This case was prepared by Gigi Cothier, under the supervision of Markus Christen and DavidSoberman, Assistant Professors at INSEAD. It is intended to be used as a basis for class discussionrather than to illustrate either effective or ineffective handling of an administrative situation. Althoughthe case is based on a real life situation, some names and figures have been disguised. Theinformation in this case had been obtained from Ford France, public sources, and industry interviews.
Ford Ka (A)Breaking New Ground in the Small Car Market
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Gilles Moynier, Brand Manager at Ford France of Ford’s latest and smallest model, the Ka,sat in his office in Rueil-Malmaison near Paris in February 1996 and reflected on the meetinghe had attended the day before. Goldfarb Corporation, a market research agency, had made apresentation on possible segmentation and targeting strategies for the Ford Ka. The Ford Kawas scheduled for launch at the Paris Motor Show in October 1996.
Before he could develop a marketing strategy for the Ka in France, Gilles Moynier needed todetermine the target market for the new product. The car industry traditionally segmented thecar market into size-tiers but Europe’s market for small cars was changing rapidly. Thechanges raised significant concerns about continuing with “traditional” size-based marketsegmentation. Alternative segmentations did not reveal a clear target for the Ka either. Timewas running short, as he needed to present the marketing strategy for the Ka to seniormanagement at the beginning of the following week.
Company Background
With its headquarters in Dearborn, Michigan, USA, Ford was the second largest manufacturerof cars and trucks in the world after General Motors, in 1995. It sold 6.6 million vehiclesworld-wide for a total of US$ 110 billion resulting in a net income of US$ 2 billion, comparedto US$ 107 billion and US$ 3.9 billion, respectively, in 1994. In 1995, sales in Europeaccounted for 26% of total dollar sales. Ford entered the European markets soon after thecompany’s incorporation in the USA in 1903. By 1995, Ford had 47 automotivemanufacturing locations across Europe, including major industrial complexes in the UK andGermany and assembly plants in Spain, Belgium, France and Portugal.
Ford sold its first cars in France in 1907. In 1995, Ford was the largest non-Frenchmanufacturer with a 7.3% unit share of the total passenger car market in France, behind thedomestic manufacturers PSA, which owns Peugeot (17.7%) and Citroen (12.5%), and Renault(29.2%). Sales and net income totalled FF17.7 billion and FF 0.28 million, respectively,down from FF 18.7 billion and FF 0.64 million, respectively, in 1994.1
Exhibit 1 shows the different Ford models marketed in France in 1995. Apart from thedistribution of Ford cars, of the Ford France Groups’ activities included the distribution ofJaguar cars and the manufacturing of components at two locations.2
At Ford, brand managers were responsible for marketing individual Ford cars at the regionallevel (France, of course, was one of Europe’s most important regions for Ford). The Ka
1 The prevailing exchange rate for the French Franc in early 1996 was roughly 5 FF per US $.
2 Ford acquired Jaguar in 1989. Plants at Bordeaux-Blanquefort and Charleville-Mezieres producedcomponents used in the assembly of Ford vehicles throughout the world.
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Brand Manager in Ford France had a great deal of responsibility as it was considered to be amajor initiative in the French market.3
The Small Car Market in France
Table 1 shows the typical categorisation of cars used by the industry as well as automotivemagazines in Europe. Apart from the emergence of minivans and sports utility vehicles, thiscategorisation had changed little over the years. Exhibit 2 shows the market size of thesedifferent categories along with Ford’s market share position in France.
Table 1: Categorisation of Cars
Category1 Description Examples
A & B Small carsless than 390 cm long
Ford Fiesta, Fiat Cinquecento, Opel Corsa, Peugeot106 and 205, Renault Clio, Renault Twingo, VW Polo
C Lower medium cars Ford Escort, Opel Astra, Peugeot 306, RenaultMégane, VW Golf
D Upper medium cars Ford Mondeo, BMW 3 Series, Peugeot 406, RenaultLaguna, VW Passat
E Executive cars Ford Scorpio, Audi 6, BMW 5 Series, Mercedes E-Class, Renault Safrane
F Luxury cars Jaguar XJ6/12, BMW 7 Series, Mercedes S-Class
G Cabriolets BMW Z3, Mazda MX-5, Mercedes SLK, PorscheBoxster
J Sports utility vehicles(Dual-purpose vehicles)
Ford Maverick/Explorer, Opel Frontera, Range Rover,Toyota RAV4, Toyota Landcruiser
M Minivans Ford Galaxy, Fiat Ulysse, Renault Espace, VW Sharan
S Coupés Ford Probe, Mercedes CLK, Opel Tigra
1 The category labels are those used by Ford France. Other organisations use different labels, but thecategorisation remains the same.
As shown in Table 1, a car less than 390 cm long is categorised as a small car. There arehowever, a few exceptions to this rule. For example, the Opel Tigra is categorised as a sportscoupé and the Toyota RAV4 as a sports utility vehicle even though both are less than 390 cmlong.
3 The Ka was launched in other European markets but the case focuses solely on the initiative and activities
in France given the Ka’s importance in that market.
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In France, small cars (i.e., categories A and B) accounted for 43.7% of the 1.9 million newcars sold in 1995. In contrast, they accounted for 32.2% of the 12 million new cars sold inEurope. The small car market was more developed in France than in most other Europeancountries largely due to taxation policy. In France, owners of small cars pay significantly lessin car taxes than owners of bigger cars or owners of cars with powerful engines.
