After spending 250 Million dollars in development over a 10 year period, followed by a heavy investment in yearlong teaser campaign, Ford launched “Edsel” brand car in September 1957, with an assured air of overconfidence in creating a revolution. Unfortunately, the car flopped so spectacularly, and it had become a timeless case study for brand failures. Failures may not show what could be the right way to do things, but it would indicate the pitfalls in a path, avoiding us to re-invent the wheel in certain scenarios.
It’s not just Ford, many other brands had learned from the “Edsel” brand failure. So, what are the takeaways for us?
Back in 1956, Ford Motor Company realized that there was a void in their selections of mid-size automobiles – Customers who upgrade from Lower end of the market to Medium end of the market.
In the medium segment, Ford had only “Mercury” brand, whereas GM and Plymouth had brands like Buick, Pontiac, Oldsmobile, Dodge, Desoto, Chrysler. The perception was that Ford was losing customers to other manufacturers when the time came to trade-up from the lower end segment. The options from competitors in “Medium” segment enabled “Ford” lower end owners to shift loyalty and move to other brands.
FMC needed a new car line between Ford and Mercury to compete on a level playing field. The design of the car was to be completely unique – distinguishable from any angle with distinctive promotions and advertisements.
By looking at competitors rather than customers, Ford wanted to create a brand in “Medium Segment”.
Benchmarking Competitor’s product to understand market signals, market behavior, market trends, is a noise and a distraction from a brand’s core activities. Product data about the market can be gathered more successfully by studying the users.
Following were the objectives for FORD management team during launch of EDSEL
- To ensure greater retention of ford upgraders
It is the beginning of end if we start thinking about preserving old customers than attracting next generation customers
- To keep more customers in ford family
- To add More dealers to Ford Family so that we can sell more ford cars
- Aim is just not to sell more Edsel cars but should help to sell more ford cars by “Halo Effect”
What do you feel by reading the above objectives? Does it not appear like – only about Ford, rather than people or consumers? Does it not talk about profits for Ford than consumers? It appears like Ford Centric(Indirectly – Product-Centric) than Consumer Centric objectives.
Customer focused company – If you ask a phone manufacturer, he would say that he is the business of connecting people and enabling communication any place, anytime rather than saying they are in the business of making smartphones – AG Lafley
Theodore Levitt identifies this as “Marketing Myopia” –
- Companies spend billions of dollars making their new generation of products just slightly better than their old generation of products – Ford’s teasers with tagline “Car of the Future” created a huge hype, increased consumer’s unrealistic expectations. But when they launched, people could not find a huge difference in value propositions from other brands. Yes, there were a couple of notable innovations from Ford’s perspective – but consumers did not consider them as highly valuable.
- Ford management team used entirely internal measures for success/progress of the project – example, Technical Achievements like Teletouch, floating speedometer, Self-adjusting brakes, transmission lock, electronic hood release. – They should have used external, customer-centric measures for success of a feature.
The product-centric view makes the brand focus on materials, engineering and takes them away from the customer.
GREAT BRANDS ANTICIPATE TRENDS
In a free market scenario, success or failure of a brand is in the hands of the consumer than the manufacturer. As Ford Motor Company was product-centric than customer-centric, they completely missed the changing consumer trends, attitudes.
“When the Edsel was first developed it looked like big was the way to go,” says Ellsworth, “But by 1958 people were thinking more along the lines of smaller economy cars. The public’s interest in huge, big fin cars with glitzy chrome was just about over,” he notes.
Ford motor company did not see the shift in the cultural movement of consumers – People were looking for smaller cars – exposure due to the launch of Beetle, Nash Rambler, Studebaker Lark. Consumers were also moving towards Cheaper models and fuel efficient cars- Ford missed this point completely and Edsel was a “fuel guzzler”.
Ford started Styling of Edsel in 1955, the year in which two million units of “Medium Sized” car were sold. Ford used this sales data to justify the design investment and blindly followed the trend. If Ford had launched this car in 1955, the brand would not have failed. By 1957, market and consumer attitudes had changed.
