Defensive Strategy

The End of Mercury

28 May 2010  

Ford is killing off the Mercury brand.

This news is getting a lot of attention today, with a big article on the front page of the Wall Street Journal, but it shouldn’t be a surprise.  Mercury has been fading for years.

Indeed, the only notable thing here is just how long it took Ford to make the final decision.

Mercury is an old, well-known and famous brand.  But it is a brand that hasn’t been relevant for a long time.  What makes Mercury unique?  What makes Mercury special?  What is the difference between Mercury and Ford?  Nothing.

Supporting a brand is expensive; it needs consistent marketing support, new products, product improvements and customer service initiatives.  Without support, a brand will gradually fade away.

Ford hasn’t been investing in Mercury for a very long time.  Job #1 at Ford these days is fixing Ford.  With limited financial resources, Ford hasn’t been able to support to support Mercury.

I suspect Mercury survived as long as it did for two reasons.  First, killing off a brand is unpleasant and expensive.  You don’t just announce the decision and walk away; you have to unwind all the dealer relations, reassure current owners and liquidate the existing inventory.  This takes time and money.

Second, brands are emotional.  Some senior executives at Ford had a deep attachment to Mercury.  They fought to keep Mercury alive until there was absolutely no reason to believe the brand could come back.

It is sad to see an old brand pulled from the market.  But brands don’t always last forever and a cumbersome brand portfolio is a major problem.

Ford is making a difficult but very smart decision.

3 Responses

  1. DVI says:

    I’m not sure most Lexus owners I know would appreciate being equated with Buick. They tend to look down on Mercedes owners. Nevertheless, I wonder if Ford isn’t making a strategic mistake. They need something whose styling, performance, purchasing (dealer amenities) and owning experience (image) is higher than the Ford brand but not as expensive as Lincoln. Moving Lincoln down into the Mercury market risks tarnishing Lincoln’s image.

    It may be mostly ‘name-plate’ engineering, but how people perceive their lifestyle is in turn perceived by their friends and neighbors as expressed in their choice of automobile is still a powerful factor in the marketplace.

    Unfortunately, Ford didn’t invest enough to sufficiently differentiate Mercury over the last couple of decades. The styling seemed to be those drawings rejected for the flagship Ford brand and the dealers were cookie-cutter. They ended up competing with themselves.

  2. RJ says:

    I remember my mom’s Mercury Monarch. Quite a nice car, looked like a little Lincoln Continental. But given the much small market share Ford has today than in the 1970s, it doesn’t make sense to continue the brand. Ford should spend the money saved on Mercury to expand its lineup of Lincoln vehicles. Recent models are starting to get some of the old Lincoln panache back, the MKZ and MKT in particular. Ford needs to develop some high performance verison of its Lincoln line to directly compete with Cadillac, BMW and Mercedes Benz. Right now, Lincoln is more on the level of Buick or Lexus, luxurious but not particularly sporty. Than should be changed.

  3. […] This post was mentioned on Twitter by Kellogg School, Flavio Zanetti. Flavio Zanetti said: RT @KelloggSchool: End of Mercury #Kellogg Prof Tim Calkins gives us 2 reasons Ford's Mercury brand may have survive … […]

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