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FORD WINDSTARCASE ANALYSIS

PREPARED BY:

FAIZATUL AMRAH

AISHAH

WAN HAMIZA

WAN HAZIRA

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SUMMARY

Minivan history and development

Minivans designed for families, for people with two or more children and who were tired of cramming into sedans for long and short-hour trips.

Minivan is divided into 2 categories: LWB and SWB.

It was first introduced by Dodge Caravan on 1983 and then followed by General Motors and Ford.

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SUMMARY

Ford Windstar

o Ford Windstar was introduced in Canada in 1991.

o Windstar was the first to be given 5 stars rating by NHTSA

o Windstar is way back behind when it comes to introducing product innovations.

sliding fourth door

flip-fold seat

o Quality problems and product recall.

o Limited choice

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Ford Windstar

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Pontiac Montana

Honda Odyssey

Chevrolet Venture

Grand Caravan

Toyota Previa

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SUMMARY

Below Table 1 show % of market share in LWB

segment in 1999 and 2001

1999 2001

Windstar 44% 30%

Pontiac Montana 9% 14%

Grand Cadavan 19% 27.4%

Honda 3.3% 11%

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Highlight of the case

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Question 1:Assess the various promotional tactics available to Brian. Which one(s) make financial sense. Why?

Ford Windstar

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Brian Tafler had considered the followings:-

• Direct Mail Campaign• Repositioning Through Advertising

• Value Pricing• Sales Incentives

• Leasing• Cash Offers

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Direct Mail Campaign

Lease Renewal Customers

• Targeted to about 5000 customers

• Highlighted the new features i.e Safety System and Family Entertainment System

• Current Lease renewal Rate : 40%

• Expected : 45 to 50% returning lease customers

• Offered: $500 loyalty discount

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Direct Mail Campaign (cont..)

Potential New Customer

• Focus – the customer who leased a minivan from other manufacturer

• Offered - $500 switching incentive

• Expected – 2 to 3% customer switched to Ford

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Repositioning Through Advertisement

Tier 1

• Manufacturer paid and control the advertising

• Focused- Building brand image

• Impact- can be seen after few years

Tier 2

• The dealer and manufacturer associates for the advertising

• Focused- promoting particular brands within region and for short time.

Tier 3

• The dealer paid for the advertising

• Focused- To attract customers with price,

promotion and incentives

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Repositioning Through Advertisement (cont)

Shortcoming of Tier1, 2 and 3• Manufacturer focused on building brands,

dealers interested in immediate sales• Cost of advertising/promotion of minivan

increased i.e 10% since 1998• Advertisement spending in Tier 1 and 2.• Tier 2- Price of LX model to fight the SWB

market

• Brian need to target customers by price oriented strategy or by image advertising.

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Value Pricing

o Tier 1 Advertising

o Bundled attractive features

o No charge for Family Entertainment Systems worth $1500 in its Sport, SEL and Limited

o Rivals- offered the features for top-of-line models

o Improve the selling of vehicle mixed.

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Sales Incentives

To trigger sales

Benefits the buyer of subvented lease or financing rates, cash-backs and other discounts.

Incentives offered by domestic manufacturers were higher than imports.

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Leasing

• In 2002- 55% sales of Windstar in Canada were lease.

• Ford offered 24 to 36 months rates• Windstar offered 48 to 60 months rates• Rivals-GM & Chrysler offered 24, 36 and 48

months rate. Imports – none.• General Motor Acceptance and Ford Credit

provides attractive lease and financing options

• Interest rate charged to customers – 0 to 2%

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Leasing (cont)

• Longer lease- lower monthly outlay

• Shortcoming- customers will not be back almost 12 to 24 months.

• Customer satisfaction was lower after 3 or 4 years

• Benefits – sales mix would be larger proportion to lease.

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Cash Offers

Cash discount offered to buyer and salespersonCash $2000 on Windstar purchasedRed Carpet Lease Cash- $500 cash on Windstar leaseRenewal Offer - $1000 cash on returning leaseChristmas Bonus- $500 cash to purchase and lease in DecemberSales person incentive-$100 for every vehicle sold in 30 daysPeriod Golf Vacation- for top salesperson in each regionProduced- 2% of volume in next 3 months

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Financial Sense

Brian should considered :

• Repositioning Trough Advertisement by using structure Tier 2.

• Value pricing

• Leasing

• Cash Offers

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Repositioning Trough Advertisement by using structure Tier 2

Associated manufacturer and dealers, cost will be shared by them

Promoting Windstar and price promotionAttacking region by region and also

globally.

