Ford Ka Professor Andrés Musalem Marketing Management Fuqua School of Business

Postcript Let’s start with a few questions: Which segmentation did they use? Who did they target? How?

Postscript Approach Ford pursued an attitudinal segmentation Leading Gilles Moynier to note “… When we decided to adopt an attitudinal segmentation we did not really know whether the target customers represented a large or small population, who they were, or how to recognize them.” Target segment(s): Freedom Lovers and Attention Seekers Media: Cinema advertising and direct mail based on magazine subscriptions. 4

Postscript Other elements of marketing mix Price Advertising FF 59,300 (Twingo FF 62,300; Peugeot 106 FF 55,900) Advertising Budget = FF 50 million (in line with Fiesta) Strong emotional images in message Distribution Dealers had difficulty understanding the segmentation scheme Led to uneven sales performance in France as dealers tried up-sell these new, relatively wealthy customers Exchange rate: 5.15 francs = 1 dollar in june 1996 => divide francs by 5. http://www.oanda.com/currency/historical-rates 5

Postscript Sales Initial quarter = 4,200 units in France (short of 6,800 forecast based on Fiesta) By 1998 = 266,000 units (for all of Europe) Best selling car in its category in Europe Did especially well in the UK (no competition from Twingo) By 2001 < 200,000 units Some “wear out” in initial position as competitors launched new brands, updated older versions Fashionable image tiring a little Ford Europe also doing poorly at this point 6

Takeaways Marketing Management Framework: Before making marketing recommendations, we need to become experts about the customers, the company and its competition. Market segmentation  Product categorization Products can always be categorized based on physical attributes, but that categorization need not “line up” with actual market segments As markets change, so should your segmentation Changes in what drives customer needs and preferences Changes in competitive offerings / targeting “Benefit segmentation” Needs are often the most insightful basis for segmentation But needs do not always correspond to observable characteristics. Problem: implementation ! 7

Why did we discuss this case? Introduce the basic framework: 3Cs and 4Ps. 3Cs: Customer, Company & Competition 4Ps: Product, Price, Promotion and Place (distribution) Consider marketing in a non-US setting. Introduce key concepts about customer segmentation, targeting and promotions. Discuss the issues that arise in implementation

Appendix

Requirements for a useful segmentation scheme Effectiveness: Distinct Similar within groups, different across groups? Relevant Are the differences relevant for the decision at hand? Sizable/Profitable Is there sufficient business potential to warrant special attention? Ease of implementation: Measurable Can you describe and quantify segment membership in general? Accessible/actionable: Can you identify and address segment members in a targeted way?