See that Ford has finally sold Volvo…
“Ford Sells Volvo To Chinese Car Maker Geely For $1.8bn”
Reported sale price is US$ 1.8 billion, but after Ford has to tip in money to the Volvo pension fund and cover other liabilities, they’re basically going to end up with nothing.
Ford bought Volvo in 1999 for US$ 6.5 billion.
In other words, Ford has taken a bath on this one.
The reality is that Ford has lost a lot more than $6.5 billion…
…because Volvo has been “persistently loss making” and Ford will have pumped significant amounts into the company to try and turn things around.
Now, there are probably many reasons for this debacle, but I’d suggest that a major factor will have been…
…the strategic blunder over the positioning of Volvo.
As an aside, I’ve just read Jack Trout’s newish book “Repositioning” so this whole topic is top of mind right now.
For many years Volvo owned a very clear position that can be summed up in one word…
…”Safety”.
Sure, the cars may have been dull and a little boxy, but if you wanted a safe, solid car…
…especially one that you knew would protect your family…
…Volvo was it.
But of course, this wasn’t enough, especially for the marketing geniuses at Ford.
Oh no.
You see, Volvo has always had something of a split personality. Because as well as their signature “safe” cars, they’ve always had a line of “sporty” cars as well.
If you’re old enough, think back to the 60s TV series “The Saint” starring Roger Moore. The Saint drove a very cool, sporty…Volvo!
The big problem with this, is that you can only have ONE position in the mind of the customer. You can’t be both “Safe” and “Sporty” (positions that are almost diametrically opposed).
And if you try to do this, then people are likely to get confused.
And as students of marketing and copywriting, we know that a confused mind doesn’t buy.
For years, Volvo concentrated on “Safety” and they came to own that position. In recent years, however, their marketing and advertising has tended to focus more on the “Sporty” side.
They didn’t completely abandon the original position but tried to have it both ways.
Result? Confusion in the mind of the marketplace.
And I’d suggest that was a big factor in their problems.
Effective Positioning can be hard and takes some spine to implement…
…but the alternative can be very costly indeed.