Sales Forecast And Marketing Budget

Published Date: 02 Nov 2017

Ford Motor Company (Ford) has been a leader in the auto industry. They have targeted on designing and manufacturing and have been very successful. However, they have sustained to lose their market share to foreign opponent over the past few decades. Ford Motors have been reluctant to keep up with current trends and evolving competitors from economic growth. When classifying their strengths and weaknesses and implementing them to the current opportunities while considering their threats, they thought of inventing a product responding to the growing environmental awareness trends concerning cars. Ford has already taken measures in response to this slump by introducing new car models which is Ford Edge Hybrid that attempting to make their mark in the new crossover SUV market with the. 

By applying this strategy to current trends and innovating vehicles, it leading them in the direction of hybrid technology with low fuel consumption in order to overcome those problems. They hoped that it can regain their past success as well as their target customer in Malaysia which fall under the age group of 29-39 years old who is earning higher income, have higher education levels and young consumers are believed to have higher propensity to purchase a hydrogen powered cars.

2. Company Overview

Ford Motor Company (Ford) which was incorporated in 1919 and is the world’s second largest manufacturer of cars and trucks with products sold in more than 200 markets. The company employs nearly 400,000 people worldwide, and has grown to offer consumers eight of the world’s most recognizable automotive brands. Ford Motor Company started out with Henry Ford’s passion of engineering and mechanics. Ford’s first leap into the world of automotive mechanics was in 1899 when he founded the Detroit Automobile Company, in Dearborn Michigan. The company operates through two sectors, Automotive and Financial Services. Ford Motor Company started out with Henry Ford’s passion of engineering and mechanics. Ford’s first leap into the world of automotive mechanics was in 1899 when he founded the Detroit Automobile Company, in Dearborn Michigan.

Ford Motor Company is focused on creating a strong business that builds great products that contribute to a better world. The mission of the company are One Team which mean "People working together as a lean, global enterprise for automotive leadership, as measured by Customer, Employee, Dealer, Investor, Supplier, Union/Council, and Community Satisfaction" and One Goal which mean "An exciting viable Ford delivering profitable growth for all". Besides, the visions of the company are created by using the first alphabet of FORD. Which are Ford Functional and Technical Excellence, Own Working Together, Role Model Ford Values, and Deliver Results.

Ford strives in order to achieve the non-financial goals and also financial goals of the company in 2013, then FORD come out with new product which is FORD Edge Hybrid. For the non-financial goals, first, they try to retain spot as global market leader with over 100 plants and 280,000 employees worldwide. Furthermore, they hope to sustain the profitability and rank as number one in US auto Company. Third, they introduce their new product which is FORD Hybrid Edge into China, European and US markets. Then, they also enter and increase manufacturing in India to lower plant costs. Build efficiency through better logistics, distribution and control is another nonfinancial goals of their company. Besides that, they try to succeed all of the implementation factors. Lastly, they build awareness and increase sales of all Ford Hybrid automobiles.

For the financial goals, there are three which are Increase market share from 16.7% of the market to 20% by 2013. Second, by 2013, Ford hybrid sales should increase over 100%; in 2009 Ford hybrid sales increased 73%. Lastly, they hope that they can sustain 50% increase of new car sales through 2013 (Ford increase new car sales of 40% on April 1, 2010)

3. Market Opportunity

To get a market opportunity, the company must be able to identify who its potential customer are, the needs and wants that need to be met, the market size, and its capacity to capture market share. Market opportunity of Ford Edge Hybrid products can be identified through market analysis which is SWOT analysis.

