Brand Inventory
Ferrari today offers three main model ranges (Ferrari World, 2008), distinguished by criteria like the number of cylinders, the location of the cars engines, or the number of passenger seats. Additionally, the company offers approved used Ferraris through its dealerships and at times special models are released as limited editions which are only available to loyal customers already owning a number of Ferraris.
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F430 – This is the entry level model starting at £118,647. Besides the normal coupe buyers can choose between two sub-brands, the racing version called ‘challenge’ and the convertible-roof model named ‘spider’. Additionally, various sports-packages and interior and exterior designs can drive the price to areas in excess of £150,000. The F430 range targets the younger and first time Ferrari buyers through its lower price, more youthful image and rigorously sporty orientation (see Appendix Figure 3) (New Car Net, 2008).
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599 GTB Fiorano – This is the second two-seater car in the range, however, being more powerful and luxurious than the F430, the basic model costs £172,175. Again this model with all available options can cost more than £200,000. The 599 focuses on affluent customers, who might have previously owned other Ferraris and are now seeking something more mature and comfortable without forfeiting the performance (see Appendix Figure 4) (New Car Net, 2008).
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612 Scaglietti – The only four-seater Ferrari offered at present costs a minimum of £170,350 without options, offering the most interior space and comfort at the cost of a slightly lower performance compared to the other two models. The 612 is what Ferrari calls a ‘granturismo’ i.e. a car for long highway journeys with up to three passengers. It is aimed at Ferrari owners with families or at individuals who want to use their Ferrari more often and thus require more space (see Appendix Figure 5) (New Car Net, 2008).
Ferrari is also involved in the business of merchandising their brand. It’s in-house merchandising line licenses laptops, perfume, bicycles, stationery, leather goods, mobile phones, and all kinds of apparel bearing the Ferrari logo. Nowadays consumers can buy Puma sneakers or an Acer laptop with the prancing horse design. The goods can be bought online (www.ferraristore.com) and in Ferrari stores across Italy, as well as in Australia, China, Saudi Arabia, Spain, UAE, and USA. For its cars Ferrari has import agents in most countries.
The main brand elements of Ferrari are the company brand name, the car model names, the car design and the emblem. The company name is the founder’s surname and the model names have a tradition of being based on numbers related to the cylinders or the displacement of the engine. Some models also feature names of famous designers or locations related to Ferrari’s production or racing history. Just as recognisable as the Ferrari name is its logo, the prancing horse (see Appendix Figure 2). Ferrari doesn’t use the logo sparingly, it can be found all over the cars; to name a few areas: bonnet, mirrors, engine, wheels, headrests, dashboard, and even the speedometer. Interestingly, one of the most recognisable elements of a Ferrari to its fans is the sound of the engine, enabling them to distinguish the cars from far away without seeing them.
It’s a known fact that Ferrari has no real advertising budget. The company doesn’t advertise or publish any ads in print media, TV or cinema (GizMag, 2007). Ferrari indirectly promotes its cars through the Ferrari F1 team for which in 2006 it reportedly allocated a budget of £165m (Wheels24, 2006). “Ferrari’s marketing department is fittingly innovative in showcasing and developing the brand in many ways”, recent examples include the worldwide ‘Tour of Ferrari’ and the ‘Ferrari theme park’ for grownups in Abu Dhabi (GizMag, 2007). The Ferrari brand has such strength, that the oil giant Shell uses its affiliation with Ferrari in their ads. An example is one of their latest TV commercials featuring the most famous Ferrari race cars speeding through Rome, Monaco, Rio, Hong Kong and New York. With £2m production costs this ad is said to be one of the costliest commercials in history (Quilter, 2007).
