Ford Marketing Channel Analysis
The research paper gives the description of Ford Motors Company. This company is considered to be one of the oldest and most successful companies of the automobile industry of the automobile industry all over the world that was founded and developed in the USA. The company’s products and their variations are analyzed in the paper. Moreover, the target audience of Ford is characterized in detail and the marketing channel is chosen for reaching each target audience. Another important fact that affects the company and its distribution strategy is the internal and external environment of the company. The PEST and Porter’s Forces analysis are described in the research in order to help develop the analysis of the company’s internal and external environment. The marketing channels that are used by the company are also defined in the paper. In addition, a new marketing channel for the distribution strategy development of Ford Motors Company is proposed. Additional purpose of this paper was to make a comparison of the strategies, including their advantages and disadvantages aiming to determine their effectiveness. Moreover, the recommendations and conclusions are provided in order to summarize the research paper and draw the positive impact for the company’s development.
The automobile industry is one of the most expensive and at the same time interesting industries for running the company. Nowadays, more and more companies are working hard to insure the comfort of their customers, win the market competition, and save the natural environment. Ford Motors Company is one of the oldest automobile companies that was incorporated in 1903 in the USA. For the lifetime of more than 100 years, the company managed to contribute many important developments to the world. Currently, the company is a multinational automaker corporation that remains among the world main industry leaders that have gained many followers.
Ford Motors Company has complicated and precise strategies, policies, and principles of development which were formed for many years of work experience. They are often the object of studies tasked with discovering the key success factors of the company. The research paper aims at producing the marketing channel analysis of the Ford Motors Company.
The target audience of Ford Motors Company is very diverse. It is caused by the fact that the company has chosen the strategy of product diversification. There is a huge variety of products presented for different markets. The product range itself is very different. For example, Ford Motors Company manufactures all types of vehicles, namely luxury cars, station wagons, vans, trucks etc.
In terms of geographic segmentation, the company is termed as the global one. It has adopted a multinational strategy for expanding its brand all over the world. However, Ford Motors Company segments the markets into the following groups: Asia Pacific, Europe, North America, Central and South America, Africa, and Middle East (“Global links,” 2015.). These regions have the same criteria and peculiarities of vehicle choice.
From the demographic point of view, the company also has a sizeable target audience. There are no certain age criteria; however, the users of the company’s products are people from 16 to 65 that have driving license. The minimum age point can change depending on the legislation on driving across the country. For example, in the USA people may receive their driving license when they reach 16 years old, while people in Europe start driving from 18 years old. Apart from this, the final users and the customers in the automobile industry usually have different age segmentation. The car buyers have the higher age level, which is caused by the high prices for the vehicles.
Basing on the income criteria, Ford Motors Company managed to be maximally diverse in the prices for its clients. The company presented both luxury and economical options for purchase in the same markets. For instance, while Ford Fiesta can be bought from the company for $ 14,090, the large and luxury Ford Expedition costs about $ 50,000 (“Global links,” 2015). In addition, when buying a car, customers have an opportunity to vary the price for the services and additional equipment settled in the vehicle. Thus, Ford Motors Company is targeting on all income level groups. Moreover, the number of female drivers is constantly increasing due to the fact that the company is aimed at both male and female customer groups. It is clear from the tools of promoting that involves men’s and women’s participation as well as from the product variations such as red and pink color of cars. Another major demographic criterion is the fact that Ford Motors Company manufactures the cars that can fit virtually any family. There is a 4-seat Ford Mustung on the contrary to an 8-seat Ford Expedition that can be suitable for a large family.
Hence, the targeting audience of Ford Motors Company is quite various. The company is targeting on both men and women aged between 16 and 70 with different income levels, needs, and geographic location. Owing to the fact that the range of customers of Ford Motors Company is very diverse, they belong to different marketing groups with different marketing channels, and consequently, different ways of contacting customer service to be applied.
Considering that Ford Motors Company is a multinational organization and the presence of the brand is needed in many world countries, the company has chosen the strategy of selling the cars through intermediaries. Brokers and local distributors present the Ford cars in their stores, where the purchase can be made. Such type of selling is not very efficient, because there is minimum control on the intermediary and additional expenditure that is spent on the intermediary margin. In addition, the company has personal show rooms, where the pre-sales and after-sales services are offered. This type of distribution is a more effective way of marketing channel. Moreover, due to the fact that Ford cars production is widespread around the globe, with the help of manufacturing facilities the logistics costs can be considerably decreased.