Strengths

The name of Ford is well known brand in worldwide, every year Ford is selling about 3 million cars. According to 2012 car brand perception survey (taken from ConsumerReport.org), Ford Motor Company leads all brands in awareness, other brands like Chevrolet from General Motors, Toyota, Honda, Mercedes-Benz and other. The company’s strong brand portfolio gives it a significant competitive advantage. Their brand recognition gives them a chance to present in Motorsports like Formula One, Rally, Sports car, Touring cars and sponsors numerous events and sports facilities around US. Ford is one of three American constructors to win titles on the international scene at the FIFA World Championships. Besides that, Ford Company has very strong engineering capabilities, the technology of their industry are very good. They have invested effort to go green to help the environment. In years 2005, Ford introduced the first hybrid electric SUV to the market. Hybrid is a type of vehicle which combines a conventional internal combustion engine propulsion system and electric propulsion system. This technology can reduce petroleum consumption and vehicle is pollution emissions worldwide. Other than that, hybrid vehicles can reduce noise emissions resulting from substantial use of electric motor, leading to roadway noise reduction.

Weaknesses

Ford Motor Company affected by the global recession and Europe crisis, the sales performance of Ford Company has been lagging. In Ford’s latest quarter it lost about $468 million in Europe. It was worse than it lost in the third quarter of last year which cost $306 million. Due to the Europe crisis, Ford company sees its have been losses more than $1.5 billion in Europe at year 2012. If it keeps falls on the revenue, Ford Company will have a lot of debt to pay off. Ford is using a "voluntary separation program" to lay off employees, they plan to elimination about 10 percent of Ford’s salaried workforce. It will lay off about 4000 to 5000 workers in the company. This news will affect the performance of those employees, they will worry about is they are one of them will be fired. Therefore, they will look for another job to make sure if they have been fired by Ford still has a backup plan. This action will decrease the sales performance of the Ford Company.

Opportunities

Although Toyota and Honda also came out with hybrid vehicles, Toyota had faced the problem based on few years that is the break system cause accidents, Toyota have make a massive recall back to check the break system, it affect the sales performance of Toyota company. Ford can grab this opportunity to increase their production and total sales. The sales performance of Honda doesn’t have a big change, nowadays customers are seeking for American products. It show a large potential in emerging markets if they introduce Hybrid vehicles to Malaysia. Ford Company hired new management member like CEO, it can increase the management efficiency. Nowadays, the vehicles market is looking something new, the outlook for hybrid and electronic vehicles are great. Ford can create a new design for Hybrid vehicles and launch of new models Hybrid vehicles. Petrol is natural resources, it has a finite supply and one day it will finish. Hybrid vehicles design to reduce gasoline demand. It can save cost for petrol and also help to reduce the carbon dioxide emission and to protect the environment.

Threats

The global economic slowdown has caused Malaysia’s GDP to decrease. Less GDP means citizens will spend less on buying a new car. It might be threats to Ford Company. In addition, Malaysia’s government set high tax-rate on foreign automobiles. Our government want Malaysian buy only national car, so the selling price of foreign vehicles is quite expensive if we compare with other country. Our government also advise us to use more public transport due to increase of fuel cost, but most of the citizen would like to have a private transport if they can effort the price because it is better to have your own vehicles rather than waiting at bus stop under a hot temperature.

4. Target Market

The target market, for 2013 Ford Edge Hybrid can be identified by examine the factors that influence the adoption of hybrid car and the connection between demographic variables and intention to adopt hybrid car among Malaysians.

Statistical techniques such as descriptive analysis, independent samples t-test, one-way ANOVA, factor analysis and regression analysis were used in this study. The descriptive analysis shows that respondent’s demographics are described in terms of gender, age income and education. The respondents comprised of 63.6% males and 36.4% females. Besides, the majority of respondents have a degree (59.8%), their personal income was between RM6001-RM8000 (35.5%) and ages of 29-39 years 56.1%). (Taken from 2nd Annual Summit on Business and Entrepreneurial Studies)

So, the primary targeted consumer in Malaysia is between 29-39 years old who is earn higher income, have higher education levels and young consumers are believed to have higher propensity to purchase a hydrogen powered cars. The result was consistent with Wu etal. (2010), Wan et al. (2005), and Potaloglu & ekin (2001). These groups of consumers are generally willing to pay more for environmental friendly car, high risk takers, have high interests in automotive products and have more knowledge of innovative products. Since the motor vehicles are the main contributor to atmosphere pollution, raising the level of awareness towards reduces the pollution and concern about the green environment indirectly will increase the sales of hybrid cars. This is proven because the total sales of hybrid cars in year 2011 were 8334 units compared to 328 units in the year of 2010. The top three hybrid car sellers are Honda (4596 units), Toyota (2457 units) and Lexus (267 units). (The Star, 2008)