Since the size of a car was correlated largely with production cost and thus with price, thisproduct categorisation led car manufacturers to segment customers according to their incomeand age. Small cars were sold to younger, lower income buyers and large cars to older,wealthier buyers and families. Exhibit 3 shows a breakdown of small car buyers byhousehold income, age and life stage for France. Ford traditionally used these variables toclassify the small car buyers into four target groups based on financial constraints and thepresence of children. This is also shown in Exhibit 3.
In the past, manufacturers specialised in certain categories of cars rather than producing a fullrange. As a result, manufacturers of smaller cars like PSA, Renault or Fiat concentrated onachieving low production costs through high volume and luxury car manufacturers likeMercedes or BMW concentrated on differentiation through product features and quality.
In the 1990s, the small car market became increasingly competitive with the launch of newmodels and the upgrading of existing ones. Opel updated the Corsa in 1992 and Volkswagenrelaunched the Polo in 1994. Renault added the Clio (1990) and the Twingo (1992), and Fiatthe Punto (1994) and a restyled Lancia Y (Lancia was owned by Fiat).
Moreover, manufacturers that had traditionally focused on larger cars began to show interestin the small car market. For example, BMW acquired Rover in 1994, partly for Rover’s lineof smaller cars, and Mercedes announced its own entry into this market for 1997 with theintroduction of the Mercedes A-Class, which would be followed by the Smart car – a jointventure with the Swiss watch manufacturer SMH. Exhibit 4a provides detailed informationabout the most important small car models distributed in France in 1995.
The largest manufacturers of small cars in 1995 were Renault (36.6%) and PSA with Peugeot(18.1%) and Citroen (8.0%). For the last four years, the Renault Clio remained the marketleader despite a declining market share. In 1995, it had a market share of 20.1%. With theFiesta, Ford had a unit market share of 7.6%. Other foreign manufacturers with sizeablemarket shares in the small car market included the Italian manufacturer Fiat (11.0%) and theGerman GM subsidiary Opel (7.6%). Exhibit 5 gives market share information for the best-selling models for 1992 to 1995 and Exhibit 6 a demographic description of buyers by model.
Fragmentation of the Small Car Market
Over the past 10 to 20 years, a series of environmental and demographic changes significantlyaffected the French car market. Increased road congestion and the problem of parking inlarge cities made small cars increasingly attractive to consumers. A further advantage ofsmall cars was their low fuel consumption; in France, fuel prices remained high throughoutthe 1990s due to tax which accounts for more than 85% of the retail price of fuel. Needless to
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say, environmentally conscious people also appreciated reduced toxic emissions associatedwith smaller cars.
There were also important demographic changes that made small cars a more attractive optionto the buying public in the mid-1990s (Exhibit 7 shows the changes in householddemographics for France). First, the average size of households had declined to less thanthree and this change increased the feasibility of small cars as a primary source of familytransportation. Second, increases in the number of working women in France led to anincrease in the number of women buyers. This too, led to increased demand for small cars aswomen have a relatively higher preference for small cars.
These changes brought new buyers to the small car market and raised questions about theunderlying rationale for the traditional market segmentation based on the size of a car. AsChristian Digoin, Sales and Marketing Director of Ford France, explained:
“The traditional categories no longer mean anything today. The traditionalproduct categories were based on car size, engine output and the price of a car. Ithink this categorisation is no longer appropriate. What drives a customer’schoice are his needs and today he can find a solution to his needs with a C, D or Bcategory car. Renault is one of the car manufacturers that better understands thesechanges. For example, the Mégane Scénic, due to be launched [in 1996], is a Ccategory car with the interior space of a D category car and the price of a C+category car. This car is breaking the normal categorisation barriers.”
By 1996, manufacturers were confronted with an increasingly fragmented small car market,reflecting an increase in the variety of consumer needs and manufacturers’ positioningstrategies. For many customers considering the purchase of a small car, price was no longerthe most important factor. Older customers who valued the advantages of smaller carsexpected features similar to large cars due (in many cases) to previous experience with largecars. Positioning research conducted for Ford in January 1996 showed that future small carbuyers “…will be looking for more from their cars next time… – improved safety features(airbags, ABS), robustness, more space/functionality, power steering, greater comfort (air-conditioning) and greater performance (power).”
As a consequence the traditional B category was split into 3 sub-categories. “Basic” Bcategory cars provided the product attributes that had been associated with small cars in thepast. “Trend” B category cars addressed the needs of customers who were looking for betterperformance and more features in a small car. “Other” B category cars addressed the needsof customers who were looking for a luxury small car. Table 2 provides a description of theseemerging product sub-categories and provides examples of the cars in each sub-category.
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Table 2: Emerging Product Categories in the Small Car Market in France
Category Description Examples
A Practical ‘run-arounds’; less than 360cm long.
Fiat Panda, Fiat Cinquecento, RoverMini, Seat Marbella
Basic-B Compact, stylish, good value,manoeuvrable urban cars; less than360 cm long.
Citroen AX, Lancia Y, Nissan Micra,Peugeot 106, Renault Twingo, Rover100
Trend-B Improved driving dynamics; levels ofequipment previously offered only onlarger cars; 360 cm – 400 cm long.
