Ford Figo

MKTG/299

IBS Center for Management Research

Ford Motor Company in India: Developing the Ford Figo

This case was written by R Muthukumar, under the direction of Debapratim Purkayastha, IBS Hyderabad. It was compiled from

field research, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective

handling of a management situation.

2012, IBS Center for Management Research. All rights reserved.

To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: [email protected]

www.icmrindia.org

1

MKTG/299


Ford Motor Company (Ford), one of the global leaders in the automotive industry found itself trailing in terms of sales volumes in the Asian region, especially India since its inception. Though it had entered the Indian auto market in 1995 and introduced mid-sized car models that were doing well in respective niche segments, its sales growth had not kept pace with the growth in the market. Unlike the US market, the Indian market for passenger cars was dominated by small cars and Ford India was not present in that segment. To capture a significant share of this high-volume, high-growth segment of small cars, many companies – both multinational and Indian – were gearing up with new product launches. Ford realized that a strategic decision was required through its wholly-owned subsidiary Ford India Pvt. Ltd (Ford India) for the Indian market. Ford India undertook marketing and consumer research to understand the Indian customer and to find a potential target customer for its new products. Based on the research findings, Ford India started developing the Ford Figo in partnership with global and regional Product Development teams..

By the end of 2009, the team at Ford had developed its first small car through which Ford sought to gain a foothold in the emerging Asia Pacific and Africa markets.

i The Figo was targeted at the

growing market of young buyers in India. The company felt that it had done a good job of understanding the pulse of the market, the consumer mindset and was ready with a product that would appeal to the target segment. According to the company, Figo offered more features, interior space, technology and durability than other vehicles in the same price range.

ii Ford Motor

Company‘s President and CEO Alan Mulally (Mulally) said, ―We are confident the Ford Figo will be a product that Indian consumers really want and value.‖

iii However, the challenge before the

team was how to launch this new car in the highly competitive Indian small car market and how to market Figo in a way that it would appeal to the target segment.

THE SMALL CARS SEGMENT OF THE PASSENGER VEHICLE MARKET IN INDIA

According to the Society of Indian Automobile Manufacturers1 (SIAM), passenger cars were classified

on the basis of length into mini (</=3,400mm), compact (3,400-4,000mm), mid-size (4,001-4,500mm), executive (4,501-4,700mm), premium (4,701-5,000mm) and luxury (>5,000mm). Earlier cars were classified on the basis of price into segments A (< Rs

2.300,000), B (Rs. 300,000-500,000), C (Rs.

500,000- Rs. 1 million), D (Rs. 1 million - Rs. 2.5 million) and E (> Rs. 2.5 million). Multi Utility Vehicles (MUVs) were classified on the basis of seating capacity — seven, nine, and 13-seaters.

iv

(Refer to Exhibit I for details on classification of passenger vehicles as per SIAM)

As of 2010, passenger vehicle sales contributed to 16% of the total automobile sales in India.v

Passenger vehicle sales had shown an increasing trend in the 2000s. India was the seventh largest producer of passenger cars in the world, as of December 2010 with sales of 1.95 million units.

vi

Maruti Suzuki, Hyundai Motor India Ltd. (HMIL)3, and Tata Motors Ltd. (Tata Motors)

4 were the

1 SIAM, New Delhi, was a representative body of the automotive industry in India.

2 Rs.= Indian rupees. As of mid 2011, US$1 was approximately equal to Rs. 44.89.

3 It is the Indian subsidiary of Hyundai Motor Company, Seoul, South Korea. It manufactures passenger

cars for the domestic market in India and also exports cars to other countries from India. 4 Headquartered at Mumbai, Tata Motors is one of the leading automakers of India. It manufactured

passenger cars, multipurpose vehicles, utility vehicles, and trucks.


2

dominant players with a combined share of more than two-thirds of the total sales of passenger cars

vii (Refer to Exhibit II for details on various manufacturers of passenger vehicles in India).

In India small cars accounted for more than 70% of the total cars sold in the country and the country was the largest manufacturer of small cars in the world.

viii Small cars - mini and compact –

accounted for the sales of around 900,000 cars in India in 2009. With annual sales forecast to grow to 3.0 million units by 2016, global automakers started moving to introduce small cars in the country.

ix (Refer to Exhibit III for market shares of various segments in annual sales of passenger

cars in India; Refer to Exhibit IV for details on features of small cars from leading producers).

Being the largest segment, the small-car segment witnessed the highest new car launches i.e. 11 new launches between the three years 2007 and 2010 (of which five were launched in 2010) with major ones being the Ritz, the A-Star and the Zen Estilo (from Maruti Suzuki), the i10 and the i20 (from Hyundai), the Indica Vista (from Tata Motors), the Polo (from VW), the Etios (from Toyota), the Ford Figo, and the Chevrolet Beat.

