Most of their cars sell for over $200,000. Companies need brand recognition but need to get out there in a way that is affordable to their customers, which is exactly what Ferrari did. Ferarri took the initiative of selling their brand through products other than just their cars. The company started a line of different merchandise through brand extension. This was very good for the company, it made the average person feel as though they could be a part of Ferrari without having to have the money to spend on a car. With brand extension the company had a sales revenue of $725 million.
There is not much more than the company can do, besides continuing to put their customers first. Ferrari has decided to expand through a theme park in Abu Dhabi. This is a similar move to what Walt Disney Company did when they opened Euro Disney outside of Paris. The fallback for Euro Disney was that they did not make a profit until three years after the theme park was opened. A way that Ferrari can make a better move than Disney did is to make sure that they have enough profit from other types of expansions before they decide to actually open the theme park, which is now open and running smoothly.
If you go into a business transaction with the money needed, then you will make profit right away. Now that their theme park is open, they just need to keep up with their brand extensions and keep moving to become a better, higher quality, unique company. SWOT Strengths of Ferrari : • Extremely strong brand image. • Products that are a fine combination of beauty & aesthetics combined with unforgettable performance. • The brand has connected to itself an aura of mystique • Is looked upon as a status symbol • Takes on new challenges on a constant basis with a head on attitude.
• Innovation & technology are key drivers behind every product. • A very inspired, well taken care of & satisfied work-force who are proud to be attached with the brand. This was further expressed publicly when Ferrari was voted the “Best Place to Work in Europe 2007?. Weaknesses of Ferrari : • Ferrari’s business model, based around low volumes, removes the possibility of employing certain technological solutions • That same business model also limits their sales volumes even though a lot more demand is present in the market.
• Due to their “waiting list” model, they lose out on customers to the competition. • A big challenge lying in wait is fuel efficiency & emissions which are growing in importance everyday, thanks to spreading concerns over the environment. Opportunities Ferrari : • Growth in the global market for high-performance super-cars due to growing economies & developing nations. • Expansion of the brand through entering into new & important automotive markets like India wherein competitors like Porsche have already set up base.
• Enlargement of customer base (increase appeal of their products to a more variety of buyers) through adding comfort, roominess, luggage space, engines that are more user friendly, and so on, while at the same time maintaining traditional Ferrari characteristics–performance, style, exclusivity. Ferrari has been exploiting this aspect for a while & it has been a key contributor to their success in the past 15 years. • Development of technology (for example interfacing electronics with mechanical systems) has opened up new avenues to explore for their products. Ferrari Marketing Strategy.??
Ferrari is a myth and a legend in the automotive industry. ?The Ferrari tale is one of an astounding and unique worldwide success. An unparalleled one.?? Ferrari success cannot be measured in terms of revenues and sales, or in terms of market capitalization. Ferrari never made an IPO and is not even quoted in any stock exchange market. Ferrari success has to be measured only in terms of Brand Value and Product Value.?? Probably the Ferrari brand is worth more than the Google brand, the Apple brand, Nike, GE, IBM, BMW, Mercedes, Exxon, Shell, or any other brand.? No other brand has the allure of the Ferrari Brand.??
Ferrari is known and is highly valued everywhere in the world. From the US to Japan, from Germany and Switzerland to India, to France, Australia, New Zealand, Russia, Brazil and Argentina.?? Yet, Ferrari never spent a penny in advertisement. ??? Ferrari Achievement.?? The Ferrari case is of maximum interest in marketing strategy. To understand how Ferrari achieved this stunning result, we must review the beginning of Ferrari, and its development.?? Enzo Ferrari founded Ferrari back in 1943, during WW II. The first Ferrari premises were bombed and heavily damaged. ?Enzo Ferrari was not an Engineer, nor he was an enterpreneur.
Enzo Ferrari never went to college, not even high school, no PhD, never made and MBA.?? Enzo Ferrari was “just” a mechanic at Alfa Romeo, with a strong passion for engines, speed and racing. He was a tough guy, and he had his own ideas on engines and cars. ?? Passion has always been the “drive” of Ferrari.? And its only marketing tool. ??? Ferrari Passion.?? The first Ferrari car was the 125 S. It was built in1947. Only 3 of them were produced. None survived to our days, yet a 125 S engine is on display in Galleria Ferrari in Maranello, Ferrari dynamic museum. Galleria Ferrari is the Louvre, the Guggenheim, theMoma of Car Racing.