All attitudinal factors are significant related to adoption of hybrid car. Relative advantage in terms of fuel economy is strongly related to adoption of hybrid car in Malaysia. This is mainly due to recent hike prices in petrol and diesel in Malaysia. Besides, most consumers believe that hybrid car will allow them to spend less money on petrol or diesel and it’s configured to provide better fuel efficient and savings. (Heffner, 2007) Subjective norms in terms of family, friends and colleagues influence are found not to be significantly related to adoption of hybrid car in Malaysia. That means hybrid car purchase intentions are strongly influenced by personal motives rather than social motives. Perceived behavioural control in terms of government tax incentives, sales incentives, petrol and diesel subsidy policy are found to be significantly related to adoption of hybrid car in Malaysia.

Based on the result of this study, we can conclude that the adoption of hybrid cars is strongly influenced by relative advantage, compatibility, pro-environmental and perceived behavioural control. Besides, the consumers are male, earn higher income, aged 29-39 and higher education level segments should be targeted.

5. Marketing Mix

Marketing mix is a business tool used by marketers to successfully market their products. Marketing mix consists of 4Ps: product, place, price and promotion. We need a successful mix of a right product, sold at the right price, in the right place and using the most suitable promotion in order to market our products. Every company has their own marketing mix and so does Ford.

Product Strategy

An American automaker brand, Ford, is recognized by the whole world. There are a lot of types of brands and Ford is categorized under manufacturer’s brand because Ford is its own manufacturer. As we mentioned earlier, Ford has already establishes a strong brand equity over the years. In 2013, an SUV, Ford Edge Hybrid was launched by Ford. The company used line extension strategy under branding to add another new product to its current product line by introducing Ford Edge Hybrid.

Benefits/Features: Ford Edge Hybrid, an eco-friendly SUV is equipped with a sophisticated safety system, putting safety of passengers as priority while maintaining its sleek and sporty look. This American brand SUV has stability control and anti-lock brakes. It is also equipped with dual-stages front and side airbags for front and also back passengers. It also has a special system that is called Tire-Pressure Monitoring System (TPMS). When the tires are low on pressure, it will alert you. (Taken from Ford Motor Company’s Official Website )

Since Ford Edge Hybrid is a new product from Ford, the company used product development strategy to introduce the SUV to its existing established markets like its home country USA, and Europe. In early times, Ford only focuses on its own country and never goes global. However, things are different nowadays and Asia countries especially China and Malaysia are one of the largest markets in the world. It catches not only Ford’s but the whole world’s attentions to move into this new segment of markets. Because of that, Ford not only extends Ford Edge Hybrid to its old markets but also aimed new markets like Malaysia and other South East Asia countries. This proven that Ford has used product diversification of product development strategies to introduce the new SUV. That is why we can see Ford’s vehicles are available all around Asia.

Pricing Strategy

As for pricing strategies, there are three major pricing strategies – Skimming Pricing Strategy, Penetration Pricing Strategy and Competitive Pricing Strategy.

For Ford, the company uses Competitive Pricing Strategy which basically involves the products being set around the same amount as the competitors in determining this particular vehicle, Ford Edge Hybrid. In Competitive Pricing Strategy, organizations try to reduce the emphasis on price competition by matching other firms’ prices and concentrating their own marketing efforts on the product, distribution, and promotion elements of the marketing mix. As pointed out earlier, while price offers a dramatic means of achieving competitive advantage, it is also the easiest marketing variable for competitors to match. And recently, Ford is trying to alter into a new pricing strategy. (USA Today, 2005) In order for Ford to stay among the competitive prices range, they have to first determine the relatively homogenous product that are available in the market. And since we are focusing more onto Asia market especially Malaysia, Ford has to look onto automobiles in the specific market. Even though this specific Ford Edge is a hybrid car, but it still can be categorized under both SUVs and Hybrids.

