It was once said, “Those who do not study the past are deemed to repeat it. ” On the brink of the new 21st century it is important for us at the Ford Motor Company to take a look at our past to see what has worked and what has not in order to set the standards for the automotive industry. It is also imperative to take a close look at what our competitors have done because we can also learn from their mistakes as well as improve on some of their ideas that have worked for them. It is important to realize that the world is ever changing and therefore what people want, and the market for automobiles is changing as well.
Therefore we must first take a look into our competitors, and our pasts before we can then begin to look toward the future of the Ford Motor Company in the 21st century. It was a little over one hundred year ago that Henry Ford first came up with his dream to create an automobile that would change the world. Although it was Henry’s dreams and drive for success that lead him to his achievements it was not without the three giants-steel, oil, and transportation, that were the building blocks for the Ford Motor Company.
From the beginning he knew that in order to sell his product and make his company a success he would have to be able to appeal to the masses. At this time Ford was not the only man to be in the small but growing automobile industry. There were others such as David Buick, Ransom Olds, and Billy Durant, who were also trying their luck in this new market. At this time owning an automobile was almost impossible unless one was quite wealthy. Although Buick, Olds, and Durant were all producing autos they were all having trouble selling their products because their production costs were too high.
These costs were reflected onto their selling price, which was very hard to afford for most of the working class. This is what caused their financial troubles and helped Ford move into the market. He understood that in order to make his company a success he would have to make his automobile one that could be afforded by the masses. While the other producers of autos were more concerned with who had the bigger, better, and faster car, Ford had a different focus. His philosophy was: “I will build a motor car for the great multitude?
it will be so low in price that no man? will be unable to own one. ” It was for the next five years, a young Henry Ford directed an all-out development and production program that shifted in 1905 from the rented quarter on Mack Ave. in Detroit to a much larger building. During the next 15 months a total of 1,700 of Ford’s Model A’s came rolling out of the old wagon factory on the corner of Piquette and Beaubien streets. It was not unclear that the Model A was not the car that was going to get his company rolling.
So being the intelligent man that he was he knew that a better-designed auto would sell. He and his engineers then proceeded to go through 19 more letters of the alphabet until finally reaching his gold mine. It was a simple design, rugged and practical and could be purchased in any color as long as it was black. It was the completion of the Model T that would be the defining moment in the automobile industry. It was produced at very low costs and could therefore be sold at a low price of $260. 00 ($400. 00 with all the extras) which could be afforded by the general population.
It was then that Henry Ford learned possibly the two most important lessons of success in the automobile industry: 1) Make your product available to the largest market possible, otherwise you are losing potential customers, 2) Realize that as times change so will the demands of your market, and in order to succeed you must not be afraid to change, and if something is not working try something else. When trying to look into the past to see what moves were beneficial and which ones were not, we should look at several main areas of the company: design, marketing, production/management, and customer relations.
Throughout the history of our company there have been good decisions and there have been poor ones. Making both good and bad decisions are inevitable, but we should look at both because we can learn from them in the hopes of making better choices in the future. When Ford and his engineers were trying to develop the automobile that would revolutionize the industry it took them over twenty different models before reaching the Model T. He was not afraid to try something different and knew that if he were stubborn and stuck with his original model, his company would not be a success.
The Model T was a huge success and broke sales records for several years. Here Henry also learned a valuable lesson of the industry, “If it ain’t broke don’t fix it. ” However in the automobile industry this mindset will only take you so far. It was not until 1927 that time had run out on the Model T, and it was losing its appeal to the public. Here is where Ford made one of its first major mistakes in the design of it automobiles. Ford should have realized that the T would only be able to sell for a limited time without seeing any changes in its design. Instead, he kept riding the
success of the T until its success had ended, he then decided to begin designing a new model. This caused a great potential loss for the company because Ford had to close down production for six months while new plans were drawn up. If Henry Ford could have realized that his design would eventually have to change he and his team could have been designing a new model ahead of time. This way when the Model T’s success had reached its limit, they would have had a new design ready to be produced. Although the new Model A was a huge success, Ford could have prevented this six-month loss and made a smoother transition to his new Model A.
Not only had Ford made his designs a success, but he also made great strides in his production methods, thus sparking the industrial revolution. His first great achievement in production was the assembly line that made mass production possible, while still keeping costs relatively low. His reasoning was that if each specific worker remained in one area and performed one specific task, the automobile could be produced at a much faster rate. This idea was quite a success, being that Ford was now able to produce a complete model every 10 seconds of each working day.
