Darryl Hazel, Ford Motor Co.'s vice president of marketing, must help the automaker make the transition from this summer's employee discount blitz to value pricing for its 2006 models.
With sales already off sharply in the first half of October, Hazel, 57, has a challenge on his hands. He talked about Ford's marketing initiatives with Retail Editor David Kushma and staff reporters Amy Wilson and Greg Bowens.
Employee pricing has ended. How you are going to transition to value pricing, and how will you get that message to the public?
The summer clearance campaigns have successfully come to a close. Certainly the sell-down of the old model (year) is considerably ahead of last year, and in quite a few years. There are a number of things that came out of the success of that campaign that are worth reflecting upon: the simplicity of the message, the fact that all the dealers really rallied behind it, the credibility of the message with consumers.
But like any clearance campaign, as you move into the new model (year), you move forward. We feel really good about the launches we have: Explorer, Fusion, Mountaineer, Milan and Zephyr. The new products will give us the opportunity to improve our position in leasing. And you will see more effort on our part in getting the lease message out.
Will you have more commercials or print ads that focus on leasing?
Yes. I think the message will be well-received by both dealers and consumers.
You've launched an image campaign -- "Reach Higher" -- for Lincoln that features the new Zephyr. What do you hope to achieve?
Most people know what a Lincoln is. Many, however, don't feel that it has anything to do with them. So when you have a new product, and you are able to bring what we think is a well-styled, competitively priced, properly contented vehicle that is not the norm, you really have to work at it. That is what's going on with that campaign.
How young do you think you can steer the Lincoln consumer base with the Zephyr?
In the case of Zephyr, (buyers in their) 30s, 40s, young professional people should find something of interest. It's a very good value proposition.
Can you talk a little bit about the marketing plans for the Fusion?
The Fusion will enable Ford Division to more actively participate in the retail sedan market. Similarly to what you saw with Five Hundred, where you had a product (Taurus) that previously, out of the plant that builds it, was north of 50 percent fleet (sales), with Five Hundred, you're south of 15 percent.
The same thing will happen with Fusion. The retail public will more than consume the output of the plant. And this is real progress. It's good for the dealers. They realize new-vehicle sales. They'll get new customers. It takes work, though, to get there. Not everybody is thinking of Ford Division when it comes to small-sized sedans.
How closely are you sticking with the value pricing idea for 2006 models? You had crafted that before employee discounts started.
We always try to put products out there at a good value proposition. That's what we're doing.
How do you get the message out to customers that you have reduced sticker prices on your 2006 models and, accordingly, incentives will be less than what they've become accustomed to? Will there be a campaign around that?
Incentives are a function of what happens in the marketplace. If supply greatly exceeds demand, incentives are higher. Pricing is one of those things that you try to put a reasonable value proposition for all. I don't know that it is a campaign. It's the way we are going to market.
But it is a shift from what you had done before. You indicated that earlier in the summer.
I'm not sure that I characterize it as a significant shift. I just think we've more closely aligned the price. You look at what other people are pricing, you look at what dealers are selling things for, and you try to find the best position.
How will gas mileage become a part of this year's SUV advertising campaign?
The eight-cylinder Explorer got considerably more horsepower and an 8 or 9 percent improvement in fuel economy.
Will that become a distinct ad theme?
I don't know. We have focused on performance, interior room and safety.
This summer, Ford considered a free gasoline incentive with a vehicle purchase. What happened to that?
The price of gas has already started to recede. There are a lot of issues involved in that type of campaign. So for now, we're doing what we're doing.
As you look at the fourth quarter and 2006, do you anticipate major changes in your media mix in terms of network versus cable, Internet or events?
It's no secret that more and more people are using the Internet. Turn on the cable box, and there are a lot more channels than there used to be. There's certainly been a dilution in the effectiveness of broadcast television.
How closely will you work with new Ford Motor marketing chief Hans-Olov Olsson?
We're trying to understand (that) right now. Obviously, I'm much more North American-based and only on Ford, Lincoln and Mercury products. He is more globally based and on the full portfolio of brands. Now certainly, when people say Ford, particularly in this part of the world, they tend to think of Ford Division. So there has to be a high degree of codependency, and certainly communications and understanding.
What do you think his branding experience with Volvo and safety can lend to Ford's domestic brands?
I don't know. Volvo is a very strong brand, relatively narrow product line, consistent message for a long period of time. They maintain the integrity of that message quite well. All those are very strong attributes. When you start talking about the whole corporation or even a brand like Ford Division, which really encompasses trucks, SUVs and cars in a very meaningful way, it's a whole different proposition.
Since Olsson got his new role, he has said he wants to cut incentives sharply in North America, even if it means lower sales. Do you agree?
I haven't read (his statement). I think the industry is fairly straightforward about the fact that we'd like to see less (incentives). I don't know about less sales. I don't know anybody who's in favor of that.
How closely do you work with your dealers on developing your creative?
We have committees that we talk to on creative executions. Ultimately, though, somebody has to make a decision. You almost never generate universal consensus. They have an advisory role.
Dealers want reduced complexity in contests and incentives. How will you deliver that?
I am concluding my 33rd year with Ford. That's been a statement I've heard for every one of those years.
So you're not getting the job done?
Or continuous improvement is alive and well. Pricing in close proximity to transaction and other things may help get there.
Is there a danger that the emphasis on pricing dilutes or diminishes the domestic automakers' emphasis on product and product quality?
Ultimately, people buy a product or service and they have expectations. If the product isn't what they want, or it doesn't function the way it's expected, having a low price doesn't overcome that.
How do you define Mercury's role in the company?
Mercury has been coming along nicely. Mariner has done extremely well. North of 40 percent of the people who are buying them are new to Ford Motor Co., and very few vehicles can make that kind of conquest statement.
Mercury is one of those things where not everybody wants to be closely associated with the high-volume brands, but they may have a similar value system. And this is hopefully a relevant alternative.
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