FORD WINDSTAR CASE ANALYSIS
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...
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