Ford Fiesta, Fiat Punto, Opel Corsa,Peugeot 205, Renault Clio, VolkswagenPolo
Other-B1 Luxury and sports derivatives; 360 cm– 400 cm long.
Mercedes A-Class, Renault ClioBaccara, Peugeot 205 GTI
1 The Other-B sub-category also overlapped with small sports coupes (e.g., Opel Tigra) and small sports utilityvehicles (e.g., Toyota RAV4).
In France, the approximate unit market sizes of these sub-categories as a percentage of thetotal B category were: A category 6%, Basic-B category 40%, Trend-B category 52% andOther-B category 2%.
These ongoing changes provided manufacturers with considerable latitude for innovativeapproaches to the small car market. Marketing propositions were introduced to differentiatesmall cars ranging from good value to aspirational lifestyle. For example advertisements forthe Volkswagen Polo stressed its reliability and affordability: “a condensed version of theVolkswagen Golf.” In contrast, advertising for the Renault Clio used good-looking actressesto give the car a glamorous, chic image. In addition, manufacturers had begun to reorganiseproduct lines by focusing on different customer groups with different needs (see Table 3).
Exhibit 8 shows the position of different cars in a perceptual map based on the views of smallcar buyers in 1993 and indicates the evolution of the B-category.
Table 3: Major Needs of Different Customer Groups
Customer Group Major Needs
Middle-aged buyers Safety, reliability and value
Singles Individuality and personality
Families Functionality, space and reliability
Women Combination of all factors, value
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Ford’s Strategy in the Small Car Market
Ford’s decision to develop the Ka was a response to the changes in the small car market. Fordhad long been present in the market with the Fiesta. At the time of its launch in 1977, theFiesta was a highly sophisticated vehicle with a 1100cc engine and a top speed of 140km/h,and features such as coiled suspension, rack and pinion steering, dual circuit brakes, and frontwheel-drive (see Exhibit 4b for a glossary of technical terms). For many years, the Fiesta wasone of the top three selling small cars in Europe and among the top five in France.
In 1989, Ford decided that the Fiesta would be replaced by the “New” Fiesta, which wouldseek to respond to the changing demands of small car buyers by adding both drivingdynamics and safety features normally associated with larger cars. With the “New” Fiesta,Ford wanted to target the emerging Trend-B category. The positioning statement for the“New” Fiesta described it as “a competent, safe, dynamic car with outstanding comfort.” Theobjective was to use different versions of the “New” Fiesta to target different areas of themarket. For example, the Luxury “New” Fiesta was designed to appeal to small car buyerswho were looking for “big car” luxury in a small car. Accordingly, the Luxury version wasequipped with features such as seat adjustments, a leather steering wheel and courtesylighting. In contrast, the Family version was designed to appeal to buyers who were lookingfor a small car that could serve as primary transportation for a small family. Not surprisingly,the Family version included a full centre console, vanity mirrors, a pollen filter, and aretractable rear-seat. The marketing for the Family version emphasised the Fiesta’s manysafety features. However, as the market continued to fragment, Ford realised that the “New”Fiesta, even with its many versions, could not satisfy the increasingly varied needs of buyerswithin the small car market.
As a result, Ford decided to continue to sell the original version of the Fiesta targeted at theBasic-B buyer by offering basic, cheap transportation. The original Fiesta possessed thenecessary attributes of low price, style and manoeuvrability, while the “New” Fiestapossessed features of the Trend-B category. At that point, several competitors had alreadyintroduced multiple small car models. Fiat competed with four models - Panda, Cinquecento,Uno and Lancia Y, Renault with two – Renault 5 and Clio, and Peugeot with two – 106 and205.
In 1992, however, Ford had to re-evaluate its strategy because of the dramatic success of thenewly launched Renault Twingo (see Exhibit 4a for details about the Renault Twingo).Within 12 months, the Twingo had gained a market share of 8.9% and become the third best-selling model in the small car market in France. This was especially impressive because itwas originally targeted at a more limited segment – buyers looking for manoeuvrability andurban transport – than were the Renault Clio or the Peugeot 106, the two top selling brands inthe small car market. “The magnitude of the success of the Twingo took everyone bysurprise,” said Thierry Bonnet of Ogilvy and Mather France, the ad agency of Ford France,“including Renault.”
The Twingo changed the characteristics of the Basic-B category, forcing other manufacturersto offer more than basic transportation to remain competitive. The Twingo gave customers avery distinct, original style, flashy colours, greater functionality and more interior space thancars of similar size. The Twingo was the pioneer that confirmed a demand for an urban,
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stylish car. Ford management felt that the Fiesta brand line did not have the appeal tocompete with the Renault Twingo.
The Birth of the Ka
The idea for the Ka is attributed to Jack Nasser who, at the time, was head of Ford’s Europeanoperations. Given the challenge from the Renault Twingo and the importance of the small carmarket to Ford, Ford needed to respond quickly. Ford management decided therefore, todevelop the Ka using the same chassis as the Fiesta. While this saved time and cut thedevelopment costs to US$ 250 million (instead of the usual US$ 1 billion or more to developa new car), it restricted Ford’s ability to build the Ka on the basis of technical innovation.Instead, the idea was to use innovative styling, features and manoeuvrability as a basis formarketing the Ka. Also, Ford had located production capacity of 250,000 units per year,which corresponded to the goals for Europe. Exhibit 9 provides detailed information aboutthe Ford Ka.