The price range of certain hybrids vehicles:

Chevrolet Volt - $38,883 (RM 120,770)

Toyota Prius - $24,065 - $29,469 (RM 74,745 - RM 91,530)

Honda Insight - $19,138 - $24,266 (RM 59,442 - RM 75,370)

Ford Edge Hybrid - $27,432 - $38,278 (RM 85,203 – RM 118,891)

Note: All the prices are tax-free. ( US News, 2013)

Other than the pricing strategies, Ford also applies one of the pricing policies that is price flexibility. Price flexibility defines as whether or not to set one price that applies to every buyer or to permit variable prices for different customers. As we know automobiles is a large purchase and takes a lot of time to consider. Ford’s retailers are allowed to a little discount to their customers.

Place Strategy

Currently, Ford cars are marketed globally through regional and local show rooms, with its main headquarters based in Michigan, United States. Ford specializes in manufacturing Sedan Cars, Crossovers and Special Utility Vehicles (SUVs), and Hybrids, making their products marketable in any countries. Whereas in Malaysia, Ford has been established since 1926 and continually expanding its operations and currently has 770 employees, 17 Ford Dealers and 31 outlets around Malaysia. Ford Malaysia has 18 show rooms in Klang Valley, 14 shows rooms in the Northern Region, 8 outlets in the Southern Region, 6 outlets in the East Coast, 4 outlets in Sarawak and 6 in Sabah. Ford can use their current show rooms and outlets to sell their Ford Edge Hybrid model. In addition, as E-commerce is being use widely as medium for business to market their products online, Ford may extend its Ford Retail service in Malaysia, which is the online marketing medium, used my Ford to sell their models in worldwide

Ford practises intense distribution, whereby they sell their products through all available channels. Their distribution strategy enables every product from Ford available in most dealers. This makes it easier for customers to search for Ford dealers around Malaysia. Besides that, through its 31 outlets around Malaysia, Ford’s products are definitely easier to be sold. Ford’s reputation as car manufacturer, who provides quality, performance and quality, will surely improve their brand reputation. This is further enhanced by their new technology which is the Hybrid engine, which will create a brand name and a opportunity for Ford to also be successful in the hybrid technology. Their brand reputation will also enable more future dealers to sell their models in the business, thus creating a larger base of channels for Ford to market their products.

Promotion Strategy

Since Ford practises nonpersonal selling, advertising methods such as electronic media, printed media, social media and internet are most effective and promotes the brand and model well, as the population in each of the methods exist in a big quantity. Electronic media advertising such commercial TV advertising and radio is the most effective way, as approximately 10 million households have at least one set of TV in their house and about 20 million people are radio receivers. Ford can maximize its advantage by creating a video advertisement, by displaying the beauty, elegance, features, and the capability of its Ford Edge Hybrid on screen. Besides that, Ford can also have a memorandum of understanding with the local media and entertainment giants, Media Prima Sdn Bhd, which consists of multiple television and radio channels such as TV3, 8TV, TV9, NTV7, Hot FM, Fly Fm, and One FM. Such memorandum of understanding can help strengthen Ford’s brand in Malaysia, as this local channels can determine the local culture and taste of Malaysian viewers, and provide assistance to Ford in creating suitable and effective television and radio advertisements.

Whereas for radio advertisement, Ford should use celebrity endorsement which they have been practising for many year. Getting famous celebrities and athletes such as Mike Rowe and Serena Williams talking about their brands talking about the Ford Edge Hybrid can be a way of advertising on the radio. As in Malaysia context, Ford can also implement the same method, by endorsing local celebrities to speak about their brand and the models on the radio.

Printed media such as newspaper advertising is also an effective way of marketing advertisements, as approximately RM 1.76 million has been spend by advertisers on newspaper advertising in the year of 2007. Through a possible partnership with Media Prima Sdn Bhd, Ford is able to advertise in Media Prima’s newspaper companies such as News Straits Times, Berita Harian and Metro. Ford can collaborate with these local newspapers, as they will be able to provide assistance on the most suitable and strong way of designing a good and effective newspaper advertisement. Besides newspaper advertising, Ford can choose to advertise on Top Gear Malaysia magazines which are one of the best-selling automotive magazines in Malaysia currently.

