Ford Motor Company was the first American company to capture the market for a mass-produced sports car with its introduction of the Mustang.
Ford Motor Company sold 418,812 Mustangs between April 17, 1964, and April 16, 1965, a record for sales of a single vehicle model during one production year. During the first two years of Mustang sales, Ford generated net profits of $1.1 billion on Mustang sales alone. The phenomenal sales of the Mustang represented the culmination of marketing research and inspiration by Lee Iacocca, general manager of the Ford Division during the 1960-1965 period. Through his efforts, Iacocca became known as the “father of the Mustang.”
When Iacocca was promoted to the position of general manager in 1960, he inherited a new vehicle known as the Cardinal, which was still in development. Creation of the Cardinal had been authorized by Robert McNamara, Ford Motor Company’s president. One of Iacocca’s first tasks was to review the status of the Cardinal’s development. Iacocca’s general impression was that the Cardinal was not suited for the times. He believed that the car had great potential for the European market, given its small size, V-4 engine, and front-wheel drive. Although its fuel economy was expected to be exceptional, Iacocca believed that the American market was not especially concerned with fuel efficiency. He also thought that the styling was too plain and simple for an emerging youthful generation.
Iacocca convinced Henry Ford II, Ford’s chairman of the board, and the company’s board of directors that the Cardinal was not going to appeal to the American market. The board agreed to stop development, and the company essentially wrote off the $35 million already invested in the project. Having canceled Ford’s only developmental vehicle, Iacocca formed what he informally called the Fairlane Committee
Key members of the Fairlane Committee included assistant general manager Don Frey
General Motors was selling its Chevrolet Corvair
Another factor to be considered was the quickly changing American population base. Millions of teenagers born in the baby boom that followed World War II were about to enter the national marketplace. The twenty-to-twenty-four-year-old age group would increase more than 50 percent during the 1960’s. In addition, young adults between the ages of eighteen and thirty-four would account for at least half of the huge increase in car sales that was predicted for the automobile industry in the next ten years. Researchers had determined that college-educated people bought new cars at a much higher rate than those without college educations. Predictions indicated that the number of college students was going to double by 1970.
Another consideration brought out by research was the fact that the number of two-car families was growing at an accelerated rate throughout the country. The number of such families had increased from about one million in 1959 to approximately thirteen million in 1962-1963. In such families, the second car was proving to be smaller and somewhat sportier than the first car. Studies also showed that greater numbers of women were buying cars and that they preferred small, easy-handling vehicles. Single baby boomers also began buying their first cars, and their cars tended to be smaller and sportier than those bought by married couples. Another factor emerging from the tremendous population growth was the increasing wealth and buying power of younger people.
Each of these considerations appeared to demonstrate that the marketplace was changing and that the consumer base was becoming younger, better educated, and more discriminating in vehicle styling and appeal. The Fairlane Committee concluded that rather than providing a product in search of a market, Ford had an opportunity to take advantage of a market in search of a car. The committee decided that the vehicle Ford needed had to have great styling, strong performance, and a reasonable price.
The committee design criteria called for the creation of a small car—but not too small. Although the market for two-seat cars was growing, the maximum sales for such cars appeared to be limited to approximately one hundred thousand cars year; a two-seater would never have mass appeal. It was therefore decided that the new vehicle would need four seats. To ensure adequate performance in factors such as speed and handling, it was decided to limit the car’s weight to twenty-five hundred pounds. The final factor was cost. Realizing that younger consumers had relatively little ready cash to tie up in transportation, the committee aimed to sell the proposed car for no more than $2,500.
The intention of the Fairlane Committee was to produce a car that would appeal to several markets at the same time. The production strategy was to develop one basic car with a wide range of options. Customers could buy as much economy, luxury, or performance as they wanted and could afford.
By late 1961, the Fairlane Committee had set a target date for introduction of the proposed vehicle. It was decided to promote the car at the New York World’s Fair in April, 1964. In the late summer of 1962, a design by Dave Ash
From the day of its introduction, the Mustang produced unprecedented sales. In one year, Ford sold 418,812 units, an all-time record for a single-year production line. The promotional events and research that went into the introduction of the Mustang would prove to have long-lasting effects on the automobile industry.
One of Ford’s first-of-a-kind promotional efforts was to purchase television advertising
The Mustang was unveiled on its target date, set several years earlier by Iacocca’s Fairlane Committee in Detroit, at the New York World’s Fair. In addition, the model 2 was released at Ford dealerships across the country. Such a springtime introduction of a new vehicle model was a first for the automobile industry; previous new model introductions by the major U.S. car makers had always occurred in the fall.