As of 2010, Maruti Suzuki was the market leader in the small cars segment, followed by HMIL and Tata Motors.

x Maruti Suzuki had been selling small cars since the 1980s; HMIL and Tata

Motors started selling them in the late-1990s. Understanding the potential of small cars in India, GM India entered this segment in 2007. As of 2009, it sold two models of small cars – the Spark and the Aveo U-VA. As of 2010, other players in the small car segment included Fiat India Pvt. Ltd

5, Skoda Auto India Private Ltd

6, Honda Siel Cars India Pvt. Ltd.

7, Volkswagen India Pvt. Ltd.

8

and Nissan India Motors Pvt. Ltd.9, Toyota Kirloskar Motor Pvt. Ltd.

10, planned to step into the

arena in the near future.xi

FORD IN INDIA

Ford Motor Company, a global automotive industry leader based in Dearborn, Michigan, USA, manufactured or distributed automobiles across six continents. With about 201,000 employees and about 90 plants worldwide, the company‘s automotive brands included Ford, Lincoln, Mercury and Volvo. The company provided financial services through Ford Motor Credit Company.

Established in 1995, Ford India was a wholly owned subsidiary of Ford Motor Company with more than 2,300 employees. Ford started its operations in India in 1995 as a 50/50 joint venture with Mahindra & Mahindra

11 (M&M). The company launched its first product in India ‗The

Escort‘ (C segment sedan) in 1996 from M&M‘s Nashik Plant. In 1999, the Escort platform was ceased and Ford launched ‗Ikon‘ from its new facility in Chennai. This was followed by the launch of Endeavour SUV in 2003, the Fusion in 2004 and the Fiesta in 2005. In March 2005, Ford bought out M&M‘s 15% stake in the company.

5 It is an automobile company formed by a 50:50 joint venture between Italy-based Fiat Group

Automobiles S. p. A., (Fiat) and India-based Tata Motors. Its manufacturing plant at Ranjangaon has the

capacity to produce 100,000 cars annually. 6 Based at Aurangabad, it is a wholly-owned subsidiary of Skoda Auto of the Czech Republic, which

manufactures passenger cars for the Indian market. 7 Headquartered at Mumbai, it is a joint venture between Japan-based Honda Motor Company, and Siel

Limited, a group company of the Siddarth Shriram Group, Gurgaon. This joint venture was formed to

manufacture and market Honda passenger cars in India. 8 It is the Indian subsidiary of Europe-based Volkswagen AG, a passenger cars manufacturer.

9 It is the Indian subsidiary of Japan-based Nissan Motors Company.

10 It was an automobile company formed as a joint venture between the Japan-based Toyota Motor

Corporation and Indian-based Kirloskar Group. 11

It is the automotive division of one of the leading business conglomerates in India, the Mahindra Group.

It manufactures multipurpose vehicles, light commercial vehicles, tractors for agriculture, and three

wheelers.


3

For the period January to December 2006, Ford India posted an overall growth of 87%. In January

2008, Ford announced plans to invest US$ 500 million to double the capacity, set up an engine

plant and launch Figo. Ford India registered a 3% overall annual growth in 2009 on year-on- year

sales performance, selling a total of 29,488 units in this year compared to 28,563 units sold during

the previous year.

Ford India did not register any significant growth in the passenger vehicle market in India (Refer

to Exhibit V for Ford India‘s sales compared to the total passenger vehicle sales in India). As of

2009, Ford India sold around 2,000 cars a month while the market leader Maruti Suzuki India

Ltd.12

(Maruti Suzuki) sold over 71,000 cars a month.xii

According to experts, the main reason for

Ford India‘s low sales volume in the country was its lack of presence in the small car segment in a

market which was extremely price-conscious.

NEW PRODUCT DEVELOPMENT PROCESS FOR FIGO

Generally, the process of new product development involved a series of stages: the generation of

new ideas, screening of ideas to identify the one with the most potential success, development of

the idea into a concept that could be tested on a small group of potential customers in order to

design a marketing strategy around it, development of the product, test marketing and finally

launch it into the market.xiii

Ford India followed a unique product development process while

developing Ford Figo (Refer to Exhibit VI for Ford‘s approach to new product development).

THE IDEA BEHIND THE FORD FIGO

The idea for the Ford Figo came about from Ford India‘s strategic plan for the future and the

market research which was carried out as part of that plan. This research highlighted a number of

changes occurring in the marketplace. For instance, it found that:

Globally in the next five years, small cars would make up about 60% of all cars sold. To be

successful in its business Ford wanted to become one of the major players in that segment

The Target customer would be a young individual, just married – probably within the last 12

months – and more ambitious. He lived at home with his parents, culturally considered quite

acceptable in India. He had an income of Rs. 300,000 to 400,000 (US$6,750 to US$9,000) a

year.

The car buyer had started becoming increasingly upwardly mobile, aspirational, reasonably

well educated – at university level, with an MBA/Post Graduation or beyond – and he was

looking to move from a motorbike to a four-wheeler.xiv

He viewed quality and value for money

as hygiene, and expected more security, less stress and more personality in his car.

The Ford brand appealed more to the older age group and the company was in danger of losing

the younger customers.

Ford used these changes in the marketplace to its advantage. It set about researching and

developing a car that would harness the true potential of the changing market. It wished to change

the attitude of consumers toward the Ford brand and also to capture a younger generation of

customers. It was against this background that the idea for the Ford Figo was born.

