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Ford Ka: Breaking New Ground In The Small Car Market : Insead Case On Market Segmentation

1751 words - 7 pages

Central IssueWith the small car market in France undergoing rapid change, the strategies of yore are making way for newer methodologies. No longer can a car manufacturer simply make a big car for the wealthy and a small car for the less fortunate. For Ford, it is critical that they determine their target market for a new addition to their lineup, the Ka. But first, Ford needs to determine who that target market is by segmenting it in such a way as to determine the best fit, which will be their typical Ka buyer. Let us examine some of the facts and obstacles surrounding this opportunity for Ford.Relevant FactsIn response to a very successful offering from rival manufacturer Renault, Ford executives decided to build a car to compete with the "Twingo" by giving customers a small car that was unique, stylish, and suited for urban driving. Ford then designed and developed the Ka based on an existing chassis of their other small car, the Fiesta. As Brand Manager of the Ka, Gilles Moynier put it, "The Ka is already developed and therefore, we need to find an appropriate target market for the product, rather than the other way around."Finding this target market is especially difficult given the changing French demographic and other environmental factors. Road congestion, high fuel prices, problems parking, decreased emphasis on price, smaller families, and an increase in the number of working women have all contributed to increased fragmentation and overall demand for small cars in France. For instance, 1995 saw small cars account for 43.7% of all the new cars sold there. This increased fragmentation has contributed to the difficulty in finding an ideal non-traditional segment in which to target and market the Ka.Given their backward situation, Ford commissioned a market research study to determine customer perceptions regarding the Ka. Unfortunately, the study was not able to find a clear target since opinions diverged significantly. That is, those studied seemed to either love or hate the Ka with few respondents in between. Perceptions also varied greatly depending on which focus group or demographic an individual represented. While the results of the study were disconcerting, the research firm collected a large amount of data that Ford could now analyze. Now it was time to dive into the data and determine which possible course of action Ford should take.Alternative Courses of ActionFord must decide on the best method to segment the French small car market. It wants to mimic the success of the Renault Twingo and ensure the success of the new Ford Ka release. While there are multiple avenues for Ford to pursue, the most salient are the following three.1) Demographic Segmentation:Demographic segmentation was a less risky proposition that had proven results in the past and seemed enticing, especially to Ford management. Demographic segmentation would cost less, and the data for the market was readily available. Furthermore, Ford also had years of...

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