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Value Pricing

Create excitement by creating the value package

Also can be swap in Tier 2 advertising instead of Tier 1.

Improve sales mix

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Leasing

55 % Windstar in Canada were leases Offered longer lease rate . Up to 60

months Will lower customer monthly outlay Lower interest rate- 2% Sales mix will be larger in proportion

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Cash Offers

Cash discount to buyer/salesperson

Increased in volume in next 3 months

70% of non-leased vehicles were financed.

Each $1000- will produce additional 2% in volume.

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Ford Windstar

Question 2:

Assess the alternatives in terms of their attractiveness to target consumers and the effect on the Ford Windstar brand?

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Windstar and Safety

• SAFETY• Important element of the Windstar

5-star rating by NHTSA

Led the industry

Personal Safety System (PSS)

• Important consideration for families

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0.45

0.42

0.39

0.350.34

0.31

0.31

0.3

0.3

0.28

0.270.23

0.23

0.18

0 0.1 0.2 0.3 0.4 0.5

Proud to own

Meets the needs of you and your family

Good value for money

Provide peace of mind

Dependable

Superior ride

One of the safest minivan

Full of innovative ideas

Power to keep you out of harm's way

Easy to convert for people or cargo

Are versatile

Distinctive styling

Drive like a car

Have luxurious interior finish

Att

rib

ute

s

Correlation score

Purchase Consideration14 Important Attributes*

*change over time

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 Seating Capacity

Fuel Economy

OEM's Reputation

SafetyOverall Quality

Price / Deal

Value for Money

Reliability

Windstar           34% 25% 28%

Venture 23%         42%   30%

Montana   22%       29%   28%

Caravan 27% 28% 28%

Odyssey     39%   21%     50%

Sienna     33% 28%       44%

MPV 30%     30%   32%    

Top 3 Reasons For Purchase

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Performance of WindstarNot Translated into Higher Market Share

Value for moneyWindstar – 40%

Leader’s score – 50%

Windstar performance is far behind the market leader in term of the price & value for money

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Performance of WindstarNot Translated into Higher Market Share

Leading: Lacking:

1. Proud to own

2. Meets the needs of you & your family

3. Provide peace of mind

4. Dependable

5. Superior ride

6. Safety7. Power to keep you out of harm’s

way

8. Versatile

9. Distinctive styling

10. Drive like a car

1. Value for money

2. Innovative Ideas3. Easy to convert for people or

cargo

4. Have luxurious interior finish

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Buying Process

Consideration Phase Image and brand perception

Active Shopping Phase Image and Features

Buying Phase Features and Price

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Consumer Behavior

• Definition:• The study on how individuals, groups, and

organizations select, buy, use, and dispose of goods, services, ideas, or experience to satisfy their needs and wants.

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Consumer BehaviorWhat Influences Consumer Behavior?

Cultural factorsSocial factors

Reference groups Family Roles and statuses

Personal Factors Age Occupation Personality Lifestyle

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Analyzing Consumer MarketsThe Aim of Marketing

Meet and satisfy target customer’s needs and wants

Understand important attributes in making purchase decision

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Minivan Buyers

Age Group 1998 2001

35 - 49 47% 40%

> 65 12% 19%

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Reasons of PurchasePrice / Deal / Value

Age Group 1998 2001

< 35 55% 57%

> 65 40% 43%

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Target Market vs PopulationDecline in The Minivan Sales

Population: 35-49 age group >> 65+

YEAR 1998

35-4947%

>6512%

Others41%

YEAR 2001

35-4940%

>6519%

Others41%

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Question 3:Develop a promotional plan for the Windstar to carry the brand to the introduction in the fall of 2003

Ford Windstar

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Brand

• Brand is name, sign, and symbol design to identify goods services of seller and differentiate from competitors.

• A brand is the marketers promise to deliver predictable product/service performance

• To create brand value convince the customer of meaningful differences among brands (related to attributes of product).

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Brand Asset Valuator (BAV)

• Provides comparative measures of the brand equity of thousands of brands across hundreds of different categories.

• Based (BAV), there are 4 components of brand equity • Differentiation –the degree to which a brand

is seen as different from others.

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Brand Asset Evaluator (BAV)

• Relevance -the breadth of a brand’s appeal.

• Esteem –how well the brand is regarded and respected.

