Strategy, Business Lessons and The Iconic ‘Mustang’ Success Story
In the year 1964, Ford rolled out the first ‘Mustang’. A mass frenzy broke out among the potential customers. The company expected to sell one lakh cars in the first year but it sold more than four lakh cars. The newspapers wrote that the youthful appeal of the car captured the spirit of the times perfectly. The other competitors immediately followed the trend set by Mustang. But being the first to consumer’s mind, Mustang’s value kept growing. It became so popular that the top heroes of the time were seen driving the Mustangs in movies, particularly in the chase scenes. Even after fifty years, the brand is still strong and has become iconic.
How did the first Mustang become successful? What factors contributed to the success? What lessons could we learn?
THE ALMOST NON-STARTER
In the late 1950s, People were looking for smaller, affordable and fuel-efficient cars, partly inspired by the exposure due to the launch of Beetle, Nash Rambler, Studebaker Lark. As a response to Volkswagen’s Beetle, Ford’s then President, Robert McNamara approved a German company to build a compact car called ‘Cardinal’ -A car that would be small, inexpensive and fuel efficient. Ford began to invest resources, time and money.
When Lee Iacocca became vice-president and General Manager of Ford Division, Cardinal’s development came under his purview. Lee visited the German factory to have a look at the new ‘Cardinal’.
The cardinal car had a V4 engine, front-wheel drive and a great fuel economy. But it had lousy styling and was too small as it had no trunk. Lee strongly felt that the car would not sell in the U.S market.
He cajoled his management to drop the ‘Cardinal’ car and initiate another new car project which became ‘Mustang’ and went on to create history.
Mustang would not have born if the company continued to work on the ‘Cardinal’.
Let’s see the reasons why Lee Iacocca felt that Cardinal Car would not sell in the U.S and which paved the way for Mustang.
TREND-SETTER or TREND-FOLLOWER
A business’ sustainable leadership largely depends on how the brand could set the trend or catch the trend direction early rather than copying what other competing businesses are doing. Lee felt that McNamara made a mistake in benchmarking the ‘Cardinal’ against Volkswagen’s beetle to understand market signals, market behaviour, market trends. Following a competitor’s product rather than the users is a noise and a distraction and it would affect the business.
Cardinal was just following the footsteps of what their competitors had been doing for the last few years. Unfortunately, McNamara’s team didn’t notice the changing market conditions and user behaviour at the beginning of the 1960s.
Why did they follow trends?
- It’s always tempting to go with the crowd -The compact cars like Beetle, Nash Rambler, Studebaker Lark were selling like hot cakes. When everyone’s doing it, how wrong could it be?
- It was the most direct and simplest way to gain short term revenue
- Be quicker to the market
- The risk involved is minimal as the product had been already tested in the market.
- Their recent failure ‘Ford Edsel’ was still fresh in their mind where they lost money and reputation.
Lee believed that the way forward to set the trend and be a leader is to understand your consumers well. It was important to observe their changing needs, trends, desires, attitudes and culture.
All great brands are good Trend Drivers.
OBSERVE, FOLLOW YOUR CUSTOMERS
As we have seen earlier, it is important that the top leadership should have sound knowledge about their present and potential customers to layout business strategy. For that to happen, they need to spend time with their customers.
By 1960, Lee Iacocca had around fifteen years of experience in sales and marketing. He had interacted extensively with a lot of customers and maintained close relationships with some of them. Similarly, he had been working along with dealers for a long time. He had trained them on how to sell each and every product to their customers. Through those interactions, Lee had developed a vast amount of knowledge about his customers and was aware of their changing tastes, needs, attitudes and desires which helped him in taking right decisions at the earliest part of his leadership career.
Even after reaching the leadership position, he continued to be in touch with dealers and people from sales & marketing. Those people were in direct contact with their customers and they would be the first one to witness shifting customer demands, needs and attitudes. Lee spent time and listened to them at every opportunity and considered it as an investment.