In September 2007, Ford identified its target customer for Figo. The research had shown that there

was a growing market of young buyers, particularly among women. After listening to research,

Ford decided to develop a small car specifically for India and similar markets. The company

believed that the small car segment was where all the action was and, hence, would account for the

12

Based at Gurgaon, it is one of the leading automobile companies in India that manufactures passenger

cars, minivans, and sports utility vehicles.


4

bulk of its new launches – one every 12 to 18 months – over the next few years.xv

Ford decided to

position the Figo in the high volume, small-car segment. Figo would meet the changing customer

needs with its attributes – pricing, fun to drive, cost of ownership, interior space, technology and

safety. ―Our market research indicated and largely confirmed to us the complexity of the Indian

market. In other parts of the world people look at the features of the cars first and then the price, it

is the other way around in India. Aspirational youth still live in a joint family system and seek

advice from their elders on major decisions,‖xvi

Michael Boneham (Boneham), President and

Managing Director, Ford India Pvt Ltd, said.

The Figo offered a platform for Ford to enter the vehicle market, affordably without sacrificing

style and comfort. According to experts, while affordability and practicality were of great

importance in this segment, buyers were not willing to sacrifice on style and performance. The

Figo was expected to be a perfect combination of style and affordability.xvii

The design team focused on listening to customers prior to the initial design process thus ensuring

that the final design of the Figo was representative of market needs. Ford designers set out to

create an attractive exterior coupled with a stylized and exquisitely crafted interior that gave

generous proportions and better value for money. ―Creating appeal and communicating value to

the customer starts with good design… You want a car that reflects and makes a statement about

you,‖xviii

said Emily Lai, color and materials Design Manager for Figo. Boneham said, ―It is a

clear shift in strategy and thinking. ‗Finally we listened to the customer.‘ The company had

maintained that the mid-size and entry-level sedans, represented by its first launch Ikon and the

subsequent Fiesta, was the segment to be present in the country, what with a growing affluent

middle class.‖xix

Ford argued that the size of the vehicle did not matter as long as the price was

right and consumer saw a value equation with the offering.

TURNING THE IDEA INTO REALITY

The Ford Figo was designed to capture the younger generation of customers and to cater to the

needs of a wider range of buyers. As such it was specifically targeted at the mid-20s age group and

the emerging needs of this group. Extensive Indian market research was undertaken to identify the

core needs of this target market.

Ford India‘s marketing team gathered 15 young men from the capital city, New Delhi, Bangalore

and Lucknow, a smaller, second-tier city. Each of the men represented the core target customer of

the new car. Ford believed that newly married young men, in their mid-twenties, represented the

prime target for Figo (Refer to Box I for details about Target Customer for Figo).

Box I

Target Customer

Sandeep

Young, 26-27 years old, Ambitious with aspirations of moving up both socially and

professionally; Newly married with no children, living with parents

Likes international, established, trusted brands; Stylish and cool in his circle

Technologically savvy – part of online social networks / blogs

First time – value seeking and status driven – buyer looking for

o Attractive Design

o Interior Spaciousness

o Substantial Package

o Cost of Ownership

Adapted from Ford India Internal Documents


5

To help designers, engineers and marketers understand this target, the potential customer was given a

typical name. For the new Ford Figo, that target customer was named Sandeep. Ford wanted to

understand what made them tick, what their lives were about, and what they wanted in a car. Rahul

Gautam, Ford India brand manager described the potential target customer, ―Sandeep is the

quintessential middle class youth. He is coming up in life and he is ambitious. He has just gotten

married and he is starting to earn more, getting recognition in his job and being promoted. He wants

to give attention to his family, he respects his parents and he wants to spend time with his wife, plus

he aspires to do well in his job. Interestingly, he has kept his bachelor mindset. So all this leads to

some stress and tension because he feels pulled in different directions and short of time.‖xx

He added, ―He‘s looking for a product that offers his own, exclusive space. A place he can use to

groove to his music while going to and from work, a place he can use to take his wife out safely at

night, pick up relatives or friends or take the family on a weekend trip. He worries about two

wheelers and accidents so the right car relieves tension for him.‖ xxi

Ford‘s learning through the past and the marketing research drove the product, marketing and

communication decisions. This research found that the target customers:

were looking for ‗a break from the routine‘

liked to buy the latest vehicle but were cautious and tended not to spend beyond their means

were looking for a distinctive design in a car and new styles which would help them, express

their individuality.

In March 2009, Ford had conducted – Consumer Immersion – an ethnographic workshop with

target customers for top management and marketing.

DESIGNING A CAR MATCHING THE NEEDS OF CUSTOMERS

Ford Motor Company President and CEO Alan Mulally stated that the new Ford Figo had been

designed and engineered to compete in the heart of the domestic India car market.xxii

The new Ford

Figo was designed to appeal to those who were more open to change, more independent minded

and more willing to embrace new things. It was designed to change customers‘ expectations of

what a car in this segment should offer in terms of design, package and driving dynamics.xxiii

Ford

Figo Shared key elements of Ford‘s kinetic design language with vehicles like the globally

renowned Ford Focus, Ford Mondeo and the Ford Fiesta. Ford Figo featured a fresh, contemporary

shape that offered a distinctive alternative to traditional brands in this segment. The design

language conveyed a dynamic spirit of energy in motion.