In terms of internet advertising, Malaysia is seen as one the greatest countries in attracting possible customer base, as the number of people with personal computers and internet connection is at 2.4 million and 3.7 million. Ford can also advertise in Media Prima’s website and also other online directories and websites available. Besides that, Ford can also be involved in social network advertising, such as Facebook. Facebook is the best way of advertising due to the facts obtained from Star paper dated October 13, 2010, which states that from a survey conducted by TNS, the results states that Malaysian has an average of 233 friends and they spent nine hours weekly making them the highest in both. This firmly proves that, Ford can use Facebook as media of advertising for its models. The effectiveness of using facebook, is further enhanced through the invention of Facebook for business, whereby Facebook will suggest them selective group, for example Ford Vehicle lovers to Ford. This will enable Ford to identify their target audience easily on Facebook.

Besides that, Ford can also use the public relations method as a way of advertising the Ford Edge Hybrid. Showcasing the Hybrid model in selected public areas, such as Shopping Complex around Malaysia, is a very effective method of creating awareness among public regarding their new product. During the show case, informative information can be shared with interested customers by verbally or even through brochure. This way is effective as, customers will experience the customer service quality Ford has provided, thus creating a brand recognition.

6. Sales Forecast and Marketing Budget

Sales Forecast

Sales forecast is a basic building block of any marketing plan is a sales forecast, an estimate of a firm’s revenue for a specified future period. Sales forecasts play major in product decisions. An inaccurate forecast may lead to incorrect decisions. A right sales forecast is very important to a company.

Qualitative forecasting techniques rely on subjective data that reports opinions rather than exact historical data. Quantitative forecasting methods, by contrast, use statistical computations such as trend extensions based on past data, computer simulations, and econometric models. Consequently, most organizations use a combination of both techniques.

Automobile companies around the world predict that in the future car sales market, a car with hybrid technology will be a highly popular cars product. In 1999, when the hybrid cars just started join into the cars industry market, the quantity of sales in global only 9350 units. After two years, the quantity of cars sale rise to 20,287 units. After that, the quantity of cars sales still continue increased to 215,000 units in 2005. All of the cars enterprises predicted that the sales of hybrid cars will totally permeate into the market and then replace petrol cars in the future.

Because hybrid cars holds a huge capacity in the cars industry, Ford also doing its own sales forecast. Ford Motor Company predicts that their total sale will rise 24 percent in January 2013, especially their hybrid vehicle should increase over 100 percent. After 2013, they are hoping that they are able push industry hybrid sales to increase 10% annually. "Although Ford has been relatively slower than some competitors to enter the passenger PEV (plug-in electric vehicles) market, its future plans are ambitious, and it will be the only automaker to surpass 400,000 PEVs sold in the United States through 2020." – (Ford research director John Gartner, 2012)

While researching Ford, we also found out that Ford Malaysia forecasts that Malaysians will buy between 7.8 million and 8.3 million vehicles in 2013 including medium and heavy trucks and hybrid vehicle is between 6.5 million and 7.1 million and for the light vehicle they think the sales will between 10 million and 12.6 million. They said that the availability of cars in the Malaysians’ highways will slowly increase year by year.

Marketing Budget

According to Ford’s marketing budget plan, they announced that they will spend 25% of its profit on digital media, more than twice the amount spent by the industry on this year to promote its products.

Ford’s marketing executive said that their company has made a bigger digital and social media to compete with their rivals because they think "if you are trying to communicate, as we are, that you have been reinventing the company, you cannot just say it. You have to get the people to say it to each other."

Ford gave 100 European Fiestas (one of Ford’s car models) to people to drive and live with. The results of the blogging, Facebooking, Youtubing and Tweeting by those people, plus the echoing of those messages by the blogosphere, followers, has been an eye opener.

