Here’s Why Ford Is Flexing Its Financial Muscles

 
on December 05 2012 4:54 AM
Ford Motor Co.'s Emblem
The Canadian Auto Workers will concentrate on the Ford Motor Co. as it attempts to negotiate a collective-bargaining agreement in the roughly 24 hours left before its fast-approaching strike deadline on Monday at 11:59 p.m. EDT. Reuters

With a Super Bowl commercial slot and a $1 billion marketing campaign, Ford (NYSE:F) has put some financial muscle behind its effort to revive sales of its luxury Lincoln-brand vehicles.

In recent times, Ford’s Lincoln has failed to stand out from its rivals: Bayerische Motoren Werke’s BMW, Daimler’s (DDAIF.PK) Mercedes-Benz, Toyota’s (NYSE:TM) Lexus, and Volkswagen’s (VLKAY.PK) Audi. Since 1990, when the 90-year-old brand reached its peak in popularity, sales have declined by 63 percent. Now, as Bloomberg noted in a recent article, the brand’s iconic black Town Car is more often pictured as airport transportation for executives than as a luxury vehicle. Even Chief Operating Officer Mark Fields acknowledged that rebuilding the brand will be a “daunting task.”

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But manufacturing a popular luxury brand is important for the company. In October, at the opening of Lincoln’s new design studio in Dearborn, Michigan, Fields said that a luxury brand was essential for the company to be a “global and successful enterprise.”

Ford wants the Lincoln to appeal to younger, wealthier buyers instead of its traditional customers, who are on average 65 years old. According to the publication, “Rather than trying to dislodge BMW and Mercedes owners from their cars, Lincoln is seeking “curious” luxury buyers not beholden to brand names.”

To achieve this end, Ford purchased a 60-second commercial that will debut on the Super Bowl. While this was a huge expense for the company — the average cost of a 60-second ad at this year’s NBC-broadcasted game was $7 million — Super Bowl commercials receive record views. The 2012 game drew 111.3 million viewers, the most in U.S. television history. The company also set to launch its largest marketing campaign ever, which will include television commercials and a series of newspaper advertisements.

However, not all analysts believe that Ford can transform the Lincoln. “Ford has got to have reasonable expectations with Lincoln,” Edmunds.com analyst Michelle Krebs told Bloomberg. “The MKZ is a very fine car, but does it really compete with a BMW 3 Series? It’s not even on the same shopping list.”

Seven new models of the car are expected by 2015.

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