BUSINESS MODEL INNOVATION
Research could provide required “Value Propositions” -We cannot satisfy every need or want of a user – But how to finalize the required value propositions? Decisions should be based on a brand’s core strengths, capabilities, resources, key partnerships, vendors, distribution channels, cost structure and the revenue streams. Design Thinking uses “Business Model Canvas” to solve this problem.
- Ford motor company used same assembly lines for Edsel and Mercury cars – Workers were uncomfortable to switch from one set of parts assembly and sequence to another set -Confusion of parts with other brand models in the assembly line. In some of the cars kept at dealers, parts were missing. Some parts were kept in the boot with a note to help dealers assemble the parts themselves.
- Ford employees did not feel the ownership of Edsel vehicles – They took a little pride in their work – This affected quality of products.
- Ford added new dealers exclusively for Edsel – with the main aim to have dealers network to match competitor numbers. Ford failed to leverage their existing dealer network.
- Dealer’s mechanics were not equipped sufficiently to deal with the mechanical/electrical problems of the car affecting the customer experience. “Tele-Touch Transmission” though a big innovation, was the most problematic.
ATTENTION TO DETAILS
The best user experience is in small details. If you are a consumer oriented company, you would be focusing even on a small customer touch point and provide a delightful experience.
Tele-Touch Transmission – Ford was promoting the “Tele-Touch Transmission” as the foremost innovation – This gear shifting arrangement needed a change in User Behaviour – Location of gear shift mechanism and way to shift the gears.
Unfortunately, the gear shifting transmission is kept at a traditional location of the horn button – Users inadvertently shifted gears when the intention was to sound the horn – The system was not good for driving in streets. Teletouch too had overload problems with the electric motor.
Tail Lights – Ford Edsel had Boomerang shaped lights – They missed an essential subtle detail – The boomerang shape was placed in reverse fashion – direction opposite to turn being made. Example – For right turn signal, the boomerang’s arrow shape pointed left.
PROTOTYPE AND TESTING
A product’s success lies in “Prototyping” and “testing”. Whatever assumptions, ideas, insights we have got could be validated by some form of prototyping and testing with a small set of actual users. A prototype could be an inexpensive model, scaled down version, to help real customers to understand the design or solution. Testing with real users helps us to optimize the design, remove low-value proposition features, enhance good value propositions and get what customers think and feel about the product.
- Ford did not “Test Market” any prototypes with potential “Real Buyers” until vehicles had been fully designed, new dealers were established. Prototype testing would have solved some of the problems associated with “Value Propositions”.
- When consumers were looking for cheaper models, Ford’s first launch was most expensive, top of the line models. The rule is to start with cheaper models to encourage people to buy. Prototype testing would have guided them.
- Every brand launched new cars in the month of November. When Edsel was launched in September, it was competing with 1957 models with discounted price before next year models pushed into the showroom.
PARADOX OF CHOICE
More the choices, worse the user experience. Design Thinking advocates fewer choices for the customer.
“As the number of options increases, the costs, in time and effort, of gathering the information needed to make a good choice also increase. It increases our cognitive load. People prefer other loads than cognitive load.” writes Schwartz. “The level of certainty people have about their choice decreases. And the anticipation that they will regret their choice increases.”
Ford Edsel had 18 models to confuse consumers – Ranger, Pacer, Corsair, Citation – 2 to 4 door-Hardtop – sedan -wagon -convertibles – 6 or 9 passengers – People had tough time in differentiating a top line model, lavishly equipped, 345 hp “Citation model” and base, with shorter wheelbase, 303 hp “Ranger” model.
Ford learned a lot from “Edsel’s Failure” and they turned “Customer Centric”. It was one of the reasons for their “Mustang” success. One of the main reasons for Edsel’s failure was unprecedented “Pre-Publicity” – Self-assured advertising – creating unrealistic expectations. Pre-publicity was the first step for failure – So, Ford Edsel was destined for failure before anyone saw the car.
References – Ford Edsel Wikipedia, Richard Feloni-Businessinsider.com, Edsel Story-Youtube, Jame Page Deaton-how stuff works, Edsel.com, Tony and Michele Hamer-thoughtco.com, Play to Win by AG Lafley, What Great Brands do by Denise Lee, Paradox of Choice by Schwartz.