Innovation in Product Development

Innovation in Product Development - Auto Industry Drivers

23, 2006, Ford Auto Company announced its "Way Forward" program. Due to concerns regarding Ford's declining bottom line, Ford's new efforts included the firing of thousands, the shutdown of several North American factories, which would most likely cause tens of thousands of workers to lose their jobs. During this challenge for Ford Auto, Bill Ford Jr., chief executive officer, along with encouraging employees that innovation serves at the compass for Ford's future, he issued a not so subtle warning that appeared in company speeches, integrated into a $90 million advertising campaign. Ford's primary message to employees was that they had to: "get behind new products and find ways to do things better or...go elsewhere" (Levin 2006). Jon Pepper, a Ford spokesman, stressed another common contention during this time: "This is for keeps. We have to get better...[we have to] change or die" (Levin 2006).

This paper which examines innovation in product development, particularly focusing on Ford, explores the following considerations:

Primary auto industry (global) drivers, along with the corresponding generic marketing strategies and key success factors that the major suppliers should possess, if they are to be successful.

Rationale contributing to Ford's '2000 globalization plan, along with Ford's performance over the period 1994 to 2004.

Potential future marketing strategy (or strategies) for Ford.

Auto Industry Drivers

Strong Product Lineup

Ford and other companies may attempt to cut production costs and utilize a superior distribution system and marketing strategy; however, "a strong product lineup is absolutely critical" ("Ford Motor Company " 2008) for a company to succeed in business. Ford of Europe, Jaguar, Land Rover and Volvo, Ford Motor Company's European operations earned:

combined profit of $1.5 billion, excluding special items in 2007 compared with a combined profit of $111 million, again excluding special items in 2006....a $1.4 billion year-over-year improvement" ("Ford Motor Company" 2008).

Tough Cost Performance Ford contends that its fresh and strengthened product portfolio helped the company improve its net pricing in 2007. Ford reported that although it currently face scost pressures on raw materials persisted, its tough cost performance contributed to contribute to its overall business fundamentals becoming stronger ("Ford Motor Company" 2008). As rigorous environmental standards in developed countries, such as the U.S. And Western Europe, increase the need for more fuel-efficient cars, smaller, more fuel-efficient cars will join the ran of drivers for the auto industry" ("Small Car Market" 2008). Another trigger for this market increasing is that fact that during the coming decade, auto market experts contend that most of the growth in the global automobile industry will evolve from emerging economies such China, India, and Eastern Europe. The most impressive contribution to the auto market's growth in these countries will reportedly be "the fast-growing small car segment. The increasing disposable of middle class population is the key driver of small car market in developing nations" ("Small Car Market" 2008). Regulations relating to the environment currently constitute another contemporary driver for the auto industry. "As a growing number of countries adopt measures to address climate change, auto company profits will become increasingly sensitive to these pressures and will be forced to reduce vehicle carbon dioxide (CO2) emissions and improve fuel economy" ("ADVISORY/New WRI Study" 2003). Marketing Strategies

Examples During 2006, Krisher (2006) relates several examples of generic marketing strategies: "Ford Motor Co. is unveiling what the No. 2 U.S. automaker says is a do-or-die marketing strategy during one of America's most-watched television shows in an effort to show consumers it has been reinvented." For the strategy, "Bold Moves," Kelly Clarkson, a Grammy-winning singer, performs a new song. Ford also sponsors commercials featuring "active people who value family time, leisure and the outdoors. The first ad debuted during Tuesday night's episode of "American Idol," the ratings juggernaut that has attracted more than 28 million viewers to its most recent telecasts" (Krisher 2006). Another generic marketing strategy revealed when Ford reported its April 2006 sales fell seven percent due to increasing gas prices, which lured buyers to more fuel-efficient models. As this marketing strategy links Ford's local and regional advertising with one theme to its national campaign, it "targets values, attitudes and emotion rather than age and other demographics" (Brodesser Akner 2008). It also focuses on conventional media and the Internet.

Ford's 2000 Globalization Plan Ford Motor Co. initiated the implementation of "Ford 2000," its global integration plan, after an Oct 1993 meeting. Where the decision to globalize was reached by key executives in London, UK. Alex Trotman, Ford Chairman and CEO, sserved as the key figure behind Ford 2000. ("The world changed the machine.1996) the rationale for "Ford 2000," Parry-Jones (1996) reports was for Ford to produce a document outlining its business plans and strategies for the next century. Ford 2000 "identifies the company's philosophy in the light of increasing competitive demands in the automobile industry. It examines the increase in new global markets and outlines a unified programme of product development." The following relates components of Ford 2000: "Globalization," a term Ford Motor Company claims it closely identifies with, reflects the way Ford prepares their business for its second century. The strategic intent of globalization in Ford 2000 consists of Ford being perceived, in qualitative term, as the world's leading automotive company. Ford 2000 reportedly constitutes the biggest and most complex realignment Ford had ever undertaken (Parry-Jones 1996).

Ford's Product Development from 1994 to 2004

1994:

The Mustang line gets a facelift with the new SN-95 bodystyle, while the SVT Cobra gains five more horsepower from its 5.0-liter V-8. In addition to a coupe, SVT offers a 1,000-unit run of red Cobra convertibles as Official Indy Pace Car replicas,...with Indy 500 graphics and a numbered plaque. In addition to black and red exterior paint choices, white Lightnings were added to the color palette.