• Knowledge –how familiar and intimate consumers are with the brand

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• Differentiation + Relevance = Brand Strength

(Point to brand’s future value, rather than reflecting its past)

• Esteem + Knowledge = Brand Stature(More to a ‘report card’ on past

performance)

Brand Asset Valuator (BAV)

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Components Windstar’s performance

Differentiation There are many newcomers entering

into the competition offering customers

various options.

LOW

Relevance Windstar is popular with safety

features but safety is not the most

important feature that customers seek

for.

LOW

Esteem Windstar is respected as it is a major player in minivan industry however, recently, it is regarded as a low quality minivan.

LOW

Knowledge High percentage of minivans buyers are aware with this brand since it is an old player in the industry.

HIGH

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Differentiation Relevance Esteem Knowledge

New Brands

Low Low Low Low

Strong New

Brands

High Low Low Low

Leadership High High High High

Declining Brands

Low Low Low High

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Brand Revitalization

• Changes in consumer tastes and preferences, the emergence of new competitors could affect the fortune of a brand.

• In Ford Windstar case have fallen on hard times because of emergence of various competitors.

• What Ford can do whether to retain the same positioning or to create a new positioning.

• Ford Windstar has to really understand what its sources of brand equity were

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What Windstar can do?

i) Expand depth, breadth of brand awareness by improving brand recall and recognition

in purchase or consumption.

ii) Improve strength, favourability and uniqueness of brand associations

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• Brand elements the devices that identify and differentiate brand.

Safety- one of the safest minivansValue- good value for money

• Brand Promise the marketer’s vision of what the brand must be and do for consumers.

Alert today: Alive tomorrow.

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Promotional Plan

• Objectives:i) Reverse a decline and put Windstar on the path to

regain market share and restoring its brand image.

ii) To carry Ford Windstar’s brand image as the safest minivan with good values

• promotional plan divisions:• public relations • advertising • direct marketing• Promotion & optional feature pricing

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Public Relation

• Public relations are very believable and seem more real to readers than ads do.

• The activities :• Media relation campaign on safety

• Auto show with concentrations on Alert today. Alive tomorrow

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Public Relation (contd)

• Publication, such as newsletters, trade journals and books about safety

• Public speaking and conference

• Sponsorship for special event/ sponsor to produce road safety advertisement.

• Organize fairs (eg: safety first fair)

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Advertising

• Advertising can reach masses of geographically dispersed buyers at a low cost per exposure

• Advertising is also very expressive as it allows the company to dramatize its products

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Advertising (contd)

• Tier 1 advertising which the manufacture paid for and controlled all the advertising.

• The advertising was focused on building brand image.

• The advertisements will be divided into various types:

• Broadcast on radio and TV• Outdoor advertising- billboards• Print in magazines and newspaper.

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Direct Marketing• A message that is normally directed to a specific person

• Direct mail to specific customers:

• lease renewal customers

• potential new customers

• customers who have road accident’s experience This is to approach road accident victims which we

assume to be more safety conscious.

• Send to potential customers:

Flyers

Newsletter

Posters

Brochure

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Value For Money

• Safety Insufficient

• Improve ‘value for money’ attribute

• Customer value product by• Features

• Quality

• Price

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Ford Windstar must…

1. Enhance the manufacturing process

2. Add new features for the new model

i) Offering various models of Windstar

Eg: LWB, SWB, limited edition, sports edition and etc.

ii) Offering new features• flip-fold back seat

• back-seat video entertainment system

• seatback grocery hooks added to rear bench

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Ford Windstar must…(contd)

2. Add new features for the new model (contd)

iii) Offering new safety features• low tyre pressure warning

• censors deployed the dashboard airbags according to crash severity and the front occupants

• A strobe light in the driver’s outside mirror to warn approaching traffic that the left-slide sliding door was open

• A rear- brake and reduced engine power to enhance control in turns

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Ford Windstar must…(contd)

3. Adopt optional feature pricing- offer optional products, features and services along with main product

i) Second-row bucket seats with a rear-seat video entertainment system

ii) Removable back-seat video entertainment system

iii) Extended warrantyiv) Electric window controlv) Light dimmers vi) Antiskid system (safety feature)

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Conclusion

• Ford Windstar should take more aggressive actions in order to regain its market share and improve their brand image.

• Ford should educate their customers on the importance of safety in a way to increase their favorability towards safety attribute

• Ford also should improve their quality problems and innovative features in order to compete with the emergence of wild competitors.

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THANK YOU!!

AMRA AISHAHHAZIRA

HAMIZA