Marketing strategies in different markets of ferrari
The sports car brand Ferrari when focused, I analyzed their success and marketing strategies in different markets, one the German and second Italian market and worldwide. For information I used business theories such as the product life cycle, marketing mix, analysis of positioning and segmentation. These two large economically stable countries are different; Ferrari does not make many differences in the way of selling cars. The company being recognized by its rearing- stallion logo is up to speed. The Italian Co. volume sales to build its status brand by producing 6,400 high-performance sports cars a year, with the initial price about $140,000. GT and sports model include models like Spider, Scaglietti and Ferrari California. The company's F1 model brings Ferrari drivers close to the racing experience. Since 1947, the exclusive cars have been manufactured in Maranello, Italy and sold through strategically selected dealerships. Fiat S.p.A group holds 85% stake in Ferrari , Piero Ferrari, son of Ferrari's founder, owns 10%. Throughout the history of the company it has been noted for its continuous participation in racing mainly on Formula 1 where they have achieved great success. For the growth the company has launched a Ferrari World Theme Park in Abu Dhabi in the year 2010 which is also leading them to gain profits as people are attracted towards it. The sales have been increasing at an increasing rate from 2004-2008, in 2008 they had performed above average with a record breaking sales of above 6587 cars in a year for the first time, as result their turnover increased by 16% while the profit has been increased by ravishing 75%. But due recession hitting in fall 2008, the sales volume drastically fell by 85% in November 2008 (the sales reduced to 92 cars from 600 cars a month). As a result in 2009 there has been a fall in sales, turnover and profit.
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The history of Ferrari is incomplete without mentioning that Enzo Ferrari worked for Alfa Romeo from 1920-1929, after which he raced for another 10years for Alfas. From the time he was 12 he knew he wanted to be a race driver, the dream which he achieved at Alfa and adopted the cavallino, or prancing horse, insignia for his Alfa race car. In 1929 Enzo left Alfa to start his privately owned Alfa Romeo racing team known as Scuderia Ferrari in Modena. Scuderia Ferrari did not race cars with the name Ferrari; the Ferrari shop built its first car in Modena in 1937 the Alfa Romeo 158 Grand Prix Racer. The first championship they got was in 1952-1953 season. Ferrari started making sports cars in order to finance his Grand Prix and Le Mans adventures. Ferrari headed the company until he stepped down in 1971 and died in his hometown of Modena. His name is the most famous in motor sports. In 1952 the emblem of the prancing horse was created which is still used today.
THE MARKET ENVIORNMENT:-
The geographical market: - in today's market Ferrari is facing tough competitors like Lamborghini, Porsche, BMW and Aston Martin. To survive in the market the competitors try and make highly innovative designs and high quality performance.
They are in an automotive industry and have a subsidiary type of business and it was started by Enzo Ferrari. The headquarters of Ferrari are located in Maranello, Italy. It had remarkable revenue â‚¬1,921 million (2008). The owners of Ferrari are Fiat group 85%, Mubadala Development Company 5%.
Political: - the environmental protection laws in the company have come out with launching eco-friendly system in the car which will reduce pollution in the atmosphere, which politically will affect the taxation system as the consumer's demand will increase.
Economic: - in the economic conditions Ferrari tries to be successful and profitable at any time because it affects its capital cost and demand. The timing and relative success of the company can be influenced by the economic conditions. The government decision plays an important role in the company's progress.
Social: - it depicts the demand and taste of the consumer demanded by the company which varies with the fashion and disposable income. Ferrari organization should be aware of the demographic changes such as the structure of the population by ages, affluence, regions and numbers working.
Technology: - the company tries to launch the latest technology for its automobiles as a competitive advantage for itself but it should keep in mind that technological breakthroughs can create new industries which might prove a treat to itself. On the other hand new technology could provide a useful input, in both manufacturing and service industries.
The main competitors: - in the market of Ferrari the competitors it faces are Lamborghini, BMW, Porsche and Aston Martin which has better performance and color and high quality maintenance Ferrari could face tough competition in the following.
Sales and profit trend: - The Middle Eastern and Far Asian sales of the competitive company has increased from 15.0-21.8% and also increased the unit sales from 2406-2430, which means the growth of 1%. The profit reports a decrease in worldwide sales for the first six months of the financial year 2009, in spite of which the company is still maintaining overall profitability among the major markets.
Market Share: - the company car tax efficiency, class-leading residual values and whole life costs have resulted in competitors winning a record share of the UK contract hire and leasing market. The competitors' share of market has reached an all-time high of 8.8%-2.7% points up on the previous results.
Target Markets: - the competitors target market is upper-class people with high level of income. They focus on a person who mostly looks for luxury. In the future automobiles will have tough competition for selling the most environmental friendly vehicles.
Sales and profit trend: - Ferrari announced "a significant increase in both profits and sales" for the second quarter of 2010, driven by the success of two new models, the California and 485, as well as demands for Ferrari 599 GTO. Revenue rose 8.6% year on year to EUR488m Euro and vehicle unit sales were 2.6% up at 1,615 units. Trading profit was up 10% to EUR77m.
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Market share: - the company's total sales were 3,226 cars for customers around the world but it was 8% less compared to the year 2008. The market share price was up but was low on sales as the share increased by 10 to 32.8% in 2009.
Business sector: - the company was found in 1947 by Enzo Ferrari in Italy. They had highest sales was in the year 2008 despite seeing the period of recession. It has achieved one of the highest awards which were in the year 1997 (FCA) which was given in the annual meet, it also achieved the Platino Award for its reorganization.
