ford fiesta movement

Topics: Ford Motor Company, Automotive industry, Renault Pages: 6 (1909 words) Published: January 24, 2014


Fiesta Movement

In April 2009, The Ford Motor Company launched a new marketing campaign called the Ford Fiesta Movement. The campaign had an unusual approach, never previously used before by Ford since being incorporated in June 1903: Ford used amateurs to create ads for Ford Fiesta, their new B category car and relied on (an artificially designed) Word of Mouth Marketing that used online social media to build awareness. Their thinking was unusual in two ways: Today, it’s a familiar case to everyone to use blogs and social media to engage buyers, but in 2009 letting consumers take over your brand was unheard of. Plus, Ford decided to create a campaign for a product that was not on sale and would not be sold for another 12 months from the start of the campaign (‘atypical timeline’ –Exhibit E). Two months into the campaign the marketing team responsible for the effort had to evaluate the campaign’s performance and possible next steps.

There are two key questions:
How do you evaluate a marketing campaign’s performance for a specific product, when in reality you haven’t sold anything? What should Ford do after the campaign to leverage the newly build brand awareness and convert interest into sales? Measuring Campaign Efficiency – Will we make enough profit at the end? 1) Calculate expectation: There are very few hints in the case study that allows the reader understand how would Ford measure success: Ford targeted 9% market-share from the total amount of new passengers in the B category, a segment that consisted of 437,000 passengers – that works out to an expected 39,330 cars sold At the start of the campaign Ford expected a 100.000 test drives within the 12 months Calculating with Ford’s expectation of market share, it sounds like Ford expected to sell 39.330 cars out of the 100.000 expected test drives, which tells us that every test drive, in Ford’s mind has a 39% conversion rate. This is one benchmark we can use to assess the prospects of the campaign

At the time of evaluation Ford accounted for 6,000 test drives for the 2 months, unless there is a fundamental change in the number of cars available for test drives, the trajectory is that this will allow Ford to assume a total of 30,000 test drives ONLY for the next 10 months of the campaign, and a sum of 36,000 test drives for the total year. Calculating with the assumed 39% test-drive success rate Ford seems well behind on its plans to reach a 9% market share. (36,000 x 0.39= 14,040 vs. 39,330)

Why is this problem?
2) Will this trajectory make enough profit? What sort of profit does a car manufacturer make on a new car? Unfortunately, no profit margin % figures were given in the case study, but if one looks at industry averages on the internet (Exhibit A), the average manufacturer makes about 4.13% net profit margin on every car. I am going to use this percentage and the given selling prices in the case: both the low-end and high-end selling prices in order to calculate potential revenue and profit generated against the year to date and year to go spend to assess whether the test drive figures for Ford Fiesta are an indication of an acceptable Return on Investment or could they be dangerously low?

The calculation above shows worth case and best case scenarios. The calculated figures above show that Ford needs to be very careful: If the test drives remain this low, and the majority of buyers chose a low-end, lower spec, low priced car, the campaign with industry average net profit margins would probably not be on break-even. This tells us that It would probably be worth importing more test cars from Europe – see cost reasoning below - as soon as possible or/and transform some cars that are now currently used by the advocators into test driving cars, e.g. Ford could make a policy that the bottom 20% advocators would have to hand over their cars for better use. These two steps...
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