The Hindu Business Line : ‘Indian customers are waiting for car makers to surprise and delight them'

After the high-profile unveiling of the Figo a couple of months ago, Ford India seems to have slipped into a self-induced coma. And while all seems quiet on the western front for now, what is brewing internally is the roadmap for an unprecedented marketing warfare to take on the biggies in the world of small cars. And standing in the middle of the huddle at the barracks in Ford India as Chief Strategist is Jim Farley, the company's biggest marketing brain.

Jim Farley is Group Vice-President of Global Marketing and Canada, Mexico and South America operations for the Ford Motor Company. He is the company's most senior marketing leader, reporting directly to Alan Mulally, Ford's President and CEO.

Farley, 47, joined Ford in November 2007. He is leading Ford's drive to connect even more closely with customers through integrated global marketing, advertising, digital communications, brand development and research.

Prior to joining Ford, Farley was Group Vice-President and General Manager of Lexus, responsible for all sales, marketing and customer satisfaction activities for Toyota's luxury brand. One of Farley's most noted accomplishments is considered to be his responsibility for the successful launch and rollout of the new Scion, Toyota's premium brand dominated by compact cars. As Scion's corporate manager, Farley focused on product development, sales planning, customer services, logistics and distribution. He was later promoted as Vice-President of Scion and was responsible for all Scion activities.

Farley was in India recently to fine-tune Ford's strategy for its latest small car — the Figo. From ‘Clinic-ing' potential Indian buyers for the car and discussing the tech preferences of Indian youngsters, Farley is said to have become an avid discoverer and fan of this market.

The Figo

He spoke exclusively to Brand Line, between mouthfuls of kebabs and vegetables, in a quick lunch. Excerpts from the interview with the man who is rumoured to be the most likely to take over the reins at Ford from the current CEO:

How have you re-structured the marketing of Ford, what have you done fundamentally different?

First and foremost, we had to transform our marketing function. I spent the first year one hundred per cent in North America. We first repaired the relationship we had with dealers. And, Allen (Mulally, Ford's CEO) really helped. The culture was confrontation with the dealers; that was the first thing I worked on (to repair the relationship). We integrated public affairs into marketing, it was separate earlier, so by integrating we were able to do things in marketing that we couldn't do earlier. For example, last year, I took more than a substantial amount of money, $10 million, and funded PR from our incentive budget in marketing. The marketing team was aghast but I told them trust me, it will pay off.

Then probably the most fundamental was investment in social media and putting the voice of the customer in product development. In the past, the company tried to save money and bet on certain product ranges — for example, pick-up trucks. In the past we spent too much money on pick-up trucks than on passenger cars. It's hard to make money; we had not integrated platforms across the world so costs were very high, and we had under-invested in power trains for passenger cars.

Also, from a tactical standpoint, we put a lot more rigour back in the system. For example, in advertising we moved to an open architecture for creative development. Earlier, the creative director at WPP would come up with all the ideas for launching a product. If I am going to launch a new car, the people in Detroit, no matter how smart, have no idea how to launch a passenger car. We migrated the creative development to an outsourced model where the creative director was actually a coach; we recruited the best small agencies and they came up with the ideas, (and developed) a sort of brand book and then disbanded them till the next launch.

Did that work for you?

We had so many new ideas. We would never have found them if we didn't have an open architecture — we did the same things for Fusion, we found an agency in northern California, we would have never found such people earlier. And the open architecture allowed us to get much better ideas without threatening the relationship with the agencies. They have the confidence (WPP) in the relationship to go out and get the best talent available for any given project. Instead of competitive pitches or bringing in another agency… that doesn't work.

You were the man behind the Scion's success in the US and the brand created an altogether new segment. What are the learnings you think might help Ford refocus on the hatch and small car segment?

Well, what I learned when we started Scion in the US with Toyota is that you can't stand for everything. You should stand for a few things so that people recognise you as being excellent at something. To compete with the big players such as Maruti and Hyundai, we have to stand not for everything, but we have to stand for certain things. You have to have a level of trust for the product, things like long-term reliability and such. But, once you get past that, you can't stand for everything. I think this is equally important here in India or even more so.

The other thing that I have learned a lot is when we launched Scion, the customer's optimism about themselves was a very important part of what we sold as a company. That the product was an enabler for you as a customer to be greater than you are today if you didn't buy the product. And I guess all brands have been doing that forever, but when you have a new group of customers who haven't felt like there was ever a product that was just for them, it is a very empowering feeling. And brands can really create a lot of success around matching customers and their unmet needs.

