NLPRacing Posted October 16, 2007 Share Posted October 16, 2007 I've heard the following arguments on here: -There won't be a Fusion coupe because it would cannibalize sales from the Mustang... -The Freestyle didn't do well because Ford didn't want to give it what it needed because it might of cannibalized sales from the Explorer... -They won't ever sell the Transit here because it would cannibalize sales from the E-Series... -Ford cancelled the Excursion because it cannibalized sales from the Expedition... -Ford won't build an Expedition SUT because it might cannibalize sales from the F150... I could go on & on. I don't know if these are true or if it's just BON fodder. My point is, if Ford builds something that does cannibalize sales from one Ford to another Ford, at the same profit margin, why is that so bad? At least they are still buying a Ford. For example, if Ford built a bad ass Fusion coupe and Mustang sales go down, then oh well. Make the next Mustang so bad ass that it takes the sales back. There is too much competition out there to worry about it. If somebody is in the market for an Altima coupe, Accord coupe, G6 coupe or Solara, what does Ford have to offer? The Mustang? I doubt many people cross shop these vehicles, despite having similar price points, options, powertrains, etc. If people want a CD sized FWD/AWD coupe, give them one. If people want a full size Ford SUT "Avalanche", then give them one. If people want a Transit, etc... With today's "flex" manufacturing, Ford should be able to cover just about any niche they want and do it at a profit. Anybody else feel this way or have any insight on Ford's logic for doing this? Quote Link to comment Share on other sites More sharing options...
rmc523 Posted October 16, 2007 Share Posted October 16, 2007 I've heard the following arguments on here: -There won't be a Fusion coupe because it would cannibalize sales from the Mustang... -The Freestyle didn't do well because Ford didn't want to give it what it needed because it might of cannibalized sales from the Explorer... -They won't ever sell the Transit here because it would cannibalize sales from the E-Series... -Ford cancelled the Excursion because it cannibalized sales from the Expedition... -Ford won't build an Expedition SUT because it might cannibalize sales from the F150... I could go on & on. I don't know if these are true or if it's just BON fodder. My point is, if Ford builds something that does cannibalize sales from one Ford to another Ford, at the same profit margin, why is that so bad? At least they are still buying a Ford. For example, if Ford built a bad ass Fusion coupe and Mustang sales go down, then oh well. Make the next Mustang so bad ass that it takes the sales back. There is too much competition out there to worry about it. If somebody is in the market for an Altima coupe, Accord coupe, G6 coupe or Solara, what does Ford have to offer? The Mustang? I doubt many people cross shop these vehicles, despite having similar price points, options, powertrains, etc. If people want a CD sized FWD/AWD coupe, give them one. If people want a full size Ford SUT "Avalanche", then give them one. If people want a Transit, etc... With today's "flex" manufacturing, Ford should be able to cover just about any niche they want and do it at a profit. Anybody else feel this way or have any insight on Ford's logic for doing this? I agree, there does seem to be a lot of 'possible cannibalization' that would be caused by these products, however, as you stated, they'd still be buying a Ford. I believe Ford should cover every niche it can (which I think will come under Mulally), b/c what's to stop a customer who wants an Expedition SUT type vehicle but doesnt want an F-150 from buying an Avalanche instead. If Ford offered this type of product that customer would've stayed in the Ford brand. That example can be pasted onto most of the other 'argument' cars. I'm not sure how much Fusion coupe sale would cannibalize Mustang sales, to me, they'd target different markets. If Explorer sales were cannibalized, so be it, they'd still be buying Ford (I don't think Ford wanted to relinquish Explorer's best selling crown) I believe IIRC the Transit IS coming and will be sold alongside Econoline AND Transit Connect (I think I read that herer somewhere, but could be mistaken) Excursion problem solved w/ Expy EL. Expy SUT, same problem as Explorer, Ford doesnt want to relinquish the crown, to solve this problem they could just name it F-125 or something of the sort (to still be considered F-series, thus tallied as such in sales figures) I think some of this 'possible cannibalization' will change though. I believe under Mulally, some 'cannibalization' will be allowed to begin, but that's just my guess. I would assume he'd want to go after any possible market there is, even creating new ones so Ford can lead, not follow anymore. Quote Link to comment Share on other sites More sharing options...
