“Why Ford No Longer Makes the Contour…” CM02 Jim Barton Kevin Potter Eric Ramey

Background of the Contour  Started as a global project in 1988 to make one car that appeals to the global market.  Project was code-named CDW27.  Mid-size family car was called “Mondeo” in Europe, “Contour” in America.

Background of the Contour  The Contour represented the pinnacle of Ford’s technology initiatives.  Ford cut back on Contour production in 1999, and stopped offering new models in  The demise of the Contour may have been because of its emphasis on general appeal.

The Ford Contour

Strengths and Weaknesses  Comfort  Safety  Initial Round:  4 th in overall revenue  1 st in contribution  1 st in % of sales  Economy  Price  Ideal Position to Lose Market Share Because of Fierce Competition

Our Overall Strategy  Try to maintain as much of our initial position as possible.  Cumulative Contribution  Revenues  % of Sales  Stabilize the Contour performance measurements.  Cater to Safety & Traditional Segments

Start of Simulation / Round 1  Sales: $960.1M, Contribution: $290.3, % of Sales: 30.2%  Started to offer factory rebates.  Moderate increase in advertising.  Moderate changes to our advertising mix and targets.  Very conservative opening strategy.

Round 2  Sales: $971.2M, Contribution: $255.7, % of Sales: 26.3%  Overestimated demand.  Significant inventory buildup.  Altered our production plan as a result.  Started watching the “underdogs.”

Round 3  Sales: $978.0M, Contribution: $237.7, % of Sales: 24.3%  Inventory situation worsened.  Shifted some focus away from Safety Conscious to Traditional.  LX model becoming more popular than base model.

Round 4  Sales: $865.4, Contribution: $235.3, % of Sales: 27.2%  Lessons learned about cutting back on production.  Traditional segment surpasses Safety Conscious segment.  Key threat: Neon.  Decision time: New model introduction.

Option 1: The Sporty Model

Or…..an SUV???

Round 5  Sales: $910.5M, Contribution: $222.3, % of Sales: 22.4%  Scared of our own shadow: threat from Neon dissipates.  Major dilemma on how to handle the introduction of our LX+ model.

Endgame  Sales: $813.8M, Contribution: $183.3, % of Sales: 22.5%  Pre-simulation contribution average: $193M (approx).  Post-simulation contribution average: $227M (approx).  Lost top position for period contribution in the final round.

What Went Wrong?

Theory #1: The Ryan Factor

Actual Target Market…

But Seriously…  Intense competition and price & promotion wars among other players.  Difficulties predicting demand conditions and ideal inventory levels.  Final round: difficult to predict and handle the introduction of the LX+, poor timing.

What We Did Well…  We were able to stabilize the Contour performance measurements.  We improved average contribution over previous 5 periods.  We ended up with the highest overall cumulative contribution. (approx. $2B)  We ended with the highest % of sales figure. (22.5%)

In Case You Just Can’t Get Enough of Contour…