More And More No Dicker StickersKathleen Kerwin
One of the hottest car-marketing tactics these days is also one of the simplest. On some of its models, Ford Motor Co. just slaps a single low price on all versions of a car equipped with a standard set of popular options.
Ford used its Escort subcompact to give the idea a test drive last year, taking it national in May. It prices any 1993 Escort--hatchback, four-door, or wagon--equipped with air conditioning, power steering, and other popular features, at just $10,899. Ford says Escort sales have jumped since the new pricing was adopted--even in California, where Japan holds about half the market. At Galpin Ford in the San Fernando Valley, sales roughly doubled, to about 100 a month recently, says owner Bert Boeckmann.
The carmaker sees plenty of benefits in the strategy. Ford saves on manufacturing costs because most cars coming down the line have a standard option package. And buyers like getting a well-equipped car at not much more than the price of a no-frills model. Plus, eliminating price haggling "just makes a more comfortable relationship" between customers and salespeople, says Boeckmann.
Ford's tactics are close cousins to ones pioneered by General Motors Corp.'s new Saturn division. Saturn has achieved booming sales by, among other things, refusing to haggle on sticker prices. Many dealers also are experimenting on their own with no-dicker stickers.
But no one is more entranced with the idea than Ford executives. They're now going national with simplified pricing on Thunderbirds. Ford cut the available versions of the car from four to two, piled on features, and slashed prices. The LX now costs just $16,292, vs. $20,316 for last year's slightly more loaded version. "We more than doubled our T-Bird sales in California," where the concept was first tested, says Ross H. Roberts, Ford Div. general manager.
LOPSIDED PIE. The strategy comes with risks, of course. Some dealers will always find a way to circumvent the sticker. And anticipating demand can be tricky. After the pricing switch, the Escort station wagon became the biggest bargain among the Escorts, shooting from 17% of the total sold to 50%. Workers at Ford's Wayne (Mich.) factory, which makes the sedan, weren't happy to see the bulk of new orders going to the Escort wagon plant in Hermosillo, Mexico. Ford says it now balances the product mix better by using promotions on other Escort models to send more work back to Wayne.
Auto analysts speculate that other auto makers, including GM's Chevrolet division, will look at the new pricing strategies and adopt them as their own. After all, in tough economic times, nothing sells like a bargain.
HOW ONE-PRICE MARKETING ADDS UP Price 1992 1993 FORD THUNDERBIRD LX $20,316 * $16,292 Options include fuel-injected 3.8-literV-6, power steering, air conditioning, power windows, temperature control, aluminum wheels, power antenna FORD ESCORT HATCHBACK LX $10,683 $10,899 FORD ESCORT WAGON $11,790 $10,899 Both Escorts come equipped with manual transmission, air conditioning, power steering, rear-window defroster, stereo radio, dual remote-control mirrors 1992 price also includes keyless entry, premium sound system, and power passenger seat DATA: COMPANY REPORTS