This was a huge step in production but it was not long after that Ford came to the realization that he was able to make a vast amount of cars, but was not utilizing the whole consumer market. He was overlooking a customer base that was right under his nose. His own employees, who are the closest potential buyers to the company, were making these autos yet were unable to purchase them on their low wages. Realizing this Ford decided to shock the world with his new plan of offering a new minimum wage of $5/day. This was more than double the previous wage.
The way Ford figured, it was now possible to produce inexpensive cars in volume, and with a higher wage more employees could afford to buy them. He was right. As the years past Ford kept up with the changing times by introducing new models, expanding into other markets, such as building tractors and boats, expanding the company by opening new factories and acquiring other companies, such as Lincoln, and designing the first one piece V-8 to work successfully. Things were going well for the Ford company until 1942 when civilian car production came to a sudden halt due to the US’s involvement in WWII.
Although this hurt the companies auto market, Ford being the smart man that he was, put all of his efforts into the war by producing aircraft, aircraft engines, and other war machinery. Being able to make this change and showing how diversified the Ford Motor Company could be was one major sign that showed it was here to stay. As the post-war efforts took place and Ford was slowly able to get back on its feet, changes were taking place in the market for automobiles. One change was that more and more companies were tapping into the automobile industry causing more competition.
Now in order to sell cars it was not only a matter of making the best car, but also a matter of who could market their product better. This was best seen in the beginning of the 1960’s when a young Pres. Kennedy was leading a new economically healthy, upbeat America. The market was changing because now families owned multiple cars, and the market for them had expanded to include much younger potential buyers. That was when Ford made another huge step in their efforts in design and marketing: the 1964 ? Mustang.
It was a rebirth of the automobile and such intense interest had not been seen since the introduction of the Model A over 30 years before. This was a huge push enabling Ford to surge ahead of GM in sales, since it took them until 1967 to produce their response to the Mustang, the Camaro. It was not that GM did not offer a sports car, it was just that the Corvette was much more expensive to produce than the Mustang, therefore making it less affordable to the masses. The concept of appealing to the masses is one of the most important aspects of being a success in the automobile industry.
This was seen again in the early 1980’s when gas prices were skyrocketing and the public was looking for a much more efficient car but also offered a radically different design. Ford again stepped up to the plate with the Ford Taurus and Mercury Sable. Again Ford was setting the standard and instilling pride in America’s car companies while others were losing their sales to foreign competitors. Although Ford has set the standard for years in areas of design and production, others have made successful steps in marketing and expansion that should also be observed.
From the beginning of GM it was always acquiring new companies which offered a variety of models at different prices that in turn gave them a larger customer base. This ranged from the luxurious and expensive Cadillac to the more moderately priced Chevrolet. Although Ford has acquired several companies since its beginning, it should take this as a lesson that if something is working for other companies, there is a good chance that it will be beneficial to Ford. GM also benefited from an extensive marketing
plan that began during the Great Depression. Since the idea of buying an automobile during the depression seemed quite absurd, GM turned its focus to accessible markets that offered lower priced products. Although there was still not a huge market for these products, GM used a marketing plan that focused more on selling the company name rather than its product. It was known that eventually the war would end and the automobile market would again flourish, but until that time GM worked on new technologies that would astonish the public.
This began with their Science and Technology display at the 1935 World’s Fair, which gave Depression-weary audiences a bright look into the future. This was then followed by their massive tour called the Parade of Progress. This was an ingenious marketing tool for this time. What it did was take the beaten up public of the depression and fill them with an optimistic future while taking their minds off of the present. In addition the Parade of Progress was brought to them and they did not even have to leave their own areas I order to be entertained by GM’s new technologies.
What this did was give the public some hope that the depression would soon come to an end and instill a little bit of optimism in their minds. In turn when the public would be reminded of this optimism, they would quickly be reminded of what brought it to them: GM. It was again in the late 1950′ that GM used this “take the company to the consumer,” marketing plan with its Motoramas. These were elaborate car shows that traveled throughout the United States, showing their accomplishments to all. This is one marketing tool that Ford might not have needed at the time, but should keep in mind when looking toward the future.
After taking a look into the past it is important to recap and see what specifically has been beneficial and what has not in the areas of design, production, and marketing. As far as design is concerned, Ford has always been a leader in new and changing designs. However, it seems that there is a slight trend in the fashion that these changes are made. Ford is much more conservative in its decisions to change than other companies. More often than not needed changes are neglected until they occur. This was very true in the case of the Model A, the Taurus, and especially the minivan.
It is movements like the creation of the Mustang that shock the public into giving them what they desire. When it comes to production, it must be stated that the industrial revolution may not have taken place when it did, if not for Henry Ford and his assembly line. This is true but there are also some areas of concern, which need to be taken into account. Although expansion is good, and opening up numerous plants may have been a good idea at the time, a closer look into the future may be necessary. This can be closely related to the early 1980’s when numerous factories were shut down and workers were laid off.
