Minivan history and development Minivans designed for families, for people with two or more children and who were tired of cramming into sedans for long and short-hour trips. Minivan is divided into 2 categories: LWB and SWB. It was first introduced by Dodge Caravan on 1983 and then followed by General Motors and Ford.
Ford Windstar o Ford Windstar was introduced in Canada in 1991. o Windstar was the first to be given 5 stars rating by NHTSA o Windstar is way back behind when it comes to introducing product innovations. sliding fourth door flip-fold seat o Quality problems and product recall. o Limited choice
Below Table 1 show % of market share in LWB segment in 1999 and 2001 1999 Windstar Pontiac Montana Grand Cadavan Honda 44% 9% 19% 3.3% 2001 30% 14% 27.4% 11%
Highlight of the case
Question 1: Assess the various promotional tactics available to Brian. Which one(s) make financial sense. Why?
Brian Tafler had considered the followings:• Direct Mail Campaign • Repositioning Through Advertising • Value Pricing • Sales Incentives • Leasing • Cash Offers
Direct Mail Campaign
Lease Renewal Customers • Targeted to about 5000 customers • Highlighted the new features i.e Safety System and Family Entertainment System • Current Lease renewal Rate : 40% • Expected : 45 to 50% returning lease customers • Offered: $500 loyalty discount
Direct Mail Campaign (cont..)
Potential New Customer • Focus – the customer who leased a minivan from other manufacturer • Offered - $500 switching incentive • Expected – 2 to 3% customer switched to Ford
Repositioning Through Advertisement
Tier 1 • Manufacturer paid and control the advertising • Focused- Building brand image • Impact- can be seen after few years Tier 2 • The dealer and manufacturer associates for the advertising • Focused- promoting particular brands within region and for short time. Tier 3 • The dealer paid for the advertising • Focused- To attract customers with price, promotion and incentives
Repositioning Through Advertisement (cont)
Shortcoming of Tier1, 2 and 3 • Manufacturer focused on building brands, dealers interested in immediate sales • Cost of advertising/promotion of minivan increased i.e 10% since 1998 • Advertisement spending in Tier 1 and 2. • Tier 2- Price of LX model to fight the SWB market
• Brian need to target customers by price oriented strategy or by image advertising.
o Tier 1 Advertising o Bundled attractive features o No charge for Family Entertainment Systems worth $1500 in its Sport, SEL and Limited o Rivals- offered the features for top-of-line models o Improve the selling of vehicle mixed.
To trigger sales Benefits the buyer of subvented lease or financing rates, cash-backs and other discounts. Incentives offered by domestic manufacturers were higher than imports.
In 2002- 55% sales of Windstar in Canada were lease. Ford offered 24 to 36 months rates Windstar offered 48 to 60 months rates Rivals-GM & Chrysler offered 24, 36 and 48 months rate. Imports – none. • General Motor Acceptance and Ford Credit provides attractive lease and financing options • Interest rate charged to customers – 0 to 2% • • • •
• Longer lease- lower monthly outlay • Shortcoming- customers will not be back almost 12 to 24 months. • Customer satisfaction was lower after 3 or 4 years • Benefits – sales mix would be larger proportion to lease.
Cash discount offered to buyer and salesperson Cash $2000 on Windstar purchased Red Carpet Lease Cash- $500 cash on Windstar lease Renewal Offer - $1000 cash on returning lease Christmas Bonus- $500 cash to purchase and lease in December Sales person incentive-$100 for every vehicle sold in 30 days Period Golf Vacation- for...