Ford Ka Hbs Case

Topics: Demographics, Ford Motor Company, Sports car Pages: 6 (1779 words) Published: March 12, 2012
Executive summary
The Ford Ka cannot be marketed to a specific demographic segment, as defined by traditional variables such as income, age, or marital status. Willingness to purchase the Ka was for the most part not dependent on membership in these traditional segments. Alternatively, we propose Ford develop a campaign toward a certain segment defined by attitudinal and psychographic variables. We plan to target this segment with tailored advertising campaigns addressing their unique worldview, and adopt higher-end pricing to maximize profit from what ultimately must be a niche product with a small number of loyal followers.

Segmentation of the overall car market
The overall market in France, in 1995, was segmented almost exclusively by primary demographics. The industry served this market with ten different product categories breaking cars down by economy, size, features, and utility. However, during the 1980s and early 1990s, changes in French tax law raised the price of fuel dramatically, making smaller, more fuel-efficient cars more desirable. This effect was amplified by increased road congestion, parking difficulty in urban areas, and a growing number of women drivers, leading a new trend for smaller cars to be increasingly popular choices for drivers at all income levels. By 1995, 71.7% of all cars sold were in the mini, small, or lower medium car categories. This rapid movement of customers to the small category attracted drivers who had been accustomed to the premium features of the mid-sized and large cars. Their demand drove the development of small cars that would have the features, performance, or handling characteristics that customers preferred. Four new product categories emerged within the small car category matched to customers’ needs: A—economy, practical; Basic-B—stylish, good value; Trend-B—high performance, features; Other-B—luxury and sports derivatives.

Ford’s Strategy
By 1992, the success of the Twingo had redefined the entire B category and forced others to redesign and include better style, functionality, and more interior space in order to compete. Ford’s solution was the Ka, which was quickly developed, borrowing the Fiesta’s chassis to save costs. Restrained in time and design, the Ka differentiated itself with unique styling, features, and maneuverability. Cars are normally designed as a solution for an existing and identified need in the market, but Ford took a backwards approach and produced the Ka without a specific market in mind. This presented the unique challenge of having to find a market for a hastily formulated product, rather than tailoring a product for an identified high-demand segment. This was doubly challenging in the case of the Ka. Its main differentiating feature was its styling. Based on the technical designs of existing products, the Ka would be hard pressed to appeal to customers on any utilitarian features such as fuel mileage or handling. Finding consumers who would purchase a car whose main selling point was unique styling necessitated studying consumer attitudes towards on a deeper level. Armed with market research data, our team identified a target market for the Ka under different criteria than ones used for the established demographic segments. The following paragraphs outlay our approach.

Demographic variables for Ka
We ran a multiple regression analysis with the dependent variable of respondents listing the Ka in their top 1/3 of car choices and the independent variables the demographic data: gender, martial status, household status, income level, and age. We found that not one of these data are predictive of whether or not a respondent will like the Ka. Each variable had low P-values, indicating that none are statistically significant. A table of correlations and a series of chi-squared tests also shows that no variable is particularly correlated with the Ka choosers with any statistical significance. (See figures 1-6 for all tables and...
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