ford introduced yet another new model B u s i n e s s F i n a n c e

Market Research–Round 1: In the late 1950s, when Americans were trading in their old cars for new ones every year or two, American automobiles were getting bigger and bigger. The demand for ever-larger, more powerful V-8 engine cars seemed unstoppable. At least one American auto manufacturer, Ford, realized the trend could not continue indefinitely, and that at some point consumers would begin to prefer smaller cars again. The question was when that shift would occur—and how to be ready for it. At the time, Ford was concerned enough that it conducted market research on consumers to determine their preferences for the cars Ford would be producing in the next few years (designing a new model of car takes several years). By the early 1960s, Ford had determined through extensive personal interviews of consumers that demand was building for a “simple, compact, no-frills, fuel-efficient sedan.” Accordingly, Ford introduced the Ford Falcon, a compact new model with a relatively low price because of its having few options, a manual transmission, and a small engine size (good for fuel efficiency). By keeping the car styling plain, Ford also kept the cost of the car down. However, sales of the new Falcon were not very successful, so Ford once again conducted market research to understand why.

Market Research–Round 2: This time, when interviewing consumers Ford did not ask “Describe the kind of new car you would look to buy,” as they had the first time. Instead, it asked the consumers to “Describe the kind of new car your next door neighbor would look to buy.” On the basis of their responses, Ford introduced yet another new model, the sporty-looking, 2-door Ford Mustang. [Historical note: The new Mustang was essentially the same car as the Falcon—just the body shape of the car was changed, little else.] The Mustang was very successful (it is still in production today). A few years later the Falcon was phased out of production. Today, the Falcon is widely regarded as a failure, and the Mustang as a great success-story.

Question: (a) How would you explain what Ford’s error was when it conducted its first round of marketing research? (b) How did it correct that error in the second round?

Answer Length requirements: 150-300 words. No less than 150 and no more than 300 words.

Rubric Grading: Little or no improvement possible; all major issues appropriately considered in analysis and presented clearly.
– “The assignments are designed to be challenging in order to develop your ability to think and decide as a marketing manager would, and thus the grading reflects this focus. The challenges facing managers are not simple, so to prepare you for the workforce the assignments have the complexity of the real world. Your learning experience would be diminished if the assignments were simple.”