The Figo was actually designed in Australia and engineered in India.xxiv

Development work was

done by Ford‘s Asia Pacific & Africa product development team in Broadmeadows, Australia,

near the northern outskirts of Melbourne. The team was led by Scott Strong. Broadmeadows was

the headquarters of Ford Australia while Ford‘s Asia Pacific & Africa product development‘s head

office was located in Bangkok, Thailand.xxv

The Figo was based on the Europe‘s Ford Fiestaxxvi

.13

When the design team for the new Figo met with the marketing team from India, the direction

given to them was: ―We Want More‖. After deciding on packaging objectives that needed to be

met, such as reducing the overall length of the car to suit the Indian market, the designers were

given the go-ahead to apply a near-clean sheet approach to both the interior and exterior.xxvii

The Figo was compact at 3.8 meters by 1.7 meters. According to experts, this size was just right to

―ease its passage through the tide of bullock carts, angry taxis, handcarts, motorbikes and cows

that clog (India‘s) city roads.‖ xxviii

Designers ensured that despite its youthful spirit, Figo was

mature and smart. Although it was small in size, it was designed to have solidness and safety.xxix

13

This should not be confused with another Ford model sold in India, also under the name Fiesta. The

Indian Fiesta was also rumored to have received significant engineering input from Ford Australia.


6

According to Scott Strong, Ford Asia Pacific and Africa (APA) design director, design team‘s

initial concepts were well received by Indian customers and received positive feedback from

research clinics. With the backing of Ford management and the Indian marketing team, the design

team went to work, adding more personality to the Figo and strategically taking elements of the

global Ford kinetic design philosophy and adding them to the new interior and exterior designs.

The new designs were tested at a second round of customer clinics and received a good response

from group of potential Figo buyers.

Quality, substance and generous proportions were evident in the design of the new Ford Figo,

which featured a solid stance, an invitingly large interior and a vibrant, youthful character. Its

package was right-sized for the market, which was predominated by congested urban driving

conditions.

From its modern headlamps, grille shapes and sculpted bonnet of its distinctive face to the subtle

integrated spoiler and chamfered window shape at the rear, Ford Figo was filled with kinetic

design touches. These also included sculpted shapes to the body side – chiseled front fenders, a

―comet tail‖ undercut in the side indicators, and additional light-catching sculpting in the lower

bodyside – which combined to communicate the solidity, substance and protective safety of its

design.

The Ford Figo‘s large side window shape was another key kinetic design feature hinting at the

comfort and spaciousness awaiting occupants' front and rear. The side window graphic was

executed with a blacked-out B-pillar, an elegant design touch that unified the side windows into

one shape visually. With its wheels positioned at the four corners of the vehicle with minimal

overhang, Ford Figo‘s bold wheel arches signaled its agility and solidity.

Beyond design, Figo had lifestyle features like Bluetooth connectivity, CD with MP3 compatibility

and ‗Aux-in‘ port for iPod connectivity. The new Ford thus instantly connected with the energy

and vitality of the buyer.

DEVELOPING THE PROTOTYPE

The prototype development process started with a thorough understanding of the needs and

requirements of the target market. A highly advanced three-dimensional imaging computer

system14

was used to ensure that everything in the car was within reach. Variations in torso, limb

size and comfort values were calculated for all human joints. As a result of this, the items like

seats, seat belts, mirrors and so on, were made to suit different car drivers. In addition, Ford

researched every other aspect of the car from its physical shape, color, the texture of the interior

surfaces; the sound of the car and even the interior smells.

The car was made with a 1.19-litre 70 bhp petrol engine and a 1.4-litre 68 bhp diesel engine, with

four variants – LXI, EXI, ZXI and Titanium (Refer to Exhibit VII for Specifications of Ford Figo).

Both these engines were manufactured at the company‘s new 250,000 capacity engine plant near

Chennai. xxx

Ford used the Three-Wet High-Solids paint technology, which gave a high-gloss finish

with excellent depth of color, while providing durability and increased resistance to scratches and

stone chips.

Throughout the assembly process, error-proofing technology helped measure precision. The plant

was equipped with precise part checking fixtures that allowed engineers and manufacturing

technicians to verify build precision very accurately. Created with a ―best of the best‖ approach, it

had been benchmarked against other competitive facilities globally, as well as the existing

manufacturers in the Indian market, for quality and production efficiency.xxxi

―We‘re confident that

the new Ford Figo will be extremely attractive to Indian car buyers,‖ said Boneham.xxxii

14

This is the Human-Machine Interface to ensure the driver doesn‘t have to reach out too much for any of

the controls.


7

PRODUCT DEVELOPMENT

The Figo was developed by engineers of the Asia-Pacific in consultation with Indian

Engineers.xxxiii

The Ford Figo was designed with a unique personality to appeal to target

buyer groups.

