EDSEL

1. EDSEL
A Failure to Exercise Fundamental Business Principles
MGT 8040
Timothy Matthew Coleman
July 28, 2011

2. In 1957, the Ford Motor Company introduced a revolutionary experimental
automotive design called the Edsel. Some of the features included self-adjusting brakes,
electronic hood release, push-button controlled transmission and a radical grill design. The
decision by Ford to engage in such a far-reaching design was to gain a competitive advantage
with General Motors, by offering a mid-priced car to its line that it felt it was lacking.
Ford set out to market the Edsel by keeping it surrounded by a shroud of mystery and
suspense. They went to great lengths to create a buzz with such campaigns as “The Edsel is
coming” and creating “E-Day” E stands for experimental) referring to the unveiling of the
Edsel (Gauss & Skinner & Waterhouse & Ford & Snyder, 1997). Ford also used the
elements of surprise and anticipation to generate a heightened interest, hopefully leading to a
frenzied public demand. Ford even went as far as producing a television show called the
Edsel Show, which included many top celebrities of the era.
As the title proclaims, the rollout of the Edsel was an enormous failure. Ford’s initial
expectations for sales were in excess of 200,000. But instead, sales were a miserable 63,000
(Long, 2008). On the big unveiling of the Edsel on “E-Day”, over two million people
converged upon the Edsel dealerships to get a glimpse of this mystery vehicle. To Ford’s
dismay, the public was thoroughly disappointed and sales were bleak at best. As Edsel
dealers quickly discovered the lack of interest in the vehicle, many dealers began to abandon
their Edsel franchises. There were a multitude of reasons for Edsel’s huge disappointment, all
of which resulted in a huge monetary loss, as well as a loss of consumer respect for Ford.
Many experts believe that the leaders of Ford missed many important economical
and consumer-related indicators that ultimately led to the failure. Ford’s debacle with the
Edsel became a well known failure that, for many decades later, the word Edsel became
synonymous with failure. When the “press” discovered the widespread disappointment of the
public associated with the Edsel, they viciously attacked the vehicle in the media,
immediately destroying the mystique and perceived value of the vehicle that Ford had
committed so many resources to create.
The principal reason that Edsel's failure is so famous is that it failed despite Ford’s
investment of over $400,000,000 in its development (Libby101a, 2010). Apparently, it has
been theorized that Ford became arrogant due to their recent enormous success with the
rollout of the Thunderbird, and felt “bulletproof” in the market. With the large infusion of
capital from Thunderbird sales, Ford decided to fund the very expensive Edsel production,
building many Edsel dealerships around the country. In the mid 1950’s, as Ford began to
devise its plan for the Edsel, they decided to sell Edsel franchises that exclusively sold
Edsels. Ford solicited dealers from their competitors with the ability to become the first Edsel
dealers in the country. Ford successfully secured over five hundred new dealers who had to
commit over one hundred thousand dollars to obtain their franchises. Many of these same
dealers had either abandoned their new franchises of filed for bankruptcy within months of
the Edsel’s unveiling.
In an industry renowned for its incredible failures, the Edsel still holds the top prize
in that category. Although as mechanically sound as other Ford products, the car was
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3. criticized from the first viewing for being too ugly, too expensive and vastly overhyped
(wired.com). The design of the grill of the car, for example, was compared to a “toilet seat”
or worse, compared to the look of the female “sex organ”. In fact, comedian Bob Hope at the
time said the grill looked like a “Chrysler sucking on a lemon” (Troscalia, 2007). The Edsel
was viewed by the public as just another typical sedan with a Ford chassis. Although it
possessed a few modern gadgets, such as push button transmission on the steering wheel and
state of the art speedometer, it wasn’t enough to overcome all the bad publicity and inflated
hype.
The largest flaw of Ford’s was not in the design of the Edsel, but in their market
research. The design and planning stages were highly flawed also, but not to the extent of the
marketing debacle. For example, as mentioned previously, Ford designed the Edsel to fill a
perceived gap in their mid priced-range vehicle selection. Ford’s research indicated that there
would be an increased demand for this price-range, as a large percentage of a particular
demographic of the population would desire this level of vehicle. Their research also
indicated that they were losing their share of the market of people who were trading up to a
mid-priced range vehicle. Their research ended up being highly flawed and incorrect. Ford
failed to realize the realities of the market. In an effort to recover from the poor consumer
response, Ford budgeted an additional twenty million dollars to its marketing efforts
(Libby101a, 2010).
Ford had hired a marketing expert who collaborated with Columbia University to
perform consumer research to determine a “personality profile” for the Edsel. The survey
asked very general questions about what consumers thought of the various auto makes
currently on the road. The major flaw with this research endeavor was that it didn’t include
specific questions regarding pricing preferences and cost of annual maintenance etc. In
effect, their research didn’t provide any substantial information regarding the specific wants
or needs of customers.
The pricing structure of the Edsel was another failing of Ford’s. The Edsel was
intended to fill the gap, as previously mentioned, between the cheaper Fords, such as the
Fairlane, and the more expensive Ford lines, such as Lincoln and Mercury. The problem was
that the basic Edsel model was priced about seventy dollars less than lower category Ford top
end model, while the fully loaded Edsel cost slightly more than the Mercury in the luxury
category. This structure violated the low and high end categories, creating competition within
Ford’s own product lines.
