MARKETING MANAGEMENT CASE STUDY :

Auto CollectionFord’s Better Idea for Selling Cars

and Trucks

Ford Motor Company

• 4th largest auto maker founded by Henry Ford in 1903

• Ford Motors- strong market position

• 1990s- Lowest costs & high quality in the US Automobile industry

Industry scenario prior to Auto Collection

• Customers dissatisfied with the process of buying a vehicle; sellers didn’t pay heed to the customer’s needs.

• Sales people had tactics to lure customers into paying more.

• Limited usage of Ford dealerships for non warranty repairs.

• Sales strategy of Saturn(division of GM) was different from it’s competitors.

• Customers were unhappy with Ford’s dealerships and Ford’s ability to change dealer’s behaviour was limited.

Auto Collection and its emergence

• Consolidating Ford dealers in a market in a single liability company(FIECo).

• Objectives• Cost reduction

• Service enhancement

• Brands•Ford

•Lincoln

•Mercury

•Mazda and Jaguar (occasionally)

• Also on agenda: Satellite light-service-only locations(garages)

Operating Model adopted by Ford

1. IT/ Technology :a) Development of an intranet.b) Construction of customer loyalty database.c) Prediction system for vehicle sales.

2. Organisation Structure : a) Each location had a head sales manager and head service manager.b) Sales and service managers reported to central collection management.

Central Collection Management

Collection head of

sales

Collection head of service

Chief Executive

Officer

Chief Operating

OfficerHR Coordinator

Chief Financial Officer

c) Role of Collection Management was to:i. Oversee Operationsii. Create Strategyiii. Facilitate sharing of information across the locations

3. HR :d) Selecting appropriate individuals and putting them in the right positions.e) Training programme.f) HR managers tried to influence change among the employees.

4. Marketing :a) Initial focus of marketing was introducing the Auto Collection

concept and explain its benefits; Current plans included base of written materials and media communication and more targeted campaigns.

b) Website for each Auto Collection.c) Development of customer relationship centres.

5. Other changes:a) Price: One price selling. No negotiations.b) Processes: Low pressure sales; Everything was to be customer

friendly.c) Compensation: Based on number of vehicles sold, not profit made

on price of each vehicle.d) Costs: Savings from economies of scale; increase in cost due to

increase in employee benefits.

Changes

Radical

• Dramatic change- sales & profits declined

• Quick; but high risk

• If benefits highlighted effectively-- will create a bigger pool of prospective buyers.

Evolutionary• 3- step process

• Slow & steady; less risk; time-consuming

• Reduced market resistance

Introduction of Auto Collection has made Ford market responsive

Scenario Before Response through Auto Collection

Customers were dissatisfied with the process Efforts to increase customer satisfaction by of buying a vehicle. charging fair prices, providing better services etc.

Customers usually didn’t find what they were Greater selection; customers had various looking for . brands and options to choose from

People rarely used Ford Dealerships for Services were promised to be customerservicing their vehicles . needs driven low pressure.

Customers were usually confused by quoting ‘One price policy’ was now adopted.a low price in advertisements.

Karishma Sehgal

Sunayana Sen

Thank You