As India was a price sensitive market, to keep the cost price under control, Ford decided to source

up to 80-85% of the parts for Figo from suppliers in India.xxxiv

Boneham said, ―This is about where

you need to be in this segment to be really competitive from the material cost point of view which

then gives you the opportunity to price aggressively. One of the other things that we are going to

focus and which is very critical in this segment is cost of ownership. Total lifecycle cost – the

purchase price, which obviously people are very sensitive about, fuel economy, scheduled

maintenance, parts pricing, overall competitiveness.‖ xxxv

To enable this Ford did benchmarking

exercises against the key rivals on component pricing, on scheduled maintenance and fuel

economy. According to the company, Figo was designed to give a fuel economy of around 15.6

km a liter and 20 km a liter for the petrol and diesel versions, respectively.xxxvi

According to the company, at Ford, Purchasing (as a department) was organizationally

independent of product development and had always been a powerful force within the company.

Because of the sheer volume of materials and services Ford purchased, a very slim reduction in

purchasing cost could result in very significant savings. Consequently, the Purchasing team was

involved closely in nearly every product decision.

TESTING

Before the car was launched, it was necessary to put it through a thorough test market program.

Boneham said, ―We are running at about 160 vehicles off the line for various trials. We are doing a

lot of kilometres all over India at the moment. We have gone through huge testing regimes all over

the world.‖xxxvii

The objective of this was to test the car rigorously prior to launch and provide

feedback to the company. A 3.2 kilometre testing facility was designed to provide engineers with

vehicle feedback under real world conditions to evaluate vehicles for squeaks and rattles, braking

performance, steering manoeuvres and wheel alignment. Straight roads, twisty roads, pavement

with a variety of smooth and rough surfaces and even simulated village streets were built into the

course.

Once the vehicles were in regular production, they were randomly pulled from the assembly line

and tested to determine if all functions were operating correctly. Designed with safety in mind, the

new test facility allowed engineers to test multiple vehicles at one time and helped reduce the

number of tests on public highways. The company engaged consumers through moderated clinics

and through one-on-one interviews before vehicles reached market. It also used the Internet for

consumer comments in auto sites, chat rooms and blogs. xxxviii

TAKING IT TO THE MARKET

By the second half of 2009, the Ford Figo was ready for its launch. In September 2009, Ford

revealed its Figo model in New Delhi. Alan Mulally claimed that Figo would be a game-changer

for Ford India. He said, ―The Figo should help us make considerable gains in India, where we have

had not much presence in the market till now. We do not operate on the basis of market share but

on customer demand and products.‖xxxix

Figo was to be launched in early 2010 in the price range of

Rs. 349,000 to Rs 442,000 for the petrol version and Rs 447,000 to Rs 529,000 for the diesel

version.xl According to Boneham, Figo offered ―more features, interior space, technology and

durability than other vehicles at this price in the segment.‖xli

―We focused on parts and keeping

their cost down. The components are built in India. This was a significant strategy to get the cost

down first, so we could price-position the car right,‖xlii

he added.


8

Industry observers said that Figo featured a premium experience at a budget price. However they

questioned whether Ford India would be able to find a gap in the small car segment to position and

price the Figo effectively. In a highly price-conscious and competitive Indian small car market

faced with the impending launch of new models of small cars from various global automakers,

what should Ford India do to market its Figo? The team at Ford also saw it as a very big challenge

as the company really needed to make its presence felt as it was one of the first multinational

automotive company to enter India, but till then, did not have an offering in the highest growing

segment. How could they effectively take the Figo to the market?

9

Exhibit I

Classification of Passenger Vehicles as per SIAM

Segment Length Engine Size Example

A1 - Mini Up to 3400 mm Upto 800 – <1000cc M800, Nano

A2 - Compact 3401 to 4000 mm 1000cc to <1600 cc Alto, Wagon R, Zen, i10, A-Star, Swift, i20, Palio, Indica

A3 - Midsize 4001 to 4500 mm ≤1600cc City, Sx4, Dzire, Logan, Accent, Fiesta, Verna

A4 - Executive 4501 to 4700 mm ≤2000cc Corolla, Civic, Optra, Octavia

A5 – Premium 4701 to 5000 mm ≤3000cc Camry, E class, Accord, Sonata, Laura, Superb

A6 - Luxury Above 5000 mm ≤5000cc S class, 5 series

B1 - Van Omni, Versa, Magic

B2 – MUV - Multi Utility Vehicle /

MPV - Multi Purpose Vehicle

Innova, Tavera, Sumo

SUV –Sport Utility Vehicle CRV, Vitara

cc means cubic centimeter

Adapted from www.siamindia.com

10

Exhibit II

An Overview of Manufacturers of Passenger Vehicles in India - As of September 2009

Company Name Year of

Establishment Vehicles

Manufactured Models

Small Car Models and their Prices (in Rs.)

Hindustan Motors Ltd, New Delhi. (Collaboration with Mitsubishi Motors, Japan)

1942 Passenger cars, Sports Utility Vehicles (SUVs)

Ambassador, Pajero, Lancer, Lancer Cedia, Outlander, Montero.

