Correlation between Sales Increase and Digital Advertising in Ford Motor Company - Research Paper Example

Correlation between Sales Increase and Digital Advertising in Ford Motor Company Productadvertisement forms a major component towards the sales success for most companies. The research conducted aims at assessing the impact of digital advertising on sales of Ford Motor Company. The scope of the study involved determining the sales that were made by the company because of digital advertising using a prescribed survey method. Obtained data was stored in a database. The result indicated that most of the sales made after a digital advertisement were from clients who learned about the products from the digital platforms. Consequently, digital advertisement increases the sales of a company. Table of Contents 1. INTRODUCTION 7 1.1 Background information 7 1.2 Formulation of the Research Problem 8 1.2.1 Research question 8 1.2.1 Research Hypothesis 8 2. LITERATURE REVIEW 8 2.1 Correlation between Advertising Dollars and Sales Volume 9 2.2 Fiords Online marketing strategy success 10 3. SAMPLING AND DATA COLLECTION PLAN 10 4. RESULTS AND DISCUSSION 12 4.1 Descriptive Statistics 12 4.1.1 Digital Advertising 12 4.1.2 Sales 12 4.2 Descriptive Statistics Interpretation 13 4.2.1 Digital Advertising 13 4.2.2 Sales 13 5. CONCLUSION 13 6. RECOMMENDATIONS 13 6.1 Challenges and minimizing them 14 6.2 Future Research 14 References 15 Appendices 17 List of Tables Table 1 Digital Advertising 12 Table 2 Skewed Distribution 12 Table 3 Raw analysis Data 17 Table 4 Descriptive Statistics 20 List of Figures Figure 1 Ford’s Sales in US dollars 18 Figure 2 Used Digital advertising 18 Figure 3 Histogram showing Ford’s sales 19 CORRELATION BETWEEN SALES INCREASE AND DIGITAL ADVERTISING IN FORD MOTOR COMPANY 1. INTRODUCTION Ford is an American automaker, and the fifth largest automaker, according to worldwide vehicle sales. It has an immaculate line of vehicles, ranging from cars and trucks, which are among the best selling vehicles in the world. Ford has one of the strongest product lines ever, and based on consistent and continued strong sales, their demand keeps coming, and the Ford brand continues to get stronger. Ford has placed lots of focus on relationship building, and growing as an industry leader in the automotive world and continues to place special emphasis on changing the behaviors, attitudes, culture, and ideology of the organization, to ensure Ford Motors has the best interest of the consumer. Over the years, Ford has learned the importance business perception from the perspective of the customer that result in improved services, and new businesses from new consumers (Collier, 1987). 1.1 Background information Ford Motor Company launched an online marketing plan that constituted the use of digital platform to engage its customers in 2008 (Hoffman, 2012). It contracted online marketers such as Scott Monty and other web based advertising agents to implement its digital marketing plan. Part of Ford Motor Company’s plan was to market through social media sites such as Twitter, Facebook, and YouTube. Ford spent 25 percent of its resources allocated for advertisement on digital advertising in 2009 and 2010. It recorded an increase in sales of 22 percent, twice the industry’s growth, in 2010- three years after it launched digital advertising plan (Woodall, 2010). Besides its increased sales, Ford Motor Company gained high consumer perception. In 2008, Ford’s brands were trending highest among its competitors in perceived quality, based on reports by ALG (Woodall, 2010). Ford applies the conversation index, which is a propriety tool designed by agencies contracted to implement Ford’s online advertising strategy to measure returns from digital advertising. It compares consumers’ frequency of mention of Ford and its major competitors such as Honda and Toyota. 1.2 Formulation of the Research Problem Ford Motor will be used as a basis to explore the research topic. There are many conversations, research surrounding social media, and its impact on business. Marketing is a business problem that plagues many business owners. Ineffective marketing can affect a companys bottom line. Social media marketing and its correlation to sales will be explored in this research paper. 1.2.1 Research question Is there a correlation in sales increase (DV) based its digital advertising (IV)? 1.2.1 Research Hypothesis Ho: There is no correlation in sales increase (DV) based on its digital advertising (IV). H1: There is a correlation in sales increase (DV) based on its digital advertising (IV). 2. LITERATURE REVIEW Barkholz (2014) indicate that Ford continues to build on this plan, as ONE Ford demonstrates focus, teamwork, and a single global approach, ensuring employees are aligned with the many efforts toward the success of the company as it push to continue it’s great marketing campaign. According to Ford (2012), in January 2014, Ford made a large financial commitment on digital advertising, joining the likes of Chrysler, Scion, and others that have launched similar programs, in order to increase their digital advertising and take full advantage of changing the behaviors of shipping patterns. Although studies indicate 9/10 conduct some sort of research online, as 2 out of 3 visits the dealer direct website through Google. He further explains that Ford continues to push and implement the ONE Ford plan to thrive through the competitive automobile market. 