Ford Motor Company

Author:Guy Cunningbam, Debbi Mack
Pages:555-564
 
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1 American Road

Dearborn, Michigan 48126

USA

Telephone: (800) 392-3673

Web site: www.ford.com

DRIVING AMERICAN INNOVATION CAMPAIGN
OVERVIEW

Ford Motor Company, based in Dearborn, Michigan, entered 2005 in a difficult position. The automaker had sold only 3.15 million vehicles in the previous year, a million units less than what it had sold annually at the beginning of the decade. The company had been hem-orrhaging market share as well, dropping to 18.6 percent in 2004 after spending much of the 1990s with more than 25 percent. Competition was especially fierce from Toyota Motor Sales, U.S.A., whose Japanese parent company, Toyota Motor Corporation, in 2004 displaced the Ford Motor Company as the world's second-largest automobile company in terms of sales for the first time (Ford's traditional rival, General Motors, remained number one).

To improve its overall image Ford mounted a brandwide advertising initiative called "Driving American Innovation" in 2005. The company wanted to bolster its reputation for innovation and address criticism from environmentally conscious consumers that the company's vehicles were not fuel efficient. To accomplish this Ford relied on two agencies owned by the communications-services conglomerate WPP Group—Penn Schoen & Berland and Ogilvy & Mather Detroit—to develop an advertising campaign. The effort included television, print, and Internet elements. Television spots and print ads featured the company's CEO, William "Bill" Ford, Jr. The TV commercials combined archival footage of previous Ford Motor Company successes, such as the famous Model T, with images of contemporary Ford vehicles. In the spots Bill Ford discussed how the company was building on its history of innovation and touted new products such as Ford's fuel-efficient hybrid vehicles. The campaign began in October 2005 and ran through the end of the year.

Because the campaign was designed to bolster the entire Ford brand's image, its success was difficult to gauge. According to marketing-information firm J.D. Power and Associates, in 2005 Ford drivers remained loyal to the brand at higher rates than was typical in the industry. Nevertheless, the company continued to lose market share.

HISTORICAL CONTEXT

Based in Dearborn, Michigan, Ford Motor Company was the third-largest automaker in the world in 2005 in terms of units sold. The company was founded in Michigan in 1903 by Henry Ford. In 1908 the company introduced the Model T. The car quickly became one of the most successful vehicles in U.S. automotive history, selling more than 15 million units from its inception through its cancellation in 1927. The Model T helped

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William (Bill) Clay Ford, Jr., Chairman of the Board and Chief Executive Officer of Ford Motor Company. © James Leynse/Corbis. make Ford the world's largest automaker at that time. In fact, in 1918 nearly half of all cars owned in the United States were Model Ts. While Ford was eventually overtaken by General Motors as the world's largest automobile manufacturer, the company continued to prosper throughout the twentieth century.

By 2005 Ford was employing more than 320,000 people worldwide and selling vehicles under the Ford, Lincoln, Mercury, Land Rover, Mazda, Volvo, Jaguar, and Aston Martin nameplates. The company also faced substantial challenges. In January 2004 the Toyota Motor Corporation, based in Japan, passed Ford to become the second-largest automaker in the world. Toyota was able to overtake Ford in part because the latter's sales fell sharply in the first few years of the twenty-first century.

In 2004 Ford sold 3.15 million units worldwide, more than a million fewer units than it had sold in 2000. The company had maintained a market share of 25 percent through the mid-1990s, but by 2004 that was down to 18.6 percent. More worrisome was the fact that Ford had failed to turn a profit in 2004. As a result there were a number of shakeups at Ford in 2005, as the company introduced a slate of new top executives in September in the hopes of turning around its sales decline. In October 2005, just before the "Driving American Innovation" campaign began, the company reported a quarterly loss of $284 million.

