Ford is an American multinational company that is famous for manufacturing cards. Henry Ford founded the organization back in 1903. The company is renowned for selling high-quality vehicles. Ford’s pricing and promotional strategies have helped them stay at the top of the market even after 118 years. Their pricing strategies have been evaluated over the past hundred years. Here are some details about Ford’s pricing strategy.
Types of Pricing Strategy Applied by Ford
Ford Motor company applies different pricing strategies according to the market’s need. They evaluate the product’s needs and the appropriate marketing mix needed to attract consumers. Depending on the market, Ford implements two types of pricing strategies.
- Market-oriented pricing strategy: Under this, Ford sets a suitable price for the market environment. Along with that, Ford observes its competitors, consumer behavior, and other factors that affect the market.
- Premium pricing strategy: Ford has a luxury line called the Lincoln automobiles, which implies the premium pricing strategy. All the products under this line are on the more expensive side.
Detail Discussion on the Ford Motor’s Pricing Strategy
Ford is one of the most diverse automobile companies that has been in business since 1903. It has various products that make the business portfolio even more potent. Ford doesn’t disappoint its consumers. This means that everyone will find something according to their taste. Starting from SUV to Crossover, Vans, Hybrid cars, Future vehicles, People Mover, whatever you name it. Ford has it. Their popular models are Mustang, Galaxy, Puma, Transit Kombi, Fiesta, Mondeo, Eco Sport, Focus, etc.
One of Ford’s special services to its consumers is financial planning. This gives Ford the competitive advantage that they need. Recently Ford had to recall a few of its models due to some safety concerns. During 2020, consumers from some of the states of America and a few regions of Canada have talked about the safety issues. Ford has recalled 775,000 SUVs from America and 60,000 cars from Canada in response. This has indirectly affected Ford’s pricing strategy.
Leaving all these aside, Ford usually follows two types of pricing strategies mentioned. In this segment, we will discuss those two strategies in detail.
Ford mostly follows the market-based pricing strategy. As the automobile industry is quite competitive, it needs to set the prices of its products by observing many different aspects. These aspects are mentioned below:
Demand: At the very beginning, Ford looks at the demand of the product before setting its price. For example, if the demand for a certain model is higher than other models, the company sets a relatively higher price as consumers will be willing to pay that price.
Competitor’s pricing strategy: Competitor’s pricing strategies matter a lot while deciding the appropriate pricing strategy for the company. Ford usually observes the prices set by the competitors before setting a suitable price.
Profit margin: A lot of the time, Ford evaluates its cost and profit margin to meet its required rate of return. If the profit margin is relatively high, the brand will set a higher price. On the other hand, if the required rate of return is lower than usual, the company can ease its prices a bit.
Target audience: Target audience matters a lot while setting the appropriate prices. For example, if the target audience is the consumers who have moderate earning, then the prices have to be in the mid-range. For the consumers who have higher income, Ford has a special line of luxury products to implement the premium pricing strategy. The products under that line are much expensive than the usual ones.
Ford has different pricing strategies depending on the above market factors. According to the demand, competitor’s pricing strategy, profit margin, target audience, and other factors, Ford decides a suitable pricing strategy and the perfect marketing mix for that particular product.
The two preferred pricing strategies are the market-oriented pricing strategy and the premium pricing strategy.
A market-oriented pricing strategy is one of the most popular pricing strategies applied by most automobile companies. Under this strategy, Ford aims to set a suitable price for the ongoing market condition. It observes the competitors, consumer’s demand, the behavior of the customers, etc. Most of the vehicles of Ford are launched by following this strategy. For example, Sedan and all the models of trucks are launched by following the market-oriented pricing strategy.
Alongside that, Ford applies another pricing strategy called the premium pricing strategy, in which Ford sets a relatively higher price for some of the models. Ford has a luxurious lineup for high-end consumers. This lineup is called the Lincoln automobiles. All the products under the Lincoln lineup are sold at a much higher price as the target audience is the premium one.
These are all the basic factors and strategies that Ford follows while deciding its vehicles’ perfect pricing.
Pricing Strategy of the Competition
Vehicle manufacturers use a variety of pricing techniques. Probably one of the best is the cost-plus strategy. Certain businesses prefer competitive pricing techniques over the cost-plus method. Whenever it comes to pricing strategies, this industry, unlike other industries, does not always follow consumer preferences. However, firms consider the market worth of the car they are making.
Recommendation
Ford usually sets the price according to the dealer’s preference in the market-oriented pricing strategy. But instead, Ford can look up consumers’ preferences. Ford can also develop strategies that will attract the students as they are the growing consumers of this industry. Attractive strategies like installment programs, financial plans, etc., will keep the students captivated. Along with that, during the holidays, Ford can develop innovative pricing and marketing strategies. These are the few tweaks that Ford can do in its current pricing strategy to further elevate its pricing game.
Related Reading
- Pricing Strategy of Nike
- Marketing Mix of Adidas
- Marketing Mix of General Electric
- Marketing Mix of Walmart
- Marketing Mix of Coca-Cola
Nishat Tarannum Mridula is a contributing writer at The Strategy Watch. She has been contributing for last two years.
Nishat is currently studying at the University of Dhaka. Even though her major is in Banking, she enjoys writing on diverse topics, starting from appliances to blogposts. She is in the middle of completing her BBA from University of Dhaka. Alongside that, she writes different types of business articles for The Strategy Watch.