Death of a Brand

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Ok.. The ubiquitous disclaimer - The following are my words only and not at all affiliated or endorsed by my employer.

Some have asked about the scuttling of the Mercury brand. If you care about the North American auto industry, you probably know that a few years ago, GM ended production of its Oldsmobile line. Earlier this year Ford Motor decided to do the same and officially end its longstanding Mercury product lineup.

I say officially, because it could be said that the Mercury brand was dead for several years prior to the official announcement. Why did Mercury die a slow death?

  • Product Differentiation
  • Complexity
  • Poor Demand

Perhaps the most obvious was the lack of differentiation between blue oval products. Arguably, this differentiation problem was a marketing decision and not an engineering one.

Complexity is always problematic when you are running a lean shop. The product development factory has drastically shrunk in size since downturn in the economy. The number of vehicles sold in North America has reduced considerably. Vehicle sales in North America have dropped to roughly 9 - 11 million over the past three years.  Since the demand for products have drastically decreased it only makes sense that brands that are not profitable be dropped.

Now lets look at some engineering challenges. Commonization is a term that is tossed around a great deal in PD factory. In layman's terms it means eliminate redundant parts. Utilize a common architecture whenever feasible. That is a common sense way of mandating that product development and manufacturing work from a common platform. Additionally, re-use the same fasteners, Powertrain components, stuff the customer will not see.  Though it sounds logical, execution of this concept is not quite that simple.  When you are trying to support the vision of three distinct brands, ie Ford, Lincoln, Mercury, people assume that there really must be a tremendous different between the brands.  Marketing sells this vision daily in its advertising campaigns, as a result engineering must deliver on that promise.  So you end up with unnecessary replicates of parts which serve the same functions, ie mirrors, visors, seat trim, etc.  Basically it really becomes waste when the customer is not getting additional value.  If customer are not willing to pay more for this differentiation, then you're wasting money. Who can afford waste in an ultra competitive landscape?  Besides the cost of managing multiple part numbers, you also have to store and sequence these parts. 

Because assembly plants have a finite amount of space on its manufacturing floor, OEMs typically outsource the handling of the parts to a third party.  This off-line handling is called sequencing. Once this third party handles the parts they are sent into the assembly plant for installation. All of this adds cost to the parts used to assemble a vehicle.

Now that "organic" demand for vehicles are down due to a very soft economy. We cannot consider "cash for clunker" sales because that generally distorts the real picture for demand. Consumers generally want a compelling value proposition when making a huge expenditure. If the perception is that Mercury looks and feels very much like the blue oval product you cannot expect incremental sales. Particularly in a down economy.

Lastly, there is the Lincoln brand that frankly needed attention.  Mercury essentially diverted resources that were sorely needed in the revitalization of the Lincoln brand. There are probably other reasons, but these appear to be the most obvious.  As the OEM attempts to absorb market share it cannot afford waste in any capacity.  Thus far, it seems to be making the more prudent moves when compared to its closest competitors. Time will tell..

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    This page contains a single entry by AG published on October 5, 2010 3:29 AM.

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