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The Ferrari

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 Ferrari

Course: Marketing in Global Context

Professor: Afsun Gurbanov
Date: 16.05.20
Student: Turan Mirzayev
Table of Contents

History of the company .................................................................................................. 5

Marketing Insights ......................................................................................................... 5
Digital Channels ............................................................................................................ 6
Brand Positioning & Ferrari’s Customers ....................................................................... 6
Competitive Pressure and SWOT Analysis ..................................................................... 7
Ferrari Marketing Mix (4Ps) Strategy ............................................................................. 7
Ferrari’s Approach for Product ............................................................................................ 8
Ferrari’s Approach for Price ................................................................................................ 8
Ferrari’s Dealers & Ferrari’s Distribution Channels............................................................8
Ferrari’s Approach about Promotion and Advertising.........................................................9
Recommendations ........................................................................................................ 10
Figures...............................................................................................................................11
Bibliography ................................................................................................................ 14

2
List of Figures
Figure 1 Vehicle Sales By Segment ..................................................................................... 10
Figure 2 Average Price ........................................................................................................ 10
Figure 3 The Brand Identity Prism of Ferrari ....................................................................... 10
Figure 4 Ferrari’s Market Position By Region ..................................................................... 11
Figure 5 Adoption Model .................................................................................................... 11
Figure 6 Michael Porter's Five Forces ................................................................................. 11
Figure 7 SWOT Analysis of Ferrari ..................................................................................... 12
Figure 8 Distribution Model By Client's Size And Geographic Dispersion .......................... 12
Figure 9 Pricing Strategies .................................................................................................. 12

3
History of the Company
In 1929, Enzo Ferrari founded Scuderia Ferrari primarily to make fastest racing vehicles. The
whole company was concentrated on building cars for motorsports, and the owner Enzo was
not engaged in the concept of making road cars when he established the company. Ferrari’s
elements are ultimately connected to the whole life story of Ferrari Enzo. The first make - 125S,
was made in 1947 in Italy, Maranello. In 1937, Ferrari was picked to be the peak of Alfa -
Corse. However, in 1938, Ferrari Enzo neglected the business in order to create a new
enterprise - “Auto Avio Costruzioni”.

In that area, Ferrari Enzo produced a powerful sports car - eight cylinders with 1300
horsepower motor and called it “Ferrari 815”. Ferrari 815 Enzo participated in the 1940 Miglia
Grand Prix, but unfortunately, The World War made this racing end with an unexpected
conclusion.

After The World War, Ferrari won the Le Mans race around 1948. The company acquired its
initial World Championship in Formula 1 Grand Prix between the years of 1950-1953. The
year of 1950 delivered crucial developments. After one decade, this brand as already well-
known throughout the globe. The marque confirmed so successfully with the public that sales
doubled amid 1950 and 1960.

In terms of manufacturing, the year of 1951, was essential because of the advancements, and
Ferrari commenced to co-operate with a well-known company called - Carrozzeria. During this
phase, Ferrari was commissioned to assemble and build the particular parts of the sports car.
2000s started with an increased presence of Ferrari on developing markets such as China,
Japan, as wells as the Middle East. So far, the company achieved an excellent example of
convenience and driveability while maintaining Ferrari's performance. In 2015 Fiat Chrysler
Automobiles gave nearly 9% of its value in Ferrari in the first offering. In the same year, on 21
October it was publically listed on the stock exchange (NYSE: RACE), [1].

After on year, on 4 January, the company was listed on Borsa Italiana, becoming a self-
governing company.

Marketing Insights
According to the Statista, in 2020, the total sales of sports cars and undefined vehicles is equal
to 6,6t (Figure 1). The total amount of sales is $6,772M in the same year. The illustration
depicts that the vehicle sales by Ferrari will be expected to be nearly 4,9t (in thousand vehicles)
in 2023.

The volume-weighted mean value of the vehicle in 2020 is US$1,025,196. The total volume of
the weighted average price is shown below. Figure 2 represents the average prices from 2013
to 2023. In 2020, the average price of sports cars and undefined ones are respectively 1,027,688
$ and 279,771$. The projected mean value of the Ferrari sports car will reach its maximum
point in 2021, and it will be approximately 1,278,926$.

