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How to Dominate Brand Management like Ford

June 27, 2016 by Brian Fraley

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Ford Motor Company has been a timeless American brand for more than a century. Like most enduring automotive manufacturers, they have traditionally carried multiple brands, some good and some not so good.

The Ford story is about how this industrial giant lost its luster, but rebuilt its reputation. While its strategy was multifaceted, we will hone in on one of the most critical aspects: brand management.

The core of its strategy was to strip away the Aston Martin, Jaguar, Volvo, and Land Rover brands. The issue wasn’t necessarily that these lines weren’t profitable either. Ford had simply decided to streamline its line-up and double down on its own brands.

There are valuable lessons here for AEC firms regardless of whether you offer products or services. While the parallels are obvious for construction equipment manufacturers and distributors, design firms can learn a few things about managing service brands as well.

The Problem with Legacy Firms

The history of Ford will be told for centuries to come. Henry Ford incorporated the company in 1903, but he had been dabbling in innovating the automobile long before that. It was in 1908 that the transformative Model T was introduced and mainstreamed the automobile for millions of Americans.

The problem with legacy firms like Ford is that they get so large and complex they lose their ability to adapt quickly to changing market conditions. This inflexibility metastasizes into their branding as well. The phrase “too big to brand,” an obvious play on “too big to fail,” often comes to mind.

Legacy firms often get so entrenched in their old ways that they lose the power to market effectively. They become overly conservative and married to the idea of the original brand. The “that’s the way we’ve always done it mindset” is as dangerous for branding as it is for business in general.

SEE ALSO: How to Fight A/E Commoditization with Branding

A Once Great Brand Stumbles

Ford’s reputation for quality had declined as recently as 2008 as the financial crisis rolled in. Creative detractors crafted such acronyms as “Found on Road Dead” or “Fix or Repair Daily.” Fueling the fire was a general perception that foreign cars were more reliable with Toyota and Honda leading the charge.

Quartz Magazine captured the essence of Ford’s problems perfectly: “When Mulally took over as Ford’s CEO in September 2006, the company was clearly broken: Its stock price had fallen precipitously (the low was $1.01 a share in 2008), its debt was at “junk” status, and 2006 would go down as the worst year in its history with a $12.7 billion loss. It was widely expected that Ford would eventually file for bankruptcy.”

The magic happened when Ford took an honest look at its lineup and decided to streamline the brands under its corporate umbrella. Branding Strategy Insider reported that Mulally sold off Aston Martin in 2007, and Land Rover and Jaguar in 2008. Volvo was then sold in 2010.

The Leadership Factor

Alan Mulally served as the Chief Executive Officer and President of Ford from September 2006 to July 2014. It was under his leadership that this iconic brand took the detour toward its original position of power.

As the world descended into the bowels of the Great Recession in early 2008 and consumer spending hit the brakes, Chevy and GM lined up for bailout funding from the Obama administration. USA Today reported that the government disbursed $49.5 billion to General Motors and $11.96 billion to Chrysler.

It was obvious that Ford had done something special as the only American auto manufacturer to refuse a similar disbursement of bail out funds. Mulally’s moves leading up to the crisis, including streamlining brands, left the firm in a position of strength. There is disagreement over whether Ford accepted any funds from the Federal government, but the fact is that whatever Ford might have accepted paled in comparison to its domestic rivals.

Too Many Products or Services?

We often think about marketing as promoting products and services when this is but one aspect. What takes a back seat is making sure that the product or service offered is actually wanted or needed. This is a major disconnect for many AEC firms.

Let’s say you have seven construction equipment lines. Four are profitable and three are not. Or perhaps you specialize in four civil engineering disciplines and one is a loss leader. Is there room for improvement?

Profitability isn’t the only problem. Like everything else in life, spreading your focus on too many things dilutes your potency. Could your marketing budget and overall efforts be better spent promoting fewer products or services? Most likely.

SEE ALSO: A/E Branding, Marketing and More with Mark Zweig

Get Out the Scalpel

Why not take a hard look at your offerings and carve out those that no longer work? Many AEC firms are aware of these realities, but unwilling to take corrective action.

These are not light decisions. It can mean making tough personnel decisions, eliminating offices, cutting business from long-time vendors and affiliates, or simply breaking tradition. It requires nerves of steel.

I also believe some growth-oriented leaders are reluctant to think about streamlining because it doesn’t feel like progress. To them, it feels like going in reverse.

Let’s be clear. While eliminating products or services could hamper revenue in the short term, it could immediately improve profitability, as well. Revenue can always be rebuilt.

Ford’s Model Branding Behavior

The Ford turnaround story is an inspiration. There is obviously far more to this turnaround story than the streamlining of brands that I have chosen to focus on, but this was a critical element.

It’s a reminder to us all that marketing is about responding to market demand; not promoting weak products and services. It’s a reminder that a firm’s age and size should not dictate marketing and branding in the current day. And most importantly, it’s a reminder that the most lucrative marketing results often stem from the hardest decisions.

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