Ford’s Claude Lobo who headed the team that developed the Ka emphasised:
“We purposefully designed a car that was out of the ordinary, for a marketsegment in which we were not yet present and keeping in mind the urban,educated customer who is self-confident and rejects the commonplace.”
And Gilles Moynier explained:
“Renault spent more time researching the needs of small car buyers at the productdevelopment stage of the Twingo than we did with the Ka. One of the maindisadvantages of a small car is the lack of space. Renault decided to maximise theinterior space of the Twingo by designing an adjustable rear seat. This allowedcustomers the option of enlarging the luggage compartment or extending leg-space for rear seat passengers. We did not have the luxury of time. We could notfirst research consumer needs. The Ka is already developed and therefore, weneed to find an appropriate target market for the product, rather than the other wayaround.”
“The Ka’s styling is one of its key attributes. It is more innovative than that of theTwingo but the car does not change consumer perceptions of what a small car canoffer to the extent the Twingo did.”
While being different in many respects, there was a strong similarity in the styling approachestaken by Ford with the Ka and Renault with the Twingo. As noted by Renault managersduring the Twingo launch in 1992,
“For at least a decade, the car industry has been working at making cars that asfew people as possible dislike. Renault had reached a point where it could nolonger keep producing risk-free designs.”
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Market Research
The market research to identify target customers for the Ka consisted of two stages. First,following Ford’s standard approach, reactions and attitudes of potential customers towards theKa were elicited in focus groups from three potential target groups: first-time buyers, singleworking professionals, and multi-car households. Thirty focus group sessions wereconducted and the groups were recruited on the basis of demographic and lifestyleinformation from Ford’s existing buyer surveys. Second, more structured personal interviewsof potential customers were used to better understand the competitors in the small car marketand customer perceptions of the Ka relative to its potential competition. In addition, a seriesof customer characteristics and general attitudes were measured.
The Meeting
Matthew Sell and Jeff Nash of Goldfarb Market Research presented the market researchresults.
“The motto for the Ka from day one has been ‘not business as usual,’ and theconsumer research we have conducted seems to justify this approach.”
“Our traditional targeting methodology does not seem to be working. Duringfocus group interviews, we found that the response to the Ka is polarised. Thereare pockets of interest emerging in the three potential target groups but there is notone clear target emerging as did for the “New” Fiesta, i.e., 25-44 year oldprofessionals in white collar occupations.”
“There are surprisingly strong reactions from customers to the styling of the Ka,people either like or dislike it. Relatively few people had a neutral reaction.However, the arguments were different depending on the make-up of the focusgroup. The younger people felt the Ka is too much of an image risk. Olderpeople liked it but thought it was for a younger person. Men saw it as a femininecar and women were concerned that they might not be taken seriously driving acar that looks frivolous.”
“Our conclusion is that the Ka does not seem to be a life-stage car. It captures theimagination of people who are not necessarily young or old. Older peopleresponded favourably to the Ka, but this is not unusual in the small car market.Let us not forget that 72% of Twingo buyers are over 35 years old.”
“The second type of research provided some interesting insights about customerperceptions. First we asked respondents to choose their three most preferred andthree least preferred cars from a list of 10 small cars.4 Similar to the focus groupresults, we find a polarised reaction to the Ka (Figure 1). About 45% of the
4 Besides the Ford Ka, the cars included in the survey were: Volkswagen Polo, Renault Twingo, Fiat
Cinquecento, Peugeot 106, Ford Fiesta, Opel Corsa, Nissan Micra, Opel Tigra, and Toyota RAV4 (seeExhibit 4a for more information about these cars).
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respondents listed the Ka among their top three choices of the 10 small carsprovided. However, just over 30% of the respondents listed the Ka among theirbottom three choices. This is a fairly strong negative rating given that therespondents were selected among potential target customers.”
For those people who listed the Ford Ka as one of their top three choices, the Renault Twingoand the Opel Tigra were frequently in the top three as well. Those who put the Ka as one oftheir bottom three choices had most often chosen the Peugeot 106 and the Volkswagen Poloas their favourites.” A demographic description of ‘Choosers’ (those who put the Ka amongtheir top three choices) and ‘Non-choosers’ (those who put the Ka among their bottom threechoices) is provided in Exhibit 10.
“From the survey results we developed a series of correspondence maps (Exhibit11). These maps show simultaneously the position of the different cars relative toa selection of descriptive adjectives for ‘Choosers’ (Exhibits 11a) and ‘Non-choosers’ (Exhibit 11b). From these maps we can see that ‘Choosers’ perceivethe Ka to have similar attributes than the Renault Twingo and the Opel Tigra,namely flashy, sophisticated, fun to drive and futuristic. ‘Non-choosers’ alsoperceive it as futuristic. But in general they see in the Ka similar attributes as theNissan Micra and the Fiat Cinquecento have. These two cars were the leastpreferred cars by all types of respondents. In addition, ‘Non-choosers’ perceivethe Ka as ugly.”
Figure 1: Ranking of the Ford Ka from a List of Ten Small Cars
0%
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In Top 3 In middle 4 In bottom 3
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The Segmentation
Gilles Moynier sat back in his chair. The market research provided a lot of information, butno clear answer about who the target customers should be. As a result of the excitement theKa project generated at Ford, everyone had something to say and they made sure that Gillesknew about it.