You feel the thrill, an overwhelming excitement and admiration when you are inside. A unique, amazing experience.?? After the 125 S, the Ferrari 166 came, and the races. Formula 1 was not even existing at that time. ?Since the beginning Ferrari was doing both things it still does today: Car Racing and constructing extraordinary sports cars for exacting car and speed lovers. How can you call them just clients??? This has been the marketing strategy of Ferrari. The unaware, unstudied, unplanned marketing strategy of Ferrari. The Passion for speed, the Passion for engines, the Passion for Car Racing.
And this Passion and excitement goes through to every racing sport lover all around the world. ?? And this Passion and excitement goes through in each Ferrari 360 Modena, in each Ferrari Enzo, in each 575 Maranello, in each F430 you drive or simply encounter in the streets. Winning races, losing races, fiercely fighting in car racing has built the brand. ?? Insight on Ferrari Distribution and Ferrari main geographical markets. ???
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The dilemma: boosting global sales without compromising the key brand component of exclusivity. The icing on the cake: to be in an industry greatly affected by the global recession over the past couple of years. Regardless, the Italian carmaker Ferrari has managed to boost annual sales over the past decade from about 4,000 to 7,200 in 2011. “Like a good looking woman, you have to desire her,” says Luca Cordero di Montezemolo, Ferrari’s Chairman of the luxury car. However, while a woman’s secret may be known to lie in her perfume, the secret to a Ferrari lies in the sound of its engine.
Three years before a model hits a showroom, Montezemolo votes with top officials on a selection of engine tones that are composed by a musician. The car is then built, and in a padded, soundproofed room the car is judged. Only if the engine tone hits the right note does the car get approval for production. (Source: The New York Times). Although time consuming and tedious, those are exactly the kind of details that have made the Ferrari brand rise to the top. What challenges has the luxury company been up against? And how have they successfully aligned strategy with execution in order to overcome them?
In the following discover how Ferrari has managed to become more versatile while still boasting the envious title of “sex on wheels”. The car industry hasn’t exactly had the best decade ever in terms of sales, and has had some serious strategy-effecting factors. In a recent report for the Indian Institute of Management, the team of experts suggests that the car industry has been faced with the following four marketing-induced factors: -Globalization, regionalization and market convergence: National markets have become increasingly globalized, giving companies a chance to expand to new markets, but also facing new, international competition.
-Increasingly diversified consumer aggregate patterns of behavior: Consumers no longer want a standardized product; they want one that satisfies their individual needs. -Accelerated modification and diversification of the product portfolio: Product lifecycles have been shortened as consumer demands are changing faster than ever before and due to the necessary competitive advantage of innovation. In the automotive industry cars used to change every eight years, and today are being modified every two to three.
-Increased pressure for innovation and flexibility in development and manufacturing: Not only do development departments have to deal with the complexities of digital technology, but also by the aforementioned shortening of product lifecycles. Although appearing to be somewhat contradictory, the key to success the report lies out for the automotive industry are to be “focused, responsive, variable and resilient”. In turbulent times, auto companies must have strategies that are flexible, but stern in other areas such as brand identity.
Thanks to an executive board dedicated to both innovation and preserving the company’s heritage, Ferrari has been able to overcome these challenges and has only strengthened as a brand on a global scale. Montezemolo has spent the past two decades dedicated to the painstaking effort of preserving the Ferrari brand while pushing innovation. According to Montezemolo, the three keys that have never changed and are essential to the Ferrari brand are “extreme technology, beauty of design, and the emotion of driving”. However, embedded in that recipe lies the very important factor of exclusivity.
According to a recent piece by the New York Times, Montezemolo says he prefers to cultivate exclusivity by limiting production and enforcing wait lists. As Marco Mattiacci, CEO of Ferrari North America, explains in the video of the day, “It is not just growing numbers that is important, but thinking of Ferrari as a culture. There is a philosophy of leading like Ferrari. ” However, according to Sergio Marchionne, the chief executive of Fiat (who owns 85% of Ferrari), the vision and goal of the company is “to aim for higher profit and sales by offering a wider range of cars.