I think India is this kind of market absolutely. There is a group of customers here that has had generic choices, products that were commodities, and they are just starting to wake up as customers because of the choices available in electronics, beverages and apparel. They are going to expect the same level of diversity, intelligence and creativity in their automobiles, but at a different price point than the rest of the world. And I feel that one of the things that gets me up in the morning to work with the India team is I think that Ford can deliver a unique product that is different from our competitors for that kind of Indian customer.

Last night I met some target customers. We went to the mall and did some spot research with some young guys. We went shopping with them, I learnt a lot and what I saw was a very familiar feeling. Here was a customer that was just waiting for a manufacturer to surprise and delight them, just like the electronics industry had done. I think Ford has that potential in India and to me I learnt that at Scion how important that is both in the communication and in the creation of the product itself.

Ford had a brand ambassador for the Fiesta when it launched in India. Do you think ambassadors work or should cars should sell on their own strength?

I'm on a journey of self-discovery myself. I guess what I have learned about India in a short time, if you do have a brand ambassador you have to use them intelligently, they should not just be a nice piece of art on the wall, they have to be at the table talking, be explaining your product and add value to what you're saying about your product. I have learned a lot about Indian advertising . a young man told me that he enjoyed advertising. Indians like stories, he said, and I have learnt a lot about effective communications in India where you have to combine emotion and product evidence together and that's why it may have worked so well here. An intelligent manufacturer will take an ambassador and use them in a way, like Toyota with Innova, which will highlight something concrete about a product in a way only that ambassador can say . in that case, it can be effective. The predisposition I have as a marketer is that my product should be at the centre of the communication, I don't want it to be competing with a famous person. I learnt that customers here are interested in the stories as long as the ambassador is presenting it in a compelling way in which only they can ... if they are just a painting, like they are in Japan: "Buy this whisky because Brad Pitt drinks it" won't work in India. The question is ambassadors can work if the communication uses them to advantage, if they are just sitting there it's a waste of money.

This is one of the reasons I am in India, and why I will come back over and over again. This story-telling element of the Indian customer is very interesting and can be applied to many other markets. I really believe that the more time I spend in India, the better marketer I will be in markets outside India.

You spent many years in Toyota before you moved to Ford. How do the two companies compare and how have each of them adapted to the slowdown?

The contrast between the two companies is so dramatic and to watch what the global downturn has done to these two companies has been interesting to see. I feel we have made meaningful progress at , in Ford in terms of our pricing power and share in markets, where we have needed to bring get the business scale back to become profitable. I'm really proud that we have been able to get back our pricing power in the US; we don't discuss it too much but that's been a dramatic change. Because most companies in my function, if they we see an incremental opportunity in the market, because of a new product or brand improvement, they usually take it in share. But we have chosen to take a much more balanced way of growing the business revenue on passenger cars by improving our pricing power. That to me is a great symbol of the new Ford. The old Ford would have gone for market share, the new Ford goes for a balance.

You've been holding prices, or hiked them taken hikes as well?

If you look at our financial statements, we have grown our pricing by $4 billion; it almost offsets the downturn in the whole industry. If we held the same market share, (without price hikes), our revenue would have been down by 7 per cent, but our revenue is up 7 per cent because of our pricing power. In almost every market, in Western Europe, especially in the US, Canada, Mexico - in Mexico, we have taken a 16 per cent price increase, our competitors have taken 7 per cent. In the US we were able to take our incentives down, so our resale values are improving, which is always a risk when you take prices up.

How else is Ford fundamentally different from Toyota?

In the Toyota system the functional silos are separate, and there is we have very little interaction between the functions . manufacturing is separate from purchase, from marketing and sales. At Ford, it is an integrated operations, so for me as a marketer, I have learnt more than I ever thought I would have of manufacturing and engineering.

What's the big picture that you are seeing on the movement away from clunkers and then there was the downturn . what's the big picture emerging in the US?

The most significant is the globalisation of the US customer, they want similar things as in Europe and Asia. It never happened before. We had world cars in the past that failed. American customers in the summer of last year, when the fuel price was $4-5 a gallon, they bought the same cars as in Western Europe. More than one-third of the cars were small cars, B&C products, almost double of a year before. Also, the growth of the hatchback market in Europe is another great example of the globalisation of the consumer. That's one major trend that is threatening the business model of companies.

Was Ford able to capture that trend with an offering of the right vehicles?