None

Maruti Suzuki India Ltd, New Delhi.

1981 Passenger cars, SUVs.

Maruti 800, Maruti Omni, Alto, Gypsy, Versa, Wagon-R, Esteem, Zen Estilo, Baleno, Vitara, Swift, A-Star, SX4, Ritz.

Maruti 800 Rs 185,000 - Rs 222,000

Alto Rs 225,000 - Rs 290,000

Wagon-R Rs 330,000 - Rs 426,000

Zen Estilo Rs 312,000 - Rs 398,000

A-Star Rs 345,000 - Rs 410,000

Swift Rs 400,000 - Rs 520,000

Ritz Rs 390,000 - Rs 517,000

DaimlerChrysler India Private Ltd, Pune

1994 Passenger cars Benz C-Class, Benz E-Class, Benz S-Class, Benz SL-Class

None

Fiat India Private Ltd, Pune. 1997 Passenger cars Sienna, Palio Stile, Palio Stile Multijet. Petra, Uno, Linea, Grande Punto, Fiat 500

Palio Stile Rs 336,000 - Rs 444,000

Fiat 500 Rs 1,482,500

Palio Stile Multijet Rs 431,000 - Rs 470,000

Grande Punto Rs 400,000 - Rs 612,000

General Motors India Private Ltd, Vadodara.

1994 Passenger cars and Multi Purpose Vehicles (MPVs)

Optra Magnum, Tavera, Vectra, Spark, Aveo, Aveo U-VA, Captiva.

Spark Rs 320,000 - Rs 423,000

Aveo U-V A Rs 400,000 - Rs 497,000

Honda Siel Cars India Pvt. Ltd, Greater Noida.

1995 Passenger cars and MPVs

Honda Accord, Honda CR-V, Honda City, Civic, Honda Jazz.

Honda Jazz Rs 698,000

11

Company Name Year of

Establishment Vehicles

Manufactured Models

Small Car Models and their Prices (in Rs.)

Hyundai Motors India Ltd, Chennai.

1996 Passenger cars and SUVs

Santro Xing, Getz, Accent, Verna, Sonata, Terracan, Tucson, i10, i20.

Santro Xing Rs 264,000 - Rs 373,000

Getz Rs 360,000 - Rs 500,000

i10 Rs 332,000 - Rs 540,000

i20 Rs 480,500 - Rs 773,000

Toyota Kirloskar Motors Private Ltd, Bangalore.

1997 Passenger cars, SUVs and MPVs

Innova, Corolla, Camry, Prado, Land Cruiser, Fortuner

None

Skoda Auto India Private Ltd, Aurangabad.

2001 Passenger cars Superb, Laura , Octavia, Fabia

Fabia

Rs 490,093

Audi AG, 2004 Passenger cars and SUVs

Audi A4, Audi A6, Audi A8, Audi TT Audi Q5 and Audi Q7, Audi R8.

None

BMW India Private Ltd, Gurgaon.

2007 Passenger cars and MPVs

BMW 3 Series, BMW 5 Series, BMW 6Series BMW 7 Series

None

Nissan Motor Company Ltd. 2008 Passenger cars and MPVs

X-Trail, Maxima. None

Porsche AG 2003 Passenger cars and MPVs

Boxster, Cayman, 911, Panamera, Cayenne.

None

Tata Motors Limited, Mumbai.

1945 Passenger cars, MPVs, Trucks.

Nano, Indica, Indica Vista, Indica Xeta, Indigo, Sumo Grande, Safari

Nano Rs 115,000 - Rs 172,000

Indica V2 Rs 338,500

Indica Xeta (petrol)

Rs 314,250

Indica Vista Rs 447,400

Compiled from various sources


12

Exhibit III

Market Share of Various Segments in the Annual Sales of Passenger Cars in India

Adapted from “Indian Passenger Vehicle Industry: Long Term Demand Outlook Remains Robust,”

www.icra.in, January 2010.

13

Exhibit IV

Features of Various Small Cars in India

Maruti Alto Hyundai i10 Maruti Swift Tata Indica V2 Hyundai i20 GM Spark

Model Petrol Petrol Petrol/Diesel Petrol/Diesel Petrol/Diesel Petrol

Engine power

(in bhp15

)

46 bhp 66 bhp 87 bhp (petrol)

75 bhp (diesel)

64-70 bhp (petrol)

53-69 bhp (diesel)

79-100 bhp (petrol)

89 bhp (diesel)

63 bhp

Seating capacity 5 5 5 5 5 5

Variants 3 4 5 5 8 6

Length 3495 mm 3565 mm 3760 mm 3675 mm 3940 mm 3495 mm

Torque

(in Nm16

)

62 Nm @ 3000

rpm

99 Nm @

2800 rpm

113 Nm @ 4500 rpm 140 Nm @

3000 rpm

220 Nm @ 1750 rpm 90.3 Nm @

4200 rpm

Fuel efficiency

(in kmpl)

17.6 12-16.3 14-18 (diesel)

12-17 (petrol)

12.2-16.6 (diesel)

10.5-14.5 (petrol)

19-22.6 (diesel)

11.3-16.1 (petrol)

12.3-16.9

Maximum speed 137 kmph 149 kmph 160 kmph 135 kmph 156 kmph 164 kmph

Doors 5 5 5 5 4 5

Compiled from various sources.

