The product Ford Fiesta: A Marketing Analysis - Part I & Part II

Seminar Paper 2011 43 Pages

Business economics - Marketing, Corporate Communication, CRM, Market Research, Social Media


Table of Content

Executive Summary

List of Abbreviations

List of Figures

List of Tables

1. Introduction

2. The product Ford Fiesta

3. Market Analysis
3.1 Demographic segmentation
3.2 Geographic segmentation
3.3 Behavioural segmentation
3.4 Prototype of the customer

4. Marketing Objectives and Strategy
4.1 SWOT Analysis
4.2 PEST Analysis
4.3 Competition of Ford of Germany and the Ford Fiesta
4.4 Position within Ford

5. Unique Selling Proposition
5.1 Understanding customers’ requirement
5.2 Benchmark of the Ford Fiesta and its main competitors
5.3 Positioning of the Ford Fiesta
5.4 Definition of the Ford Fiesta’s USP

6. Conclusion

Appendix 1: Porter’s model of 5 Forces

Appendix 2: PEST-Analysis


List of Abbreviations

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List of Figures

Figure 1: Ford Fiesta

Figure 2: Ford's classification as a consumer product

Figure 3: Competition of cars in general

Figure 4: 2009 Market Share of German automotive manufacturers

Figure 5: BCG Growth-Share Matrix for FOG

Figure 6: Positioning of the Ford Fiesta and its main competitors

Figure 7: Porter's Five Forces of industry competitiveness for the Ford Fiesta

List of Tables

Table 1: Different types of the Ford Fiesta

Table 2: Benchmark of the Ford Fiesta and its main competitors

Table 3: PEST Analysis

Executive Summary

The Ford Motor Company (FMC) is one of the biggest and most successful automotive manufacturers in the world based on a long tradition of automotive development. Since 1931, the plant in Cologne has produced more than forty million vehicles. The focus of this assignment is to analyse the latest version of the product Ford Fiesta (FF) for the German market which has been introduced in 2008.

First of all, the product will be introduced followed by a market analysis including de- mographic, geographic and behavioural segmentation in order to determine the proto- type of the customer Ford of Germany (FOG) targets. It has been assumed that the cus- tomer is female, 28 years old or close to that age, living in or next to big or capital cities and is mainly focussed on design and life-style aspects. The analysis of marketing ob- jectives and strategy starts with Porter’s model of Five Forces shown in the appendix. In order to analyse the environment, the SWOT analysis has been chosen. As part of the SWOT’s analysis of the external environment, a PEST framework has been applied. Finally, the competition of FOG and the product itself will be demonstrated. In order to present a clear positioning within FOG for the FF, data of the Kraftfahrzeugbundesamt (KBA) have been used to create a BCG portfolio analysis of FOG’s products with the highest market share.

The unique selling proposition (USP) is defined by the understanding of the customers’ requirement, the benchmark of the FF and its main competitors exemplified by a benchmark of the Auto Motor Sport magazine (AMS), a two-dimensional positioning of the FF and a final definition of its USP. FOG has achieved to launch the new FF at the optimal point of time and gained a momentum which has resulted in high market share in the market of smaller cars and was based on the right type of target group and a pre- cise positioning of its product. This assignment is based on publicly accessible data on- ly.

1. Introduction

Ford of Germany (FOG) has introduced the first model of the Ford Fiesta (FF) in 1976. Already in 1979, the production and sale of the first model has started. Ford Motor Company’s (FMC) product range consists of several models placed in different price levels. The FF represents a model of the so called small car line which is positioned in a lower price range. From a company’s perspective, the amount of revenue of vehicles sold determines also the revenue generated by additional services within the customer life cycle.1

The market of the small cars is a very aggressive market since profits are low and suc- cess depends on a high number of sales and a mature market2 with low growth rates in the past. This has resulted in a shorter product life cycle of the product, whereas compa- nies have reacted by a variety of modifications to meet customers’ requirements and satisfaction.3 Moreover, loyalty of existing customers has become an essential aspect. Within last years, the economic recession and the introduction of scrappage premium programs, predominantly within Europe, have led to a shift to smaller cars and an ex- tended customer profile. In addition to that, one of the most striking aspects of the au- tomotive market is a higher focus on environmental aspects influenced by the idea of sustainable development.