The United States of America is a more valuable market for the company. Hence, for the make
Ferrari, the United States is in the first place with the revenue ($5,387M) from sales. Germany
is second place on the list and Ferrari made nearly US$456M from that business.

4
Digital Channels
The Ferrari using different digital channels to boost sales and gain power among its rivals such
as Bentley, Lamborghini, Mercedes-Benz, etc. It is crucial to transform the core values into the
digital marketing world with the help of its official website or YouTube channel. Ferrari
spreads various YouTube commercials to support the brand and its values.

The leading digital channel is the company’s official website that customers can explore the
brand-new models of Ferrari, as well as its vintage models. In reality, the company has
few marketing tools. The Ferrari’s web site receives approximately one and a half million hits
daily. TV advertising is not famous among Ferrari purchasers because of the demographic
factors and especially income. Gian Luigi Longinotti Buitoni, president of Ferrari in North
America, states that Ferrari clients, on average, are entrepreneurs, own six vehicles and have
an income more than $450,000 annually. In common they are not engaged with TV ads or any
campaigns about the Television advertisement.

Buitoni declares that “we are not trading a product, but an experience.” He also reveals that
when we take place in auto shows, we are not demanded to pay for space because we are
generating excitement. The movie stars such as Nicholas cage and Bill Cosby have asked to
use our cars, and we let them do it, but other companies pay them to promote theirs [2].

Brand Positioning & Ferrari’s Customers

The company practices selective targeting because the company is not willing to see everyone
to have a Ferrari. Therefore, they do a history check, and their target clients are memorable
characters or celebrities globally. Ferrari has set itself as a luxury vehicle manufacturer (see
Figure 3). Ferrari applies a valuable positioning tactics to provide the clients with a sense of
self-satisfaction because of having the masterpiece [3].

Ferrari pays attention to high-context and low-context cultural diversity among regions in
order to accomplish the target market. Interestingly, having a Ferrari is not sufficient to be a
part of the “Ferrari.” There are various rules for owners and employees have to follow. For
instance, the Autoweek reveals that Ferrari in North America addresses its clients to sign a
deal when obtaining a brand-new sports car by Ferrari. Throughout the process, there is a
condition that restricts particular action - “Customer cannot sell his\her car at the initial year
of owning a Ferrari car.” Also, according to the website - CarSite, an automaker will not wait
to demand a buyer’s history of purchase for a background check [4]. The source implies that
car sellers will be willing to give up the Ferrari car to the new client who is between the age
of 40-50 or even more.These strict rules can hugely impact consumer preferences around the
world. However, the company achieved being a market leader in many regions (see Figure 4).

There is an exciting point that Ferrari is not obsessed with the pink Ferraris. Although, the
company has a tolerance to let the customers paint their cars, the disapproval of pink colour
appeared straight from Australia - Herbert Appleroth, the President and CEO of Ferrari.
Appleroth replied - “We do deny the colour pink on the surface,” [4].

5
Competitive Pressure and SWOT Analysis
In global marketing research, analysis of competitive pressures can support the company to
distinguish main threats in the automobile market. Besides, Ferrari can investigate profitable
possibilities in the whole Consumer Goods area. For all of that, Porter Five Forces is a holistic
strategy framework (see Figure 6).

There is an intense rivalry among the current opponents in the market. For Ferrari, it can be
severe and sometimes it can lead to down prices and decrease overall profitability in the
industry. Among automobile manufacturers, new entrants always bring innovations and new
ways of doing things. That process generates intense competitive pressure. For instance,
environmentalist consumers can substitute a Ferrari to emission-free vehicles such as Tesla or
Toyota Prius. Hence, such vehicles create new opportunities such as reducing costs,
contributing new value prepositions to the buyers. Most automobile manufacturers buy raw
elements from various suppliers.

Suppliers in a dominant status can reduce the power of Ferrari. Powerful suppliers can practice
their negotiating skills to extract higher prices from giant companies, and it can result in
reducing revenues annually. In other words, higher supplier bargaining power lowers the
overall profitability of Ferrari. Frequently, consumers demand a lot, and as a result of that, they
want to get the most suitable offerings by paying the least prices as possible. Such customers
give extra pressure on the company’s profitability in the long run.