On April 17 and 18, more than four million curious car enthusiasts paid visits to their local Ford dealerships to view the unleashed Mustang. It is estimated that Ford salespeople wrote more than twenty-two thousand orders for vehicles on introduction day alone. Eight months into production, Ford had manufactured 250,000 Mustangs, and demand was still greater than supply.
Ford applied basic marketing principles well in the development and promotion of the Mustang. The product was superbly designed to capture the attention of prospective buyers; one award bestowed on the Mustang was the gold medallion Tiffany and Company award for Excellence in American Design, the first ever presented by Tiffany for a specific product. The Mustang was also obviously in the right place at the right time. The targeted market, America’s younger car buyers, proved eager to purchase a product that exemplified youth, glamour, status, and economy, wrapped in an attractive package. The car’s price was equally appealing to the burgeoning youthful market.
All the advertising and promotion for the Mustang emphasized its price of $2,368. This pricing level drew immediate attention from potential buyers. During the developmental stages of the Mustang, Ford researchers found that few consumers believed that such a car would or could be offered at the relatively reasonable price quoted. Finally, Ford did an excellent job of promoting the Mustang. As early as February, 1964, for example, the Chicago-Sun Times reported that Ford was going to introduce its newest model in mid-April, already identifying it as the Mustang. Such reporting did not occur by chance; Ford had placed strategic tips and dropped appropriate rumors in the right places. The unveiling of the Mustang at the New York World’s Fair thus drew tremendous public attention. In addition, the pre-planned television, newspaper, and publications blitz ensured nationwide exposure for the Mustang.
Ford also catered to the college-age population by hosting numerous campus events. During late 1963 and early 1964, Ford established a separate department to handle youth-market activities. Frank Zimmerman devised some of the strangest promotions by any car manufacturer ever, including a campus “Folk and Jazz Wing Ding.” At each school, Ford would pick up the tab for the show and then split the proceeds with a student organization. Other youth activities included hot-rod shows, airline stewardess panels, teen fairs, and a national Miss Smile contest.
The success of the Mustang was the result of years of research, planning, and promotion. Few car models have enjoyed the popularity and mass appeal of the Mustang.
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Abodaher, David. Iacocca. New York: Macmillan, 1982. Abodaher provides a good biography of Lee Iacocca and presents the key events of his spectacular career. The discussion spans both Iacocca’s tenure with Ford and his association with the Chrysler Corporation. -
Brown, Robert. “The Careful Breeding of a Mustang.” Sales Management 94 (January 1, 1965): 30-33. Brown discusses the fantastic success of the Mustang and identifies the key marketing strategies used in the car’s promotion and marketing. -
Collier, Peter, and David Horowitz. The Fords: An American Epic. San Francisco: Encounter Books, 2002. A history of both Ford Motor Company and the family that founded it. Bibliographic references and index. -
“Ford Division Will Launch Its Cars Soon with Stepped-up Ad Program.” Advertising Age 34 (September 9, 1963): 6-7. Addresses Ford’s promotional efforts, including increased spending for magazines and newspapers, cutbacks in network television and outdoor advertising, and a return to spot radio advertising. -
“Ford Mustang Gets Three-Network Exposure.” Broadcasting 66 (April 20, 1964): 42-43. Discusses the first advertising campaign to broadcast simultaneously on the three major television networks, for the introduction of the Ford Mustang. -
“Ford Soups Up Its Youth Drive.” BusinessWeek, January 4, 1964, 32-34. Discusses Ford’s attempt to target the younger generation for potential sales. Describes promotional events sponsored by Ford at colleges, raceways, and teen fairs across the country. -
“Ford Turns the Mustang Loose.” BusinessWeek, April 18, 1964, 152-154. Discusses the introduction of the Mustang on April 17, 1964, at Ford dealerships across the country. Addresses the Mustang’s styling and pricing. Describes Ford’s various promotional activities and competition with other automobile manufacturers. -
Iacocca, Lee. Iacocca: An Autobiography. New York: Bantam Books, 1986. Iacocca discusses in great detail the creation and production of the Mustang. The chapter concerning the Mustang identifies key people involved with the project and the chronology of the events leading to the ultimate success of the automobile. -
McCormick, John. “Engineering an Icon: Power Galore and Nimble Suspension Get Fabled Pony Car Off to a Gallop.” Automotive Industries 184, no. 6 (June, 2004): 38-41. Brief but detailed look at the engineering behind the Ford Mustang. -
Wyden, Peter. The Unknown Iacocca. New York: William Morrow, 1987. An excellent biography of the key figure in the Mustang’s development.
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