Ford Escape Hybrid

Agenda

• Background
• Current Big Picture
• Impediment
• Proposed Solution
• Summary and Key Takeaways
• Q&A
Mother Jones, July / August 2004 Issue
•Five-passenger SUV
•Achieves nearly 40 mpg in city
driving
•Improves fuel economy by
nearly 20 percent on the highway
•No sacrifices in performance or
roominess
•Acceleration performance
similar to a V-6
•Reduced emissions – meets
SULEV and PZEV standards
•Confidence of a Ford “No
Boundaries” SUV
 Current Markets
•Compact SUVs account for 1.6% of total automobile market.
•Ford Escape (non-hybrid) sold 167,700 SUVs last year

•Ford Escape Hybrid

target first year sales
are 15,000 – 25,000
SUVs
 Current Big Picture
Main variable:
TA Description: Environmentally
Friendly
execute
•50, often female
•Environmentally conscious product
•Higher Income / Better Educated Dynamic variable:
Search
•Willing to pay more for hybrid Need for utility service
•Not a current Ford owner STP

segment Value
price
business marketing source of
target evaluate
objective objective volume

position place Dealership

Entity:
Ford
Category:
Green Vehicles
Acquisition •Unique
Goal: promotion -Internet presence
Stimulate
Hybrid player - New product •Benefits of SUV -“Green” Channel
Demand
PR & category but also Green
Improvement
-Emphasis on
- Educating •“Drives
utility category
users normally,
Core Competence: benefit
performs
Skill at SUV superbly”
Marketing
Q&A

• Are you ready to take the challenge??

 Questions on Case
• Do you consider hybrid SUVs to be
environmentally friendly?
• Do you feel Ford is an
environmentally friendly company?
Toyota? Honda?
• Is Ford’s current marketing campaign
focused on the right audience? Is it
effective?
• How do you think Ford can best
compete with other SUV hybrids?
 Segmentation
Hybrid Category

450
Ford Escape
Hybrid
Toyota Highlander Hybrid

Need for Utility - Range, Volume, & Power

(2005)
400 Honda Civic
Lexus RX 400h (2005) Hybrid

350 Honda Insight

Honda Accord Hybrid
(2005)
300 Toyota Prius

Toyota Prius
Ford Escape Hybrid
Toyota
250
Highlander
Honda Civic Hybrid Hybrid (2005)
Lexus RX 400h
Honda Insight 200
(2005)

Honda Accord
150 Hybrid (2005)
7 6.5 6 5.5 5 4.5 4 3.5 3 2.5
Need for Environmental Friendliness - Annual Greenhouse Gas Emissions in Tons
 Impediment - Source of Volume
TA Description: Main variable:
•50, often female Environmentally
Friendly
execute
•Environmentally conscious
•High Income (approx. $100k); product
willing to pay more for hybrid Dynamic variable:
Search
•Highly educated Need for utility service
•“Influentials” STP
•Drives less, think fuel $ to grow
•Not a current Ford owner segment Value
price
business marketing source of
target evaluate
objective objective volume

position place Dealership

Entity:
Ford Acquisition
Category:
•Unique
Green Vehicles
- New product •Has all features
Goal: & category of regular small promotion Education
Stimulate -Internet presence
Hybrid player SUV, but is green
Demand -Green Magazines
PR - Educating and fuel efficient
Improvement users “Drives normally,
-Emphasis on
performs
utility category
- 70% not superbly”
Core Competence: benefit
current Ford •For utility and
Skill at SUV owners green buy the
Marketing Escape Hybrid
 Steal Share Advantages
Stimulate Demand Steal Share
• Stimulating Demand • Stealing market share
for green vehicles with from SUVs which are
a poor company within Ford’s core
environmental image. competency
Will grow market for
Toyota and Honda