2.1 Correlation between Advertising Dollars and Sales Volume Social media such as Twitter, Facebook, You Tube, and blogs increase the Ford Motors’ sales (Ford, 2012). The growth of Smartphones and tablets has promoted social media and digital marketing. The company finds the digital platform very instrumental as they try to create awareness about their new products. Using the fiesta Movement in 2009 as an example, the company gave the new Ford Fiesta to 100 customers to drive and talk about it through the social media for six months. In 2010, Ford became the first company to skip the auto show and directly to their clients to reveal all the Ford products on Facebook. As a result, the company recorded a tremendous increase in sales of its products more than it had been experienced earlier. Remarkably, the fiesta movement rejects the Ho hypothesis and accepts the H1 hypothesis. According to Robyn (2004), the launch of the roadblock ad was widely successful that Ford site registered 3,800 hits per second that just sent the servers crashing. The strongest correlation with sales came from the online searches that were made by online buyers that used roadblock ads defined by Briggs magazine as “the ultimate opt-in (Robyn, 2004)”. With only 6 percent reach to its customers through the digital platform search, 3% of the buyers were those who used the digital platform or searched and received information about particular products through digital media. This research also indicates that, people who have used these searches to find Ford Trucks online, are more than 4 times as likely to buy them than people who haven’t search the trucks online (Robyn, 2004). In addition to the marketer-directed roadblocks and other online ads, there were other consumer directed actions used via the digital media that increased reach and sales of the Ford products. Magazines such as Briggs noted that, visits to the Ford sites had a strong correlation with sales. The same research indicated that, visits to the truck pages registered a moderate correlation with sales, while visits to the auto sites had a weak correlation with sales (Andy & Alisa, 2010). This shows that consumers visiting the ford sites are making actual purchases indicating a correlation in sales increase (DV) based on its digital advertising (IV). 2.2 Fiords Online marketing strategy success MotionPoint Corporation (2014) indicates that the Company has been attracting their customers with a remarkable and progressive digital marketing strategy for the last three years. The company has a commitment with creating resonant relationships with their consumers, resources, and hiring online-savvy marketers (MotionPoint Corporation, 2014). Many brands want to be “liked” on Facebook, Twitter, Instagram, Tumblr and Youtube as well as most other platforms, which allow consumers to connect directly. Digital marketing has attracted diversified customers, which have allowed them to embrace a more accessibility and transparency strategy. Consumers are spending more time on mobile smart phones or surfing the net more than they are watching TV (MotionPoint Corporation, 2014). Ford’s marketing chief Jim Farley states that he feels the company’s money is spent more efficiently online promotions such as social media, rather than those played during the Super Bowl (MotionPoint Corporation, 2014). The goal for promoting on social media is to be able to break into the world of people on internet sites, which also allows the understanding of the public’s perception of the Ford brand, and if the vision need to be changed. 3. SAMPLING AND DATA COLLECTION PLAN 3.1 Sampling Random sampling is a sampling technique where each item in the universe has an equal probability of being selected for a study. In most cases, it is difficult and expensive to study a population as a whole, therefore, the need for sampling. A sample should always portray the population being studied; hence, appropriate planning is critical prior to the sampling process (Babbie, 2013). Ford Motors has invested a very huge amount of money in research and development and it is now one of the highest investors in research and development (Robyn, 2004). Ford Motors, the 5th largest automaker in the worldwide, introduced online marketing in 2008 and since then its sales have been steadily increasing. In 2010 sales increased by 22 percent (Ford, 2012). Consequently, the research was precise in picking the sample population the following formula is used (Kube & Johnson, 2008). Sample Size = (Z score)2-std Dev*(1-Std Dev) / (margin of error) 2 The sample group was selected randomly giving each element of the population an equal opportunity of being selected to ensure the validity, A large sample size ensured representativeness of the data and hence reliability. This is because other researchers doing the same research and using a different sample will get similar results (Kothari, 2004). The sample size of 384 people used was a perfect representation of the population, Using simple random selection and the survey method was the best fit conducting the research. 3.2 Data collection method The research used the survey method to collect data, which was used to answer the research question. The survey asked basic demographic questions (age, race, sex) as well as the type of vehicle (year, make, model) they purchased and where they purchased their vehicle. The data was collected from a database and the subjects protected because no personal information was used. Every customer was assigned a number in the database. Information received was stored in the company’s database to ensure security and availability for analysis (Kothari, 2004). Statistical analysis was carried out on the data to test the hypothesis and reach conclusion. 