Ferrari competes with brands in the niche market for luxury sports-cars. Their main competitor is Lamborghini, albeit owned by the VW group now (BBC News, 1998); their factory is still situated only a few miles from the Ferrari factory. Lamborghini started with building tractors which it still does today, however it is mainly known for its luxury sports-cars, the Gallardo and the Murcielago. Both are priced slightly cheaper than the Ferrari models they target, at £116,947 and £159,947 respectively (New Car Net, 2008). In terms of performance and prestige the cars are said to be equivalent to Ferraris, however, Lamborghini doesn’t offer a four-seater, yet. Lamborghini tries to differentiate itself from Ferrari by offering a less traditional approach to sports-cars. Both its models have four-wheel drive for improved traction and stability on the road, whereas all Ferraris have rear-wheel drive. The Murcielago model also has the famous and often copied ‘scissor doors’, which open vertically.
Porsche compared to Ferrari has a much broader model range with numerous sub-brands. However, the only model which is competing with Ferrari is the 911 Carrera with its Turbo and GT sub-brands. The GT starts at £81,357 and the Turbo at £100,617 (New Car Net, 2008).
Aston Martin has cars in price ranges of both Porsche and Ferrari, despite the fact that it hand builds the vehicles. The V8 Vantage at £84,135, the DB9 at £111,985, and the Vanquish at £178,235 (Buy Your Car, 2008).
Points of difference:
Ferrari’s racing heritage and its current involvement in F1 give the road cars their thoroughbred edge. Consumers buying Ferraris want to be part of this history and own a race car for the road, so to say. None of Ferrari’s competitors can offer this image to that extent. Many parts in a Ferrari are based on tradition and consumers know that. From the angle of the cylinders to the location of the engine, many technical features have been constructed in the same way in previous models, based on the success of those cars. However, Ferrari is also a design and technology leader in the automotive industry. The company’s president Luca di Montezemolo states: "We made a big effort to show the innovative technology we put in our cars. We were the first to introduce a F1 gearbox in a commercial car; the first to apply the aerodynamic approach used in F1; the first to build an all composite car like in F1. The demand for Ferraris has since continued to grow” (The Scuderia, 2008). Ultimately, the premium price sets Ferraris apart from generic sports-cars even more.
Points of parity:
Like all high-end sports-cars Ferraris have disadvantages over everyday cars. Among them; a rather cramped interior, a hard ride, and a chassis very close to the ground. Most customers who are in the market for a no-compromise sports-car, will consider these disadvantages irrelevant as Ferrari’s competitors come with mostly the same issues, and all deal with these issues rather well. In order for sports-cars to be able to perform the way they do, their ride needs to be hard and there is only limited space for passengers due to the engine-layout etc. Consumers accept and tolerate this. Ferrari is also not the only Italian sports-car maker but this isn’t a disadvantage. Furthermore, as do most of its rivals it uses some of the finest materials and manufacturing techniques known to man. On a scale of attractiveness it can also be said that Ferrari has parity with its competitors.
Keller (2007) suggests using three categories to design a good brand mantra. The emotional and descriptive modifiers and the brand function.
The brand function of Ferrari is ‘performance’. The descriptive modifier ‘racing’ further explains this. ‘Racing’ could be further extended with the modifier ‘Formula One’. Finally the emotional modifier ‘heritage’ in reference to the racing history or ‘thoroughbred’ as the horse on the logo could be used.
Ferrari’s brand mantra could sound something like this: ‘thoroughbred F1 road performance’.
Brand Exploratory
For the purpose of capturing consumers’ perceptions about the brand Ferrari, research in the form of semi-structured interviews (see Appendix Figure 1) was carried out to facilitate self-expression. The subjects gave their consent prior to the interview. Overall five males and five females were interviewed, each individually. Due to the difficulty of finding samples of Ferrari owners, the online Ferrari forum ‘F Chat’ (www.f-chat.eu) was used and results from four owners were obtained. The other six samples have never owned or driven a Ferrari.
