How Ford's F 150 Lapped The Competition
The atmosphere was boisterous and festive as about 400 Ford Motor Co. designers and engineers gathered late last month to celebrate the success of the hot-selling F-150 pickup truck. Ford executives sipped cocktails, nibbled hors d'oeuvres, slapped backs, and applauded members of the F-150 team in speeches from the podium.
But when James E. Englehart, Ford's vice-president for light-truck development, singled out the efforts of one mid-level design staffer, he took the room by surprise. So obscure was the designer, James C. Bulin, that higher-ups had forgotten to invite him. Fortunately, Bulin heard the noise from down the hall and came by in time to hear Englehart praise him for "having a real impact on the direction we took with this truck."
MAVERICK. Englehart wasn't just blowing smoke--and Ford execs aren't likely to overlook Bulin again soon. The sinewy, sculptured F-150 is Ford's hottest new model since the Mustang tore up the streets in the mid-'60s. Sales of Ford's F-series pickup trucks are up 18% since the F-150's redesign was launched in January. Altogether, the F-series could sell 800,000 trucks this year, easily retaining the lead as America's top-selling vehicle. "This launch has exceeded our wildest expectations," gushes Ford Div. General Manager Ross H. Roberts.
For that, Ford executives can largely thank Bulin, 55, a maverick who has spent most of his career operating on Ford's fringes. Working out of the basement of Ford's design center, Bulin and his bookish sidekick, auto consultant John Wolkonowicz, created an automotive anthropology by pinpointing the tastes and characteristic values of six generations of 20th-century Americans (table). By using Bulin's generational "value groups," Ford was able to tailor the design and marketing of the truck so that it would "hit the hot buttons" of baby boomers, says Bulin. "We developed a way of crawling inside the heads and hearts of tomorrow's customers."
Bulin's research helped Ford design a trimmed-down model packed with family-friendly features--and boomers are taking the bait. Although the over-50 crowd rang up two-thirds of the old model's sales, boomers are expected to buy 80% of the new F-150s. Peter Palestri, 40, recently chose a black F-150 Supercab over a Lexus luxury sedan when he searched for a new car. "It rides as nice as the Lexus and my three kids fit very comfortably in the backseat," says Palestri, who owns a landscaping company in Morristown, N.J. "We use it as our family vehicle."
And Wall Street is applauding the beefier $4,000 in pretax profit each vehicle should generate on average, double what the old model mustered. While the F-150 starts at $15,455, buyers are snapping up heavily equipped models such as the four-wheel-drive Supercab, which goes for $25,800. Thanks in large part to the F-series--which accounts for 23% of Ford's vehicle sales--Ford's second-quarter earnings jumped 21%, to $1.9 billion. For the year, J.P. Morgan & Co. analyst David Bradley estimates profits will rise 18%, to $4.6 billion, on revenues of $118 billion.
That may be just the beginning. Although Ford senior execs first thought Bulin's approach kooky, insiders say it could completely change how Ford develops and markets its cars. Jacques A. Nasser, the influential group vice-president in charge of overhauling worldwide vehicle development, says it will become "one of the building blocks" of product development. "Jim Bulin is a real wizard at this stuff," says Nasser. "It gives us a competitive advantage."
Indeed, with its focus on using customers' desires as a starting point for design--rather than simply benchmarking rivals' cars--Bulin's approach marks a big step forward for Detroit. In the past, U.S. carmakers have not used extensive consumer research at the very beginning of the redesign process; instead they tended to start by tearing apart rivals' successful cars.
REBATE. The roaring success of the F-150 compared with the sputtering start of the Taurus illustrated the limits of Detroit's traditional route. Taurus developers set their sights on beating the highly engineered Toyota Camry. But the changes pushed Taurus prices near $20,000, scaring consumers. The Taurus now needs a $1,000 rebate to keep the Honda Accord at bay. Bulin's approach allows designers to better predict what buyers really want, says Nasser, who adds that Ford will no longer develop cars by copying rivals. "You're always looking backwards," he says.
Of course, psychological market research on boomers and other generations has been around for years. But Madelyn Hochstein, president of DYG Inc., a New York social and market research firm headed by the renowned consumer researcher Daniel Yankelovich, says that Bulin's approach has made such demographic tools far more useful. Its predictive powers offer a clearer method of designing products to anticipate the needs of targeted consumers. "In 10 years, this will be used much more broadly, and well beyond the auto industry," says Hochstein.
Yet for all its success, Bulin's work developed almost by chance. As Ford began planning to overhaul the truck in late 1989, he was given the mundane assignment of putting together a pictorial history of truck design. Bulin brought in Wolkonowicz, an automotive history buff who had worked at Ford before joining consultant Arthur D. Little Inc. in 1986.
Bulin and Wolkonowicz quickly figured out that pickup-truck design had not really changed for a generation. Frustrated, they commiserated over beers one night at Miller's Bar in Dearborn and hatched a plan to expand the project on their own.
They soon added different images to the truck pictures they had affixed to giant, rolling bulletin boards. As photos of cars, trains, planes, radios, and toasters were added, they had a history of consumer products of the 20th century. They noticed that designs changed at similar times, but they didn't know why. "We started looking for what was driving people to make different choices," recalls Wolkonowicz, 45. Next came information about pop music, movies, fashion, wars, and economic hardship.
