On this day in 1959 the Ford Motor Company announced that it was discontinuing the Edsel. It was the greatest disaster in US automobile history. The Edsel did not even sell half the volume required to break even on the investment.
There are hundreds, and I mean literally hundreds, of theories as to why the line failed. There is a lot of talk about styling, the horse-collar grille that was mocked at the time for looking like someone sucking a lemon, and was likened to a vulva.
Others contextualise the failure in terms of the late 1950’s economic downturn, which may have played a part. The car market was contracting, not a great time to introduce a new marque.
There is a lot of material on the internal politics of the organisation, and how the divisions were competing with each other. Also how Robert McNamara was a Ford purist, and disliked the proliferation of brands. There is criticism that Henry Ford II was just not the man his father was. Of course he wasn’t, Ford was now a public company, not a personal fiefdom!
For me the failure comes down to marketing, and to the most simple, basic aspects of marketing.
The company did not test the designs with real customers. They promised an all new singing and dancing product, but built it on existing models. When the public eventually saw the product they could see nothing new or special or unique about it. If anything it looked dated.
They never got the positioning right. In the customers mind there was no compelling reason why you should buy an Edsel. These days the positioning of the product comes very early in the development process. Positioning will determine price, which determines cost, which determines features and benefits. For Fords the product positioning appeared to be an afterthought, after it failed.
The pricing strategy for Ford was to move the Lincoln Brand, and the Continental in particular, upmarket to compete with Cadillac. This was the right strategy and proved itself over time.
They then needed to create space between the Mercury brand, in the more luxury mid-range, and the Ford brand in the value range, to make space for the Edsel. They did not get this balance right.
For instance, a full spec Ford brand, with all bells and whistles, should have retailed at more than the most basic Edsel. Instead it was cheaper, making the Edsel seem very expensive.
More damaging still was the fact that most of the Edsels were priced to compete with Mercury, so if Edsel was successful it ran the risk of caniballising the Mercury brand with a slightly cheaper model. This set up tensions between the dealerships, and the internal product managers.
Customers did not know if the Edsel was supposed to be more or less premium than Mercury. When customers doubt, they avoid.
Edsel initially sold through a network of less than 1,200 dealers, in a market where GM dominated with 16,000 and both Ford and Chrysler had 10,000. When the car was not selling these Edsel dealers immediately took on extra marques, diluting the offering.
The search for the Name of the Edsel is symptomatic of the problems that were going on. They tried to come up with a name internally, with no success. Initally it was called the E car, for Experimental. They hired an ad agency to generate a name. Foote, Cone & Belding came up with 6,000 names. Fords commented that they paid for a name, not for 6,000. Edsel was not a front running name in the report! At a board meeting (not the place to choose names) the name Edsel was chosen to honour the father of Henry Ford II and son of the great Henry Ford. Henry Junior hated it (he was absent from the meeting).
The company promised something new and exciting. The build-up advertising was a teaser campaign, which showed blurred shots of the car, or small detail shots. The cars were delivered to dealerships wrapped in paper to conceal them until the last moment. When they were unveiled it was to a sigh of disappointment. All build up and no bang!
Every Cloud has a Silver Lining
The 1960 Edsel Comet was quickly reworked and launched under the Mercury Brand as an entry level Mercury (where Edsel should have been). The plant set up for Edsel was retooled to produce the Ford Falcon series of cars which proved to be a great success for the company.
One clear lesson
Begin with positioning. Know your USP, the unique sales proposition, why anyone should choose this product over all the others in the market! If you don’t have a USP, go back to the drawing board.
If you want examples, Honda have a brilliant strategy which focuses on the quality of the engine. Toyota focus on reliability. And here is an interesting notion from Subaru. Clearly aimed at brand loyalists! https://www.youtube.com/watch?v=guIJphOyCLM