In many companies, often the leader is the last one to know the changes happening in the business environment. Robert McNamara was covered by many layers of people and the news of changing marketing conditions did not reach him at all. On the other hand, Lee Iacocca and his management team remained closer to customers which helped them to spot the change as early as possible.
Lee’s knowledge of customers helped him to drop the ‘Cardinal’ car as he felt that the product would not meet the customer’s changing desires and initiate a new car design project.
FOLLOW CHANGE IN CONTEXT
Ford team’s observation of business environment gave them a lot of inputs for the new car. Let’s see what were those factors which prompted Lee to initiate Mustang.
Optimism In The Air -In the 1960s, the whole country is feeling optimistic -Younger president at the helm of the government inspired many Americans to achieve greatness. The GNP value was rising every year and the country was becoming the most prosperous nation in the world. The government created many programmes to lessen the impact of poverty. The government had also allocated money with a goal to send a man to the moon. It was a time where people believed that anything is possible. An aura of optimism, prosperity and youthfulness pervaded the air.
Prosperity -A lot of new industries(Clothing, toys, books, luxury, everyday items, food) sprang up to cater to the needs of the new segment of customers. Many industry workers were better off financially in the 1950s and rose into the ranks of the middle class. The disposable income was on the rise.
The Growth Of Suburbans -By 1960, the rate of home ownership rose to 62 per cent from 43.6 per cent in the 1940s. Many of these newly purchased homes had been built in the new suburban areas and the suburban growth accelerated rapidly in the late 1950s. Fast food chains, parks, supermarkets, theatres, discounting stores popped up in those suburbs. It impacted the economy and society positively.
The development of suburbs increased the demand for automobiles. Most of the families were looking to purchase a second car and by 1960, about 20 per cent of suburban families owned two cars.
FOCUS ON NEXT GENERATION OF CUSTOMERS
Nokia was a market leader in mobile phones in the early 2000s with a huge customer base and designs to meet customer needs. They had an efficient research and design team. Their designs were user-friendly and made after extensive research. Nokia thought they were keenly observing people, finding out opportunities and solving the problems. Unfortunately, they became irrelevant sooner than they could predict and respond.
Clayton Christensen says, “Best firms succeeded because they listened responsibly to customers, invested aggressively in technology, manufacturing abilities, designed wonderful products to meet the next generation needs. Same best firms failed after some time, because they listened to the SAME customers, invested again, designed again to meet NEXT GENERATION needs”.
As a brand, it is true that you need to be obsessed with users. You need to listen to them, observe them and identify their hidden needs. But focusing only on existing customers will break the existing market into finer segments, forcing us to tailor the offerings further, and reducing the market further. To remain relevant in the changing business environment, you need to build a product with a focus on “Next generation users”.
The ‘Next Generation’ Customers for ‘Mustang’
When Lee looked at the age of people buying cars, he saw that the average age of the population was falling at an unusually rapid rate. They were getting younger and younger. It prompted his team to study the market of the younger generation in detail.
In the 1960s, the children born after world war II called ‘Baby Boomers’ became the largest single generation available at that time.
They began to form opinions that were different than what their parent’s believed. They began to establish their own identity and fought against middle-class oppression. They were in charge of their own lives. They began to influence every cultural movement due to their sheer numbers.
As they had never faced scarcity, unlike their parents, their lifestyle was different from the previous generation. They worked part-time and had sufficient amounts of disposable income. They also exerted a great deal of influence over their parents’ purchases as well. Every product manufacturer began to alter their products to meet the needs and desires of the ‘Baby Boomer’ segment.
Lee Iacocca was aware of ‘Baby Boomers’ and saw how other product brands were targeting them. He felt that the automobile industry had not yet recognised the power of youth and he saw a golden opportunity to exploit the gap in the market. He firmly believed that the new car model had to appeal to those younger buyers.