Pioneer Posted October 16, 2007 Share Posted October 16, 2007 I think Ford should do whatever they need to do with their products to make them the best in their segments, no matter if it steps on another Ford's product toes or not. Quote Link to comment Share on other sites More sharing options...
rmc523 Posted October 16, 2007 Share Posted October 16, 2007 I think Ford should do whatever they need to do with their products to make them the best in their segments, no matter if it steps on another Ford's product toes or not. I agree. Quote Link to comment Share on other sites More sharing options...
Traveler Posted October 16, 2007 Share Posted October 16, 2007 (edited) I think rather than cannibalize on particular models, only some shuffling is required. I read somewhere on here where someone suggested that the Taurus X would either go to or would be best as a Mercury. I agree...and please don't call it a Sable or another "M" name. That's a win-win situaton. Ford has Edge. Lincoln has MKX. Give Mercury the wagonized version of the D3. I've suggested before to move the Explorer Sport Trac to Mercury. Then use the Explorer platform to build a Ranger four-door, extended cab and standard cab. Essentially, the Ranger four-door would be a clone of the Sport Trac underneath, but with a more like F-150 styling...squared and brawny. Use much of the interior, glass, tailgate, wheels, etc. for both Sport Trac and Ranger. I also think a Fusion coupe probably wouldn't hurt Mustang hardly at all, but I'm not sure how a Fusion coupe would do against Accord coupe, Toyota Solara and Nissan Altima coupe. The Fusion really has grown bland to me from almost every angle except the front, where it is still a very handsome auto. It needs more character in the body before I'd say a coupe would be worthwhile. Lastly, I think if Ford does roll out a couple of Panther replacements, it should be a Mercury and Lincoln and maybe just leave the Taurus as the flagship sedan for Ford. Mercury really needs something to call its own and the Interceptor built as a Mercury with an appropriate balance of modern-retro styling would do wonders for the brand. Ford could simply market the Mercury for police fleet as well with a separate name than that used for the retail version and then sell a third performance model under yet another name. There is no need to cannibalize sales when Ford has the Mercury division still in play and by their own account, plans to retain Mercury for the future. Edited October 16, 2007 by Traveler Quote Link to comment Share on other sites More sharing options...
jpd80 Posted October 16, 2007 Share Posted October 16, 2007 I think Ford should do whatever they need to do with their products to make them the best in their segments, no matter if it steps on another Ford's product toes or not. Exactly. Ford can argue why they shouldn't build certain products but, at some time they have to build something that really sells!!! Quote Link to comment Share on other sites More sharing options...
J-150 Posted October 16, 2007 Share Posted October 16, 2007 My point is, if Ford builds something that does cannibalize sales from one Ford to another Ford, at the same profit margin, why is that so bad? At least they are still buying a Ford. COGS (cost of good sold) is a combination of fixed and variable. Variable is parts and labor. Fixed is salaries, building, overhead etc. The cost of the building needs to be paid regardless of how many Mustangs are built. The more Mustangs you build, the lower the fixed cost per vehicle is. So any plant that runs a single shift has a higher fixed cost per unit. Cannabalizing reduces individual model sales and increases COGS on that model. Cannabalizing works if new, uncannabalized sales are significant enough to offset this. So if the Fusion Coupe gets 10% of sales from the tang, but 90% conquest, the tthat is a good thing. If only 50% are conquest, then there is no business case. Quote Link to comment Share on other sites More sharing options...
Biker16 Posted October 16, 2007 Share Posted October 16, 2007 if we don't "Cannibalize" our own products the competition will do it for us. the company needs to be focused on making the best product posibl without far of overshadowing another product or brand. Quote Link to comment Share on other sites More sharing options...
FordBuyer Posted October 16, 2007 Share Posted October 16, 2007 I agree. Yes, Ford's aim is to keep each customer in the Ford family. So if Explorer customer hated his gas mileage at end of lease, he can go to Edge on next lease with better gas mileage and same room. If Ford did not have Edge, that customer would probably leave Ford family altogether. Same for TaurusX/Freestyle. So cannibalization is very good in that respect. The aim is to hold onto the customers you have. Obviously, that has not worked out well for Ford so far as they have lost so many customers last few years, but at least they are holding on to some. At some point though they are going to have to go after new customers and at same time keep customers they have. Quote Link to comment Share on other sites More sharing options...