Ferrari has managed to maintain the association of its racing heritage with its road cars by owning one of the most successful F1 teams, making it one of the most recognised sports-car manufacturers in the world. Moreover, consumers are aware of the inclusion of F1 tested technology in Ferrari road cars. Ferrari is seen as a leader in this field. Some characteristic consumer brand associations for Ferrari are performance, speed, handling, design, luxury, Italian, costly to obtain and maintain, dangerous, snobby, long waiting list, flashy, bad build quality, and unreliable. Generally Ferrari is seen as a ‘cool’ brand by youngsters and as a recommendable ‘dream car’ for adults. The colour red is directly associated with Ferrari, known as Ferrari-Red to fans, not many other cars are perceived to look good in red, whereas most Ferraris are actually bought in red, supporting the extroverted design. The brand’s uniqueness mainly stems from the cars’ looks; their Italian elegance and style combined with their sheer racing performance.
Sources of customer-based brand equity (based on Keller’s CBBE pyramid, 2007:136):
Resonance - High social status and passion for style and speed:
very loyal consumers; owners very attached to brand - have special relationship with brand; high repeat purchase rate
Judgements - Extremely high performance:
among the best sports-cars in the world; one of the design and technology leaders in automotive industry
Feelings - Fun, self-rewarding and elite:
owning a Ferrari signals ‘I have arrived’; feelings of achievement and high social status; social approval and self-respect
Performance – Luxury / performance / high-end product:
carefully made sports-cars; use of premium materials; high resale value; various patents on technology; extraordinary relationship with valued customers
Imagery - Success, style, and performance image:
performance and racing image through affiliation with Ferrari F1 team and previous racing heritage; design leader image through use of famous designer Pininfarina; status symbol; Italian origin synonymous with style
Salience - High brand awareness:
very commonly recalled luxury sports-car brand; engine-sound recognised from far away; shape of cars very distinguished
Ferrari is definitely not seen as an everyday vehicle. Owners state weekends, pure driving situations with no definite destination, and the occasional rounds on a racetrack as times where they use their Ferrari. The typical Ferrari driver is male in their mid-fifties; sometimes seen as trying to overcome a mid- or late-life crisis, by seeking new found youth in their Ferrari. The brand is described as a premium sports-car or luxury vehicle, in terms of the luxury price tag, but not so much for its comfort or plush interior. Ferraris are seen as very exclusive, there is a waiting list of two years for some models, and some models are limited editions only sold to valued customers of the brand. As one interviewee put it: “buying a Ferrari is sort of like joining an elite club”.
All of Ferrari’s competitors in the premium sports-car segment are seen as comparable in terms of performance. Consumers base their choices on more trivial details. Ferrari compared to its competitors is seen as more stylish and elegant, whereas Lamborghini is perceived as less mature, more attention-seeking, and sometimes even tacky with its ‘scissor doors’. Porsche is known to many as the ‘drivers’ car as opposed to the Italian brands which are said to be ‘all about looks’. However, this is also where Porsche suffers, as it is often regarded too common for sports-car drivers. Porsche’s looks have hardly changed in the last forty years, making it one of the more conservative sports-cars. Porsche with its German image of quality and Aston Martin being hand built in England both are driven by an aura of reliability. Whereas, Lamborghini and Ferrari, although now backed by big corporations still suffer from the Italian image of sloppy build quality and unreliable materials in some consumers’ eyes.
SWOT Analysis
Strengths:
- Only premium sports-car maker with true racing heritage.
- Implementation of technology developed in F1 into road cars.
- F1 team serves as promotional platform.
- Success of F1 team projected onto road cars.
- 15.3% revenue jump in 2007 thanks to strong sales of 599GTB and F430 (Just Auto, 2008).
- 45.4% trading profit increase over previous year in 2007 (Just Auto, 2008).
- Sales rise in all markets in 2007 especially in emerging Asian and Middle-Eastern markets.
- Loyal customer base with high repeat purchase tendency.
- High brand strength (Halliday, 2004).
Weaknesses:
- Limited production capacity.
- Long waiting lists.
- High servicing costs.
- Small dealer network.
- Short service intervals.
- High fuel consumption.
- High emissions.
Opportunities:
- Off-road/SUV market entry possible with new four-wheel-drive system in development (Left Lane News, 2007).
