has done some things very well. He is a man filling a very large pair of shoes, being the great grandson of two giant industry leaders Henry Ford and Harvey Firestone. We can't pick our parents but we can influence our environment during our lifetimes. Bill has been doing just that by taking a forward thinking approach to the company his great grandfather Henry started 100 years ago. Bill recently finished rebuilding Henry's legendary Rouge plant in Dearborn, at a cost of $2 billion dollars into a different kind of factory from its predecessor with its billowing smokestacks and almost unbearable working conditions. The new plant incorporates many leading environmental practices and has Bill's fingerprints all over it. The Ford factory has the world's largest grass covered roof, with the rooftop and surrounding grounds now reversing some pollution and supporting ecosystems. The Rouge assembly lanes are twice and wide as before and many ergonomic improvements have been made for the workers that will also positively impact quality. He hasn't been timid about announcing plant closures and cutting huge numbers of jobs while seeking a way to get the company out of its past. He also got out of the way recently and welcomed a new CEO this year while remaining Chairman.
The biggest problem Bill Ford seems to have is not really knowing the business he is in so that the whole company and not just aspects of it can be aligned to meet upcoming needs by being in tune with the market. He is not alone in this. It is a huge leadership challenge. All the US automakers have been in the same predicament for decades while the Japanese took over a big chunk of the market. Japanese automakers recognized a market need for consistent, quality products and by positioning themselves ahead of the other producers on this, took over the industry leadership position. They came out of virtually nowhere in doing this. Japanese automakers also took the lead in hybrid automobiles and got them into the driveways of many opinion leaders while American producers were putting out bigger versions of yesterday's winners. Bill saw potential in hybrids but did not know he had to make a move in that direction until 4 years after his competitors did. Bill's revitalized Rouge plant is cranking out the F150 series of pick up truck, a good seller but one of Ford's longest running products, having been around for decades. No amount of environmental improvement and plant revitalization will save the company if people lose interests in Ford's products. Bill needs to ensure his company regains touch with the market and the customers within it. That requires the right type of leadership, using the right knowledge and it comes at a price.
For Ford to regain it's leadership position, it has to become a better marketing organization then the others in the car making business.
Atomica Creative Group is a specialized strategic product marketing firm positioned to help companies assess their R&D processes relative to market drivers and establish a marketing strategy led approach so that R&D spending can be applied rationally for greater returns on these important investments.