As if he needed a reminder of the fact that time was getting short, Marie-Louise, his assistant,walked in and asked him when he would have a draft of his presentation ready for her toprepare. Not having a clear answer for her, Gilles decided to see what she thought about theKa, “Marie-Louise, since everyone in this organisation seems to have a view on the subject,who do you think would be the typical Ka buyer?” She was taken aback, it was rare that heropinion was sought in marketing decisions. “Well, it seems to me that this is Ford’s realchance to attract women buyers. I have never wanted to browse in a Ford show room before,but the Ka is the first model that might tempt me. I think single working women would reallybe attracted to this car.”
Gilles smiled. A gender segmentation of the market was what he and his marketing teamwere arguing for. He had already thought of a folding shopping caddy that could be wheeledstraight out of the super-market and into the boot of the Ka. There were solid reasons formarket segmentation by gender. In 1996, 38% of all cars in France were driven by womenand three out of every ten car buyers were women. In addition, 44% of women car buyersinterviewed said the reason they bought their current car was that it was a small car for urbandriving as opposed to 25% of men interviewed. However, Ford’s advertising agency inFrance, Ogilvy and Mather, was concerned that this approach had already been taken by thePeugeot 106 and would be unoriginal.
Instead, the advertising agency was arguing for an attitudinal segmentation of the market. Inother words, it felt that the market should be segmented according to consumer life-styles andbehaviour. From the market research, Goldfarb had defined four main segments: (i) FreedomLovers – described as outgoing, social and active; (ii) Attention Seekers – innovators, opinionleaders and flashy; (iii) Sensible Classics – responsible, risk-averse, traditionalists; and (iv)No-nonsense Neutrals – brand wary, TV watchers, unenthusiastic consumers. Thesesegments emerged from the assessment of different statements taken in the survey. Exhibit 12provides a description and a demographic profile of the four segments and Exhibit 13 showstheir overall choice pattern of the Ford Ka.
The agency argued that the Ka’s targets should be the first two groups, who would help act asambassadors to the third group. As Thierry Bonnet of Ogilvy and Mather had argued soforcefully:
“This is Ford’s big chance to make an impact with some ground-breakingcampaigns. The Ka is made for design-conscious consumers who want to belooked at. We must make sure they look at us by the creativity of our marketingand advertising.”
Gilles felt nervous. He could see advertising budgets soaring in an attempt to attract anelusive ‘behavioural target’ and he could predict senior management’s reaction to this kind ofsegmentation scheme.
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Senior management was averse to risk and felt that a traditional demographic segmentationshould be used. As they had pointed out, small cars remained a first-time buyer’s step on thecar-buying ladder. Age, income and household size remained the key factors definingcustomer segments and the target groups should be working singles, first-time buyers andmulti-car households. They brushed away the fact that reaction amongst these groups in thefocus group sessions had been mixed.
“We are not trying to obtain Renault’s market share in France but a third of thatfigure. We know how to target these segments, we have done it before and itworks.”
Gilles Moynier had heard a different opinion from dealers in the Ford network. As Jean-Pierre Gaillot, manager of a dealership in Puteaux, a wealthy Parisian suburb put it,
“We do not need fancy, esoteric advertising campaigns to sell the Ka. We knowthe needs of our customers and we need a city car that competes directly with theRenault Twingo, Nissan Micra and Peugeot 106. Segmentation based on whichcar a customer already owns and the targeting of Twingo buyers will enable us toachieve our commercial objectives. These customers can be reached via directmailings.”
This was a traditional method of car marketing and it presented many opportunities for directmarketing since in France, mailing lists of car owners by model and brand were readilyavailable. The problem that Gilles could see with this kind of an approach was that currentTwingo buyers may now be looking to buy a C or D category car if their needs had evolvedwith time. Furthermore many of these customers might be reluctant to buy a non-Frenchbrand.
Which of these different segmentation approaches and targeting strategies should he use orhad he failed to consider a more appropriate segmentation? How should he compare thedifferent segmentation approaches? It was clear that Ford had developed the Ka beforeresearching consumer needs, so he needed to find consumers whose needs the Ka can meet.This was certainly a different exercise to the marketing he had learnt in business school.
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Exhibit 1Description of Ford’s Product Line of Passenger Cars for France in 1995
Ford Fiesta Ford Escort Ford Mondeo Ford Scorpio
Typical Model 1.3i Navy 1.8D Navy 1.6i 16v 1.8TD 1.8i 16v 1.8 TD 2.0i 16v 2.5 TD
1 Fuel type noted in parentheses: g = gasoline, d= diesel. 4 Fuel consumption in litres per 100 km; h = highway driving; c = city driving.2 CV = chevaux fiscaux: Basis for road tax; depends on engine size, transmission and fuel type;5 3d = 3-door model; 4d = 4-door model; 5d = 5-door model; sw = station wagon; the higher the rating, the higher the road tax. cab = convertible (cabriolet); 4x4 = all whell drive.3 Time in seconds for 1,000 m from standstill. 6 Does not include the Ford Escort 2.0T Cosworth, which costs FF265,400.
Source: Ford France and Automotive Press.