UltimateX Posted October 16, 2007 Share Posted October 16, 2007 It is always better to lose a sale to yourself than to somebody else. In a lot of ways to auto industry has become one huge niche market. If Ford keeps walking away from these niche markets, there will be nothing left. Quote Link to comment Share on other sites More sharing options...
Hugh Posted October 16, 2007 Share Posted October 16, 2007 I think Ford should do whatever they need to do with their products to make them the best in their segments, no matter if it steps on another Ford's product toes or not. IMHO, that's a good point. I agree. Quote Link to comment Share on other sites More sharing options...
NLPRacing Posted October 16, 2007 Author Share Posted October 16, 2007 if we don't "Cannibalize" our own products the competition will do it for us. That's exactly the point I was trying to make! Quote Link to comment Share on other sites More sharing options...
P71_CrownVic Posted October 16, 2007 Share Posted October 16, 2007 (edited) I've heard the following arguments on here: -There won't be a Fusion coupe because it would cannibalize sales from the Mustang... Thats the funniest thing I have ever heard. People said that jokingly right? Did the SHO ever take sales away from the Mustang? Edited October 16, 2007 by P71_CrownVic Quote Link to comment Share on other sites More sharing options...
CarShark Posted October 16, 2007 Share Posted October 16, 2007 I think the main vehicle class where cannibalization may be a concern is the 5-or-7-seat SUV/CUV/Crossover clusterfuck every manufacturer has now. The best way to break it up in my mind is in two groups: the on-roads and the off-roads. Small, medium and large is enough. Quote Link to comment Share on other sites More sharing options...
Biker16 Posted October 18, 2007 Share Posted October 18, 2007 I think the main vehicle class where cannibalization may be a concern is the 5-or-7-seat SUV/CUV/Crossover clusterfuck every manufacturer has now. The best way to break it up in my mind is in two groups: the on-roads and the off-roads. Small, medium and large is enough. no one has found the sweet spot in the CUV market yet. no one has been successful enough to establish the bench mark that everyone copies. the scary part is that this may never happen. Quote Link to comment Share on other sites More sharing options...
NickF1011 Posted October 18, 2007 Share Posted October 18, 2007 no one has found the sweet spot in the CUV market yet. no one has been successful enough to establish the bench mark that everyone copies. the scary part is that this may never happen. Very few segments have a defined "benchmark" vehicle. However, you will find similarities between all of the vehicles in a segment...heck...that's what defines a segment. The fact that there is no benchmark in the segment is anything BUT a scary thing. If anything, that means manufacturers are reaching parity with one another. That only BENEFITS the consumer. Quote Link to comment Share on other sites More sharing options...
BORG Posted October 18, 2007 Share Posted October 18, 2007 When margins are smaller, growth is weaker, and demand is softer, they are more concerned about potential cannibalization. But if you have cars like the Escape, Edge, Taurus X, and Flex reaching for overlapping customers on the same lot, that's because the market is booming and there is a need to offer absolutely everything possible to get those customers what they want from a Ford. Some of these things, like the Fusion coupe and Transit are reaching for different markets altogether so I think cannibalization is not the issue. I love the Mustang, but it's completely impractical as a daily commuter in Michigan. But give me a 2-door Fusion with AWD and that's something I would consider. Quote Link to comment Share on other sites More sharing options...
SVT_MAN Posted October 18, 2007 Share Posted October 18, 2007 COGS (cost of good sold) is a combination of fixed and variable. Variable is parts and labor. Fixed is salaries, building, overhead etc. The cost of the building needs to be paid regardless of how many Mustangs are built. The more Mustangs you build, the lower the fixed cost per vehicle is. So any plant that runs a single shift has a higher fixed cost per unit. Cannabalizing reduces individual model sales and increases COGS on that model. Cannabalizing works if new, uncannabalized sales are significant enough to offset this. So if the Fusion Coupe gets 10% of sales from the tang, but 90% conquest, the tthat is a good thing. If only 50% are conquest, then there is no business case. I feel like I'm in managerial accounting again. *Runs and hides* LOL. Actaully, Managerial Accouting wasn't bad. It's far better than the Business Finance course I'm in now. I easily got an A in managerial, but I will be lucky to scrape by with a B in this finance course .... (Kind of aggrivating ... for someone who is used to getting As). Quote Link to comment Share on other sites More sharing options...
