The Edsel case summary

The Edsel

Edsel was introduced in the US market in 1957 to fill the gap in the Ford Motors inventory in the medium-price range cars. It was introduced on a grand scale amidst much hype and secrecy on September 4, 1957.

A lot of planning and research had gone into the production of the Edsel. Over $250 million were spent on the development over a 10 year period. Another $50 million was spent on advertising. A separate division was established for distributing Edsel and 1200 new dealers were carefully selected to handle only Edsel distribution.

Edsel had a number of unique features such as push-button transmission, push-button hood and trunk lid and push-button parking brake lever. The external design included a unique vertical front grill. It was a large and powerful car with a 345 horsepower engine. Despite all these features and grand plans, Edsel was a spectacular failure.

Edsel’s failure can be attributed to a number of factors, some of which were outside the control of Ford’s management. Edsel’s introduction coincided with the economic recession of 1958. When Edsel was planned, the market for medium-priced cars was growing. However, by the time it was introduced in 1957, the trend was changing to economy cars and small foreign cars.

Another exogenous factor was the signing of the agreement with National Security Council in 1957 against advertising of power and performance. Edsel was designed to be a high performance, powerful car, designed to handle high speed. However, these qualities could not be advertised. Thus the most important feature of Edsel went unadvertised.

While a lot of expenditure went into marketing research, it failed to come up with tangible product features which would make the new car desirable to the upwardly mobile executives and professionals. The market research was done years before the introduction of Edsel and Ford was unable to keep abreast with the changing market dynamics. Also, the name, “Edsel”, was not a very attractive name.

Another reason for Edsel’s failure was that the production of the car was rushed and it failed to meet the quality standards. By the time the various bugs were fixed, the car had acquired the reputation of being a lemon.

Ford’s decision to separate the Edsel distribution also backfired since a separate division was expensive and Ford did not have enough personnel to staff all the divisions adequately. Also, many of these dealers were underfinanced and under-skilled.

Finally, the huge promotional build-up also worked against Edsel since people were expecting some groundbreaking product but Edsel was just another luxury car from Ford. Introducing the car earlier also impacted its sales since it had to compete with the clearance sales of the 1957 cars. The high price of Edsel did not help. Also, Ford stopped the advertising later on when it could have helped in the sales. Thus a number of exogenous factors and management mistakes were responsible for the failure of Edsel.

Robert Hall
Robert Hall was low-priced garment retail chain offering clothes at very low markup and on a cash only basis. It was founded in 1940 by Louis Ellenberg and Harold Rosner and was acquired by Jacob Schwab’s United Merchants and Manufacturers, Inc. in 1946. Until 1960s, Robert Hall was a very successful retailer and in and in 1965, the chain consisted of 376 units. However, problems started to confront the retailers by the late 1960s.

First, more and more customers started asking for credits. While Robert Hall’s competitors were willing to provide this credit, Robert Hall continued to insist on a cash only policy.
Throughout the 1960s, the personal income was rising and the customer focus shifted from bargain clothes to fashion clothes. Robert Hall’s attempt to carry fashionable attire was too late and too little to be of any help. Robert Hall also continued to stock conservative clothes at a time when customer preference was shifting to casual clothes.

In 1975, Robert Hall incurred a loss of $21 million as stocks never moved from the shelves. Despite attempts to revive the company, the chain finally closed for good in 1977.
Robert Hall’s failure can be attributed to a number of factors listed above such as its refusal to modernize with changing time. It continued to be located in free-standing urban locations as opposed to the customer preferred suburban mall sites.

Robert Hall was also unable to change its image of a low-priced no-frills clothing chain when its customers became more affluent. The retailer also did not adopt the latest scientific techniques of merchandising such as controlling markdowns, analyzing regionally what items sell best, emphasizing merchandising turnover, testing new styles and using sales and other traffic generating promotional tools.

The management of Robert Hall, after 25 years of success, had been lulled into complacency and failed to recognize signs of an impending catastrophe, which ultimately led to the closure of the chain.

Robert Hall’s biggest failure was that it did not recognize the changing market preferences until it was a decade too late. Its insistence of maintaining the status quo proved to be myopic and led to its doom.

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