Because Ford sold a number of large vehicles, such as the Explorer sport-utility vehicle (SUV), that got few miles to the gallon, Ford's sales were especially sensitive to high gas prices. In 2005 gas prices rose to as high as $3 per gallon in the United States, in part as a result of market pressures caused by war in the oil-rich nation of Iraq. One way to reduce demand for gasoline was to offer hybrid vehicles. A hybrid vehicle combined two energy sources for propulsion: an internal combustion engine and an electric motor. The electric components reduced the need for gasoline, allowing the car to go further on less gas. In 2005 Ford produced about 24,000 hybrid vehicles. At the time the only Ford hybrid available was the Ford Escape Hybrid SUV, introduced earlier that year.

TARGET MARKET

Ford was interested in promoting the entire brand, not just one or two vehicle lines. This was an unusual move in the industry; most automotive campaigns tended to spotlight a particular vehicle or group of vehicles. Hence the new campaign would have to be accessible to a notably wide audience (essentially, any potential car buyer). The purpose of the campaign was to improve Ford's overall corporate image. The automaker wanted to project an image as an innovative company that was at the cutting edge in designing safer, more environmentally friendly vehicles. In addition, any Ford campaign would have to

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emphasize performance, because according to internal data, 52 percent of Ford drivers were also racing fans.

Ford was also interested in reaching out to environmentally conscious consumers. Although Bill Ford made environmental innovation a focus of his tenure as CEO, the company drew the ire of many environmental groups. Various organizations, including the Sierra Club, the Bluewater Network, and the Rainforest Action Network, staged protests against the automaker.

COMPETITION

The two automakers that Ford traditionally competed against were General Motors and the Chrysler Group, the U.S. affiliate of Daimler Chrysler. Commonly referred to as the "Big Three," these three major American automakers had dominated the industry for most of the twentieth century. General Motors was the largest automaker in the world, and its Chevrolet brand was the best-selling brand in the United States. Chevrolet's success stretched back for decades: 1 out of every 10 cars in the United States was a Chevrolet in 1964. By 2004 Chevrolet's TrailBlazer sport-utility vehicle was making inroads against the Ford Explorer, the most popular vehicle in the segment. The TrailBlazer moved 283, 384 units in 2004, versus 339, 333 units sold by the Ford Explorer.

By the late twentieth century, however, the U.S. automotive market had changed. Toyota Motor Sales had made substantial gains in the U.S. market. In 2004 it sold 2,060,049 units in the United States alone. Sales were buoyed by vehicles such as the Toyota Camry, a midsize sedan that was the best-selling car in the United States in seven out of eight years between 1997 and 2004 (1997–2000 and 2002–04). Toyota's sales gains were helped by the automaker's reputation for innovation, safety, and quality.

MARKETING STRATEGY

Ford decided to bolster its reputation with a brandwide campaign. Two different agencies, Penn Schoen & Berland and Ogilvy & Mather of Detroit, worked in concert to create this major initiative. Both were part of the WPP Group, a media and communications services holding company. The theme of the campaign was "Driving American Innovation," a title that was intended to reflect both Ford's history of innovation and its stated commitment to developing new technologies, particularly in regard to safety and fuel efficiency. The campaign celebrated the company's enduring "spirit" of innovation. Its centerpieces were two television commercials, the 60-second "Innovation" and the 30-second "Compass." Eventually another 30-second spot, "Rebirth," also appeared, following a similar format.

FORD'S STAR EXECUTIVE

William Clay "Bill" Ford, Jr., was born in Detroit, Michigan, in 1957. He was the great-grandson of Henry Ford, the founder of Ford Motor Company. His father, William Clay Ford, Sr., also worked at Ford as chairman of the company's finance committee. After graduating from Princeton University in 1979, Bill Ford joined Ford Motor Company, working as a product-planning analyst. In 1987 he became managing director of Ford Switzerland, a Ford affiliate based in Europe, before being elevated to the company's board of directors the following year. He became chairman of that board on January 1, 1999, and was named CEO on October 21, 2001.

A professed environmentalist, Bill Ford promised to make the Ford Motor Company a "greener" automaker, speaking out about global warming and air pollution. Upon becoming CEO he directed the company to publish its first report outlining the environmental impact of its vehicles and operations. In addition, he pledged in 2001 to improve fuel efficiency by 25 percent by 2005. He withdrew that goal in 2003, however, saying that market conditions made it untenable...

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