Ford Motors is one of the leading automobiles brands in the world with an extensive global presence. Apart from a large product portfolio, the company is also known for its focus on innovation and customer experience. Ford has also established a strong global manufacturing and sales network which has played a major role in helping the company find global growth. The automobile industry has grown highly competitive and for a company to find growth faster, it must focus upon several things apart from product quality, passenger safety, and technological innovation. Supply chain and human resource management have also become critical to finding sustainable growth amid a highly challenging industry environment. Ford’s focus has been on product excellence but it has also optimized its value chain for cost efficiency. It is a popular automobile brand and several of its leading models have acquired global fame and success. This is a discussion of generic and intensive growth strategies employed by Ford to find global growth faster.
Generic Growth Strategies used by Ford Motors:
The generic growth strategy employed by Ford motors mixes elements of cost leadership and differentiation to achieve superior growth. The company targets a large base of middle-class and upper-middle-class consumers around the world. However, it has also successfully differentiated its brand from the competitors leading to higher popularity and business success. The largest market of Ford Motors is the United States. Compared to the US, the company has somewhat leaner in the emerging markets. The pandemic has affected the entire automobile industry and led to dwindling automobile sales worldwide. Ford also suffered a huge loss of sales and revenues during 2020 caused mainly by the pandemic. In this post, we will analyze the generic and intensive growth strategies of Ford Motors that have helped the brand manage its global growth efficiently.
The generic growth strategy employed by Ford Motors is not entirely cost leadership because the brand does not make and sell low-cost products. However, by maximizing operational efficiency, it does keep production costs and product prices under control, which is critical to achieving higher sales in a highly competitive scenario. The company prices its products competitively to retain its market share and leading position in key segments. However, its product range is not limited to regular cars and SUVs but it has also maintained its valuable presence in the luxury automobiles segment through the Lincoln brand. Some of its leading competitors like Toyota and Hyundai have also introduced a competing line of products and to manage its sales and growth, the company also has to focus on prices. This is essential for retaining customers in the automobile industry where product prices affect consumer loyalty heavily. However, rather than depending on minimized costs or competitive pricing, the company has focused on offering its customers high-quality vehicles that deliver superior performance.
Differentiation is a key generic growth strategy employed by almost all the leading automobile brands throughout the world. The main bases of differentiation for automobile producers are technological innovation, product innovation, and marketing. Automobile companies also use marketing to differentiate their products and brand from rivals. Ford’s branding strategy has played a key role in growing the popularity and reliability of the brand and its products worldwide and helping it differentiate its products from others.
As a leading automobile brand, Ford places a very high level of focus on passenger safety, fuel efficiency, and the environmental impact of its products. Apart from its exclusive and differentiated car and SUV models, Ford has further differentiated itself from rivals through its presence in the luxury segment. The luxury brand Lincoln owned by Ford makes and sells SUVs, cars, and crossovers in the luxury segment.
To differentiate their brands from their rivals, car companies invest in research and development. Now, the leading brands are placing a heavy focus on the latest technologies like AI, automated driving technology, and digital technology since these are driving higher popularity for automobile products. Apart from that, these technologies also help automobile companies differentiate their products from the others in the market. Companies also invest in marketing and spend billions on advertising each year to differentiate their brand from others. They are also making higher use of digital and social media channels for marketing and customer engagement.
Intensive strategies used by Ford Motors
Ford Motors has used several intensive strategies to grow its market presence and expand its market share. The company has mainly employed product development and market penetration strategies to grow its market share in the automobile industry. The company also used the market development strategy to grow its customer base globally during the earlier phases of its market expansions.
The product development strategy is one of the most extensively used intensive strategies in the automobile industry and which most leading automobile brands use to grow sales and market share. It is the strategy of bringing new product innovations to your customers and existing markets to grow sales and market share. Technological innovation has become crucial due to the growing competition in the automobile industry. It is also important for automobile brands to improve their existing products to grow their customers’ interest in these products.
Ford is an innovative brand of automobiles and invests a large sum in research and development each year. In 2019, the company spent around $7.4 billion on research and development. The main focus of R&D efforts at Ford Motors is customer convenience, higher passenger safety, fuel efficiency, and reduced environmental impact of their vehicles. Moreover, product development has helped Ford grow the popularity of its products and make its product range more attractive to its existing customers.
Ford focuses on continuous innovation to improve its line of vehicles and attract more and more customers. The company has introduced a nice range of SUVs and electric cars that are popular in various corners of the globe. Apart from product design and efficiency, environmental standards are also a key area where the focus of vehicle brands like Ford remains in terms of innovation.
Market penetration is the strategy of selling more to your customers in your existing markets. It is also one of the leading growth strategies employed by the makers of cars and other automobiles which want to find faster growth. To grow their penetration of existing markets, automobile companies including Ford employ various marketing and sales techniques including digital marketing and other customer relationship and engagement techniques like developing their sales and service network.
The United States is the largest and most penetrated market of Ford Motors. Other leading markets of Ford include Canada, UK, and Germany. China has become the largest market of automobiles worldwide and emerged as a strategically important market for Ford products. Over the past three years (2018-20), the company has sold around 0.6 million vehicle units in China each year.
Market Development is the strategy of entering new markets and finding new customers in new regions for your products and brand. Globally, Ford has maintained a strong presence through its manufacturing, distribution and sales network. The company has eight regional engineering, research, and development centers, and 55 manufacturing and assembly plants (Annual Report 2019). The United States is the largest market of Ford Motors where it sells the highest number of vehicles. In 2019, when the company achieved a net sales of 5.5 million units worldwide and its market share in the global automobile industry was around 6%, the retail sales volume of Ford in the US was 2.4 million units.
Sales volume in China during the same year reached 0.6 million units. The leading four markets of Ford motors based upon revenue in 2019 were the United States, United Kingdom, Canada, and Germany. The company sells its products in nearly all regions of the world and based on geographic region, its market is divided into the following segments: Asia Pacific, North America, Europe, Central and South America, Africa, and Middle-East. In this way, Ford has maintained an extensive global presence and it utilized the market development strategy mainly during its early stages of growth.
Other Sources: Ford Motors Annual Report 2019.