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Exhibit 1 (Continued)Description of Ford’s Product Line of Passenger Cars for France in 1995
Ford Probe Ford Galaxy Ford Maverick Ford Explorer
1 Fuel type noted in parentheses – g = gasoline, d= diesel. 4 Fuel consumption in litres per 100 km; h = highway driving; c = city driving.2 CV = chevaux fiscaux: Basis for road tax; depends on engine size, transmission and fuel type;5 3d = 3-door model; 4d = 4-door model; 5d = 5-door model; sw = station wagon; the higher the rating, the higher the road tax. cab = convertible (cabriolet); 4x4 = all whell drive.3 Time in seconds for 1,000 m from standstill. 6 The 5-door version is 4665 mm long.
Source: Ford France and Automotive Press.
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Exhibit 2French Car Market Size by Car Category and Ford’s Market Share (1995)
Market Size in France Ford France
Product Category% of Total
UnitMarket
Ford ModelFord
Sales (%)
UnitMarket
Share (%)
ShareChange(94/95)
A Mini cars 1.0 -
B Small cars 42.7 Classic FiestaNew Fiesta1
45.41.8
3.30.1
-0.2
C Lower medium cars 28.0 Escort 30.5 2.2 +0.1
D Upper medium cars 18.1 Mondeo 18.7 1.4 -0.5
E Executive cars 3.6 Scorpio 1.0 0.1 +0.1
F Luxury cars 0.1 -
G Cabriolets 0.1 -
J Sports utility vehicles 1.9 Maverick/Explorer
0.8 0.1 0.0
M Minivans 3.8 Galaxy1 0.2 0.02
S Sport Coupes 1.1 Probe 0.9 0.1 0.0
Total Unit Sales 1.9 mil. Total2 140,778 7.3% -0.5%
1 Introduced in 1995.2 The total figures include sales of models whose marginal volumes are not reported in the table.
Source: Ford France and EIU Motor Business Europe (1995).
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INSEAD 484415
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 3French B-Category Buyers by Household Type, Age and Income for 1994
Household Description Age Total
<100 100-150 150-250 >250
Single Women <30 3.6a 1.7 1.4 0.9 7.6%
30-45 2.7 3.1 0.9 0.2 6.9%
Single Men <30 2.7 1.6 2.1 1.3 7.7%
30-45 1.0 0.9 0.7 0.4 3.0%
Childless Couples <30 0.9 1.2 1.7 0.3 4.1%
30-45 0.5 0.8 1.0 0.4 2.7%
Full Nesters <35 0.9 1.8 2.0 1.0 5.7%
Single-Car Household >35 1.1 1.5 1.4 0.5 4.5%
Multi-Car Household >35 1.1 1.4 5.8 5.5 13.8%
Empty Nesters 45-60 2.7 2.9 3.1 1.5 10.2%
>60 6.9 4.8 3.5 2.1 17.3%
Wife’s Car, Multi Car Household, Children
0.3 1.2 3.3 4.2 9.0%
Wife’s Car, Multi Car Household, No Children
0.4 0.7 2.5 3.7 7.3%
Total 24.8% 23.6% 29.4% 22.0% 100.0%
Average Annual Income (FF 000)
a To be read as 3.6% of B-category car buyers in 1994 were single women who were less than 30 years old and had anaverage annual income of less than FF 100,000.
Ford’s Segmentation of Small Car Buyers
Ford traditionally grouped the small car buyers (A and B categories) into four target groupsbased on financial constraints and the presence of children in the household. The resultingfour target groups are indicated in the above table by the following colour coding:
Financially constrained buyers
Average income and/or family constrained buyers
Average income, more youthful/expressive buyers
Higher income, not family constrained buyers
Source: Ford France and New Car Buyer Survey France 1995.
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INSEAD 484416
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 4aLeading Small Cars Distributed in France in 1995
Car1 Citroen AX (*) Fiat Cinquecento (1992) Fiat Panda (*) Fiat Punto (1994)
1 Year of market introduction or major model update in parentheses (* = before 1991). 4 Time in seconds for 1,000 m from standstill.2 Fuel type noted in parentheses: g = gasoline, d= diesel. 5 Fuel consumption in litres per 100 km; h = highway driving; c = city driving.3 CV = chevaux fiscaux: Basis for road tax; depends on engine size, transmission and fuel type;6 3d = 3-door model; 4d = 4-door model; 5d = 5-door model; sw = station wagon; the higher the rating, the higher the road tax. cab = convertible (cabriolet); 4x4 = all whell drive.
Source: Automotive Press.
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INSEAD 484417
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 4a (Continued)Leading Small Cars Distributed in France in 1995
Car1 Nissan Micra (1994) Opel Corsa (1992) Opel Tigra (1995)7 Peugeot 106 (1991)
Typical Model 1.0 16v Lagoon 1.2i City 1.5TD Sport 1.4i 16v 1.0 Kid 1.6 Griffe
1 Year of market introduction or major model update in parentheses (* = before 1991). 4 Time in seconds for 1,000 m from standstill.2 Fuel type noted in parentheses: g = gasoline, d= diesel. 5 Fuel consumption in litres per 100 km; h = highway driving; c = city driving.3 CV = chevaux fiscaux: Basis for road tax; depends on engine size, transmission and fuel type;6 3d = 3-door model; 4d = 4-door model; 5d = 5-door model; sw = station wagon; the higher the rating, the higher the road tax. cab = convertible (cabriolet); 4x4 = all whell drive.7 Not considered a small car, but included in the market research (see Exhibit 11).