Project focus: - the product of the company is an automobile, the brand name is Ferrari, it has launched models such as- Ferrari 308 GT4, Ferrari 550 Maranello, Ferrari 360 Modena & Spider, Ferrari Challenge Stardale, Ferrari 430 Monza and many more. Their main segment is focused on F1 races. It mostly races in Italian and Australian Grand Prix.
SWOT analysis :-
Extremely strong brand image
Takes on new challenges on a constant basis
Innovation & Technology are key drivers behind the product
Is looked upon as a status symbol.
Ferrari's business model, based around low volumes, removes the possibility of employing certain technological solutions
Some models also limit 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 every day,
Growth in 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 maintaining Ferrari characteristics-performance, style and exclusivity.
Development of technology has opened up new avenues to explore for their products.
Tough competition from other iconic super car brands like Lamborghini & Porsche.
Automotive policies being pushed by countries & continents all over the world which are being strictly enforced like the emission norms of 130g/km of CO2 are very difficult to keep up with due to the performance oriented nature of the engines built by Ferrari
A competing brand like Porsche does not follow the same low volumes, high on exclusivity model which is followed by Ferrari & hence sells a lot more of its products.
THE COMPANY'S MARKETING STRATEGY
Segmentation:- demographic segmentation defines market accordingly
White / Caucasian - 89%
Age - 51.5
Married - 83%
Total in household- 2.94
Total of children - 0.75
Education - 79%
Psychological Segmentation identifies market according to lifestyle characteristics
Targeting: - the identification of target markets based on the regional, urban, or rural locations of the customers. The company has different models of vehicles to help each individual accomplish a safe drive where ever they are coming from.
Positioning: - Ferrari is a car in the Super Luxury sub- category and is distinctly more expensive compared to the luxury cars such as BMW, Lexus and Mercedes. It is probably the only car maker that never worries at competition price its name is unmatchable. It is one of a kind automobile that doesn't need to be compared to other brands since it has a well-developed name in the car's market. The latest innovation is the 360 Modena, the 360 Modena combines Ferrari heritage with innovation.
Differentiation/Low Cost Leadership/Focus: - it is a unique automotive which painted in 'race red' as this was the customary national racing color of Italy. The company is currently focusing on its own performance in Abu Dhabi.
Growth strategy: - the company opens an office in Dubai airport free zone, "sales have been in double digits in the last couple of years". It is only natural to open a regional office in Dubai which is experiencing rapid economic growth along with the UAE and the entire Gulf region.
THE MARKETING MIX
Vehicles of high performance
Carrazzeria Scagliette- program to allow clients to personalizing their cars
A statement of class.
Price: - least expensive Ferrari: 360 Modena-$170,200 and most expensive Ferrari: Enzo- $700,000.
1 location in Vancouver
2 locations in Toronto
1 location in Montreal
Location in Yorkville and Woodbridge
F1 advertise through their use of F1 race car
Brochure - information about the different models.
Reputation - Relay on words of mouth, since the car meets a small amount of societies demand( cost)they expect customers who have interest to visit a dealership for more information
Ferrari knows well of their clients.
People, processes, physical evidence:- the 2010 Ferrari 458 Italia would be headline news from any car company since it is an attempt to bring forward the concept of an exotic sports car into an age more conscious of efficiency
EVALUATION OF THE COMPANY'S STATEGIES AND TACTICS
Evaluation of the company's current position: - currently the company has closed the quarter with a trading profit of â‚¬39 million. The decline was attributable on one side, to a less favorable product mix and, on the other hand, to the fact that newly -released F458 Italia provided a limited contribution for the period. The success of 8- cylinder models continued in the first quarter of 2010, with numerous awards and recognitions being received by the California and the F458 Italia.
Evidence of the company's success:- Ferrari SpA, the maker of the $228,000 California supercar, will increase profit by more than 10% this year , helped by a surge in demand in emerging markets, said Chairman Luca Cordero di Montezemolo. Ferrari's earnings before interest, taxes and one-time gains / losses, or trading profit increased by 10% to 77 million Euros in second quarter as the revenues increased. China sales increased 20% in the first half. The company was also successful in launching the Ferrari Theme Park in Abu Dhabi.
Prospects for future growth/success: - the luxury car maker company plans to start selling in India in the beginning of the year.2012 Ferrari 458 Italia Spider is the future model to be launched although it hasn't been officially announced, an open-up version of the 458 Italia is on its way in 2011 and the 2013, the final addition to the Italia lineup will be the Scuderia track model, which will leave behind some luxury in return for less weight & improved performance.
The company is large enough to be organized into strategic business sector facing the challenge.
Cash cows: - Ferrari has a vast market share in a slow growing industry. Cash cows require investment and generate cash which can be used to invest in other business units.
Star: - the company is leading in the high growth markets. They are generating huge amount of cash from the F1 races and have also used cash for launching new projects.
Question marks: - the company did not achieve a dominant market position, and do not generate much cash. Due to growth of the market they use most of the cash. The company by launching new sports cars and taking part in races is a rapidly growing market.
Dogs: - comparing to the Ferrari company sports cars other company cars have little future as they gain less cash by virtue of their low market share.
By analyzing the above report I can conclude the company is doing good as its sales and profit are good even in this time of recession compared to other competitive companies (i.e Lamborghini, Porsche, Maserati etc). Also their future projects are interesting which will attract the young generation. Ferrari achieves most of its success from the Formula 1 races by wining many awards, and also they have been successful in their recent launch of the Theme Park and aiming to launch more in other countries
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