The environmental analysis indicates an analysis of the critical internal and external issues that strongly influence the automobile industry in general and Ford Motors Company in particular. The main points regarding the environmental analysis are elements of PEST analysis of the external environment and components of 5 Porter’s forces analysis. Apart from this, to perform a complete environmental analysis, personnel and market conditions must also be considered.
The key criteria that affect the automobile industry are political conditions of the country where the company operates. Taking into account the fact that the head office of Ford Motors Company is situated in the USA, the US political conditions play critical role for the company. In essence, this state creates one of the most favorable political and economic climates for business development, even though the automobile industry business is still obliged to pay the taxes according to rather high corporate tax rates of the country. In spite of this, the general environment is of Anglo-Saxon type that is advantageous for business development, because it is characterized by decentralization of power and flexible approaches to business. Nevertheless, considering the fact that the manufacturing facilities of Ford are situated in many world countries, namely China, France, Germany, Russia, Brazil, Japan, Australia, Argentina, Canada, India, Mexico and others, the head-office of the company needs to take into account the peculiarities of political conditions in those countries (“Operations Worldwide,” 2015).
Economic trends are also very important in the automobile industry. Primarily it is caused by rather long production process and high expenditure on manufacturing. The economy should be stable in order to plan the automobile business properly and follow the plan. From another perspective, economic conditions affect the purchasing power of customers. The better global economy is, the higher income level and savings of the target audience are. Consequently, the sales and market share increase, which results in profitability for the vehicle producers. An alternative situation is when the economy crisis occurs, which triggers the economy fall and the serious losses in industry as well.
Social factor also need to be taken into consideration in the automobile industry. Different people have different tastes as to which vehicle types and size to choose. Ford Motors Company has to be aware of such trends, analyze them, and implement new strategies according to them. Moreover, there are some national trends that are particular to certain nation due to geographic or cultural factors. For example, citizens of the USA prefer large crossovers and SUVs. Such Ford vehicle models as FLEX, Explorer, and Escape are thus suitable to their tastes (“SUVs and Crossovers,” n.d.). As for Europe, people prefer small and economical cars, such as Ford Fiesta, Focus, Fusion, and Taurus (“Cars,” n.d.). In terms of post-soviet countries, the relatively high popularity there was gained by trucks and vans. Such Ford models as Ford Transit can be frequently seen on the roads (“Trucks,” n.d.). In addition, concerning social factors, it is important to mention the trend of saving the natural environment due to which the usage of electric cars is constantly increasing. Ford Motors Company have reacted in time on this trend, diversified the production, and developed a vehicle model with the electric engine.
Technological factors are crucial for the automobile industry. Rapid technological development and fast innovations implementation give an opportunity for the company to acquire competitive advantages among the competitors in a tough industry rivalry. All the inventions and innovations are adopted in the head office in the USA. From this point of view, the US environment is very favorable, because there are considerable financial resources invested in the sphere of research and development.
The internal analysis of the industry includes industry rivalry, bargaining power of buyers, bargaining power of suppliers, threats of new entrants, and threats of substitutes. The level of competition on the global automobile market is very high. Even though there are not so many competitors in the industry, they are sufficiently strong. The main competitors of Ford are Toyota, Volkswagen group, Fiat, Honda, Hyundai, and others. The bargaining power of buyers is moderate which is caused by the fact that the variety of vehicle brands are presented on the market, although, the company has managed to develop loyal relationships with its clients. Similarly, the bargaining power of suppliers is moderate as well. The raw materials play critically important role in vehicle quality. However, many of the spare parts are produced by the car brands itself. The threat of new entrants is low due to high financial investments in research and development, manufacturing, and promotion. Thus, in spite of high expenditures and risks, the automobile industry is quite attractive. Analyzing the environmental issues of the automobile industry, the importance of technological and social conditions of the external analysis should be underlined. Regarding internal industry analysis, the industry rivalry is the key criterion to pay attention to.
Owing to the fact that automobile industry needs very qualitative and skilled personnel, the workforce of the industry plays a considerable role. Besides, because of the complicated process of vehicle manufacturing, intelligent people need to participate in the research and development process. Thus, the automobile industry has decent salaries and high competition on the workforce market. As for the market conditions, the industry has also quite an intensive level of competition. The number of competitors is not high, but they are very strong and have loyal clients that are rather hard to compete for.