In the following analysis, the tangible product FF will be analysed by demonstrating the important aspects of the product in Chapter 2, its market in Chapter 3, its marketing objectives and strategy including its positioning within Ford in Chapter 4 and its unique selling proposition (USP) in Chapter 5. Finally, the conclusion in Chapter 6 summarizes all analysed aspects and draws the conclusion.

2. The product Ford Fiesta

The FF has been originally introduced in 1976 and has been produced for more than thirty years in the German market. In 2008, the seventh generation has been launched in Germany. As the car is produced in the plant in Cologne, it is one of the first cars of the FMC which is developed and produced in one country and exported from there to all other markets of the company.4 This global approach is based on slight product varia- tions which are affected by the different regulations of those markets. One reason for the global development of a product is to gain competitive advantage5 by a decrease of development and production costs which have become a major part of the fixed cost6 of automotive industry.

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Figure 1: Ford Fiesta

The FF belongs to a product range of nine different vehicles FOG sells in the German market. Moreover, due to its basic price, equipment and size it is classified as a product belonging to the small car line next to the smallest car Ford sells, the Ford Ka. According to Kotler, Armstrong, Wong and Saunders, the FF is also classified as a consumer product.7 Consumer products are sold to private households. Although FOG’s higher prized cars are also sold to companies and used as lease or utility

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Figure 2: Ford's classification as a consumer product

cars, the predominant function of the Fiesta and its small size define its target group being private consumers. Within the area of consumer products, automotive vehicles can be classified as speciality products. In general, speciality products consist of unique criteria and consumers are willing to overcome a long distance to purchase such products.8 An important aspect of this situation is its impact on the manufacturer’s bargaining power compared to the bargaining power of its buyers.

However, typically for cars, the differentiation9 of the product is achieved by offering different modifications of the car including a variety of amenities. In general, a higher prized version contains all amenities of the lower prized version and offers different types of engines or other product features which might not be available for lower versions. By that offer, FOG is able to offer its product to a larger target group and fulfils the customer requirement of individualisation.10

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3. Market Analysis

As for the theory of market segmentation, different approaches exist according to Ko- tler, Armstrong, Wong and Saunders.11 It is worth stating at that point that within the strategic development, a combination of several points of views is used by marketing experts to draw a specific picture of the customer. As exemplified by the new version of the FF, often a prototype of a typical customer is created including a picture and further information. The aim of this prototype is to share a simple vision of who the customer should be outside of marketing with all departments belonging to the value chain.12

In addition to that, this approach is helpful to gain a common understanding of the cus- tomer with suppliers or other companies FOG cooperates with. Finally, it is important to recognize that the driver has been defined before the development of a vehicle had s]tart- ed in recent years.13 In the following analysis, the demographic, geographic and behav- ioural segmentation is used. After that, a prototype of the main target customer is pre- sented.

3.1 Demographic segmentation

Demographic segmentation can be achieved by measuring age, gender, size of families or households, job, income and many other aspects. It would be reasonable to assume that those data is easily available for companies and can be measured in a simple way.14 Based on the definition which Ford has created for its target group15, the following characteristics can be defined:

- Single person household
- Female, aged 28 or close to that age
- Cares more about the function and design of the telephone than that of her car
- Is a fun-seeker
- Can afford whatever she wants.

Ford Fiesta - A Marketing Analysis Part I 5

In a nutshell, stylish, young female buyers have been chosen to be the main target group of the product. However, affected by economic recession, also male customers who meet the other characteristics described have become a valid indirect target group of small cars.