In practice, the company creating a balancing of three elements carefully - driving satisfaction,
power, and also style. The company's marketing head stated that "Our idea of performance
involves entertainment or pleasure which offers the most thrilling vehicle" [5]. According to
the SWOT analysis (see Figure 7), the company admits that they are making the volume of the
production small intentionally, so they can reach “scarcity” level. They call it "deprivation
marketing". Ferrari creates a huge list for particular models and awards for faithful consumers
with the first opportunity to get limited edition products. For consumer preferences, such
measures can influence on adoption model of Ferrari (Figure 5). In terms of the adoption, the
company has been always affected by political environment or political risk during Formula 1.
During Formula 1 Grand Prix 2019, the company had many issues with building relationship
with employees and Ferrari revealed that “politics is one of our weaknesses and we are working
on it” [6]. Ferrari Formula 1 team principal - Mattia Binotto stated, our team must improve its
handling of paddock politics. During the F1 race in 2019, "Fédération Internationale de
l'Automobile" declared three technical directives at end of the race, though Ferrari consistently
rejected any wrongdoing [6].

Ferrari Marketing Mix (4Ps) Strategy

Ferrari created different marketing tactics such as merchandise or assistance innovation,
financing marketing or marketing experimentation, consumer releationship\feedback etc. So
far, these strategies supported the brand to develop even more. Marketing mix strategy
encourages businesses like Ferrari to manage short-term or long-term intentions and goals
throughout the year. It is a widely accepted structure among large companies.

6
 Product Strategy

As a product-oriented car manufacturer, Ferrari creates beautiful, well-outlined products which

are fabulous value for capital. The company focus on a particular product rather than satisfying
the demands of the customer. That is when the product orientation appears, which is one of the
leading construction pieces of the marketing mix.

The current popular vehicles by the Ferrari are 488 GTB, Spider, California, Aperta Ferrari,
LaFerrari, etc. Every car on the lineup is unique, and F1 Ferrari, Gran Turismo is influenced
Ferrari to make them so. Fo GT championship, Ferrari also has a variety of vehicles for harsh
tracks such as Italia GT or FXX K.

Price strategy

In the marketing mix, price arrangements can be practised immediately, which makes it more
elastic element compared with the others. Besides, the price can discover the characteristics of
the products that can be offered, and it can also determine the production expenses for Ferrari
vehicles.

By examining different analyses, several strategies are made by Ferrari. Putting to much price
tag can impact sales in a corrupt manner or vice versa. Ferrari has different methods for pricing
cars, and they have appropriate product positioning. Also setting fixed prices creates an easy
way to predict the company's income.

Among the price tactics (Figure 9), premium pricing method is more appropriate for Ferrari.
The before-mentioned strategy adopts a considerable cost but gives better products or services
(Adcock, Dennis 2001). The exclusivity of car models by Ferrari adds extra value to the
company's premium pricing policy. Taking the geographical factors into consideration, Ferrari
can apply geographical pricing method when the customers are too far away, and it can
increase transportation costs. Ferrari's vintage vehicles are considered to be a massive
investment. Their price gaining more value with time and eventually equals millions of dollars
after 3-5 years.

Ferrari Place & Distribution Strategy

There are more than 50 Ferrari dealers in the world such as Europe, North and South America,
the Middle East, and they are expanding these numbers. Their distribution chain is not limited
to different stores. Also, they are offering online shopping on their official website.

The section of supply chain and manufacturing operations have a vital influence, and it depends
on the company’s decision or its strategy.They have introduced a unique approach to supply
chain processes. With the help of such a target, there will be no delay in the manufacturing
process. By eliminating the potential future delays that cause damage to the relationship
between consumers and company, Ferrari can double its revenue. In terms of manufacturing
part of the strategy, Ferrari generated a production framework, which enables to make a variety
of customizations in the garage.
Such manufacturing framework is able to use the time more efficiently and increase the power
efficiency of power-driven processes. These implementations have been successfully applied

7
for V8/V12 engine models of Ferrari in the middle of 2012 [7]. Direct channel distribution does
not always appear in the traffic of Ferrari (Figure 8).

