Ford Employee Discount Copying GM At A Cost To Ford

Ford Employee Discount Copying GM At A Cost To Ford

Ford announced its employee discount plan on July 6 which says all eligible 2005 model car or truck at the same low price that Ford employees pay. Ford employee discount plan was announced to counter the GM price war. Ford announced an extensive marketing campaign to push its Ford Employee discount plan to the public. It will be nice to see what are the costs of this renewed marketing campaign by Ford and GM.

GM announced an employee discount plan during June and its sales report showed a whopping 41 percent rise in sales volumes. Ford Employee discount plan was announced as a stop gap measure on July 6 and runs through Aug 1. It seems GM had something innovative in mind and bargained with the media firms including TV, web and dealers what the plan and the advertising costs. As GM being a big account media firms relented in their advertising pricing and provided more air time at the right slots. But Ford Employee discount plan which was announced in a haste environment doesn't seems to have all the advantages that GM had in negotiating the cost of advertising. Adding to the woes of Ford employee discount plan even Chrysler joined price war eventually making air time expensive for Ford to offer its Ford employee discount plan. Certainly the cost of adverting the Ford employee discount plan and with that of GM the gap is going to be at least 15% on the upside for Ford. It means if GM spends 20 million dollars on the media campaign, Ford has to spend 23 million dollars for the same media campaign. But GM had already reaped the advantages of being first and automotive experts are quite crossed to see how Ford employee discount plan will increase the sales volumes of Ford cars.

To conclude it costs more for Ford to offer its employee discount plan copying its competitors plus it doesn't have the advantages its competitors have put in their version of plans compared to Ford employee discount plan. Also Ford's calculation of costs in line with GM sales won't be right since Ford can never achieve the sales volume of GM and eventually spending 15% more on advertising is going to cost its bottom line heavily unless until Ford comes up with a souped up employee discount plan and counter GM a step forward rather than following it.