BORG Posted October 18, 2007 Share Posted October 18, 2007 (edited) I feel like I'm in managerial accounting again. *Runs and hides* LOL. Actaully, Managerial Accouting wasn't bad. It's far better than the Business Finance course I'm in now. I easily got an A in managerial, but I will be lucky to scrape by with a B in this finance course .... (Kind of aggrivating ... for someone who is used to getting As). Don't worry, everybody hates Financial Accounting. God it's been 6 years since I had those classes, seems like I was just recovering Edited October 18, 2007 by BORG Quote Link to comment Share on other sites More sharing options...
J-150 Posted October 18, 2007 Share Posted October 18, 2007 I feel like I'm in managerial accounting again. *Runs and hides* we can all curl up in a ball and weep together LMAO Quote Link to comment Share on other sites More sharing options...
SVT_MAN Posted October 18, 2007 Share Posted October 18, 2007 (edited) we can all curl up in a ball and weep together LMAO Managerial Accounting for me was actually somewhat enjoyable. Minus the tests, the lectures were hilarious. We had this old skinny Vietnam war veteran for a professor - he talked really funny because of a war injury and he owns like 4 Cadillac Allantés. He always had some story about them that somehow related to the class. One time he was talking about value, and he was asking the class if it added value to his cars by having the bodies made by Pininfarina and having them shipped across the Atlantic lol Most of the class had no flippin clue what he was talking about. (I raised my hand and said that "You may have a Ferrari body on your car, but it's still a Cadillac - so I don't think it added an ounce of value. That's like putting a Ferrari body on a Fiero chassis. It might look pretty, but you've still got a GM chassis underneath so you know it'll cry when it hits a corner." - he wasn't exactly sure what to make of that, but a couple of the car guys in the class were cracking up ...) In any case, the funniest part of that class was when he did his G.R.E.A.S.E. presentation. I don't remember what the acronym stands for anymore, but he dressed up in a James Dean like outfit (leather pants, jacket, white undershirt with pocket, comb in pocket, greased hair) .. and then he was using all these 1950s terms like "I'm a cool cat" and he had all these music pieces from the 1950s to go with his teaching. He would also find songs with names of people in class (for example "Dawn" by the Four Seasons and then he'd call on Dawn). I'm glad there were no songs named "Adam" or anything :P The guy was one of those nutjob professors that you kind of despised for his lofty, unclear expectations yet you couldn't hate him because he made the day entertaining. Edited October 18, 2007 by SVT_MAN Quote Link to comment Share on other sites More sharing options...
SVT_MAN Posted October 18, 2007 Share Posted October 18, 2007 (edited) Don't worry, everybody hates Financial Accounting. God it's been 6 years since I had those classes, seems like I was just recovering I actually didn't hate financial accounting that much. I got an easy A in that course as well. It seemed quite logical to me since they follow GAAP .. I am good as long as there are consistent rules. What messed me up in managerial were the decisions. I hated having to decide whether to close a division, etc. The class I'm in currently in that I hate is Business Finance. It's just a terrible course with an awful professor who speaks in monotone and throws overheads up that are worthless. The class average on the first test was a 65% and I have to say, I, for the first time in my life, was basically average. The guy has a D+ rating on ProfessorPerformance. Doesn't seem like that bad of a guy, he's just not a good professor. Doesn't teach. Throws an overhead up on the overhead projector, and then reads it, verbatim, and says "Any questions?" If you want to learn a concept, you better learn it yourself. At least I know this for the next exam. I'm just going to read and take notes massively for the next exam. I was mostly pissed at the accounting majors in my finance course. A few of those jerks got like 94% on the first exams because they're so familiar with accounting junk that they can easily manipulate the balance sheets. Considering that was half the test, you can see why they did well and people like me (I'm an IT infastructure major) sucked on it. He also has these essay questions which he seemingly took points off mine with no explanations. He just kind of did it. One of them was to compare OTC markets to the NYSE .. and I had a pretty in-depth analysis (and yes I answered the aspects he asked about), but he didn't like it and took off 50%. The guy next to me had almost nothing and only got 3 points of. The guy seems to do whatever the hell he wants. That was my first D ever on an exam .. I hope I do better next time. I have a 3.95 GPA so far and I don't want to lower it that much. I like being on the dean's list because my car insurance stays lower. I digress. Back on topic, sorry. (Had to tell somebody about this stuff since my GF says I'm a whiner :P) Edited October 18, 2007 by SVT_MAN Quote Link to comment Share on other sites More sharing options...
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