3.2 Geographic segmentation

As FMC operates in a variety of countries worldwide, directly all of those markets are target markets from a company’s point of view.16 Due to the restriction of this assign- ment, the German market has been chosen as basis for analysis. Based on the demo- graphic segmentation17, FOG targets a certain customer profile which still exists more often in big or capital cities where women are independent, earn a high amount of mon- ey and are mainly focussed on design. Due to FOG’s operational structure, a high num- ber of dealers belong to the Ford organisation within Germany.18 As Ford dealers exist close to every big city within Germany, the organisational structure does not influence the geographic segmentation with regard to the FF contrary to utility cars which are often sold in smaller cities.

3.3 Behavioural segmentation

The behavioural or psychographic segmentation defines the target group according to their social classification, their life-style or certain personal criteria.19 According to the FF, the following behavioural segmentation is defined:

- Social Classification: middle to high class
- Life-Style: Innovator, who see themselves as creating changes
- Loyalty Status: Not necessarily loyal customers, but customers with a very fast buying decision mentality.20

3.4 Prototype of the customer

The analysed criteria have been concluded into a final imaginary person called Antonel- la, an attractive 28 year-old woman living in Rome. As she is totally focussed on exter- nal factors like design, parties and independent on financial subsidies, she represents exactly the mentioned criteria. The character Antonella has been the basis of the devel- opment of the concept car Verve, which has been the pre-version of the FF.21 Usually, concept cars differ a lot from the car produced. For the example of the FF, there has been only little difference between the concept car and the final product. So, FOG in- tended to take away 75% of the FF customers from other manufacturers.22

4. Marketing Objectives and Strategy

Marketing objectives have to be aligned to the overall company objectives23 and strategy. In the following assignment, the internal and external assessment has been undertaken as the basis for marketing objectives and strategy.

4.1 SWOT Analysis

As the basic approach for strategic analysis, the most widely used approach is the SWOT framework which is an internal analysis of the company by analysing its strength and weaknesses followed by an external analysis of the opportunities and threats a company has to face.24


- Financial Capabilities
- Long traditional brand
- High knowledge of design and development
- Org anisational structure including a European headquarter consisting of market- ing and management experts located in Germany
- High orientation on environment, health and safety


- Weak image reputation in Germany
- Organisational structure is complex
- No availability of personnel customer contact (retailer distribution).

4.2 PEST Analysis

As part of the external analysis of the environment and the O and T of the SWOT Anal- ysis, a PEST Analysis27 has been applied. Within the PEST Analysis, factors to be ad- dressed are political, economic, social and technological and this has been chosen as the essential instrument to analyse the external environment for this assignment without further adjustments to the PEST. The outcome of this analysis is shown in the appendix.

As for the theory of SWOT-Analysis, the following outcome has been defined for FOG to use its strengths and weaknesses to take opportunities and to overcome threats as part of the differentiation strategy.28

- FOG has overcome the threats of recession and exchange rates due to its strong financial capabilities
- FOG’s high knowledge of design and development, subsidies for producing electrical cars and new technologies which customer require might result in a great opportunity
- FOG has a strong environmental orientation to overcome penalties for pollutions and meet customer demand.

Due to the size of an assignment, those are only examples of a detailed analysis.

4.3 Competition of Ford of Germany and the Ford Fiesta

FOG faces a high amount of competition29 in the mature automotive market of small cars. This has even increased in 2009, as the shrinkage of the automotive market has resulted in a decline of bargaining power and a variety of price reductions by manufac- turers to maintain their market share.30 First of all, the competition of FOG has been analysed by demonstrating the competition automobiles face as an entity. Medium sized cars have been recognized as the direct competition of small cars like the FF, as the threat of upgrading a car to a medium sized and higher prized car is considered to be strong due to life-style-changes like founding a family or gaining a better paid position. Due to similar reasons, large cars are considered to be the next competition small cars face. Due to the increase of entry barriers like the higher prize, the threat of competition is lower for large cars. It would be reasonable to assume that

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Figure 3: Competition of cars in general

all kinds of transportation based on engines reflect a competition for a car. Thus, railways, cabs, planes and also motorbikes and utility cars have been included in the analysis. However, the characteristics of railways, cabs and planes are that they are a special kind of transportation which is not available at any point in time (railways, planes), it is expensive in relation to the amount of usage (cabs, planes) and it is not flexible in terms of departure and destination (cabs, planes, railways). Motorbikes are considered to be affected by seasonal changes and only available according to the weather, whereas utility cars fulfil business demands rather than private ones.

