Ford Truck Marketing in the US and China

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Table of Contents

Introduction
Description of Ford F-150 SVT
Ford F-150 SVT’s Target Market
Competition in Ford F-150 SVT Truck Category
Segmentation, Targeting and Positioning
Environmental Facts and Trends in the Chinese Market
Marketing Campaign for Ford F-150 in China
Ethical Marketing Considerations
Conclusion
References

Introduction

Marketing refers to the “management process through which goods and services are developed and sold to customers”. Marketing activities include product development, setting prices, identification of distribution channels, and implementing promotional strategies. These activities are often executed by marketing managers in most companies.

This paper will highlight the marketing principles that can be used to market Ford F-150 SVT in the United States and China. Ford F-150 SVT is a truck model manufactured by Ford Motor Company in the United States. Ford F-150 SVT can gain market share in China because it provides the four utilities of customer value and the demand for trucks in China is high.

Description of Ford F-150 SVT

The four utilities of customer value include “functionality, time, place, and ease of possession”. Functionality refers to the tangible attributes of a product such as its durability, color, and safety.

Ford F-150 SVT has several in-built safety mechanisms such as front and rear cameras to ease navigation and hill descent control to prevent accidents when driving on steep terrain (Ford Motor Company, 2013). The truck is also available in several colors to satisfy the tastes and preferences of different customers. Similarly, the truck has manual and automatic gearbox options to ease its use.

Time utility refers to customers’ ability to access a product whenever they need it. Ford Motor Company has established a global distribution network to ensure that Ford F-150 SVT gets to the market at the right time.

The company also focuses on mass production of trucks to avoid delays in fulfilling orders (Ford Motor Company, 2013). Ford Motor Company has also partnered with independent distributors in countries where it does not operate to sell Ford F-150 SVT.

Place utility “includes where and how the product or service is delivered”. Ford F-150 SVT is sold through the company’s website and show rooms. Once the truck is purchased, the company arranges for shipment to the customer.

The ease of possession utility refers to the procedures that lead to acquisition of a product. In order to ease possession, Ford Motor Company allows its customers to acquire the truck in several ways. These include leasing, cash purchase, and hire purchase. Moreover, the truck has a warranty to encourage customers to purchase it.

Ford F-150 SVT’s Target Market

In the United States, the target market for the truck includes construction companies, security companies, and individuals. Construction and security companies use the truck to transport equipment and materials to various sites (Ford Motor Company, 2013).

The truck’s off-road capabilities enhance travelling to construction sites in remote areas that have poor road network. Since Ford F-150 SVT is a low cost model, its target market among individuals includes middle-income earners who are interested in both comfort and extra space to carry their luggage when travelling.

The truck is also popular among individuals with large families, as well as, people who prefer to travel to remote areas such as wild parks and forests during their holidays.

In China, Ford F-150 SVT’s target market includes companies in the construction and manufacturing industries. Moreover, the truck can be used by farmers and medium-sized businesses that are not able to purchase large trucks. Farmers are likely to prefer the truck because of its ability to travel in the country’s rough terrain (Ford Motor Company, 2013).

Competition in Ford F-150 SVT Truck Category

Ford F-150 SVT competes with several truck models in the United States and China. In the United States, the truck’s main competitors include Toyota Hilux, Isuzu Dmax, and Nissan Navara. Toyota Hilux and Isuzu Dmax are competing based on price. Their manufacturers are low cost producers who are able to charge competitive prices.

Besides, Toyota Hilux has a strong brand image that is known for durability and reliability. Isuzu Dmax is known for both comfort and low prices in the United States. Nissan Navara competes with other models based on quality and price. In this regard, Ford F-150 SVT faces high competition in the United States since most producers of medium-sized trucks are focusing on product differentiation.

The competition faced by Ford F-150 SVT in China is very high. The Chinese car market has several medium-sized truck models whose prices are very low. This reduces customers’ switching costs since they can easily shift from one model to another.

The Chinese market is also characterized with price sensitive customers. This makes local models more competitive than Ford F-150 SVT. In this regard, Ford F-150 SVT competes based on its qualities that are superior to those of the Chinese truck models.

Segmentation, Targeting and Positioning

Segmentation is the process of using shared attributes to classify or categorize customers in a given market. Demographic and psychographic segmentation are relevant to the Chinese market since the customers’ purchasing behavior is mainly influenced by their income levels and perception of products.

Demographic segmentation involves categorizing customers according to attributes such as sex, age, income, and occupation. In this context, the Chinese market can be segmented according to customers’ income and their occupation in order to identify the group that is likely to purchase Ford F-150 SVT.

Psychographic segmentation involves categorizing customers according to their interests, activities, lifestyles, perceptions, and opinions. In this case, the Chinese market can be segmented based on customers’ lifestyles and perceptions.

Targeting refers to the process of selecting the right market segment. In demographic segmentation, the right group to target includes the high and middle-income earners in China. This choice is justified by the fact that high and middle-income earners are not likely to be sensitive to price changes. Consequently, they are likely to consider the non-price attributes of Ford F-150 SVT in their purchase decisions.

In addition, occupation is a relevant factor for choosing the right market segment. In this case, the segment that should be targeted includes owners of small and medium-sized businesses who are able to afford high quality trucks. In psychographic segmentation, the right group includes the customers who believe that American trucks such as Ford F-150 SVT are superior to local trucks.

Additionally, individuals who are interested in outdoor recreational activities such as visiting tourist attractions are likely to purchase Ford F-150 SVT because it offers comfort, style, durability, and off-road capabilities.

Positioning refers to the process of “identifying the most appropriate marketing mix for a given target market”. Customers in the Chinese market are interested in product quality and price. Thus, the most appropriate elements of the marketing mix for the segments identified in the foregoing paragraph are product and price.