Personally for me, technological, social, and market conditions of the industry play a critical role for the success on the automobile market. On the contrary, the participants of our group consider the industry rivalry, legislation conditions, and bargaining power of buyers to be the key factors that need to be analyzed the most in order to succeed in the automobile industry.
Ford Motors Company uses two marketing distribution channels in order to deliver the products of the company to the target audience. Thus, the multichannel distribution is used in the marketing strategy. There are two alternative variants that are applied by the company. The first one is selling the vehicle through distribution agents and intermediaries. This type of distribution channel enables to reach a maximum number of target customers and cover maximum of geographical locations. Another option that Ford uses to sell its products indicates direct distribution through Ford show rooms and stores. This type of product dissemination gives an opportunity to provide high quality pre-sales and after-sales services. Furthermore, the company’s core strategy implementation can be well-controlled.
One of the alternative strategies that can be used by Ford Motor Company is direct selling through the Internet. Nowadays, almost everything can be bought through the Internet, so the option of buying a car on the global network should be provided too. The Ford vehicle can be ordered on the web-site according to all criteria and delivered to the address of the buyers. This type of marketing channel is appropriate only for the target audience with the higher than the middle income level. Additionally, similar approach to the customers may be applied while buying luxury segment vehicles.
As for the analysis of advantages and disadvantages of such marketing distribution channel, it is important to state that there are both positive and negative points. The main advantage is a personal approach to each client and a high level of service of the company, which can gain Ford a competitive advantage compared to its competitors. The main disadvantage is expensive prices for such distribution channel, since, for instance, the human resources and logistics expenditure will take up to 30% of the vehicle price.
Analyzing the marketing channel strategy of Ford Motors Company, it is important to stress the effectiveness of the company’s strategy. The company uses two marketing channels for the distribution strategy implementation, namely direct marketing channel strategy and multichannel distribution strategy. In addition, it is important to mention that these two strategies facilitate the process of delivering the products to a vast number of clients that are aimed by the company. All groups of the target audience according to geographic, demographic, social, and physiological factors are reached with the help of direct marketing channel strategy and multichannel distribution strategy.
As for the proposed alternative variant of marketing channel strategy, it is a reasonable strategy that can be applied by Ford Motors Company. However, the main peculiarity is that the proposed marketing channel strategy has to be accompanied by the other two strategies. In such case, the luxury segment of the target audience can be reached by the company. Using the combined strategy, the company has an opportunity to increase sales and occupy considerable market share, which, consequently, results in Ford company profitability increase. Besides, the company may implement an innovative approach to distribution in the automobile industry that will bring Ford a considerable competitive advantage compared with its rivals on the market. Another advantage that the alternative strategy can provide for Ford Motors Company is following the trend of online sale. It is impossible to question the fact that nowadays more and more people prefer to make purchases from the comfort of their homes, thus, the car purchases are not an exception. For this reason, using the alternative strategy of marketing channel with the sales over the Internet can help the company to occupy the unique niche enabling the customers to buy the cars online. Therefore, only the combination of all three marketing channels may be useful to reach the largest number of target audience.
Summarizing the Ford marketing channel analysis, it is essential to emphasize that the company is a well-developing and prosperous multinational corporation in the automobile industry. It is targeting on a seemingly wide range of audience. The company is aimed at capturing the target audience of all social groups, ages, and genders. In addition to this, it is does not focus on one market, but intends to cover the majority of the world countries instead.
To reach the target audience, Ford Motors Company employ two channel strategies. The first one uses the industry intermediaries, while the second one is engaged in the direct selling process through the company stores. The strategy of additional marketing channel was proposed. It deals with the implementation of Ford vehicle selling through the Internet with the personal approach to each client and personal delivery to the most convenient places for the customer. However, it was proved that in order to reach the highest effectiveness of the marketing channel strategy implementation, it is necessary to use a sensible combination of all three strategies. In such a way, a maximum number of target audiences can be reached.
The main conclusion that can be made is the fact that there is always an opportunity for further development in spite of the level of company’s success. Similarly, Ford Motors Company is one of the oldest automobile manufacturers that still have a possibility to diversify the distribution strategy through implementing additional market channels.