Source: Automotive Press.
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INSEAD 484418
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 4a (Continued)Leading Small Cars Distributed in France in 1995
Car1 Peugeot 205 (1991) Renault Clio (1990) Renault Clio Baccara Renault Twingo (1992)
1 Year of market introduction or major model update in parentheses (* = before 1991). 4 Time in seconds for 1,000 m from standstill.2 Fuel type noted in parentheses: g = gasoline, d= diesel. 5 Fuel consumption in litres per 100 km; h = highway driving; c = city driving.3 CV = chevaux fiscaux: Basis for road tax; depends on engine size, transmission and fuel type;6 3d = 3-door model; 4d = 4-door model; 5d = 5-door model; sw = station wagon; the higher the rating, the higher the road tax. cab = convertible (cabriolet); 4x4 = all whell drive.7 Does not include the Peugeot 205 GTi with T16 engine.
Source: Automotive Press.
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INSEAD 484419
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 4a (Continued)Leading Small Cars Distributed in France in 1995
Car1 Toyota RAV4 (1995)7 Volkswagen Polo (1994) All Other Small Cars
Available Engines gasoline: 2.0 gasoline: 1.3, 1.6 * Discontinued in 1995
Price Range (FF) 145,000 – 165,000 60,900 – 84,200
1 Year of market introduction or major model update in parentheses (* = before 1991). 5 Fuel consumption in litres per 100 km; h = highway driving; c = city driving.2 Fuel type noted in parentheses: g = gasoline, d= diesel. 6 3d = 3-door model; 4d = 4-door model; 5d = 5-door model; sw = station wagon;3 CV = chevaux fiscaux: Basis for road tax; depends on engine size, transmission and fuel type; cab = convertible (cabriolet); 4x4 = all whell drive. the higher the rating, the higher the road tax. 7 Not considered a small car, but included in the market research (see Exhibit 11).4 Time in seconds for 1,000 m from standstill. 8 The 5-door model is 4150 mm long.
Source: Automotive Press.
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INSEAD 484420
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 4bGlossary of Technical Terms
Term Description
Car platform Level structure raised above the ground and placed over the car tires; different model versions and even models can be built on top of aplatform.
Coiled suspension Coiled = Form of suspension that improves handling while delivering a smooth ride.
Rack and pinion steering Preferred steering system for small cars (originally developed for racing cars).
Dual circuit brakes Dual circuit system provides backup in case of leak in brake system.
Front wheel-drive Engine powers front wheels of a car. All small cars have front wheel-drive (with the exception of 4x4 models).
ABS Anti-breaking system. Prevents the looking-up of wheels during breaking, which enables driver to control car even when breaking.
Power steering Support mechanism to facilitate the turning of the steering wheel.
Courtesy lighting Interior lighting for passengers for night travel.
Vanity mirrors Small mirror on the backside of sunvisor for front passenger seats.
Centre console Moulded housing between bucket seats that houses instruments, gear shift, and storage compartments.
Pollen filter Filter in ventilation system or air conditioning to prevent pollen to enter the interior of a car.
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INSEAD 484421
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 5Market Shares of the Leading Small Cars Distributed in France in 1995 (as a % of unit sales in the
A/B category)
1992 1993 1994 1995
Renault Clio 26.0 23.5 23.0 20.1
Peugeot 106 11.0 12.1 13.7 13.7
Renault Twingo - 9.1 11.2 13.3
Citroen AX 9.4 6.5 7.9 8.0
Fiesta (Old + New) 8.9 7.7 8.1 7.6
Opel Corsa 7.0 6.7 6.7 7.6
Fiat Punto - 0.5 6.0 7.3
Volkswagen Polo 3.5 2.8 2.1 4.6
Peugeot 205 14.5 6.7 6.7 4.3
Renault 5 6.3 3.3 3.7 3.2
Fiat Panda 1.9 1.4 2.6 2.3
Nissan Micra 0.7 1.6 1.3 1.3
Fiat Cinquecento 1.0 0.8 0.6 0.4
Total 90.2 82.7 93.6 93.7
Source: Ford France and EIU Motor Business Europe (1995).
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INSEAD 484422
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 6Demographic Description of French Car Buyers by Car Model for 1995
Power (hp @ rpm) 60 @ 5000 Length/width (mm) 3620/1631
CV1 5 ABS na
Max. Speed (km/h) 153.2 Power Steering yes
Acceleration (sec)2 34.5 Available Model/Engine 1.3i Endura (3d)
1 CV = chevaux fiscaux: Basis for road tax; depends on engine size, transmission and fuel type; the higher the rating, thehigher the road tax.2 Time in seconds for 1,000 m from standstill.3 Fuel consumption in litres per 100 km; h = highway driving; c = city driving.
Source: Ford France.