4. RESULTS AND DISCUSSION 4.1 Descriptive Statistics 4.1.1 Digital Advertising Table 1 Digital Advertising Central Tendency: Mean = 64 Dispersion: Standard Deviation = 29.75903224 Number: 384 Min/Max: 25 and 101 Confidence Interval: 31.23018904 See scatterplot in Appendix B, and descriptive statistics in Appendix C. 4.1.2 Sales Table 2 Skewed Distribution Central Tendency: Mean = 1447500 Dispersion: Skewness = 1.259723352 Number: 10780000 Min/Max: 750000 and 3535000 Confidence Interval: N/A Refer to scatterplot in Appendix B, and descriptive statistics in Appendix C. 4.2 Descriptive Statistics Interpretation 4.2.1 Digital Advertising Variable one is the customers who purchased a Ford vehicle using digital advertising. In testing the hypothesis, the individuals were given closed ended questions, with Yes or No answers. Results showed that around 25 to 101 cars were purchased using digital advertising between years of 2008 and 2013. The average amount of cars purchased was 64. There was a 95% confidence level that the average population of cars purchased is around 31. 4.2.2 Sales Variable two is Ford’s sales from the purchase of vehicles using digital advertising. Six years were selected for the study of company sales trend (from 2008 to 2013). The average sales recorded for the years were $1796667.00 with a variation of plus or minus $10000. The total sales were 10780000. There is a 95% confidence level that the average sales range was $750000 to $3535000. The data was significantly skewed. 5. CONCLUSION Objective of the study was to investigate whether there was an increase in sales of Ford Motor Company cars with proper digital advertising. Given the findings, the Confidence Level for both digital advertising and sales 95%; hence, rejecting the Ho hypothesis and accepting the null hypothesis (H1) hypothesis that there is a correlation in sales increase based on its digital advertising. It is clear that an increased efforts in digital advertising lead to higher sales. 6. RECOMMENDATIONS Given that the results indicate that Ford‘s sales increased with increased digital advertising, it would be commendable for the company to invest more on marketing its product through the digital platform. Additionally, Ford should come up with online software that allows potential client to pay or the products online, which will promote purchase of its products even from clients who cannot access Ford dealers where they will receive the product through shipping and other means of transport. 6.1 Challenges and minimizing them A major challenge that faced the research was the lack of credibility of the answer received from the clients who used the digital platform to access the Ford products. In future, possible way to minimize the lack of credibility from the online data is through using tracking devices on the vehicles sold through digital advertising 6.2 Future Research The study gives a base for future studies to research on the sales increase brought about by digital advertising in comparison to the increase from media services advertisements such as TV has and Radio stations. References Andy, B., & Alisa, D. (2010). Regression Model Building with MS Excel: Using Excel’s Multiple Regression Tool to Explore the Correlation Between Advertising Dollars and Sales Volume. Journal of Applied Business and Economics , 1-9. http://www.na-businesspress.com/jabe/jabe111/bertschweb.pdf Babbie, E. (2013). The Practice of Social Research, 13th Ed. Belmont: Wadsworth Cengage Learning Inc. Barkholz, D. (2014). Ford pushes dealers toward paid search, digital advertising. Retrieved http://www.autonews.com/article/20140210/RETAIL03/302109985/ford-pushes-dealers-toward-paid-search-digital-advertising Collier, Peter; Horowitz, David (1987). The Fords: An American Epic. Summit Books. p. 263. Ford. (2012). People-Sustainability 2011/12. Corporate Journal of Ford Motors , 62-63. http://corporate.ford.com/doc/sr11-people.pdf Hoffman, B. (2012). American Icon: Alan Mulally and the Fight to Save Ford Motor Company MotionPoint Corporation. (2014). Ford Motor Company Uses Online Marketing Strategy To Boost Image, Profits. Retrieved August 5, 2014, from http://www.motionpoint.com/company/web-localization-news/motionpoint-news-2010/651-ford-uses-online-stragety-to-boost-profits.htmlWilcox, R. R. (2012). Introduction to Robust Estimation and Hypothesis Testing Statistical modeling and decision science. Waltham: Academic Press. Robyn, G. (2004). Ford-F150 Drives Away With Online Success. ClickZ Marketing News and Expert Advice , 1-4. http://www.clickz.com/clickz/news/1712283/ford-f-150-drives-away-with-online-s Woodall, B. (November 1, 2010). Ford bets big in digital marketing departure. Reuters. Retrieved on July 28, 2014 from http://www.reuters.com/article/2010/11/01/retire-us- ford-marketing-idUSTRE6A05DR20101101 Appendices Appendix A: Raw data used in the analysis Table 3 Raw analysis Data Used Digital Advertising to purchase Sales (In US Dollars) 2008 25 750000 2009 41 1435000 2010 52 1300000 2011 73 1460000 2012 92 2300000 2013 101 3535000 Appendix B: Charts and Tables Figure 1 Ford’s Sales in US dollars Figure 2 Used Digital advertising Figure 3 Histogram showing Ford’s sales Appendix C: Descriptive Statistics Table 4 Descriptive Statistics Used Digital Advertising to purchase   Sales (In US Dollars)   Mean 64 Mean 1796666.667 Standard Error 12.14907404 Standard Error 402553.6541 Median 62.5 Median 1447500 Mode #N/A Mode #N/A Standard Deviation 29.75903224 Standard Deviation 986051.0467 Sample Variance 885.6 Sample Variance 9.72297E+11 Kurtosis -1.689710771 Kurtosis 1.514758532 Skewness 0.001365985 Skewness 1.259723352 Range 76 Range 2785000 Minimum 25 Minimum 750000 Maximum 101 Maximum 3535000 Sum 384 Sum 10780000 Count 6 Count 6 Read More