From that kaleidoscope of images, Bulin hatched what Ford came to call its value groups strategy. Bulin concluded that the basic values that motivate purchases are instilled in each generation between their teens to mid-20s, formed by everything from their relationships with their parents to whether their lives were touched by war and the movie stars they worshiped. "The growing-up experience of each generation establishes the rules they live by," Bulin says.
The real challenge was translating those insights into design changes. With the F-150, Ford designers first wanted to style the truck like a big rig. But that idea died after Bulin showed that boomers value compact designs found on Japanese cars they came of age with.
But that didn't mean boomers still didn't expect a pickup truck to look powerful; instead, they defined power differently from earlier generations. One reason: Starting with President John F. Kennedy's National Council on Physical Fitness, which pushed exercise in public schools, boomers have grown up with a passion for staying in shape. That, Bulin argues, has led them to equate strength with being trim and fit, and they seek out sleek products. Bulin's data convinced Ford's designers that the F-150 would have to look lean and muscular to succeed. So Ford narrowed the cab by two inches and lengthened it by five. "Once you establish those key strategies, it was hard for a designer to jump off the cliff," says Thomas D. Baughman, the F-150's chief engineer.
Bulin's unconventional approach grew quietly at first, but eventually it influenced everything from the wheel size to the F-150's doors. Bulin's analysis showed that while boomers expected a pickup to have a commanding "presence," they also wanted comfort. So Ford increased the wheel size to make the truck taller but smoothed out the tire tread so it would ride like a car. The nose is compact and almost carlike, which added passenger space. On the six-seater F-150 Supercab, Ford added a rearward-swinging third door tucked behind the front passenger door that makes hopping in the back easier--a big draw for boomers with growing children. "The value group research was the reason we read the need for the third door," says Edward E. Hagenlocker, president of Ford's auto operations.
EASY ACCESS. Now Ford is spreading Bulin's tactics to other models. Company sources say an entry-level luxury car and a sport-utility vehicle for the youth market are receiving the generational treatment, as will the Thunderbird.
Bulin's approach also helped shape the design of the Expedition, the full-size sport-utility vehicle Ford is introducing on Oct. 2. The Expedition shares nearly half the F-150's parts, including its softly sculptured front end. And as with the pickup, Bulin helped Ford shape it to the needs of baby boomers. To add more passenger space, Ford shortened the front doors on the four-door model, offering easier access to the back rows of seats.
With such well-targeted goodies, Wall Street expects a huge hit. Ford is predicting annual sales of 150,000 to 200,000. Analysts say the Expedition--expected to be priced between $35,000 and $40,000--could add up to $1 billion to earnings. "This will be a category-killer," says J.P. Morgan's Bradley.
It's all a far cry from the early summer days of 1990, when Bulin and Wolkonowicz began rolling their giant bulletin boards around to show off their nascent research. By then, they had divided up the generations into six groups, beginning with Depression Kids, born from 1920 to 1934, and ending with the Baby Boomlet, children born since 1978. From those groups, they eventually distilled their data into 30 customer segments--another radical change for Detroit, which traditionally sliced the market by products, not people.
But the two were still working out of a cramped basement office evenings and weekends, while handling their regular design assignments during the day. Finally, they showed the giant boards to project manager Baughman and his boss, Terry de Jonckheere, then program director for full-size trucks.
The two were fascinated by what they saw. They had faced pressure to stick with the traditional lines that had made the F-150 a sales leader. High-level execs warned them not to butcher the company cash cow with a radical redesign. "Nothing that the company was doing represented more profit opportunity or sales volume," recalls Andy Sarkisian, who became the first marketing manager for the new F-150.
But Bulin's data drove home the fact that if Ford kept to the tried-and-true, baby boomers wouldn't buy it. "We realized we could offer a vehicle to a generation that might be dying off," recalls de Jonckheere. "This gave us courage not only to get off the diving board, but once we got in the water, to keep swimming." Bulin also won a key ally: In 1990, after Hagenlocker, then vice-president for truck operations, saw the approach, he boosted funding and backed it.
Sticking with the approach took some courage. Traditional truck buyers disliked some of Ford's softer designs in early consumer clinics in 1991 and 1992. Although boomers liked a rounded look that reminded them of minivans, ranchers and hardhats would have none of it. Under Ford's old development system, the criticism from traditionalists might have frightened the F-150 team into retaining an old boxy design. But the backup from Bulin's data helped the modern design win, says Hagenlocker. "This allowed us to stretch, and as we went along, stretching became more comfortable," he says.
JITTERS. Yet before the F-150 proved to be a home run, some top Ford executives wondered if the value groups strategy might push the all-important truck too far. And as the auto maker came under criticism for the unusual ovoid styling of the 1996 Taurus, executives grew even more jittery. "A lot of people reckoned we went too far," recalls Andy Jacobson, the F-150's design director.
But as F-150 sales have soared, so has Bulin's stock. Even though he didn't get asked to the June celebration, he's now getting plenty of invitations to share his secrets with Ford's product developers. And Bulin was recently asked to join Chairman Alexander J. Trotman and Hagenlocker for lunch on Aug. 7 to celebrate the F-150's success with the rest of the team. "Everybody's interested," Bulin says, chuckling. "They are warmed by the thing having actually proven itself." That may have surprised many at Ford, but not the guys who built it from the ground floor up.