The challenge — The design requirements of existing customers was completely different from the needs and desires of ‘baby boomers’. Should Ford design the car targeting existing customers or should they design the new car to meet the needs of baby boomers? What type of customers should Ford focus on? The solution is to go for the largest catchment. Baby boomers by their sheer numbers were the largest customer segment by 1960. Moreover, their population would double within the next decade as more people would be entering the colleges. So, Lee and his team realised that the best move would be to design a car to meet the needs of ‘baby boomers’.
In order to appeal to those younger customers, Lee believed that any car should have three main features -Great styling, strong performance and a low price.
TRACK CHANGING USER’S BEHAVIOUR AND ATTITUDE
Sporty Cars -In 1960, people were writing to Ford requesting them to bring out one of Ford’s earlier vehicles -a two-passenger sporty ‘Thunderbird’ car which was a failure and sold only 53,000 units over three years. This clearly showed that people’s tastes were changing towards sportier models.
Ford’s market research showed that young people loved the sound of a high-performance engine and also liked the feeling of being closer to the road which highlighted the need for lowered seating position to give a sporty feel.
The research also showed that the ‘bucket seats’ were the younger generation’s favourite feature.
Families’ Second Car -Lee observed another trend -As the economy boomed, there was an enormous growth of families having two cars. The families preferred their second car to be typically smaller and more sporty than the first.
Luxury and Performance -To understand more about the existing customers, Lee looked at Ford’s Falcon car sales figures. He saw that though Falcon was marketed as a low-priced economy car, far more customers had ordered luxury options such as automatic transmission, white-wall tires and more powerful engines.
In the 1950s, people preferred fuel-economy cars. But the growing economy, prosperity and lower taxes made people shift away from the economy and fuel-efficient cars. They were willing to look beyond purely functional to more sporty and luxury models.
It was becoming clear that Americans had more money than ever before to spend on transportation.
OBSERVING NON CUSTOMERS
Focusing on existing customers will break the existing market into finer segments, forcing us to tailor the offerings further, and reducing the market further. To break away from this and to increase the demand for a new car, the first step is to shift the focus from “Customers” to “Non-Customers”.
W Chan Kim and Renee wrote in Blue Ocean Strategy “If you are targeting existing customers, due to the intense competition, you might focus on differences. On the other hand, if you focus on non-customers, you will find commonalities more powerful than the differences”.
For Ford, Baby Boomers were their primary non-customers. Would targeting those customers alone be enough? Lee and his team realised that they had to increase the catchment area in order to bring down the cost of the car. They had to dig deep and find some other type of non-customers who could share commonalities with the baby boomers.
Who could be the other non-customers for the ‘Mustang’ car?
Women -The female workforce had grown by fifty per cent by the end of the 1960s and their fight for equality in wages with men was getting recognised. Women enjoyed greater freedom during this period and played a major role in decision-making. A lot of women began to buy cars. They preferred small cars with easy manoeuvrability. The woman also played a substantial role in influencing the purchase of the second car in the families as they would be using the car most.
Most of the women were yet to build loyalty to a particular brand. Lee felt that if the new car could offer a leap in value to women, it would unlock enormous demand.
Educated Customers -When Lee looked at the data of people who bought the cars, he observed that college educated people bought cars at a much higher rate than their less educated counterparts. In the early 1960s, 19% of U.S population had some college degree, yet they had bought 46% of the cars sold. The customers were becoming more sophisticated and highly informative. There was a significant growth correlation between education and purchasing power. They were constantly looking for something better. This segment also had ‘shared commonalities’ with the ‘baby boomers’.
Singles -Lee’s team also saw that other than married couples, a lot of single people were also buying cars. Most of them preferred smaller and sportier models than their married friends.
FIGHTING SUNK COST FALLACY
The Sunk Cost is a mental shortcut that would force an individual to continue investing his or her time, money, emotion in a losing activity because of their earlier investments.
A Fearful Culture
Until Iacocca’s arrival, the ford’s team continued to invest time, money and effort in building the ‘Cardinal’ car, though some of the senior managers had their doubts about the car’s marketability among American consumers.
