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Market Segmentation

Final Project - Group A

March 2022

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Team Members

Ram Kumar

Greg Hakanson

Aniket Manjrekar

Rajeev Devarahalli

Shreeyash Ghag

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Shreeyash

Greg

Ram

Aniket

Market Situation Problem Statement

Situation Comparison Secondary Research

Result Interpretation

Model Selection Research Method

Research Analysis Segments

Product Centric Forecast Recommendations Conclusion

Business Strategy

Recommendations

Segment Comparison

Multivariate Causal Model Data Analysis

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Consumers are moving from Gasoline to Electric Vehicles

Ford is revamping its production line from Gasoline to EVs

Ford has the highest market share in the pick-up truck market

With the release of the F-150 Lightning, it is crucial for Ford’s future success to target the right segment to sustain their market dominance

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MARKET SITUATION

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PROBLEM STATEMENT

The Electric Truck market is projected to grow by 73% from 2020 to 2026. Ford is planning to nearly double the production capacity of their F-150 Lightning pick-up. In a changing world from gasoline to electric, they are facing challenges in identifying the strongest market segment that would sustain their market dominance. By targeting the strongest market segment, they will see a 95% increase in their market share.

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Market Segmentation - Cluster Analysis
Statistical Analysis Software - Excel, R, JMP
3 Significant Clusters Identified

The U.S. truck market is saturated with competition. However, new opportunities for segment growth are available as electric trucks are introduced to the consumer market.

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MODEL SELECTION

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SOLUTION PROCESS

STEP 1

Collect Sales and market share data truck sales across United States

STEP 2

Price

Avg Income

Payload Capacity

Fuel Economy

Horse Power

Cluster Analysis

Performance

Cost

Niche

STEP 3

STEP 4

Correlation

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RESEARCH METHOD

DATABASE

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RESEARCH ANALYSIS

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CLUSTER ANALYSIS

S.No	Units Sold (3 year Avg)	Market Share	Price (in $)	Avg Fuel Economy (mpg)	Rating	Horse Power (hp)	Max Payload (lbs)	Avg Household Income (in $)
1	1742001	0.66	31496.67	19.67	4.8	331.67	2272.67	78333.33
2	430666	0.16	28250	18.5	4.6	222	1982.5	88235.5
3	459332	0.17	30766.88	19.38	4.78	290.88	1756.25	87093.25

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SEGMENT 1

Performance Truck Market

Models	Units Sold (3 Year Avg)	Market Share
Ford F-Series pickup	716667	27.23%
Ram pickup	528667	20.09%
Chevrolet Silverado pickup	496667	18.87%
Total	1742001	66.19%

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SEGMENT 2 - Cost (Utility Based)

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Models	3 year AVG	Market Share
GMC Sierra pickup	209333	7.95%
Toyota Tacoma pickup	221333	8.41%
Total	430666	16.36%

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SEGMENT 3 - Style (Niche Trucks)

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Models	3 year AVG	Market Share
Toyota Tundra pickup	94000	3.57%
Honda Ridgeline pickup	33333	1.27%
Nissan Titan/Titan XD pickup	29333	1.11%
Ford Ranger pickup	74333	2.82%
Jeep Gladiator pickup	49000	1.86%
Chevrolet Colorado pickup	93667	3.56%
Nissan Frontier pickup	58333	2.22%
GMC Canyon pickup	27333	1.04%
Total	459332	17.45%

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SEGMENT COMPARISON

Segment 1 (Performance-oriented) most likely uses their truck for work and also as their personal vehicle.

Lowest Income, Highest Prices, Highest Rating, Most Horsepower, Heaviest Payload

Segment 2 (Utility-based) has the highest income but the lowest cost. This segment is not using their truck for work, but as their personal vehicle.

Highest Income, Lowest Price, 2nd Heaviest Payload, Lowest Horsepower

Segment 3 (Style-focused) has the highest variability among all models. Indicating high customization. This segment attracts the most competitors.

Highest Competitors, 2nd Highest Income, 2nd Highest Price, 2nd Highest Rating

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MULTIVARIATE CORRELATION MODEL 1

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Horse Power has a High Positive Correlation with Price

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MULTIVARIATE CORRELATION MODEL 2

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Max Payload has a Moderate Positive Correlation with Market Share

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SITUATION COMPARISON

Market Share FY 2017-18

Maruti-Suzuki

52.3%

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SECONDARY RESEARCH

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RESULT INTERPRETATION

Segment 1 (Performance Truck Market) is the largest segment, without any presence of electric trucks. Making it the most attractive for the F-150 Lighting model.

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Product Centric Recommendations

Ford should position the F-150 Lightning for Segment 1 - The Performance Truck Market, potentially syphoning market share from other manufacturers as the early mover into the Electric Truck market

There is opportunity for the Ford Ranger to capitalize on Segment 2 - Cost (Utility Based) and Segment 3 - Style (Niche) depending on the product customization and price point.

The lower priced model of the Ford Ranger could target Segment 2 and the higher priced, more customizable model of the Ford Ranger could target Segment 3

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Business Strategy Recommendations

Focus on Innovators moving to Electric Trucks, and all the Imitators will eventually adapt

Prioritize high Horse Power as the technology improves to justify price point

Continue to maintain Max Payload model to sustain market share

Focus on current truck owners as they are going to lead the demand for electric trucks
Target the Gen Z/Millennial demographic as a potential target group for future growth
Continue to reassess market conditions in the fast changing future

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FORECAST

A total of 324,100 Electric Trucks is estimated to be sold by 2026

From our Cluster Analysis, we determined that 66.19% is the total market share for the Performance Truck Market (Segment 1)

If Ford focus on the Performance Truck Market Segment, they can sell 213,906 Electric Trucks in 2026

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CONCLUSION

Market segmentation is a highly effective strategy for Ford to deploy because it allows them to target the exact consumer segment that yields the most market share for Ford F150 Lightning and future EV truck market. Ford will sustain its position as an industry leader and continue to pioneer the electric truck market.

By nearly doubling the production of F150 lightning and targeting the strongest market segment, Ford can take the production to 300,000 units, then based on their market share Ford can probably sell 213,906 units by 2026.

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SOURCES

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