In the 20th Century multinational corporations (MNCs) have a choice to make: do we apply a standardised marketing strategy or a differentiated approach to each geographic region? Ford has boldly chosen the former in their marketing direction of the 2012 Ford Focus – their flagship car. This will mean that the one car will be sold and promoted generically across the globe, rather than adapting the product and promotional material to suit local tastes. It is very unusual for a global firm to come out and state they are going to take a standardised approach. Other MNCs, such as Starbucks and McDonald’s, have been criticised for selling a generic product across the globe; this is a highly controversial decision.
The marketing mix decision to use the same promotional material worldwide, has been made – from a functional point of view – as highly rational. Namely, the company has adopted a global corporate strategy named ‘One Ford’ that has been adopted to make the company more efficient and benefit from cost-reducing economies of scale. And this is no surprise, given Ford’s last year financial results reported a $14 billion loss. The marketing department’s strategy, therefore, clearly supports the company’s wider goals. Hence, the logic is simple enough: by producing just one standard product to satisfy all of their customers needs – as ambitious as it sounds – there are substantial cost savings to be made. For instance, Ford currently spends $4 billion annual on promotion.
But there are more benefits that merely saving costs. As Jim Farley, Ford’s group vice president of global marketing, insists, there are is a degree of marketing momentum that can be generated; economies of scale is not just about reducing operating costs. No – it is more than that. Marketing economies of scale are the benefits of having a large, simultaneous marketing strategy across the globe. For instance, it enables a more coherent message to be conveyed to consumers. And, in the case of the new Ford Focus, the benefit being sold to consumers is technology.
Hence, the global division has created 50 short advertisements that each regional division will choose to promote in their geographic area. This may be seen as Ford trying to pursue a transnational strategy – thinking globally, acting locally. Thus, there is a world-wide emphasis on innovation and cutting-edge design; there will be no risk of decentralised marketing trying to sell conflicting benefits.
However, as I previously mentioned, this is a highly controversial approach. Since the development of consumerism, firms have developed poor corporate reputations for trying to sell homogenous products and cite them as the ugly side of globalisation. Other truly transnational companies, like HSBC, have developed a strong brand image around their differentiated offerings. Moreover, differentiation is one of Micheal Porter’s three competitive strategies for success (Cost-leadership, differentiation and focus). Perhaps Ford risks destroying its brand equity by become generic – and thus undistinctive.
Moreover, if we focus at the product itself, it is obvious that different consumers will seek different benefits from the car. For instance, consumers in the USA may place style and look as important product attributes; consumers in Europe could favour functional design; consumers in Japan seek high-tech innovation. Can one product really satisfy all of these consumer wants? Even if it can to an extent, the consumer may be better off seeking a differentiated product that is highly tailored to the market segment they belong to.
It should be clear by now that this strategy will either go down like as a huge success or a failure. Although 99% of the time I prefer marketing that focuses on a niche – or at least differentiates its products – I actually like Ford’s global approach. Not only does it make practical sense, every company claims to differentiate their offerings – regardless of whether or not they actually appeal to a specific market segment. I like Ford’s optimism. In a way it says ‘this car is good enough for anyone, anywhere wanting to do anything’.
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© Joshua Blatchford, author of Manifested Marketing, 28/02/2011.