” So what strategy has the company taken on to do so without damaging the exclusivity of the brand? Expanding to new markets as well as versatility in design. The luxury automotive company now sells four models, including the hatchback FF, designed for the same customer that loves the design and power of a Ferrari, but needs a place to store their groceries and a child seat. As far as expansion, with the Italian market in the slumps the company has had no choice but to look outwards. According to CNBC 1,436 cars were delivered in the US & Canada this year, up 14. 5%, and 542 cars were delivered to China, Taiwan and Hong Kong.
China has now become Ferrari? s second largest market, a fact that will continue to challenge the car maker to design and execute for a very changed target market. And the strategy seems to be working. The company saw record revenues of 1,605 million euros in 2011, up 18. 9% from the previous year. According to Montezemolo, he expects to boost production to 10,000 cars in 10 years, increasing the amount of available Ferraris without making the car a commodity. With US$200,000 the cheapest price for a new Ferrari, the sound of that perfectly roaring engine will still be the closest the majority of us will ever get to the Ferrari experience.
And that continued dream and desire is precisely the brilliance behind the Ferrari brand. Ferrari is a premium automaker that has created an elite brand associated with elegance, style, prestige, high performance, and cutting edge technology. Ferrari customers expect nothing less than the absolute best. Following the lead of other luxury brands in “democratizing” luxury by selling to the broad demographic known as the “middle market”, Ferrari established a licensing group to monetize the Ferrari brand. While Ferrari’s automotive business grew by 12 percent in 2008, its sales decreased slightly in 2009 by 5%.
The company’s non-automotive business grew by some 23 percent. The growth of Ferrari’s non-car business suggests demand for Ferrari branded products is booming. The Ferrari brand’s total non-car sales exceed $876 million a year, although the company takes only a percentage of these sales, mostly in licensing fees. Ferrari’s non-automotive business amounted to about 25 percent of its trading profit of $267 million last year, or about $67 million. Since launching the first Ferrari merchandise store in 2002, sales have increased at double-digit rates every year.
Apart from model Ferrari cars and shirts and caps bearing its logo, Ferrari has 37 branded stores in Europe, Asia, and the US, will open another four stores in China and the Persian Gulf by year end, and plans to operate 60 30 Ferraristores by the end of 2011. During a recent Formula One race in Shanghai, the local Ferrari store sold more than $100,000 worth of merchandise in a single day. Ferrari is also developed a theme park devoted to the Ferrari brand in Abu Dhabi, which is be part of a larger Formula One World theme park.
Visitors are able to access “virtual Ferrari simulations”, and the park includes a racetrack for driving lessons. A case in point is Ferrari, owned by Italian car giant Fiat, that achieved the highest brand rating in the Global 500 despite being a niche sports car manufacturer with a much smaller enterprise value than many of the other global brands in the Top 500. “I often think that the Italian genius for car design is based in the language of craft,” comments world renowned design critic Stephen Bayley.
“Theirs is a workshop vocabulary with words for a car’s features and contours many of which simply don’t exist in English. If you have a word for it you can draw it. That word is beauty,” he says. A key driver of brand value is revenue. Clearly Ferrari cannot compete in terms of the size of the multi-national brands. However its brand rating takes into account other financial metrics such as net margins, average revenue per customer, marketing and advertising spend as well as qualitative measures such as brand affection and loyalty.
Taken together, Ferrari outperforms not only rival auto manufacturers BMW, VW, Mercedes Benz, Lexus and Audi but all brands worldwide. Ferrari today announced record results for the first nine months of 2012, recording an increase in net profits by 7. 6 per cent to €244m on a turnover of €2. 43 billion. “It is always a pleasure to top any list and still more so when the competition includes some of the world’s most famous companies. This achievement proves that even in very tough economic times, Italy can still offer the world businesses of excellence,” commented Ferrari Chairman Luca di Montezemolo.
“Behind this acknowledgement are exceptional products made by equally exceptional men and women. They made it possible and for that I thank them. ” David Haigh concludes: “As the Global 500 powerfully demonstrates, customer expectations of brands are much higher than ever as trust becomes a critical business issue in a time of increased economic uncertainty. To fulfil such expectations, brand owners must continue to innovate whilst at the same time deliver quality with value, choice with social responsibility and sustainability with growth. ”