• Ford needs longer • Company’s “green”

than 6 month jump image can be improved
start to improve by directly competing in
“greener” company compact SUV market
image to compete in
hybrid market
Current Target Audience
Ford is currently targeting new users who are non-SUV,
non-Ford owners but who want to do something for the
environment
Karen, Sylvia & Barbara
•New users, often female
•Around 50, highly educated
•“Influentials”
•More Affluent
•Willing to pay a premium for
the hybrid
Target Audience
Target Audience
Environmentalist Response
 Where should we steal share?
Hybrid Compact SUV
• Sustainable advantage for • Sustainable advantage for
extremely short-term until years as Escape Hybrid
other hybrid SUVs go to will be the only compact
market SUV in the market
• Strong need for vehicle’s
• Major demographic and range, space, and power
behavioral differences in • Rising fuel prices and
automobile vs. SUV buyer geopolitical issues relating
to oil, causing buyers to be
more concerned about fuel
economy
 STP Variables
brand competitor competitor competitor competitor competitor
Variable Ford Escape Toyota Ford Escape Subaru Honda CR-V Saturn Vue
Hybrid RAV4 Forester
List Price $26,380 to $18,550 to $19,405 to $21,295 to $19,995 to $17,055 to
$28,005 $19,950 $28,005 $26,395 $25,050 $24,315
+ tax credits
MPG (City/Hwy)* 36/31 24/30 24/29 23/30 23/29 23/29
Gas Capacity 15 15 17 16 15 16
Utility - Max Range in miles 540 450 493 480 435 464
Utility - Interior Volume in cu ft. 127 111 127 126 137 131
Utility - Horse Power 155 161 200 165 160 250
Utility - Range, Volume, & Power 331 295 339 319 317 358
Environmental Friendliness 6.2 7.9 9.8 9.0 8.3 8.9
Annual Greenhouse Gas Emissions in Tons*

*http://www.fueleconomy.gov
http://www.cars.com
 Segmentation
Small SUV Category

Need for Utility - Range, Volume, & Power

285 295 305 315 325 335 345 355 365 375
4.5
Ford Escape
Annual Greenhouse Gas Emissions in Tons

Hybrid
5.5
Need for Environmental Friendliness

R&D Toyota RAV4

6.5 Ford Escape Hybrid

Ford Escape

Toyota RAV4
7.5
Subaru Forester

Honda CR-V
8.5 Honda CR-V

Subaru Forester

9.5 Saturn Vue

Saturn Vue

10.5 Ford Escape

 New Target Audience
Ford should target current and potential compact SUV
buyers
Ted & Kelly
•25 – 44 years old
•Active
•Road trips
•Tech enthusiast
•Image Conscious
•Environmentally / Politically Aware
 New Big Picture
Main variable:
TA Description: Need for utility
execute
Ted & Kelly Dynamic variable:
•25 – 44 yr. olds Environmental
product
•No kids friendliness Search
•Tech enthusiasts service
•Environmentally / Politically STP
Aware
segment Value
price
business marketing source of
target evaluate
objective objective volume

place Dealership
Entity: position
Ford Acquisition

- New product •I drive a

-Comparison Vs.
Goal: & category Category: compact SUV promotion
Competitor’s
Hybrid player Compact SUVs
Compact SUV’s
PR - Educating •The Escape
Improvement users Hybrid has same
Steal Share features as SUV,
- 70% not but is tech cooler
Core Competence: current Ford and more fuel
Skill at SUV owners efficient
Marketing
 Key Takeaways

• Stimulating demand when you are not the

market leader helps your competitors
• Know your target audience and how they
will respond to your ads
• Segmentation based on core competence
should result in sustainable advantage
 Actual U.S. Hybrid Sales (in parens)

Calendar year US
2000[81] 42,635
2001[82] 164,184
2002[83] 145,471
2003 167,678
2004 183,430[84] - (inc. 2,993 hybrids)
2005 165,122[84] - (inc. 18,797 hybrids)
2006 157,395[85] - (inc. 20,149 hybrids)
2007 165,596 - (inc. 21,386 hybrids)
2008 156,544[86] - (inc. 17,173 hybrids)
2009 173,044[87] - (inc. 14,787 hybrids)
2010 191,026 - (inc. 11,182 hybrids)
2011 254,293[76]
Q&A