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INSEAD 484426
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 10Demographics of Ford Ka Choosers and Non-Choosers1
Ka Choosers Ka Non-Choosers
Gender Men 47%2 50%
Women 53 50
Age 20-24 8 4
25-29 15 18
30-34 19 17
35-39 9 15
40-44 32 20
45-49 17 25
Marital Status Single 57 47
Living Together 12 8
Married 31 45
Children in Household 0 53 63
1 25 16
2 22 21
2+ - -
Cars previously owned 0 11 11
1 20 18
2 14 19
3 9 4
3+ 47 47
Cars in household 1 41 54
2 48 43
3 9 3
3+ 2 -1 “Choosers” = respondents who put the Ford Ka among their top three choices;“Non-Choosers” = respondents who put the Ford Ka among their bottom three choices.2 To be read as “47% of those who put the Ford Ka among their top three choices were male and 53% female.”
Source: Ford France.
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INSEAD 484427
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 11Correspondence Analysis
Correspondence maps are created from respondents’ evaluation of cars using differentattributes. The maps show simultaneously the cars and the attributes. These maps provideinsights into (1) similarities and differences with respect to attributes for a given car modeland (2) similarities and differences with respect to cars for a given attribute. There are noabsolute values on the maps and thus, unlike perceptual maps from multidimensional scaling,the distances between objects cannot be directly compared. But the maps give insights in twoways – first by examining the proximity of attributes to different models, and second byobserving where different cars are located. A car model in the centre of the map is perceivedto be more mainstream and less differentiated, while a car model further away from the centreis perceived to be more differentiated.
For example, respondents who selected the Ka as one of their top three choices (Exhibit 11a),perceived it to have similar attributes than the Renault Twingo. This is not true for therespondents who selected the Ka as one of their bottom three choices. Both groups perceivedthe Ka as futuristic, but the former group also perceived it as sophisticated and fun to drive,while the latter group perceived it as ugly and poorly constructed.
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INSEAD 484428
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 11aCorrespondence Map Based on Market Research for Respondents Who Had Listed the Ford Ka
Among Their Top Three Choices
KaFuturisticFlashy
Ugly
Stylish
PoorlyConstructed
Dull
Flimsy
Boxy
Cheap
Boring
Small
Outdated
Exciting
Sophisti-cated
Youthful
Unusual
Roomy
Cute
Fun toDrive Versatile
Energetic
Safe
Practical
Fiat 500
Micra
Fiesta
Corsa
Twingo
Tigra
RAV4
106
Polo
Exhibit 11bCorrespondence Map Based on Market Research for Respondents Who Had Listed the Ford Ka
Among Their Bottom Three Choices
Ka
Futuristic
Flashy
Ugly
Stylish
Poorly Constructed
Dull
FlimsyBoxyCheap
BoringSmall
Outdated
Exciting
Sophisticated
Youthful
Unusual
Roomy Cute
Fun to Drive
Versatile
EnergeticSafe Practical
Fiat 500
Micra
Fiesta
CorsaTwingoTigra
RAV4
Polo106
Source: Ford France.
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INSEAD 484429
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 12aPsychographic Descriptions of Attitude Segments
Sensible Classics
Jean has taken early retirement from his job as a service engineer. In his early 60s, he ismarried with three grown-up children. His wife, Brigitte, is secretary to the Branch Managerof their local bank. Jean lives in a semi-detached house in the suburbs of a small town. Hespends his time fishing, looking after his grandchildren and is a member of the localcommunity action group.
No-nonsense Neutrals
Fabienne is a single, 45-year old woman who works as a Social Counsellor. She lives in arented one-bedroom apartment that she chose for its convenient 15-minute bus ride to herwork. In her spare time she goes to the theatre, meets friends for days out visiting places ofinterest and is a keen member of her local walking club.
Attention Seekers
Didier is a 29 year old, cosmopolitan Manager of an Information Technology servicescompany. He rents a three bedroom apartment in the centre of the City he lives there so thathis international friends can stay overnight. He enjoys dressing in the latest designer clothes,hand-glides in his spare time and spends his holidays diving in the Caribbean. He is single.
Freedom Lovers
Angélique is a 35 year old Director of a public relations company which she started five yearsago with two university friends. She has an 18-month-old baby and her partner, Daniel is afree-lance photographer. They live in a cottage in a small village 30 minutes from a majorCity. During their frequent holidays, they enjoy skiing, trekking in the Himalayas and takingAngélique’s son to exotic destinations.
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INSEAD 484430
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 12bDemographic Descriptions of Attitude Segments
SensibleClassics
No-NonsenseNeutrals
AttentionSeekers
FreedomLovers
Gender Male 58%1 39% 59% 50%
Female 42 61 41 50
Age ≤ 24 9 7 7 13
…29 17 13 19 24
…34 24 23 13 11
…39 13 3 18 11
…44 20 36 20 32
≥ 45 16 19 22 11
Marital Status Married 47 50 54 53
Living Together 15 9 10 8
Single 38 41 36 39
Children in 0 62 58 60 50
Household 1 19 13 23 24
≥ 2 19 29 17 26
First Car Yes 19 13 12 11
No 81 87 88 89
Relative Size 30% 26% 31% 13%
1 To be read as “58% of the respondents classified as Sensible Classics were male.”
Source: Ford France.
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INSEAD 484431
Copyright 1999 INSEAD, Fontainebleau, France.
Exhibit 13Reactions to the Ford Ka by Attitude Segment
0%
10%
20%
30%
40%
50%
SensibleClassics
Non-NonsenseNeutrals
AttentionSeekers
FreedomLovers
Res
pond
ents
Top 3
Bottom 3
Source: Ford France.
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