Although this was necessary at the time, it eliminated numerous potential buyers due to former angry workers and the resulting bad press. It is not to say that the company should not expand, in fact quite the opposite, but it is important not to expand too fast, too quickly. Another issue, which ties directly into this, is that of expanding into foreign markets. Again it is important to stress that when taking a company like Ford into an area such as Europe, it is important to take it slow and first test the waters. Here it is important to remember what happened in the case of Disney opening Euro-Disney.
Ford should not start building plants throughout Europe and then try and sell them but rather work on designs that may appeal to the European nations. In Europe their cars are much smaller and more efficient and not bought for their eye appeal but rather practicality. This means smaller cars that don’t have to be flashy, that can be built better, and have longer lifespans can be developed and marketed to European nations. As far as our marketing plans are concerned, we should look closer at what GM and Chrysler are doing.
GM began their marketing genius with their cross-country parades and shows. It is obvious that it is very impractical to do this now however, it is the concept of taking the product to the customer in new and different ways that is very beneficial. Now, with the ways that technology has developed, the possibilities in marketing are endless. Another point, which is of concern, is that of Ford still relying on the fact that they were the first major players using their history and “classic” status as their main marketing tool.
Ford trucks use the motto, “Built Ford tough,” and GM uses, “Like a rock. ” Yes, this may be true and using American pride and reliability to appeal to consumers works, but here we must look at what Chrysler has done to market Dodge. They use a simple yet so effective slogan that appeals to the new era and changing times. The public likes change when it comes to the automotive industry, unless of course if refers to their job. Dodge takes advantage of this by using words such as, different, new, and change. They also use phrases such
as, “Breaking the rules,” “Changing for the future,” and “The New Dodge. ” This coupled with their marketing scheme of using only red models in their ads is very appealing to the consumer. Now more often than not when a potential buyer thinks of a red car, Dodge will most likely be their first response. Marketing tools such as these should be a focus for Ford when looking into the future. As we are already in the 21st century, we need to have a plan in the areas of design, production, and marketing that will put Ford back on top for the remainder of the century.
It should already be obvious that change in design is good and essential to the success of a product, in this case the automobile. However, it is also important that the nostalgic public also likes a little taste of the past to remind them of “the good old days. ” Therefore, the combining of a general look of the past with modern technology is a sure thing. This can be seen in the success of the newly redesigned Ford Thunderbird and Mercury Cougar. Although they are both much more modern than their predecessors in design, there is still some of that original style that can be seen throughout the body frame.
This should be an ongoing scheme in many of the new designs that will be coming in to future. When it comes to marketing something needs to be done to grab not only the publics eye, but also their minds. A new marketing plan should be designed on the same basis that Dodge is using. Make the ads consistent with each other so that whenever they see something that is used, like a color or common word (ex: red, change = Dodge) they will immediately associate it with the Ford Motor Company. Until then the fact that Ford’s centennial is coming up in only 3 years.
This is a huge marketing scheme which should be taken full advantage of for new models, special offers, and possibly some new “Centennial Model,” which could be marketed as a limited addition with only a certain number produced. Then depending on its popularity it could then be brought back into production after a year or two and its future success can be predicted. As far as production is concerned, it is obvious that America has moved back to its craze for bigger, faster, and more powerful gas-guzzlers.
This is fine for now, but with government regulations, the growing concern for the environment, and the increasing popularity of alternative fuels; Ford should be prepared for these potential changes. Here it is important remember that change needs to be anticipated and prepared for in the automobile industry. These new technologies should be developed and perfected for when this change comes about, rather than playing catch-up when it is too late. Although Ford is leader in the truck and SUV markets, a great lack of presence is apparent in one of the largest model markets: the minivan.
This is one of the most popular automobiles in today’s market that is dominated by the Chrysler Corp. The minivan market is still growing because of the capacity that it offers, its affordability, and efficiency. Although at this time the SUV is the fastest growing market, it is risky to put more effort into it due to the fact that the bigger, faster, gas guzzler craze is probably nothing but a craze, especially as we move into a more environmentally safe future. This has been seen before in the early eighties when this same craze took place right before gas prices jumped and the move to a more efficient automobile took place.
American car companies were not ready for this and foreign markets became much more popular. In order not to repeat this history, more emphasis should be placed on the development of a new and efficient minivan that will surpass GM and Chrysler. In conclusion, as we move through the beginning of a new century we must first look to our past to learn what has worked and what has not. After doing so, we can then begin to devise our plans that will move us ahead with the changing times. This can, and will be, accomplished as the Ford Motor Company moves back on top of the automotive industry where it started almost 100 years ago.