Ford 2005 Annual Report Download - page 26

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations
Trends and Strategies – the Way Forward Plan
The global automotive marketplace has become increasingly fragmented and crowded, and we anticipate that this trend will
accelerate into the future. Anticipating little growth in the overall volume of vehicles sold in North America for the foreseeable
future, we expect more manufacturers to offer an increasing number of products. Presently, there are about 255 different nameplates
being offered in the United States, compared with 215 in 2002 and a projected 300 or more by 2010. In order to stabilize and grow
our U.S. market share in this increasingly competitive environment and generally improve our business, we are implementing a
business improvement plan for our North American automotive operations that we refer to as our Way Forward plan. This plan
focuses on the following key areas: renewed customer focus and brand differentiation, commitment to innovation, clear pricing, and
cost reductions.
Customer Focus and Brand Differentiation
To compete more effectively in today's global marketplace, a sharpened customer focus is essential. Toward that end, we have
developed a new customer segmentation model using a proprietary large-scale quantitative survey to better understand the values and
attitudes in the U.S. marketplace. This model focuses on values and attitudes that drive purchase behaviors and that cross traditional
demographic lines of age, lifestage, gender and cultural identity. Using this new segmentation model, we selected target customer
segments for our Ford, Lincoln, and Mercury brands. These target customer segments will provide a sharper focus for our business,
and we will use this focus to ensure all aspects of our business will be aligned to satisfy our customers' current needs and anticipate
their future needs.
To effectively leverage our global resources, we must focus on differentiating our brand identities, especially within the crowded
North American marketplace. Going forward, we intend to have clear and distinct identities for our brands. Our Ford brand in the
United States stands for bold American design that exudes strength and progress; a number of our products already reflect that design
philosophy, including our award-winning Mustang, F-Series, and Fusion models. We plan to continue this brand philosophy in future
Ford-brand models, such as the new Ford Edge crossover vehicle. Mercury appeals to consumers with different values and attitudes,
and brings conquest purchasers to us. Our strategy for the Mercury brand is to create vehicles that offer modern, expressive design for
the American consumer, while maintaining common product functionality with the Ford brand. The Mercury Mariner and Mercury
Milan are examples of products delivering the intended brand identity and product functionality. Our strategy for Lincoln is to appeal
to self-made American consumers who are achieving their dreams, by offering these consumers refined and dynamic vehicle design,
smooth power on demand, and a personalized environment. The Lincoln Zephyr and Lincoln Navigator are examples of products
delivering this brand identity today, and this brand philosophy will be continued in future products, such as the new Lincoln MKX
crossover vehicle.
Innovation Initiative
To continue delivering the cutting-edge technology consumers desire, we also are rededicating ourselves to driving innovation
through our entire business, beginning with the way we analyze the marketplace, develop and produce products, and continuing
through the sales and service channels. Our innovation initiative demands creative and original thinking, implemented through a
disciplined process, throughout our global operations, which we can then maximize through global synergies in order to create more
new products and features, more flexible plants, more common processes and economies of scale to deliver more new product faster to
all of our markets and for all of our brands. Our strategy is to differentiate ourselves in the marketplace through design innovation,
safety innovation, and new environmentally-friendly technologies.
Clear Pricing
We began introducing clear, simple pricing two years ago with the introduction of the new Mustang, and have continued this
strategy with new models such as the Ford Fusion, Mercury Milan and Lincoln Zephyr. These vehicles are proving that well priced
products with great appeal can reduce our reliance on incentives. Our plan is to extend this strategy to all of our vehicles over time.
This is a key component of communicating our brand philosophy to our customers through bold styling and clear, simple pricing.
Ford will continue this approach of bringing sticker prices in line with actual transaction prices by reducing rebates over time as we
introduce new models into the marketplace. Our customers will benefit from a simpler purchase experience and improved residual
values and cost of ownership.
Ford Motor Company Annual Report 2005 24 Ford Motor Company Annual Report 2005 25