Ford Motor Company, the business which brought the famous phrase: “Any colour so long as it’s black”, to the marketing lexicon, is suffering from a crisis of confidence.
Last week senior Ford executives met to discuss whether its upmarket US brand, Lincoln, would be called simply The Lincoln or the Ford Lincoln when it comes to the UK. What appears to be a minor issue is at the heart of a branding dilemma that is affecting the car giant’s global marketing strategy.
Quite simply, Ford does not know what to do with its name.
Central to the confusion is Ford’s attempt to deal with a long-term decline in market share. Ford’s share of the European car market is on the way down: the latest car registration figures for Western Europe for January to May 1997 show a decline in volume year on year of six per cent, with Ford group’s total share of the West European car market falling from 12 to 11.2 per cent.
The biggest problem is trying to reduce costs – Ford is estimated to be losing between 1m and 2m a day across Europe because of weak sales and high production costs.
It has introduced a global engineering strategy, called Ford 2000, where one vehicle centre is responsible for designing and building a certain car category for the whole world (for example the Escort’s global vehicle centre is Cologne). The company has also embarked on a radical programme to close and restructure plants, to transfer production to East European countries and cut work forces in long established plants such as Halewood and Dagenham.
And for the past three years, it has been implementing a category management strategy around the world, which was introduced in the UK last summer.
A single team now works on each type of car, known within Ford as a “carline”, in distinction to the previous structure where there were different departments working on different specialisms such as advertising, pricing and product specification across all models. One source says the restructure meant many people were suddenly having to work in unfamiliar areas, but at least the new system is addressing the previous problem of a lack of communication between departments.
Such reorganisation may not be at the cutting edge of marketing thinking, but for a mass-market car manufacturer, these are quite radical changes and ones which General Motors is watching with interest.
Ever since the company instigated the Ford 2000 strategy three years ago it has been wrestling with what to do with the main brand. As part of the strategy, Ford decided to drop umbrella branding, because the Ford name was perceived to be a hindrance to its new brand names.
It also axed the strapline “Everything we do is driven by you” in favour of promoting individual brands. The campaign had been a “pride and confidence” drive for the dealers, without specific brand messages.
Ford introduced new car brands such as the sports coupÃ© Probe in January 1994, the people carrier Galaxy in 1995, the small car Ka last year and a small sports coupÃ© Puma this month.
Many of these new cars launched across Europe are explicitly developed for the US market, which provides obvious economies of scale for the motor manufacturer.
Last year Ford chairman Ian McAllister said that there was an intentional shift in Ford’s advertising to take any “Ford look” out of the car’s branding. He added that in the past Ford had a uniform brand image across all its carlines which made the advertising anodyne.
Umbrella branding failed to form emotional bonds with consumers and the Ford brand suffered from a mass-market, dowdy image. However, the shift to category management brings with it the danger of a “patchwork” of advertising for the Ford car portfolio, with each carline going its own creative route.
There are signs of some disquiet about this policy and the effect on the Ford brand. Partly to appease the doubters within the company, and partly to encourage the dealerships and fleet managers, Ford is using the excuse of 21 years of pretty much uninterrupted market leadership in the UK to launch a through-the-line campaign by Ogilvy & Mather and Wunderman Cato Johnson to promote the Ford brand.
WCJ client services director Graham Bateson says that the campaign was launched largely because of the need to improve Ford’s image. “The aim is to get people to reappraise the Ford brand, to displace the impression that Ford is functional, value for money, and not very sexy,” says Bateson.”It introduces the idea that Ford has sexy products like Ka. People may not go and buy the sexy brands, but it will change their image of Ford.”
The new campaign is also intended to target dealers who are unsure about the individual brand strategy. These dealerships are of particular concern to the company. It has 400 main dealers (large), and about 500 retail dealers (small) around the UK. One observer points out that Ford has too many dealers, with each fighting for sales in small geographical areas (although it lacks dealerships in vitally important London).
But Ford is secretly planning to restructure the dealerships across Europe to reflect the new category management style of operation.
It is now looking at downplaying the Ford marque, having recognised that the Ford name is for some categories of vehicle more of a hindrance than a help. There will no longer be simply Ford dealerships, but dealerships pushing certain lines.
Sources say Ford may rebadge its dealerships so some sell only the mass-market Fiesta, Escort and Mondeo models, while certain specialist outlets could sell exclusively off-road vehicles, and others luxury cars.
Ford plans to introduce the luxury Lincoln brand in the UK to keep its US production line economically viable, but faces tough decisions on how to distribute it here. Should it use its existing Ford network, its small existing Jaguar network (about 50 dealerships), should it set up its own specialist Lincoln dealerships or even a system of “virtual dealerships”, on the model of telephone bank First Direct?
Nevertheless, the new brand-centred strategy has not been without problems. There have already been some disasters – the upmarket Scorpio which is likely to be scrapped and the Probe which is being replaced by the Mondeo coupÃ© model and rebranded as the Cougar.
Ka has also had its problems. Though the advertising campaign is understood to have been successful at getting consumers into the dealerships, the small price difference between the Ka and the Ford Fiesta created a problem. Ford dealers began advising consumers to buy Fiestas instead. Ka’s sales are below expectations as a result, so its price is being cut by 500 in an attempt to regain sales.
The company is also known to be considering changing the long-established Escort name in favour of a more modern brand image.
But such constant rebranding, relaunching and soul-searching could prove costly, especially in the light of a recent Economist Intelligence Unit report which claimed that Ford Europe’s marketing costs were more than twice those of Ford in the US.
Ford bosses are suffering from a failure of nerve about whether they should carry the weight of the brand’s history, or jettison it.
They may do well to stop worrying about the past and get on with building for the future. As a certain famous mass-market car manufacturer said 70 years ago: “History is more or less bunk.”