Fear Of Admitting Mistakes -Some of the senior managers were afraid to publicly admit that their earlier judgements in building the ‘Cardinal’ were wrong. This eventually led them to work hard to justify their past choices and they were sinking into the trap of ‘Sunk Cost’ bias without being aware of.
Fear Of Failure’s Consequences -The reason why other senior managers were not ready to drop the ‘Cardinal’ car was that it would have made them directly responsible for the decision if stopping the Cardinal turned out to be a gigantic mistake. The companies need to have a fearless culture to avoid ‘Sunk Cost’ bias.
Overcoming Sunk Cost Bias
Lee had a few advantages that helped him to overcome the ‘Sunk Cost’ bias -He was not at all involved in the earlier decisions related to the ‘Cardinal’ car development. So, he had no commitment, emotional attachment or emotional stake towards the project. This helped him to apply an impersonal logic to the situation, unlike the senior managers who had a history of deep involvement in the earlier decisions. Lee could present the problems from a different perspective.
When Lee proposed the idea of dropping the ‘Cardinal’ car development, Ford’s financial team was against it as they had already invested $35 million in the car. It’s human nature to focus on what we may lose than what we may gain.
Lee pointed out the huge losses the company suffered in the failure of ‘Ford Edsel’ car(happened a couple of years ago) and cautioned them in repeating the same mistake. He advised them to stop spending further on Cardinal and run away to cut the losses. He also substantiated his reasonings with the research insights about baby boomers and women customers.
The team listened.
Based on the market and user research, Lee and his team laid out the required product specifications(Qualitative and Quantitative).
- The car has to be small but not too small like Beetle-More of a compact size -length not more than 5m. Slightly shorter(to provide a sporty feel) and narrower than Falcon(One of Ford’s model).
- Though the market for a 2-door, coupe shaped two-seater car was growing, Lee felt that still, it would be limited to a hundred thousand cars. It would never have mass appeal. So the proposed new car had to hold four passengers while still retaining much of the “coupe” look.
- Powerful and good performance.
- A lighter car -Weight below twenty-five hundred pounds.
- An inexpensive car -The selling price of the car should not be more than $2500 with equipment, mainly to attract baby boomers.
- A floor mounted shifter(Luxury feel).
- Styling -A distinctive, easy to identify style among the models available in the market. Sporty car for people who dislike driving the real sporty cars. It should also appeal to people who prefer their second car to be typically smaller and more sporty than the first. Enough room for a fair-sized trunk. Lee chose ‘1945-Continental Mark I’ as a styling-benchmark model image from one of the automobile magazines. The first ‘continental mark’ was a dream car for many, including Lee. He felt that the car’s long hood and short deck gave an appearance of verve and performance.
- Simple to manoeuvre in order to appeal to young women.
- Seating position as close to the ground.
- Bucket seats to be standard across all models.
- Context and Jobs To Be Done — The production volume had to be increased to bring down the product cost. To increase volume means that the car has to appeal to several strategic groups within the targeted customer segment at once. Lee told his team, “we have to develop a car that a person could drive to the country club on Friday night, to the drag strip on Saturday and to church on Sunday”. So, the car’s personality — Demure enough for church-going, racy enough for dragstrip and modish enough for the country club. (Content from Ford’s Mustang story in Ford.com)
- To meet the requirements of a wide customer base, Lee was of the opinion that it would be better to offer one basic car with a wide range of options in power, comfort, and luxury than several different versions of the same car.
The desire to launch a new car soon put enormous pressure on the senior management team and they began coercing Lee to build the new design on Falcon’s platform. Some of the senior managers worried that the new car’s success might come at the expense of other Ford products especially the Falcon.
Building a new car from the ground up would cost up anything between $300 million to $400 million. The recent Ford Edsel’s failure also lingered on the minds of the financial team. They naturally looked for a way to save the investments in case the new car fails like ‘Ford Edsel’. A market Study initiated by Ford’s finance team showed that the expected sales of the new car would be approximately 86,000 units which were not enough to justify the huge expense of starting up a new model. They felt that by piggy-backing on Falcon’s platform would be the best way forward and that could save them more than $200 million.