Other than that, in order to produce hybrid technologies, rare earth elements are required and they are dispersed and difficult to mine, which makes them highly expensive. For Ford, the spike in rare earth prices a couple of years ago came at a critical time, when it was finalizing development plans for its next generation hybrid system. Ford cuts half of the amount of dysprosium – the most expensive rare earth elements they are using now. They redesigned the magnets that makes the electric motor’s shaft rotates, making it consumes less dysprosium so they wouldn’t have to spend so much funds on it. In all, Ford says it reduced the use of rare earth metals in its hybrids by 500,000 pounds annually – the equivalent weight of 150 cars.

7. References

2nd annual summit on business and entrepreneurial studies (2nd ASBES 2012) Proceeding. Retrieved 2013, March 3 from www.internationalconferences.com.my.

2013 Edge (2013). Retrieved 2013, February 24 from http://www.ford.com/crossovers/edge/models/

Alisa Priddle, Detroit Free Press (2012, May 4). Ford raises 2012 U.S. sales forecast. Retrieved 2012, March 3from http://www.freep.com/article/20120405/BUSINESS0102/204050498/Ford-raises-2012-U-S-sales-forecast

Ford, Toyota Forecast to Lead Plug-In Car Sales Thru 2020 (2012). Retrieved 2013, February 21 from http://evworld.com/news.cfm?newsid=29064.

Ford Motor (n.d.). Retrieved March 11, 2013, from http://yousigma.com/comparativeanalysis/fordmotor.html

Ford Motor Company (n.d.). Retrieved March 11, 2013, from http://www.mbaskool.com/brandguide/automobiles/1499-ford-motor-company.html

Ford Motor Company (n.d.). Retrieved March 12, 2013, from http://en.wikipedia.org/wiki/Ford_Motor_Company

GM, Ford change pricing strategy (2005, February 8). Retrieved on 2013, February 21 http://usatoday30.usatoday.com/money/autos/2005-08-02-prices.htm

Hybrid Electric Vehicle (n.d.). Retrieved March 12, 2013, from http://en.wikipedia.org/wiki/Hybrid_electric_vehicle

Joann Muller (2012, November 12). Ford Sees Cost Breakthrough With New Family of Hybrids. Retrieved 2013, February 25 from http://www.forbes.com/sites/joannmuller/2012/09/12/ford-sees-cost-breakthrough-with-new-family-of-hybrids/2/

Kristi (2006, September 28). Hybrid Market Forecasts. Retrieved 2013, February 28 from http://www.hybridcars.com/hybrid-market-forecasts/

Kurtz Boone (2012). Principles of Contemporary Marketing (15th Ed) International Edition. p832. Paperbound.

Marketing Mix (n.d). Retrieved 2013, February 20 from http://businesscasestudies.co.uk/business-theory/marketing/marketing-mix-price-place-promotion-product.html#axzz2LR3WjuCp

Michael McCarthy, Advertising Age, (March 14, 2013) Dealer Ad Campaign Touts Ford as 'Best-Selling Brand Retrived: 2013, March 3

Sharon Silke Carty, USA TODAY (2005, May 8). GM, Ford try to alter pricing strategy. Retrieved 21/2/2013, from http://usatoday30.usatoday.com/money/autos/2005-08-01-gm-pricing_x.htm

Ted Reed, CNBC, (Wednesday, 13 Mar 2013) What's Wrong With Ford and GM Shares? Retrieved : 2013, March 2.

The Malaysian Insider (March 12, 2013), Ford recalls 7,150 Newly built vehicles to

W30377 Hybrid Auto Market Analysis. Retrieved 2013, February 2 from w303.com/354/hybrid-auto-market-analysis/

8. Conclusion

In conclusion, by completing this marketing plan we have obtained important knowledge on the significance of a marketing plan towards establishing a new products and service. The marketing plan is the source for reference when the product and service is being introduced to the market. Through the process of completing the whole assignment, we have realized that without determining the strength, weakness, threat and opportunities that exist internally and externally within the organization. This step is important as it will enable the company to determine the important measure to overcome any problems that might affect the performance of the company. Besides that, we have also determined that without proper planning, a product or service might sustain and grow, maintaining its profit at the highest level.