- Possible release of new Millechili light weight model due 2010, promising 42% less fuel consumption, lower emissions, less weight, and size than current models (Ciferri, 2007).
- Release of the Fioravanti-patented rotating roof concept could further drive sales up and strengthen competitive advantage and help differentiate brand (Motor Trend, 2004).
Threats:
- Possible problems with F1 team could be projected onto road cars.
- New EU requirements for emissions target to be implemented by 2012 are a fourth of what Ferrari cars emit now (Just Auto, 2007).
- Pressure to improve fuel economy.
- Counterfeiting business could be damaging to image and take some revenue (Barry, 2008).
- Tries to reduce fuel consumption and emissions could affect performance.
- Talks about an implementation of four-wheel-drive in future cars might deter traditional Ferraristi used to rear-wheel-drive (Left Lane News, 2007).
Brand Equity Evaluation
Ferrari shows all the main qualities of a strong brand as described by White (2008). Its price is in the premium segment of the industry. It is quite differentiated from competing brands through its history and far from becoming a commodity brand. Furthermore, with its recent growth in sales it exceeded shareholder prospects and shortened its sales cycle. Finally, owning a Ferrari will definitely strike up many conversations, thus generating a high referral rate for potential owners.
Strategic Brand Management
Recommendations
To increase CSR Ferrari could buy hybrid car technology from Toyota and enter the hybrid car market in the near future, being one of the first sports-car makers to provide a true hybrid sports-car.
The company should also consider the implementation of the new Fioravanti-patented rotating roof concept into other models as it will further differentiate Ferrari from its competitors.
Ferrari should consider developing a four-by-four or SUV model in collaboration with its parent company Fiat, as this market segment grew by over 60% annually in the last years in many countries and is forecasted to grow further at this rate (R.L. Polk & Co., 2007). Also the competitor Porsche’s SUV model Cayenne was a huge success, Ferrari should thus attempt to get a share of the ‘SUV pie’.
Ferrari might also want to consider investing in an extension of its factory to facilitate larger output and thus minimise the customer waiting-list and increase yearly revenue.
Finally, Ferrari should attack the counterfeiting business to strengthen the image of quality.
References
Barry, C. (2008). ‘Italy busts ring building fake Ferraris’. [Online]. (http://www.mercurynews.com/nationworld/ci_8395100?nclick_check=1). Mercury News – Silicon Valley. (accessed 08.03.2008).
BBC News. (1998). ‘The Company File Audi clinches Lamborghini deal’.[Online]. (http://news.bbc.co.uk/1/hi/business/138623.stm). BBC Online Network. (accessed 06.03.2008).
Buy Your Car. (2008). ‘Aston Martin’. [Online]. (http://www.buyyourcar.co.uk/new-car/aston-martin/). Buy Your Car. (accessed 06.03.2008).
Ciferri, L. (2007). ‘Ferrari future: Lean, green’. Automotive News. 81(6262), p.6.
Ferrari World. (2008). ‘Cars – Today’. [Online]. (http://www.ferrariworld.com/). Ferrari S.p.A. (accessed 05.03.2008).
GizMag. (2007). ‘Bardou-Jacquet’s must-see Shell Ferrari Commercial’. [Online]. (http://www.gizmag.com/go/7141/). GizMag. (accessed 05.03.2008).
Halliday, J. (2004). ‘Ultra-luxury car marketers roll out red carpet for buyers’. Advertising Age. 75(5), p.6.
Hoovers Inc. (2008). ‘Ferrari S.p.A.’. [Online]. (http://www.hoovers.com/ferrari/--ID__59581--/free-co-profile.xhtml). Hoovers Inc. (accessed 08.03.2008).
Hoovers Inc. (2008 b). ‘Industry Overview: Automobile Manufacture’. [Online]. (http://www.hoovers.com/automobile-manufacture/--ID__276--/free-ind-fr-profile-basic.xhtml). Hoovers Inc. (accessed 08.03.2008).
