Motorists repeatedly express their dissatisfaction
with servicing and their apprehensions
about buying cars under the present
selling setup. The anxieties and problems
they encounter during the auto buying and
maintenance processes are probably more intense
and widespread today than many years
ago. Yet the automobile companies do not
seem to listen to or take their cues from the
anguished consumer. If they do listen, it must
be through the filter of their own preoccupation
with production. The marketing effort is
still viewed as a necessary consequence of the
product—not vice versa, as it should be. That
is the legacy of mass production, with its parochial
view that profit resides essentially in
low-cost full production.
What Ford Put First.
The profit lure of mass
production obviously has a place in the plans
and strategy of business management, but it
must always
follow
hard thinking about the
customer. This is one of the most important
lessons we can learn from the contradictory
behavior of Henry Ford. In a sense, Ford was
both the most brilliant and the most senseless
marketer in American history. He was senseless
because he refused to give the customer
anything but a black car. He was brilliant because
he fashioned a production system designed
to fit market needs. We habitually celebrate
him for the wrong reason: for his
production genius. His real genius was marketing.
We think he was able to cut his selling
price and therefore sell millions of $500 cars
because his invention of the assembly line had
reduced the costs. Actually, he invented the assembly
line because he had concluded that at
$500 he could sell millions of cars. Mass production
was the
result
, not the cause, of his low
prices.
Ford emphasized this point repeatedly, but a
nation of production-oriented business managers
refuses to hear the great lesson he taught.
Here is his operating philosophy as he expressed
it succinctly:
Our policy is to reduce the price, extend the
operations, and improve the article. You will
notice that the reduction of price comes first.
We have never considered any costs as fixed.
Therefore we first reduce the price to the point
where we believe more sales will result. Then
we go ahead and try to make the prices. We do
not bother about the costs. The new price
forces the costs down. The more usual way is to
take the costs and then determine the price;
and although that method may be scientific in
the narrow sense, it is not scientific in the broad
sense, because what earthly use is it to know
the cost if it tells you that you cannot manufacture
at a price at which the article can be sold?
But more to the point is the fact that, although
one may calculate what a cost is, and of course
all of our costs are carefully calculated, no one
knows what a cost ought to be. One of the
ways of discovering…is to name a price so low
as to force everybody in the place to the highest
point of efficiency. The low price makes everybody
dig for profits. We make more discoveries
concerning manufacturing and selling
under this forced method than by any method
of leisurely investigation.
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