One of Lee’s teammates commented, “Making a sporty car out of a Falcon is like putting falsies on grandma”. Lee also felt that making changes over a Falcon model would not be distinctive in the market and might appear as a set of incremental changes.
Remember Objectives -Lee kept all those pressure tactics aside and reminded himself of his project objectives and checked whether ‘building over Falcon platform’ would aid his objective or act as a barrier. Lee’s team experimented with several different models over the Falcon platform but concluded that the new car’s design and exterior had to be completely original. It needed a new skin, windshield, side glass and back-lite to make it sportive. It was clear to Lee that building on Falcon’s body would be blocking the company from achieving its objectives.
Lee firmly told everyone that he would not be compromising on the new car’s styling but he was open to using some of the Falcon’s components like suspension, springs and drive-train components.
Trade-offs is about choosing what not to do rather than what to do. Lee’s clear decision on ‘what not to do’ was one of the pivotal reasons behind Mustang’s success.
As the research showed that people loved two-door, coupe type sporty car, Lee’s team began to work on designing something similar. The car should appeal mainly to young women and at the same time, men should also desire it.
Joe Oros, the chief designer, in one of the interviews, “We wanted a Ferrari-like front end, the motif centred on the front — something heavy-looking like a Maserati -We wanted air intakes on the side to cool the rear brakes. I said it should be as sporty as possible and look like it was related to European design. We talked setting parameters for what it should look like — and what it should not look like. We also had photographs of all the previous sporty cars that had been done in the Corporate Advanced studio as a guide to themes or ideas that were tired or not acceptable to management”.
The design team prototyped more than eighteen new designs. Out of them, one model inspired by feline stood out. It took the idea from one of Ford’s design concepts -Mustang 1. The Mustang-1 concept car was a hit among college students.
Lee was impressed by the new design. The car was called ‘Cougar’ which eventually renamed as ‘MUSTANG’, after the much-lauded World War 2 fighter, the P-51 Mustang. Instead of ‘Cougar’ logo, a horse was chosen to show speed, agility, dynamism and a sporty feel. The horse motif quickly became the emblem for the Mustang, aiding in brand recognition & recall. Rather than the words, symbols have the potential to communicate effectively at a glance, even from a far away distance. The horse symbol conveyed a story quickly.
Mustang’s styling distinction was brought by the proportionately longer hood and short rear deck. In ‘Road and Track’ magazine, a reporter wrote “The overall body styling — accentuated by the upswept rear lower body treatment — did create the feeling of litheness, agility and speed that it was intended to convey. The rake of the windshield (52.5˚) assists in this illusion when coupled with the more upright slant (about 45˚) of the back of the top”.
The car was fully carpeted, trimmed and neatly finished simulating a European look.
To go with sports car proportions, the seats were lowered to bring down the centre of gravity. The clutch pedal was designed in such a way to provide for comfort especially for women wearing high heels.
In the image below —The sculptured(gradually debossed) area in the side enhances the sporty appearance. Mustang Emblem and the Mustang Block letters near the front wheel helps in easily identifying the car from the side.
Compact rear deck with a short overhang to accentuate sporty appearance.
As Lee targeted a broader base of customers, he was eager to provide ‘luxury’ feel to the customers who wanted it and at the same time, he didn’t want to cut out the people who were more interested in performance and economy.
If a customer could afford the luxury, Ford offered him extra accessories and more power. Lee believed that if a person loved luxury but couldn’t afford those extras, still, he should be happy purchasing the car. He never wanted people to call ‘Mustang’ as a poor man’s car. So, he included bucket seats, vinyl trim, sporty steering wheel, floor mounted gear-shift console, sporty wheel covers and carpeting as standard features of the car whereas competitors were charging for them. A bench seat was provided in the rear. The dashboard was mounted a little low to go with the sporting nature of the car.