We are just starting, so we will come out with Fiesta in the spring, similar to the Figo here in India. We will launch a global product which will be launched not at Frankfurt or at Geneva, but in Detroit. We will have more than 10 versions of Focus - it's a revolution in the US and there are many marketing challenges associated with that transformation. That's one big trend. The other one connected to it is the importance of fuel economy. In the past, fuel economy was dictated by the government but what's happened to the US customer psychologically in the past 24 months is very important - they now know that even when fuel prices are low now, it could be high tomorrow. They are really starting to change radically. We are seeing the consumer walk towards small cars more quickly; this is a fundamental change in the US.

What are the other trends that you are seeing influencing the automobile industry in the US?

The other big trend in the US is the actual destruction within the dealer network. We have had over-capacity (in manufacturing) and the dealer side even more . and it's not just a few; literally tens of thousands of dealers, their capacity was wiped out overnight. There's a huge displacement in the market, the relationship with manufacturers was destroyed overnight. The relationship between credit companies and dealers, the tax base for local communities was destroyed overnight, I have never seen anything like that in my career. We had dealers advertising half-price, brand new Chrysler pick-up trucks which were priced at $30,000 with no miles on them sold for $15,000. Families which were dealers for 75 years were gone overnight.

The last big trend in my world is the disappearance of brands overnight: Pontiac, Saturn - one of the most successful domestic brands ever created - gone; Hummer, gone; brand after brand, many brands most of America grew up with, just gone. What do you do if you own one of those cars? There are hundreds of people who own Pontiacs, what do you do? There are just no dealers any more.

Who has captured the shift to the small car market?

Ford has, Hyundai has, (they've had) dramatic expansion in the US market in the last 12 months. They are the number one reason Toyota sales went down two points in the US. Hyundai and Kia together.

What else are you doing differently at Ford?

What we are doing differently at Ford is that instead of dictating, we are involving common processes and engaging each other, so that we don't duplicate assets unnecessarily. We will find the balance between clarity of the brand, complexity and cost, by engaging and working as a global team very early. Ford used to wake up about six months to one year before a launch and start working on the launch and now in order to eliminate the waste work early. For example, the new Ford Focus had as many as 120 campaigns around the world. And the answer isn't one campaign and I know it is not a 120 either. For this we have been working for almost two years before launch. Together with public affairs and marketing with all the regions around the world detailing all the assets we have been creating and we have an intentional level of complexity. We don't let it just happen. It requires a lot more engagement and a lot of sweat equity earlier in the process.

That is the approach we are taking to deal with the complexity without wasting money, but allowing flexibility. By working together, understanding the complexity and discussing the level of complexity we want to permit, (as a group) that has allowed us to find a better balance than a 120 different campaigns. I don't think the answer will ever be one campaign.

Is it a conscious strategy to choose existing products for trying out your new marketing strategies?

As of yet most of the existing models are regional products. So, the products were such that we couldn't really gain any benefit, for synergies for reducing complexity. The Taurus is only sold in the US, the Flex is too and the F-150 is. and The Galaxy, Ka and the S-Max are sold only in Europe. But, now that we are launching these global products, our product strategy is so unique in the industry. It is not based on regional scale anymore. It is based on global scale. So, that means most of our focus in terms of reducing the complexity of brand promise on the product side or even communication is really in the new products, because almost all the carry-over products are all regional.

We are just starting the product creation for our global small car line-up. Figo is just one of the exciting products that we are developing at lower price points for Brazil and India and although I can't give you the details about the products themselves, we will use the process we have learnt for products like the next Mondeo and the next Focus. And instead of marketing them in places such as Western Europe and the US, we will be marketing them in the developing countries. That is one of the reasons why I came here, because I have to learn about the Indian customer and the Indian small car market, because as a marketer, I am going to be doing this over and over again.

So, coming here and learning and being involved with the Figo launch is critical for the process we will invent for the launch of all of our future small cars.

Our B-cars that I am talking about won't even be sold in the US. I mean, we will have a product range that won't be sold even in Western Europe, that will be in common with all the developing countries and would use the same process. The complexity or the campaign or the assets we develop for the marketing and public affairs - we will probably share some and some of them will be unique too. That is also one of the reasons why I am here.

So the small car definition for markets like the US will be very different compared to a developing country market?

I think that the small car market in the US and the small car market here and in Brazil are completely different. But there is some commonality, for example, in-car technology - customers here and in the US expect to have the same level of in-car technology in their small cars as that of an expensive car. But, yeah the line-ups are really very different, it is not the same. Brazil, India and parts of AFTA, like Thailand, are similar, but the US is completely different.

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