In this regard, Ford F-150 SVT will be positioned as a high quality, luxurious, versatile, and durable medium-sized truck. Given the high competition in the industry, it will be important to position Ford F-150 SVT as a truck that offers superior qualities at affordable prices.

Environmental Facts and Trends in the Chinese Market

In the microenvironment, the factors that are likely to influence the sales of Ford F-150 SVT are high competitive rivalry and high bargaining power of the buyers (customers). The competition in the market is very high because there are very many sellers of medium sized trucks. The competition is also high because firms are focusing on product differentiation and cost leadership.

The high competition is likely to affect the sales of Ford F-150 SVT negatively. Customers have high bargaining power because their switching costs are low. Specifically, the customers can easily change from one truck model to another in order to enjoy benefits such as low prices and high quality. Thus, Ford F-150 SVT might not penetrate the market if its qualities fail to satisfy the needs of the market.

In the macro environment, the factors that are likely to affect the sales of Ford F-150 include social, political, and economic variables. China has experienced rapid economic growth in the last two decades.

This has resulted into an increase in business activities, emergence of a large middle-class, and improved purchasing power among citizens. This can be illustrated by the fact that China is the largest market for cars in the world. Thus, high economic growth in China is likely to boost the sales of Ford F-150 SVT.

High regulation is the most important political factor that is likely to affect the sales of Ford F-150 SVT in China. The government of China has imposed high import duties on imported vehicles in order to protect its automotive industry. In addition, foreign car manufacturers that intend to produce vehicles in China must partner with local producers in order to be licensed to operate.

Thus, exporting Ford F-150 to China will reduce its competitiveness due to the high import duties. Although collaborating with a local producer seems appropriate, the partnership can lead to a brand war that will ultimately reduce the competitiveness of Ford F-150 SVT.

The social factors that are likely to influence the sales of Ford F-150 SVT include customers’ perception of imported cars and customers’ lifestyles. The low-income earners believe that foreign trucks are more expensive than local brands.

This perception is likely to discourage the purchase of Ford F-150 among the low-income earners. By contrast, the middle and high-income earners believe that imported trucks have superior qualities.

Thus, they are likely to purchase foreign brands even if they are sold at a premium price. This will boost the sales of Ford F-150 SVT in China. The rising demand for tourism products such as park visits is also likely to boost the sales of Ford F-150.

Marketing Campaign for Ford F-150 in China

Marketing promotion refers to the “coordinated series of steps that are taken to promote a product”. The four elements of marketing mix can be used to promote Ford F-150 SVT in China in the following ways. Ford F-150 SVT will be positioned as a high quality brand.

In order to keep this brand promise, the design and production team will take into account the needs of the Chinese market such as fuel efficiency. In addition, the sales team will organize free test drives to enable customers to verify the qualities of the truck.

Penetration pricing will be employed to enable the truck to gain market share in China. This will involve setting relatively low prices in order to attract customers. Discounts will be provided to encourage cash and bulk purchases. These strategies are important because customers in China are price sensitive. Thus, charging low prices will help in overcoming competition.

Selecting the most appropriate distribution channel (place) will be integral in the process of marketing Ford F-150 SVT in China. In this regard, the truck will be distributed through Ford Motor Company’s retail outlets and independent distributors. The rationale of this strategy is that China has a vast geographical area.

Thus, partnering with local distributors will help in reducing distribution costs. Moreover, local distributors have a good knowledge of the market, which will enable them to sell the truck easily. Ford Motor Company’s retail outlets will also be used to train local distributors on the truck’s qualities and capabilities. Undoubtedly, having adequate product knowledge will improve local distributors’ ability to sell the truck.

Promotional activities will also help in marketing Ford F-150 SVT. The promotional activities that will be used include advertising, public relations, and providing free after-sales services such as repairs for a limited period. The objective of the promotions will be to increase product awareness and sales.

The effectiveness of the marketing campaign will be measured by predefined sales metrics. These include the generated sales leads, sales volume, and market share.

Ethical Marketing Considerations

The ethical concerns that will be addressed in the marketing plan for Ford F-150 SVT will help in promoting fair competition and protecting the truck’s brand image. Unethical marketing activities such as price fixing, price collusion, and predatory pricing will be avoided since they are illegal and discourage competition.

Moreover, marketing promotion will focus on the use of adverts with appropriate content. Thus, inappropriate content such as sex messages will be avoided in the truck’s adverts.

Conclusion

Ford F-150 SVT can gain market share in China since it provides the utilities of customer value. In addition, robust economic growth will boost its sales in China. However, an effective marketing plan must be developed in order to take advantage of the opportunities in the Chinese market.

In this regard, Ford F-150 SVT should be positioned as a truck that provides superior qualities at low costs. This will help in overcoming competition, thereby enabling the truck to gain market share. Moreover, the marketing campaign should focus on creating brand awareness in order to increase sales in China.

References

Cant, M., Strydom, J., & Jooste, C. (2009). Marketing management. New York, NY: John Wiley and Sons.

Chemev, A. (2012). Strategic marketing management. New York, NY: McGraw-Hill.

Ding, Q., & Akoorie, M. (2013). The characteristics and historical development path of the globalizing Chinese automotive industry. Journal of Technology Management in China, 8(2), 83-104.

Ford Motor Company. (2013). Model: F-150 SVT. Web.

Lee, K., & Choi, J. (2013). Automobile industry, guanxi, and social networks in China: Emperical study of 32 automakers and 477 parts suppliers. Chinese Management Studies, 7(2), 155-171.

Roberto, M., Guo, G., & Jiang, C. (2011). Chang’an Automobile and the Chinese automotive industry. Journal of Technology Management in China, 7(2), 23-28.

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