The SVT Cobra convertible, available only in black, gets the option of a removable hard top. Just 499 are built. A limited run of 250 second-generation Cobra R. models roll off the assembly line with even more punch, thanks to a 351 cid Windsor V-8 producing 300 horsepower. The first-generation Lighting enters its final year of production as the F-150 undergoes a major makeover for 1996.

Mainstream product development's Team Mustang took the engineering lead of the SVT Cobra to help fit it with an all-new, hand-built 4.6L 32-valve V8 modular motor, producing 305 horsepower. A run of 1,999 Cobra coupes are built with special color-changing optional paint called "Mystic." A concept sketch of the proposed SVT Contour sports sedan is revealed at the Chicago Auto Show.

The all-new SVT Contour arrives in dealerships in the second quarter as a 1998 model. Based on the 160-horsepower V-6 Contour SE four-door sedan, the SVT Contour upped the 2.5-liter's output to 195 hp while upgrading brakes, wheels tires and suspension tuning. It also added interior refinements and a more aggressive exterior look. SVT reaches the milestone of 50,000 vehicles sold.

1998 SVT Contour

The SVT Cobra gets a new 5-spoke wheel design reminiscent of the popular 1995 Cobra R. rims and additional paint colors, including Canary Yellow. The 1998.5 "E1" model SVT Contour receives new 5-spoke wheels and revised suspension tuning.

Lightning returns to the market based on Ford's new PN96 F-Series platform. Packing a hot new 5.4-liter supercharged Triton V-8 producing 360 horses and 440 pounds-feet of torque, the completely redesigned SVT Lightning sets a new performance standard for sport trucks. Cobra undergoes major changes, including revised sheet metal, an all-new Independent Rear Suspension system, and a 15-horsepower increase. The SVT Contour boasts five additional horsepower and improved handling while claiming a "Ward's Ten-Best Engines Award" for the second consecutive year.

2001 SVT Lightning

Although some DOHC 4.6-liter V-8 powertrain engineering issues keeps the Cobra out of production, the third-generation Cobra R. rolls off the line at the Dearborn Assembly Plant as the fastest factory built Mustang in history. Powered by a 385-horse, naturally aspirated 5.4-liter V-8 and available only in red, just 300 units are built. SVT Contour enters its final year of production as Ford cancels Contour production for the U.S. market. The first "SVT Experience" event is held in Dearborn, MI. 2001

The SVT F-150 Lightning receives updated styling, an aluminum driveshaft, a 3.73:1 rear gearset, and a bump to 380 horsepower, helping to make Lightning the fastest production truck on the planet. The SVT Mustang Cobra gets new ultra supportive leather/alcantara seats with an embroidered cobra in the backrest, the addition of a polished wheel option, and "COBRA" reappears on the rear fascia. An SVT Focus model is unveiled to much fanfare at the Chicago Auto Show.

2002 SVT Focus

The all-new SVT Focus enters the sport compact market with a unique 170-horsepower DOHC Zetec I-4 engine, six-speed manual gearbox, four-wheel disc brakes and a sport-tuned suspension riding on 17-inch wheels. The much-anticipated supercharged 2003 SVT Mustang Cobra is revealed at the Chicago Auto Show. Making 390 horsepower and 390 pounds-feet of torque, the '03 Cobra becomes the most powerful production Mustang in history. A new color, True Blue Clearcoat, is added to the Lightning exterior paint palette. Meanwhile, a detuned version of the SVT-developed supercharged Lightning engine finds its way into a 2002 Ford F-150 Harley-Davidson specialty truck and promptly helps it double sales over the previous year's F-150 Harley truck model. SVT reaches the milestone of 100,000 vehicles produced.

The SVT Cobra rocks the enthusiast world with the performance of its Eaton supercharged DOHC 4.6-liter "Terminator" V-8. It also features a 6-speed gearbox, redesigned front and rear fascias, new "heat-extraction" hood, special rocker moldings and side scoops, and several new interior appointments. To help celebrate its 10-year Anniversary, SVT offers a 10th Anniversary Special Edition package on the Cobra Coupe or Convertible, with production limited to a total of 2,003 units. Lightning is certified as the "World's Fastest Production Pickup Truck" by Guinness World Records, Ltd., clocking a top speed of 147 miles per hour on a test track. A practical 5-door version and a special 3-door European Appearance Package is added to the SVT Focus model lineup.

2004 Ford SVT Mustang Cobra Mystichrome

On the heels of the best-selling Mustang Cobra of all time (SVT produced more than 13,000 Cobras for the '03 model year), Cobra adds two new exterior paint colors, plus a limited-edition (1,010-unit run) Mystichrome Appearance Package. With an all-new Mustang due at a new facility for 2005, the storied Dearborn Assembly Plant -- home to the Mustang for 40 years -- is closed down. With an all-new F-150 waiting in the wings, the SVT Lightning also entered its final year of production as the best-selling and longest-running sport truck nameplate of all time. With a revamped Ford us moving to a new assembly facility, the SVT Focus closed out its critically acclaimed production run ay making the full-featured European Appearance Package available in both 3- and 5-door configurations. With all three of its 2004 products on revised platforms and in new assembly plants for '05, SVT ended 2004 with nearly 145,000 sales over 12 years of production. (Ford Motor Company 2008)