There are several strategic marketing and business reasons why Ford waited a decade to refresh it’s popular Explorer SUV. To fully realize this concept, we must first have a basic understanding of what strategy is. We learned in Module one’s lecture that strategy is a game plan for the long-term survival and growth of a company. We discussed that it is important to maintain fit between and organizations goals, capabilities, and changing opportunities. We also discovered that strategy is tied to organizational objectives and not necessarily organizational outcomes.
In this discussion, I will outline five factors that influenced Ford’s decision.
One of the major factors that could cause a company to pause development of a product is the economy. Recall the economic downturn in 2008 and 2009. Sending a product to market when consumers do not have enough funds to purchase it fails to help a company achieve its operational outcomes of generating revenues and increasing share holder wealth.
“A business must comply with a standard and not impose high prices during times of economic recession1.” Fortunately for Ford, in the wake of the financial downturn a Business Insider articles explains that the Explorer quickly bounced back from poor sales and rising gas prices.
In our discussions of module one, we learned about the importance of segmenting, targeting, and positioning. Ford may have used the decade long delay to better understand their target market and the social and cultural factors that influence them. Also, in module one, we discussed the customer value proposition and marketing being more than just a sales technique.
McDonald et al, says that the product or service can be an excellent offer, but if there are no customers that want your specific offering there will be no business3. Grouping customers together and deciding which customers to target helps companies to position themselves to make the right decisions and give the best product offerings. This fact is demonstrated in the Business Insider article that was listed as recommended reading, “Ford knows its Explorer owners well, so it asked them what they wanted in the new vehicle.” Listening to consumers helps to shape a better product which in turn strengthens brand image and decreases risk that coincides with a company’s target market not enjoying or wanting their product.
Another factor that may have weighed heavily on the decision to not refresh the Explorer were the political and legal issues faced by the Ford Motor Company. Ford and many other car brands were negatively impacted by the Takata Air bag recall. Although, according to the Ford’s website, the Ford Explorer was “not in the highest priority of vehicles requiring recall.” This negative image effects promotion as well as distribution. It is difficult to promote a new Ford and distribute current Fords when the car’s airbags are exploding “spraying shrapnel that could kill or injure4.” These negative words and funds spent in repairing recalled vehicles directly impact operational outcomes of cost and profitability. Having to replace so many parts is counterproductive to keeping costs low, without low costs, profitability margins will shrink.
For a long time, the Explorer has dominated the mid-size SUV market. In a Bloomberg article one of Ford’s executives Craig Patterson says that the Explorer was doing well, so a product refresh was not something that was needed. This demonstrates an attitude of complacency and demonstrates why Ford may not have been in a rush to update the Explorer. The CNBC article that was required reading for this assignment tells us that there are many rival products that are new to the market or products that have had many refreshes, Ford is now being forced to step up to the plate because of these new entrants.
According to a Bloomberg article Ford is often criticized for not focusing on technology. This factor goes hand in hand with our previous strategic factor competition. Ford may not have previously seen the value in investing in technology, but with many of the newer SUVs sporting premium technology packages, to stay competitive and relevant it was high time to make a change. A Ford executive says that it was time for the Explorer to include “the most modern technology.” In the past, Explorer owners may have been fine with what was offered, but when the consumer spoke Ford responded. Another factor in the technology strategy could have been to spend funds developing other forms of technology instead of putting them into the research and development of the Explorer. Mentioned on Ford’s website is a partnership with other companies in the research and development of autonomous vehicles.