Although the largest flaw was in the marketing of the Edsel, a close second big flaw
was in the appearance of the vehicle Ford’s first big mistake was to create a separate division
for the Edsel, but did not erect a separate manufacturing facility to assemble these vehicles,
instead using existing Ford assembly lines. This created frequent disruptions in the flow of
the assembly line, leaving the line workers to have to perform frequent resets. The workers
resented this intrusion and, as a result, took less pride in their work on the Edsel. It was also
suspected that some workers deliberately sabotaged the Edsels along the line as retaliation.
There was also a serious disconnect between parts suppliers for the Edsel and Ford’s
assemblers. Frequently, parts were sent to the plant from distributors that were not built to
exact specifications As a result, many Edsels were sent to showrooms with notes attached to
the steering wheels, listing missing parts. In some cases, parts that assemblers could not
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4. attach due to time constraints were placed in the trunk by the plant workers, with instructions
on how to attach. In most cases, dealerships had no idea how to assemble these extra parts
due to its radical design. So the vehicles would be sold as is. In addition, most mechanics
were not able to repair an Edsel when it experienced a mechanical failure with the new
technology.
Edsels were arriving at the dealerships with ropes wrapped around doors and bumpers
to hold them together. It was also reported that the vehicle’s trunk would unexpectedly open
when the transmission control buttons on the steering column were pressed or that the hood
ornament might fly off at speeds above seventy miles an hour (Troscalia, 2007). Apparently,
the Edsels were being rushed through the assembly line in an effort to meet their introductory
deadlines this resulted in a tarnished reputation of the vehicles from the start, leading to
reduced sales.
One big economical factor that Ford missed was the oncoming recession in the late
1950’s. In fact, the Edsel rolled out during the beginning of the recession, significantly
curbing sales. Ford completely ignored or missed the fact that auto sales, in general, during
this period had steadily been decreasing significantly.
Ford also missed the growing trend of consumers who were moving away from the
enormous winged vehicles, to smaller more conservative ones. The Edsel was the epitome of
the traditional gas guzzling oversized vehicles that were becoming obsolete at the time. In
addition, another blunder Ford made was that they rolled out the 1958 Edsel in the Fall of
1957, while the 1957 model year for all vehicles were being liquidated at greatly reduced
prices at the same time, to clear the way for the new model year. It also didn’t help matters
that the Edsel offered eighteen different models to choose from, which led to consumer
confusion and frustration.
Still, another flaw with the Edsel was in the name itself. Edsel was the name of Henry
Ford’s only son, Edsel Ford. In spite of the fact that Ford’s marketing department submitted
thousands of possible names for the vehicle, Ford’s Chairman ignored all of them and opted
for Edsel. Comments at the time compared the name to “weasel” or “deadcell” (dead battery)
(Cashberry, 2006). In other words, the general public saw this name as a negative attribute,
contributing further to declining sales.
It is unfortunate that Ford failed on such an historic magnitude with the Edsel brand.
It is clear that they failed to properly analyze and determine the desires of the general public,
and built a vehicle that met their (corporate) needs, and then tried to convince the public to
buy it, rather than building a car the public was looking for. It seriously violates one of the
basic tenants of Six Sigma whereby, you perform strategic analysis that is driven by the
market and the customer. In addition, Ford failed to coordinate with their supplier network
to ensure quality control at the suppliers’ plants and with the parts that were being accepted
without proper inspection at Ford. The bottom line in this case is that Ford allowed there own
arrogance to take precedent over the basic business fundamentals that were grossly
neglected. The end result: Edsel only survived three years in production. In terms of today’s
dollars, Ford lost approximately two billion dollars on the Edsel experiment (Troscalia,
2007).
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5. References
Cashberry (2006). Classic Brand Failures: The Ford Edsel [online]. Available:
http://brandfailures.blogspot.com/2006/11/ford-edsel.html (July 23, 2011).
Ervin, Kathleen A. (2001). Failure Magazine Examines the History of the Edsel [online].
Available: http://www.edsel.com/reviews/failure.htm (July 23, 2011).
Gauss, J., P. Skinner, R. Waterhouse, E. Ford, J. Snyder (1997). The Edsel Pages [online].
Available: http://www.edsel.com/pages/edsel58.htm#TOP (July 23, 2011).
Hamer, Tony, Michele Hamer (2011). The Edsel: A Legacy of Failure [online]. Available: http://
classiccars.about.com/od/classiccarsaz/a/Edsel.htm (July 23, 2011).
Libby101a (2010). Edsel: The Big Failure [online]. Available:
http://hubpages.com/hub/Edsel-The-Big-Failure (July 23, 2011).
Long, Tommy (2008). Sept. 4, 1957: Short, Unhappy Life of the Edsel [online]. Available:
http://www.wired.com/science/discoveries/news/2008/09/dayintech_0904 (July 23, 2011).
Troscalia, Carroll (2007). Ford’s Edsel car – The Big Fin Failure of the 50’s [online].
Available: http://www.suite101.com/content/edsel-fords-fabulous-57-failure-a30989 (July
23, 2011).
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