Ford bets billions on Jaguar

The goal of every car maker is to achieve is a loyal customer base. The US approach to that, probably the only approach, is to have a product line which begins with inexpensive "introductory" models, and extends to top of the line luxury vehicles. The idea is to sell the introductory models to young adults, and build brand loyalty. When trade in time rolls around, the customer is gradually moved up the food chain.

For Ford (in the US), the food chain used to begin with small Fords (Pintos, Mavericks), then Big Fords (Torino, LTD), then Mercury, then Lincoln. That's how it worked into the 80's, but things have changed quite a bit since then.

By purchasing not just Jaguar, but Volvo and Aston Martin, Ford has managed to muddy it's middle and upper range brand identity. Lincoln Mercury is no longer a clear step up from Ford, while the various Premier products have cannibalized the market L/M formerly occupied. That in and of itself might actually be a good thing, but there are several problems.

A purchaser of a Jaguar, Volvo, or Aston may be buying a Ford affiliated product, but isn't really buying a Ford. From a brand management viewpoint, one doesn't think Focus, Taurus, Volvo, XJ6. The disjointed brand identification isn't building loyalty.

The other side of this is that the various acquisitions were originally operating as relatively small companies. In order to produce the volumes of cars needed to offset losses at Mercury, Ford had to make significant investment in production and engineering at the acquired companies. They also had to move towards more standardization of parts across brands. Unfortunately, this hasn't worked to the benefit of the acquired brands. With each new model increasingly "Ford-like", the acquired brands are losing marketing capital.

Meanwhile, the core Ford product line has suffered tremendously. With the middle and upper ranges a confused agglomeration of brands, Ford itself is concentrated on very low end cars like the Ka or Focus, and a few midrange vehicles like Mustang and Taurus. Taurus, which was once regarded as a world class car, has especially suffered from insufficient investment, and now trails Honda Accord for popularity.

In the US, the company has also concentrated a great deal of effort on light trucks. This may be a tragic blunder if high oil prices bring the SUV era to a close. Mercury is essentially ruined, while Lincoln has developed an odd brand identity, dependent on town cars which appeal to the geriatric generation, and immense Navigator trucks, which are a lightning rod for environmental lobbyists.

Ford management has terrible problems facing it. If the Premier companies remain relatively independent, Ford will have actually lost brand loyalty. If these companies become more tightly integrated, then the value of those brands diminish. It's a marketing nightmare.

The answer to your question is that Ford acquired some great companies over the last few years. But finding synergy among them is going to be an elusive goal. The best suggestion would be to finish off Mercury and concentrate on the premium brands. But to build a smooth transition, they have to move Lincoln, Jaguar, Volvo, and Aston more clearly under the Ford umbrella as a unified entity. They will undoubtedly lose many traditional purchasers of the acquired brands, but if they do it right they end up with a very wide choice of high end vehicles for the returning Ford customer. All will be lost unless they firmly hold the middle market, so investment in the Mondeo/Taurus class of cars is clearly a top priority. Poor Jaguar.

Mike Frank

The goal of every car maker is to achieve is a loyal customer base. The US approach to that, probably the only approach, is to have a product line which begins with inexpensive "introductory" models, and extends to top of the line luxury vehicles. The idea is to sell the introductory models to young adults, and build brand loyalty. When trade in time rolls around, the customer is gradually moved up the food chain.

For Ford (in the US), the food chain used to begin with small Fords (Pintos, Mavericks), then Big Fords (Torino, LTD), then Mercury, then Lincoln. That's how it worked into the 80's, but things have changed quite a bit since then.

By purchasing not just Jaguar, but Volvo and Aston Martin, Ford has managed to muddy it's middle and upper range brand identity. Lincoln Mercury is no longer a clear step up from Ford, while the various Premier products have cannibalized the market L/M formerly occupied. That in and of itself might actually be a good thing, but there are several problems.

A purchaser of a Jaguar, Volvo, or Aston may be buying a Ford affiliated product, but isn't really buying a Ford. From a brand management viewpoint, one doesn't think Focus, Taurus, Volvo, XJ6. The disjointed brand identification isn't building loyalty.

The other side of this is that the various acquisitions were originally operating as relatively small companies. In order to produce the volumes of cars needed to offset losses at Mercury, Ford had to make significant investment in production and engineering at the acquired companies. They also had to move towards more standardization of parts across brands. Unfortunately, this hasn't worked to the benefit of the acquired brands. With each new model increasingly "Ford-like", the acquired brands are losing marketing capital.

Meanwhile, the core Ford product line has suffered tremendously. With the middle and upper ranges a confused agglomeration of brands, Ford itself is concentrated on very low end cars like the Ka or Focus, and a few midrange vehicles like Mustang and Taurus. Taurus, which was once regarded as a world class car, has especially suffered from insufficient investment, and now trails Honda Accord for popularity.

In the US, the company has also concentrated a great deal of effort on light trucks. This may be a tragic blunder if high oil prices bring the SUV era to a close. Mercury is essentially ruined, while Lincoln has developed an odd brand identity, dependent on town cars which appeal to the geriatric generation, and immense Navigator trucks, which are a lightning rod for environmental lobbyists.

Ford management has terrible problems facing it. If the Premier companies remain relatively independent, Ford will have actually lost brand loyalty. If these companies become more tightly integrated, then the value of those brands diminish. It's a marketing nightmare.

The answer to your question is that Ford acquired some great companies over the last few years. But finding synergy among them is going to be an elusive goal. The best suggestion would be to finish off Mercury and concentrate on the premium brands. But to build a smooth transition, they have to move Lincoln, Jaguar, Volvo, and Aston more clearly under the Ford umbrella as a unified entity. They will undoubtedly lose many traditional purchasers of the acquired brands, but if they do it right they end up with a very wide choice of high end vehicles for the returning Ford customer. All will be lost unless they firmly hold the middle market, so investment in the Mondeo/Taurus class of cars is clearly a top priority. Poor Jaguar.

Mike Frank