Contd…

15

Brake horse power 16

Newton meter

14

Contd…

Source: “Ford Figo v/s Rivals: Comparative Specs Chart,” http://motoroids.com, March 11, 2010


15

Exhibit V

Comparison of Ford India’s Sales to Total Passenger Vehicle Sales in India

Adapted from www.automonitor.co.in

Exhibit VI

Ford’s Approach to New Product Development

It was against such a competitive and complex backdrop that Ford decided to prepare Ford India

for the challenges ahead to put the company ahead of the competition. As part of a strategic

plan for the future called Ford 200017

, Ford India started implementing a customer orientation

into every aspect of Ford‘s business operations so that every product and service delivered by

the company would be designed around the specific needs and wants of its customers.

UNDERSTANDING THE CUSTOMER

As consumers‘ wants and needs were constantly evolving, Ford wanted to keep track of them to

remain competitive. It monitored market trends, shifting consumer interests, and social and

political developments to identify issues that would affect consumers, the industry and the

company. Ford had a network of internal and external experts – from around the world – to get

a diverse, comprehensive perspective on consumer trends and how they would affect

consumers‘ future choices on vehicles and mobility. Ford used these data and analysis

throughout its marketing, product development, and research and design organizations to guide

future product and technology developments.

Ford ensured its marketing experts used an intensive research and analysis process to

understand its potential customers and their needs. Ford had a ‗brand DNA‘ and hypothetical

target customer for each of its new brands.Apart from containing simple demographic

information such as age, gender and income, Ford‘s target customer profiles had other details

such as what they liked to do, what music they would listen to, and where they shopped. This

complete approach helped the product development team focus on designing a vehicle that

would meet customers‘ needs and desires.

Contd…

17

Previously in 1995, Ford had embarked on an ambitious restructuring plan called Ford 2000, which

included merging its North American, European, and international automotive operations into a single

global organization. Ford 2000 called for dramatic cost reductions to be obtained by reengineering and

globalizing corporate organizations and processes. Product development activities were consolidated into

five Vehicle Centers (VCs), each responsible for the development of vehicles in a particular consumer

market segment (one VC was in Europe). By making processes and products globally common, Ford

intended to eliminate organizational and process redundancies and realize huge economies of scale in

manufacturing and purchasing.


16

Contd…

In addition to product- and brand-specific market research, Ford had a team specifically

dedicated to tracking shifts in social, technological, economic, environmental and political

arenas. This Global Consumer Trends and Futuring team identified trends that would impact the

future of consumers‘ values, attitudes and beliefs.xliii

The team found that the trends of consumers‘ needs included:

An increasing focus on ―careful consumption,‖ in which consumers had to balance their

values, passions and preferences with practical purchases as the global economic

recession continued

Increasing desire for information and connectivity on-the-move to make the most of

their time.xliv

Ford conducted market research online and in person, refining and creating new data-gathering

processes that influenced product development and marketing campaigns. Christine Stasiw-

Lazarchuk, Ford director of Global Market Research, said that Ford executives were truly

interested in customer feedback that would help in New Product Development decisions.

Gordon Platto (Platto), Ford chief designer, said, ―We‘re heavily influenced by market research.

We go to customer immersion events and spend time with customers in their homes to

understand how they use their vehicles. It enables us to better meet the customer needs. You can

see the influence in our new vehicles.‖xlv

Platto added, ―As vehicle segments get smaller and more diverse, Ford uses market research to

understand how far to push design concepts and unique features. This is done by extracting

information from consumer questionnaires and by inviting customers to have open discussions

with researchers in focus groups. You go to market research with an ‗open‘ mind to understand

what the customers are looking for.‖xlvi

In order to refine a future niche vehicle, Market Research took few exterior and interior designs

to a customer focus group to ask specific questions about participants‘ likes and dislikes. In the

next stage of the product‘s development, the design team analyzed and interpreted the consumer

feedback. By taking a disciplined approach to gathering consumer feedback, Ford gained a

better understanding of consumer expectations.

Compiled from various sources.


17

Exhibit VII

Specifications of Ford Figo

Vehicle Summary

Name: Figo Lxi

Car Body Type: Hatchback

Top Speed: 160

Fuel Consumption: Highway 15.00 kmpl.

Fuel Consumption: City 12.00 kmpl.