Just Auto editorial team. (2007). ‘Ferrari to cut CO2 emissions in new cars’. [Online]. (http://www.just-auto.com/article.aspx?id=93134&lk=s). Just Auto. (accessed 07.03.2008).
Just Auto editorial team. (2008). ‘Ferrari reports “record” year’. [Online]. (http://www.just-auto.com/article.aspx?id=93890). Just Auto. (accessed 07.03.2008).
Keller, K.L. (2007). ‘Strategic Brand Management: Building, Measuring, and Managing Brand Equality’ - 3rd edition. Upper Saddle River: Prentice Hall.
Left Lane News. (2007). ‘Report: Ferrari readies four-wheel drive’. [Online]. (http://www.leftlanenews.com/report-ferrari-readies-four-wheel-drive.html). Left Lane News. (accessed 08.03.2008).
Motor Trend. (2004). ‘First Look: Ferrari Superamerica’. [Online]. (http://www.motortrend.com/features/auto_news/112_news041124_ferrari/index.html). Motor Trend Online. (accessed 08.03.2008).
New Car Net. (2008). ‘Car Search/Car Information Research’. [Online]. (http://www.newcarnet.co.uk/). New Car Net. (accessed 05.03.2008).
OICA (International Organization of Motor Vehicle Manufacturers). (2006). ‘World Motor Vehicle Production’. [Online]. (http://oica.net/category/production-statistics/2006-statistics/). OICA. (accessed 04.03.2008).
Quilter, J. (2007). ‘Shell backs Ferrari F1 tie with world's costliest ad’. [Online]. (http://www.brandrepublic.com/login/News/627339/). Brand Republic. (accessed 05.03.2008).
R.L. Polk & Co. (2007). ‘SUV is entering a high growth period’. [Online]. (http://japan.polk.com/NR/rdonlyres/B9DFB0E7-A319-42A2-B003-A0C6FF61102C/741/POLKINSIGHT_NEWSLETTER_NOV_2007_EN.pdf). R.L. Polk & Co. (accessed 09.03.2008).
The Scuderia. (2008). ‘Luca di Montezemolo - Tough at the Top’. [Online]. (http://www.thescuderia.net/toughattop.shtml). The Scuderia. (accessed 06.03.2008).
Wheels24. (2006). ‘McLaren is F1's biggest spender’. [Online]. (http://www.wheels24.co.za/Wheels24/NewsPics/0,,1369-1375_1952272,00.html). Wheels24. (accessed 05.03.2008).
White, S. (2008). ‘Brand Equity’. [Online]. (http://www.brandidentityguru.com/). Brand Identity Guru. (accessed 09.03.2008).
Appendix
Figure 1: Main points of semi-structured interviews
- State your gender.
- When you think of a luxury sports car, which brand comes to mind first?
- Which brands would you classify as luxury sports cars?
- Can you describe the Ferrari logo?
- Which product categories do you associate with Ferrari?
- Which values come to mind when you think of Ferrari?
- What type of consumers do you think Ferrari targets?
- What is the one characteristic which makes Ferrari stand out from the competition?
- Have you ever owned a Ferrari or do you currently own a Ferrari?
- On what occasions do you drive your Ferrari?
- How reliable do you think Ferrari cars are?
- What is your impression on the design, image and performance of Ferrari?
- Do you feel Ferrari is overpriced?
- Would/does Ferrari satisfy your needs?
- Would you recommend Ferrari to others?
- Does Ferrari give you a feeling of social approval and self respect?
- Would you miss Ferrari if the company would stop making cars?
- Is Ferrari socially responsible, innovative, dependable, ethical, likeable, and competent?
- What’s your overall opinion on Ferrari?
Figure 2: Ferrari Logo (source: www.ferrariworld.com)
Figure 3: Ferrari F430 (source: www.sportscarcup.com)
Figure 4: Ferrari 599 GTB Fiorano (source: www.sportscarcup.com)
Figure 5: Ferrari 612 Scaglietti (source: www.sportscarcup.com)
