Ford: A Sound Marketing Strategy to Deliver Long-Term Growth

| About: Ford Motor (F)
Optimism about Ford (NYSE:F) is no news: there is a positive sentiment in the Street about this company. For investors, though, the lingering question is whether this optimism is justified. Indeed, Ford was better able to weather the economic storm that brought its American peers to their knees, but does it mean that it has the right stuff to succeed in the long term against the entrenched Asian importers? In my recent article “These Stocks Should Benefit From an Increase in Consumer Confidence”, I expressed my belief that Ford (F) is particularly well positioned to capitalize from the projected surge in the automobile market for 2011 and beyond. I pointed out that, “Ford has not only a fantastic product line: its advertising is absolutely spot on … and it’s brilliantly leveraging the ‘digital’ mindset of today’s consumers.” I want to expand on those points, explaining why I believe Ford actions in these areas profile a long-term winner.
For the sake of brevity, I will not elaborate on my comment about the product line. Experts and laymen alike are raving about the vibrant line-up Ford is delivering. A renewed emphasis on design, quality and focus on key flagship models is allowing Ford to be more effective in delivering the type of cars the market is demanding. Yet, equally - if not more - important than having the right product line-up is to a) rebuild among consumers the credibility and the affinity for the brand, tarnished by years of poor quality and complacency, and b) turn that credibility into a sustainable competitive advantage over the competition in the eyes of the consumers. By my assessment, Ford is doing a great job on those areas with a three-pronged strategy: a) Building rapport through authenticity in their communications; b) Leveraging new codes to create a more meaningful experience; and c) Capitalizing on a renewed sense of national pride.
Authenticity in communications. As indicated, the main challenge that this company – as well as the other American auto makers - had to overcome was convincing consumers that they could trust Ford again. Today’s consumer is shrewd and skeptical. After years of abusive marketing practices, with companies over-promising in their communications and under-delivering in their products and services, the typical corporate speak falls in deaf ears. Consumers demand authenticity. A personal, casual, plain dialogue in which they are talked to, not talked at. Also as a consequence of such skepticism, consumers look up to their peers in order to make purchase decisions. They might not trust the companies, but they trust other consumers to tell things like they are. This mindset demands from companies to completely change the way they communicate with consumers. They need to move from the unrelenting emphasis on product and its features of years past, to truly show the personal side of the organization: the values, the thinking and the people behind the promises that are made. Consumers today hesitate to trust impersonal corporations, but are willing to trust their people. They might not believe the hype, but are willing to believe solid, sensible arguments. And ultimately, they want all that to be confirmed by their peers. Ford is embracing this new way of doing marketing. A few examples to illustrate this point: Ford found the right spokesperson in “Dirty Jobs” host, Mike Rowe, who started supporting the F-150 3-4 years ago. Rowe’s down-to-earth, casual and approachable personality engenders immediate rapport. In the communications featuring Rowe as the embodiment of Ford, he is in an active dialogue with consumers, speaking in their language about issues they care about. In another initiative, Ford allowed consumers to switch their cars for a Ford for a few days, and then share their experiences with their peers. Rather than telling consumers things were better, they had them experiencing it through trustworthy peers. Ford’s communications were believable. And consumers reward that.
Sometimes we tend to underestimate the power of the right advertising approach. Yet, advertising –or communications in its most ample sense- is nothing but the brand speaking. It is the way for the consumers to judge whether a brand, not just a product, can be trusted. Ford is building a warm, approachable and trustworthy character. This is the first requisite for sustainable leadership and Ford passed.
A more meaningful experience: Ford is redefining the car experience by looking at the market with different eyes and hence creating new paradigms. In “Apple vs. Microsoft: Embrace the Zeitgeist”, I explained that:

“Most companies invest a tremendous amount of resources talking to consumers, gathering insights, trying to understand what is important for them. All too often, though, those insights are unconsciously sifted through previously established paradigms. These paradigms are based on the knowledge and understanding accumulated by a company or industry through the years: what worked or what didn’t in the past, previous understanding of the consumers and products, assumptions built on experience and so on. Paradigms die hard.

"The world changes around us, but we have a tendency to cling to old paradigms. More often than not, new insights are either forced to fit the old paradigms or simply, discarded as outliers. Even when new insights are gathered and understood, the second sin most companies go through is to stubbornly try to, once again, force an existing solution into meeting the new insight. Most companies develop an introspective understanding of the world, of their industry and of their own capabilities, and end up believing it as the absolute Truth. That is, we tend to fall in love with ourselves and end up drinking our own Kool Aid.”

Everyone would recognize the old auto industry in that description. Yet, I’d submit that even after the reshape of the last years, Ford is the only company in the industry that is truly acting based upon new paradigms. I credit Alan Mulally for instilling a different way to think about cars at Ford. Again, let me illustrate my point: everyone uses the conventional approach to describe and deliver the car experience: fast, powerful, zippy, luxurious, plush, etc. Indeed, the mechanical driving experience is absolutely important; but it is just "jacks to enter," the minimum requirement to be in the business. Ford has gone one step beyond … or shall I say, outside; they took a broader look at the consumer lifestyle and what defines it today. It is easy to focus on your own category and disregard what’s happening around you as exogenous, not related to what consumers seek and value in your own piece of paradise. Yet, successful companies realize that what we see around us are all expressions of deeper changes in the way consumers perceive the world and consequently, what they value in a brand experience. They are interrelated at the core and tell a story of what are the fundamental motivations behind consumers’ behavior. What I dubbed the "digital" mindset in my introductory comment refers to the experiential codes consumers have learned to expect and value out of the way we get our information and interact with the world nowadays. iPods, iPhones, Blackberries, iPads, DVRs, Facebook, Twitter … these are the tools and gadgets on which we rely for work, entertainment, information and social relationships, and which are a significant part of the experiences we value. Our relationship with products has changed, and more than the primary functional benefit they were supposed to deliver in the past, now we expect them to become comprehensive experiential enablers. In that sense, the car becomes a gadget itself and must deliver as such. Ford is re-shaping the car experience by building in those codes that we value today. A very vivid and perhaps overlooked example of that: Ford is turning the instrument panel into more than just a collection of gauges to become a key driver of the overall experience. By building in the visual cues we’ve learned to value from our new digital life, they’ve enhanced the value of the proposition. It makes sense: the visual car experience is, for the most part, what you see in front of you while driving; make it exciting, vibrant and that in turn will immediately elevate the whole satisfaction with the car. In the same vein, Ford has developed one of the best integrated entertainment and communications system with the voice-activated SYNC/MyFord Touch feature, which has made available even in its smallest Fiesta model. The importance of these subtle elements Ford is leveraging can’t be underestimated. Ultimately, the rapport with a brand and the purchase decision is driven by emotion.
Capitalizing on the renewed American pride: Last but not least, I think Ford is smartly leveraging the revival in American pride that is sweeping the country as we recover from the devastation of the Great Recession. Without flag-waving or chest-beating stunts, Ford is positioning itself as an example and a validation of such pride. The Great Recession shattered not only the Americans trust in big corporations, but most importantly, our self-confidence as a nation. We felt vulnerable and unsure of our real capabilities. In this environment, Ford made sure to equate its resilience and renewed drive with that of the country, thus creating a deeper and more meaningful sense of affinity with consumers.
These three dimensions of Ford’s marketing strategy are sound and they are building significant momentum for the brand among consumers. As a brand, Ford is showing a lot more energy, drive and consumer focus than Toyota or Honda, and it will translate into significant, sustainable market share gains the long-term. It’s for these reasons that I believe it’s time to take Ford stock for a prolonged test drive.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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