Engine Specifications

Engine Type: Petrol

Maximum Power: 70 Bhp @ 6250 rpm

Maximum Torque: 102 Nm @ 4000 rpm

Dimensions

Length: 3795 mm

Width: 1680 mm

Height: 1427 mm

Other Specifications

Seating Capacity: 5

Steering: Power

Brakes: Front Disk, Rear Drum

Gears: 5 Manual

Fuel Tank: 45.00

Compiled from various sources

Few Images of Ford Figo

Contd…


18

Contd…

Interiors of Ford Figo

Source: Ford India


19

End Notes: i Nikhil Gulati and Santanu Choudhury, ―Ford Targets India Market with First Small Car,‖

http://online.wsj.com, September 23, 2009

ii ―Ford Rolls Out Figo at Rs 3.49 lakh,‖ www.newsgaze.com, March 13, 2010

iii ―Ford‘s Global CEO Reveals New Ford Figo Targeting India Market and Export Sales,‖

http://media.ford.com, September 23, 2009

iv ―Prodding the Giant,‖ www.dhanbank.com, November, 2010

v ―Overview of Indian Automobile Industry,‖ www.automobileindustryindia.com, 2010

vi ―Indian Passenger Vehicle Industry: Growth Momentum to Continue,‖ www.icra.in, March, 2011

vii www.team-bhp.com.

viii ―India is the Second Largest Small Car Maker,‖ www.siliconindia.com, September 25, 2009

ix Nikhil Gulati and Santanu Choudhury, ―Ford Targets India Market with First Small Car,‖


x ―September 2009 Indian Car Sales Figures & Analysis,‖ www.team-bhp.com. October 7, 2009

xi Nikhil Gulati and Santanu Choudhury, ―Ford Targets India Market with First Small Car,‖


xii www.marutisuzuki.com.

xiii ―The Ford Focus – a Car for the Millennium,‖ www.business2000.ie

xiv Julian Lorkin, ―Marketing in India: How the Rubber Hit the Road for Ford's Figo,‖

http://knowledge.asb.unsw.edu.au, November 29, 2010

xv N. Ramakrishnan, ―Small Car Segment is Where All the Action is: Ford India Chief,‖

www.thehindubusinessline.in, February 3, 2010

xvi Pawan Luthra, ―How to Market in India: Ford India MD,‖ www.indianlink.com.au

xvii ―Ford Figo Goes Entry Level,‖ www.yworld.co.za

xviii Ibid.

xix N. Ramakrishnan, ―Small Car Segment is Where All the Action is: Ford India Chief,‖


xx ―@ Ford India Special,‖ www.at.ford.com, November 2009

xxi Ibid.

xxii Nikhil Gulati and Santanu Choudhury, ―Ford Targets India Market with First Small Car,‖


xxiii ―The Ford Focus – a Car for the Millennium,‖ www.business2000.ie

xxiv ―Ford Figo - Built in India, Developed in Australia. And 2012 Ford Ranger,‖

www.theautoindustrieblog.com, September 30, 2009

xxv Ibid.

xxvi ―Ford Figo - Built in India, Developed in Australia. And 2012 Ford Ranger,‖

www.theautoindustrieblog.com, September 30, 2009

xxvii ―New Ford Figo Brings Kinetic Design for Economy & Small Cars in India,‖ www.zimbio.com,

March 11, 2010

xxviii Jeremy Cato, ―Ford Figo Takes on India ,‖ www.theglobeandmail.com, March 9, 2010

xxix ―Ford Figo Goes Entry Level,‖ www.yworld.co.za


20

xxx

―Ford Gets Aggressively with Figo Pricing,‖ www.thehindubusinessline.com, March 9, 2010

xxxi ―Ford Introduces New Figo Hatchback for India‘s Burgeoning B-segment,‖ www.mazdas247.com,

September 24, 2009

xxxii ―Ford-introduces-new-Figo-hatchback-for-India-s-burgeoning-B-segment,‖ www.mazdas247.com,

September 24, 2009

xxxiii Murali Gopalan, ―Ford to Use Figo Inputs for Global Car Plans,‖ www.thehindubusinessline.com,

April 1, 2010

xxxiv Nikhil Gulati and Santanu Choudhury, ―Ford Targets India Market with First Small Car,‖


xxxv N. Ramakrishnan, ―Small Car Segment is Where All the Action is: Ford India Chief,‖


xxxvi ―Ford Gets Aggressively with Figo Pricing,‖ www.thehindubusinessline.com, March 9, 2010

xxxvii N. Ramakrishnan, ―Small Car Segment is Where All the Action is: Ford India Chief,‖


xxxviii ―Market Research Drives Product Development at Ford,‖ www.reliableplant.com, June 6, 2009

xxxix Bhattacharya Sindhu, ―Figo Will be a Game Changer for Ford in India,‖ http://findarticles.com,

September 24, 2009

xl ―Ford Gets Aggressively with Figo Pricing,‖ www.thehindubusinessline.com, March 9, 2010

xli ―Ford Rolls Out Figo at Rs 3.49 lakh,‖ www.newsgaze.com, March 13, 2010

xlii Julian Lorkin, ―Marketing in India: How the Rubber Hit the Road for Ford‘s Figo,‖

http://knowledge.asb.unsw.edu.au, November 29, 2010

xliii ―Understanding Changing Customer Needs,‖ http://corporate.ford.com

xliv Ibid.

xlv ―Market Research Drives Product Development at Ford,‖ www.reliableplant.com

xlvi Ibid.