TARGETING MULTIPLE CUSTOMER SEGMENTS
As mentioned earlier, to meet the requirements of a wide customer base, Ford offered one basic car with a wide range of options in power, comfort, and luxury than several different versions of the same car.
The Standard — “170"-cu-in Engine with 3-speed manual transmission provided maximum operating economy and good performance at the lowest cost*.
The Ford offered optional V8 engines -”260" at 164hp, “270” at 210hp. For high performance, Ford offered a V8 engine -“289” with 271hp*.
For those who want ‘Fun-to-drive’ car or car with maximum road performance, Ford offered all synchronised four-speed manual transmission with V8 engines*.
(* -The content is from the 1964 Mustang’s press kit.)
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 optimise the design, remove low-value proposition features, enhance good value propositions and gather information what customers think and feel about the product.
In the case of ‘Ford Edsel’ car, the company did not “Test Market” any prototypes with potential “Real Buyers” until vehicles had been fully designed and launched into the market. Having learnt the importance of testing from the ‘Ford Edsel’ fiasco, Lee and his team invited a select group of carefully chosen fifty-two couples to the styling showroom. The couples already owned a standard sized car and earned average incomes. They were brought to the studio in small groups and shown the new car. The design team observed their body language & other expressions through a live video feed. The impressions showed that the ‘white-collar’ couples loved the car’s external styling and interiors. The ‘blue collar’ workers saw the Mustang as a symbol of status and prestige.
“The potential customers felt that the car had a ‘performance’ look and a road-hugging stance that assured viewers it would handle well, steer and park easily” -From ‘The Mustang’s Story’ published by Ford.
The Price -At the end of the prototyping & testing session, the couples were asked to estimate the price of the car. To Ford team’s surprise, almost everybody guessed $1000 high. Some of the customers said that they wouldn’t buy the Mustang car as they thought it would be expensive. When Ford disclosed the price, the couples were shocked and most of them went back to have a re-look at the model and were willing to buy immediately. Based on the people’s feedback it was clear that the ‘low-price’ created an impact in their minds. This gave Ford’s team an idea to ensure emphasizing car’s ‘low-price’ in their ads.
At the time of launch, Mustang was priced at $2368. The Mustang’s low entry price made it affordable to the young baby boomers for whom the car was created. From prototype testing results, it appeared that promoting the car’s base price in their advertisements would be essential for its success. The company had a decades-old policy of not including a price in their advertising material but ‘Mustang’ had to break the rule.
The Unexpected -At the end of test sessions, one of the customers commented “This car doesn’t look like an ordinary car but at the price of an ordinary car. It is unexpected”. Lee and his team got the word ‘Unexpected’ from this research and they went on to use widely in their advertisements.
The Unexpected Look and The Unexpected Price
Ads targeting women segment
Ads Targeting Single Young Men saying that “It’s Hippy and cool to own a Mustang” -
MUSTANG’s PROMOTION AND PR SUCCESS
The Mustang owes its initial record-breaking sales to its massive marketing promotional programme. Lee, having worked as a salesman and a marketer for more than a decade played a pivotal role in promoting the car. Throughout his career, he had carried out dramatic promotional programmes while introducing a new car. Let’s see how Lee’s team promoted the car.
Pre-Publicity -A year prior to the vehicle’s launch, Ford started leaking information to the media and slowly built up expectations. A couple of months before launch, they released teaser commercials during TV shows. By delivering the car details little by little, Ford successfully manoeuvred public interest to reach mass-enthusiasm levels.
Location and Time -Being a revolutionary car, Lee’s team planned to introduce the car in April(in the middle of the season) which was against the traditional industry-wide launch. The team chose New York’s world fair as a venue to launch the car. The fair was very popular and attended by a lot of people from around the country.
It turned out to be a brilliant move as the car(being the only automobile in the fair) received maximum publicity from the members of the press, automotive and non-automotive journalists who were covering the fair.
Lee and the Mustang appeared on the covers of Time and Newsweek magazines and provided massive publicity for the new car. Lee believed that the twin cover stories had helped in selling an extra 100000 Mustangs.