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Figure 4: 2009 Market Share of German automotive manufacturers31

Another way of looking at competition is the question which manufacturers have to be considered in terms of market share. The data being analysed is based on the Verband Deutscher Automobilhersteller (VDA). Annually, the VDA publishes data based on sold cars of German automotive manufacturers. According to that data, Volkswagen leads the market with a market share of 21,2%. On the second place Opel follows with a market share of 8,9%. FOG holds the third place with a market share of 7,3% and a reasonable distance to the next follower Fiat at 4,7%.32 However, market share of a company does not necessarily result in the market share of the product.


1 Cf. Kotler, et al. (2011), p. 433.

2 Cf. Mankiv, N. G./Taylor, M. P. (2008), p. 76.

3 Cf. Kotler, P. et al. (2011), p. 305.

4 Cf. http://www.annualreports.com/HostedData/AnnualReports/PDFArchive/f2009.pdf, 28.12.2010.

5 Cf. Rugman, A./Collinson, S. (2006), p. 50.

6 Cf. Riebel, P. (1994), p. 759.

7 Cf. Kotler, P. et al. (2011), p. 594.

8 Cf. Kotler, P. et al. (2011), p. 593.

9 Cf. Porter, M. E. (2004), p. 14.

10 Cf. http://www.ford.de/Pkw-Modelle/FordFiesta, 11.01.2011.

11 Cf. Kotler, P. et al. (2011), p. 455.

12 Cf. Grant. R. M. (2008), p. 136.

13 Cf. http://www.nytimes.com/2009/07/19/automobiles/19design.html, 04.01.2011.

14 Cf. Kotler, P. et al. (2011), p. 465.

15 Cf. www.gwa.de/images/effie_db/2010/Ford1.pdf, 07.01.2011.

16 Cf. http://www.businessweek.com/magazine/content/09_24/b4135058974279.htm, 11.01.2011.

17 Cf. Kotler, P. et al. (2011), p. 463.

18 Cf. http://www.ford.de/cs/ContentServer?cid=1204902950885&pagename=DEDE2_ENGInE%2FLayoutDL& brand=FF&addresssearchstring=Bitte+Ort%2FPLZ+eingeben&c=Page&marketlang=DE_DE&site=DEDE2_ ENGInE, 11.01.2011.

19 Cf. Kotler, P. et al. (2011), p. 469.

20 Cf. www.gwa.de/images/effie_db/2010/Ford1.pdf, 07.01.2011.

21 Cf. http://www.nytimes.com/2009/07/19/automobiles/19design.html, 04.01.2011.

22 Cf. www.gwa.de/images/effie_db/2010/Ford1.pdf, 07.01.2011.

23 Cf. Macharzina/Wolf (2005), p. 205.

24 Cf. Grant, R. M. (2008), p. 12.

25 Cf. http://www.annualreports.com/HostedData/AnnualReports/PDFArchive/f2009.pdf, 28.12.2010.

26 Cf. http://www.annualreports.com/HostedData/AnnualReports/PDFArchive/f2009.pdf, 28.12.2010.

27 Cf. Grant, R. M. (2008), p. 66.

28 Cf. Kotler, P. et al. (2011), p. 172.

29 Cf. Kotler, P. et al. (2011), p. 535.

30 Cf. Kotler, P. et al. (2011), p. 537.

31 Cf. http://www.vda.de/de/zahlen/jahreszahlen/neuzulassungen/, 05.01.2011.

32 Cf. http://www.vda.de/de/zahlen/jahreszahlen/neuzulassungen/, 05.01.2011.


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CRM Essen FOM Marketing Marketing Mix 4Ps Strategy Customer Loyalty Marketing and Loyalty Mix 4Ps & 3Ls Ford Fiesta Product Price Place Promotion Assignment




Title: The product Ford Fiesta: A Marketing Analysis - Part I & Part II