Once upon a time, Ford's (NYSE:F) Lincoln lineup had a huge hit with its Navigator, which helped drive Lincoln to the top of all U.S. luxury brands. That was roughly 15 years ago. The brand has since faded from relevance, and the entire Lincoln lineup was outsold last year by the Escape, three times over. That looks to change, sooner rather than later, and Lincoln hopes its 2015 MKC can be its next big hit. I think it can be, and using marketing's "four Ps," I'll show you why.
The first step to increasing Lincoln's sales, market share, and profits is the most obvious: Build a product people want to buy. One thing Ford has going for it is the hugely successful Escape that has turned from an American success story to a global one. Ford has plenty of consumer feedback and can take the positives from its Escape, the platform on which the MKC will be built, fix the negatives, and load the MKC with tech features and luxury parts to create a very premium small utility vehicle that won't be recognizable to the Escape.
Under the hood, the MKC will introduce the all-new 2.3-liter EcoBoost turbocharged four-cylinder engine that puts out 275 horsepower and 300 pound-feet of torque. The EcoBoost engine has proved to be an extremely popular option, with an 89% consumer take rate on the Escape.
The exterior shows off a sleek, stylish, and athletic look, with a unique grille that will help it stand out among competitors. The MKC's interior will boast high-tech offerings, with a blast of luxury styling down to the detail of plush leather, French stitching, and real wood trim. It also includes an all-new Lincoln steering wheel to make sure its driving experience can match its fancy looks.
The MKC will also offer collision warning with brake support, a lane-keeping system, and driver assist. For safety, the MKC was subjected to 5,000 virtual and real-world crash tests for a variety of conditions and even offers a blind spot information system. While this is only scratching the surface, the MKC looks to make a big impact in the market.
Take it from Jim Farley, executive vice president of Ford global marketing, sales, and service and Lincoln: "As a challenger luxury brand, entering this segment is a natural next step for us. MKC will do more than just compete -- it will change the way people think about Lincoln."
Ford and Lincoln announced that the base price of the MKC will start just under $34,000, including shipping. That positions the MKC nicely, as its price will come in roughly $5,000 lower than a German competitor, the BMX X3. It also positions the MKC as an entry level to the premium small utility segment, where sales are surging.
Let's look at this two different ways. First, the MKC is placed in a thriving segment, which will give it the necessary consumer audience to become a hit. Consider that the premium small utility vehicle segment is the fastest growing part of the luxury market and has grown more than 25% since 2012, and 200% since 2009.
It goes beyond having more consumers step up to the luxury segment as they age and increase their purchasing power. There's a downsizing trend happening. Many consumers are trading in their larger vehicles for smaller ones and have caused sales of smaller utility vehicles to thrive -- positioning the MKC for great sales potential.
In addition to the choosing a hot segment, the MKC will extend its reach to a faraway place, China -- already the world's largest automotive market, and still growing rapidly.
All of these marketing points are key, but promotion will definitely be something for investors to watch. At the beginning of the year, Lincoln's launch of the MKZ was a debacle, and its promotion during the Super Bowl fell on deaf ears as dealerships and consumers couldn't get the vehicle for months -- leaving sales figures that disappointed.
Aside from that, and beyond typical promotion, Ford and Lincoln are pushing dealerships toward redesigns. Lincoln has roughly 900 dealerships across the nation; however, 300 dealerships in the top 130 markets represent about 90% of luxury sales. Lincoln's Trustmark Design Plan has details down to what wine and cheese to serve customers, what luxury chair is offered, and what scents are wafting through the air. It's been accepted by 70% of the dealerships in the top 130 markets, and one-third have already completed the redesigns.
Ford's stock has been on a tear over the past 12 months, but having its Lincoln brand return to relevance would boost it even further. The dealership redesigns should be a huge help to improve Lincoln sales, and ultimately the MKC hits the sweet spot in all key factors for it to be Lincoln's next big hit. I believe it will be.