Target The Feeling -To convince people, you need to target their emotional mind -Appeal to people’s feelings through sensory organs. It is a way to fight inertia and indifference to use a product. It is fine to stage a demo of a car to the audience but what if the audience could take part in the demo?. They could experience how the car behaves which would go a long way in convincing them. What if we target feelings of influencers rather than users? If the experience is good, and it solves a pain point, the influencer would soon recommend the product. That’s what happened. Lee’s team invited editors of college newspapers and gave them a Mustang to drive for a few weeks. They loved the experience. Ford also conducted a giant Mustang rally where hundreds of press members drove the car for more than seven hundred miles which gave them a first-hand experience of the car’s reliability, power and manoeuvrability. The Mustang was soon prominently covered in hundreds of magazines and newspapers. The press played a critical role in creating the initial mass excitement.
Taking The Car To The People -On the eve of the introduction, Ford sponsored half-hour programs about the Mustang on NBC, ABC and CBS, reaching an estimated 29 million people, and Mustang commercials were aired non-stop.
On the day of launch, Ford ran full-page ads in twenty-six hundred newspapers. The promotion was aimed to create a mass enthusiasm by reaching as many people as early as possible.
Since the entire public could not come and see the car, the car was taken near to the public. The Mustang was displayed at many high-traffic locations in each city. The car was also displayed at major busy airports, Holiday Inns, Universities, football games and other public places.
The promotional effort resulted in massive success -During the first weekend of launch, an unprecedented four million people visited the Ford dealership. Within a few days, Ford sold 47,000 Mustangs. In the first 12 months, more than four lakh Mustangs were sold in the U.S alone. By March 1966, a million ‘Mustangs’ were sold.
THE MARKET REVIEW AFTER LAUNCH
After any product launch, we need to constantly review and understand the buyers so that we can check whether our research insights are right and at the same time we can learn the emergence of any new trends or insights. In that scenario, it would be necessary to tweak the design or marketing content.
As expected, Mustang was bought by a lot of young people. Women and singles also bought the car. The average age of the buyer was 31. The age of more than half of the buyers was in the range of 20–34 years. The car not only appealed to young but also to older people. One in every six buyers of the car was in the age bracket of forty-five to fifty-four.
The average income of buyers was between $5000 to $10000 and the ‘Unexpected Price’ ads were effective in convincing them. Almost two-thirds of the buyers were married couples and the women influenced the decision. More than half of the buyers had been to college. For a car that cost $2368, the customers were spending an average of $1000 each just on options. The accessories were selling quickly. 85% of cars sold were with options. Almost, every research insight which guided the design and development had come true.
In the first two years, the Mustang generated net profits of $1.1 billion, that too in1964 dollars!. A massive achievement.
Mustang sold an identity instead of focusing on benefits or features. To remain relevant and to build sustainable competitive advantage, the Mustang highlighted the importance of constantly observing your customers, new non-customers, next-generation customers, change in contexts and the cultural movements. In the case of Ford Edsel, the company built a car and searched for the market. In the case of Mustang, Ford identified its buyers first and then built a car according to their unmet, hidden needs and desires.
References: IACOCCA: An Autobiography, The Mustang Story from the Ford website, The Mustang Press Kit-1964 by Ford, Article in Automotive news by Ryan Beene, The American Dream-U.S History in Philschatz.com(Data about 1960 market conditions, baby boomers are from this website), An article of Consumerism and Anti-consumerism in America in the 1960s by Susana Yepes in ‘Boston University’ website, Only The Paranoid Survives by Andrew S Grove, The Hidden Traps of Decision-Making’ -HBR article by John S. Hammond, Ralph L.Keeney, and Howard Raiffa. The Innovator’s Dilemma by Clayton Christensen, Blue Ocean Strategy by W Chan Kim and Renee, What Is Strategy-HBR article by Michael Porter, Switch by Chip and Dan Heath, Article in ThoughtCo.in, Article in The Quint by Manav Sinha.