The Ferrari Way
Ferrari might turn out to be the most valuable brand in the automotive industry. The m-cap of Ferrari has increased by 300% in the last 4 years impersonating its stock name ‘RACE’. Whereas its competitors lost ground due to the pandemic. In fact, wall street is believing that Ferrari is the stock to invest amidst the pandemic.
3 reasons for the success of Ferrari
- History: The company is as old as Indian independence. It was officially founded in 1947 by an ex- Alfa Romeo racing driver, Enzo Ferrari. He started the infamous racing team, Scuderia Ferrari, in 1929. As investment was needed to keep the racing team successful, Enzo decided to manufacture and sell sports cars. Thus, Ferrari’s first road car, Ferrari 125 S was born. Due to its idealogy, racing is in its blood. Ferrari had diversified racing presence from the 1950s to the 1970s. The team was present and successful in Daytona, Lemans, Formula1, etc., Post 1970’s, Ferrari concentrated its race efforts in Formula1 alone. And it turned out to be the most successful team in Formula1’s history and participated in every championship since Formula1’s inception.
2. Strategy: Ferrari limits its yearly production to just 10,000 vehicles compared to GM’s 2,887,046. And earns a margin of 24% for every car it sells, which is around $80,000 per car.
Ferrari is a commodity for high-net-worth buyers. So the strategy of scarcity is embraced by Ferrari (deprivation marketing) when all of its competitors increased production, Ferrari limited its production. Due to the craft in car manufacturing, demand, racing heritage; Ferraris are most sought out across the globe. The customers of Ferrari wait upto 4 to 5 years (Including waiting list, customization, etc.,) to receive their car. Overwhelmingly, Ferrari sells its limited-edition cars to select customers who are long time loyalists.
We build cars, symbols of Italian excellence the world over, and we do so to win on both road and track. Unique creations that fuel the Prancing Horse legend and generate a “World of Dreams and Emotions”. — Ferrari’s mission statement
Further, the focus is on the customer experience. Ferrari makes sure the cars are full of pleasure, performance, and style. They are neither fast nor comfortable but a good mix of both.
https://youtu.be/C_E3bSFi8lI?t=470 (Review of La Ferrari by BBC Topgear)
3. Brand: According to Brand Finance, Ferrari is the world’s strongest brand (Valuable brand is different from the strongest brand).
Ferrari is the world’s most powerful brand. The legendary Italian carmaker scores highly on a wide variety of measures on Brand Finance’s Brand Strength Index, from desirability, loyalty and consumer sentiment to visual identity, online presence and employee satisfaction. Ferrari is one of only eleven brands (including Google, Hermès, Coca-Cola, Disney, Rolex and F1 racing rivals Red Bull) to be awarded an AAA+ brand rating and has the highest overall score.
Ferrari as a brand sells various merchandise to engage its fans who can’t afford its premium cars. In fact, they also have a theme park in Abu Dhabi, to improve its brand publicity and connect with its fans.
To sum it all, The Ferrari way will lead the company to greater heights. In the era of EVs, Ferrari might be the brand that will gain popularity due to the segment it operates in. The heritage and the philosophy of Ferrari will only appreciate with time.
“If you can dream it, you can do it.” — Enzo Ferrari.
Thoughts?