Ferrari Promotion & Advertising Strategy

Formula 1 racing is the best environment where the company obtain the highest advertising.
Promotional strategy of Ferrari is entirely distinct from other brands. For example, although it
is not a well-known brand in India, they have auspiciously accomplished to get a broad client
base. Also, Ferrari provides particular courses for those who are willing to learn everything
about Ferrari, and they can even join a Ferrari club which is famous among drivers. Ferrari’s
merchandising represents a vital role in advertising. The company have a massive collection of
apparel products, watches, perfumes or footwear for every age. The first and only branded
theme park by the Ferrari was opened in Abu Dhabi, 2007. There is the most high-speed roller
coaster called “Ferrari Rossa”. In terms of the application development and promotion, an app
“SF” delivers a more convenient platform to get all the latest contents on your phone about
Ferrari. “Search Marketing” and “Display Advertising” is one of the strategies that show the
consumers are interested in something. Therefore, Ferrari creates a relevant ad and transferring
it to potential buyers. For instance, the company have a 7-year good maintenance program [8].

Promotion is one of the vital elements of Ferrari’s marketing procedure. Promotions -

catalogues, tradeshows, and direct mail campaigns are blended, and these options are the main
ones for the Ferrari.

o Ferrari is setting unusual business suggestions, and the company knows why clients need
these vehicles or how the products are distinctive among the other options.

o Creative or well-designed content can be an appropriate message for Ferrari’s customers

are able to clear the image of a particular product.

o Direct sales or high profile promotion, is more suitable for Ferrari’s style, and it can help
to grow the product auspiciously. However, that strategy demands further development of
the Ferrari brand, which will be able to attract more clients in the future.

o Accumulating the data for the target market, can determine price elasticity and
demographic knowledge such as gender, salary or social standing.

o Although the influencer marketing is a brand-new strategy for everyone, Ferrari also can
use that in order to target the mass market.

o It will also support to get an interactive relationship between consumers and the company.

8
Recommendations
Because of the recent virus outbreak (COVID - 19), customers, will not be willing to spend
money on luxury goods. As we considered Ferrari products as the premium products, therefore
such a global recession will cause a decline in Ferrari sales. Hence the company can produce
different products that fit into the various range of prices that demanded by customers, and it
will also help to gain competitive advantage among the other automobile manufacturers in the
market (Toyota, Honda, Ford, etc).

By understanding the needs of the individuals and being a service-oriented company, Ferrari
can prevent threats from other businesses in the market. In order to fight with the other rivals,
Ferrari has to build a sustainable differentiation or cooperate with competitors to expand the
market dimension. The biggest problem can be losing the clients. Hence the company can keep
them with rapidly innovating its technology and products. Lastly, Ferrari has to consider
“AIDA” (awareness, interest, desire, action) throughout the making of creative content for
potential customers.

9
Figures

Figure 1 Vehicle Sales By Segment

Source: Statista, May 2020

Figure 2 Average Price

Source: Statista, May 2020

Figure 3 The Brand Identity Prism of Ferrari

Source: Pinterest, Martin Vacth - Brand Identity Prism

10
 Figure 4 Ferrari’s Market Position By Region

Source: Securities and Exchange Commission on July 23, 2015, New Business
Netherlands N.V.

Figure 5 Adoption Model

Source: StudiousGuy Copyright, 2020, The Response Hierarchy Model

Figure 6 Michael Porter's Five Forces

Source: Business Set Free, 2013, Competitive Pressures on Business

11
 Figure 7 SWOT Analysis of Ferrari

Source: Slide Share, Yari Brugnoni, February 8, 2015

Figure 8 Distribution Model By Client's Size And Geographic Dispersion

DuckerFrontier, January 13, 2016

Figure 9 Pricing Strategies

UK Essays, Ferrari Marketing Analysis, 10 December 2017

12
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2. Jackson, & Kathy. (1999). Lower Bar ? Automotive News, 74(5852), 2.

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4. DAVID SCHMIDT. (2019, February 6). 10 Strict Rules Ferrari Owners Must Follow
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5. Michael Blanding. (2019, March 21). The Ferrari Way. Retrieved from
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