Marketing Disaster

Edsel

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.

Product:

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.

Price:

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.

Place

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.

Promotion

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

POEM

REGrant

Photo:  Richard E Grand in “How to get ahead in Advertising”

 

As anyone who reads my blog soon learns, I end each post with a poem.  The purpose of the poem is to trap emotion.  Poetry is emotion encapsulated in word.  This blog is a record of my emotional state at any given point in time.

However, I learned something very new about the POEM this week.  It is an analysis frame for tracking public relations communications in a firm.

The acronym stands for Paid, Owned and Earned Media.

Paid Media are the messages that we pay for, mostly falling under the terms “Advertising” and “Promotions”.  Advertising is sometimes referred to as “Above the Line” ATL communications, with Promotions being “Below the Line” BTL.

There is a bit of debate surrounding the origin of the terms ATL and BTL.  My preference is for the following explanation.  Under the agency system an ad agency presented a bill to the client every month.  The bill was in two parts above and below a line.  The top part, ATL, billed the advertising creative and media placement for the month.  In this section the ad agency would detail the full retail cost of the media placement if purchased on its own.  Because ad agencies place large volumes in media, they receive huge discounts against the retail cost.  They pass some of these discounts on to the client, depending on client size.  For large clients they are able to display how much the client saved that month by being with the ad agency ( as opposed to making their own ads and buying retail price media space).  So the bill to the Marketing Manager was traditionally presented as a saving.  The ATL costs came from the Marketing budget.

Promotional activities are discounted from the cost of sales.  So product vouchers, BOGOFs, 50% extra, half price offer etc all come from the sales budget rather than the advertising budget.  So the Marketing Manager did not have to spend this money.  As a result the BTL was of less concern.

With paid media you own the message but not the medium.  You might advertise your alcohol product in the middle of a programme about alcoholism, or your beautiful auto ad might follow a road safety ad.  The issue of message control, reach and message cost is central to media debates.  As a rule the more expensive the medium is, the more control we have, and the less reach we have.  We gain the greatest reach at the lowest cost in the media where we relinquish the most control.

Owned Media are those where we control both the medium and the message.  A corporate website, an annual report, product brochures etc.  In general it is not the kind of channel that sets the world ablaze, but we do retain ownership and control of both the medium and the message.

Earned Media is the bear trap.  This is the place where we can gain column inches for free, but the story is not under our control.  It may not be telling the message we want to get out there.  At the high control end we have trade magazines, which beg for copy to generate interest in the publication.  These publishers are unlikely to publish a savage dissection of a good advertising client.  At the other end of the scale is social media, where audiences will routinely hijack your message for their entertainment.  If this damages your company, brand or product they don’t care.  In the past the earned media environment was dominated by PR companies who seeded the media with positive news stories, and who attempted some form of damage control when a negative story hit the presses.  Nowdays it is increasingly in the digital space where sharing a squash club with a national newspaper editor carries no weight.  In this space everyone is still learning.

The Advertising Poem

A man wakes up after sleeping under an advertised blanket,

on an advertised mattress, pulls off advertised pajamas,

bathes in an advertised shower, shaves with an advertised razor,

brushes his teeth with advertised toothpaste, washes with advertised soap,

puts on advertised clothes, drinks a cup of advertised coffee,

drives to work in an advertised car, and then, refuses to advertise,

believing it doesn’t pay.

Later when business is poor, he advertises it for sale.

Why is it?

Unknown