Introductionof the Business (P4)Ferrari isan Italian sports car manufacturer based in Maranello, Italy. Founded by EnzoFerrari in 1939 out of Alfa Romeo’s race division in Italy, the company builtits first car in 1940. However the company’s first manufactured and sourced carwas completed in 1947, this marked the first Ferrari-badged car was nowcompleted.In 2014,Ferrari was rated the world’s most powerful brand by Brand Finance. In May 2012,the Ferrari GTO became the most expensive car in history, selling in a privatetransaction for £38.
1 million.Throughoutits history, the company has been noted for its continued participation inracing, especially in Formula One, where it is the most successful racing team,holding the most constructors championships (16) and having produced thehighest number of winning drivers (15). Ferrari road cars are generally seen as asymbol of speed, luxury and wealth. The legendary “prancing horse”has also been a cornerstone of Formula One racing since the beginning of theWorld Championship series in the 1950s.
Purchased by the Fiat Group in 1969,Ferrari has maintained a presence in motorsports, particularly Formula One. Atthe same time, the Italian automaker has also produced such famous road cars asthe Dino, 288 GTO, F40, F50 and Enzo.Enzo Ferrari – Founder of FerrariEnzo Ferrariwas a racing driver who founded the Italian sports car manufacturer bearing hisname.
Ferrari cars are generally seen as a symbol of luxury and wealthHe was bornEnzo Anselmo Ferrari on February 18, 1898, in Modena, Italy. His father,Alfredo Ferrari, had a metal business. At the age of 10 Enzo saw several carraces in the 1908 Circuit di Bologna, and he decided to become a race cardriver.
He received little formal education, and in his youth during WWI he wasshoeing mules during his assignment to the Alpine Artillery division of theItalian Army. Both his father and brother died in 1916 as a result of Italianflu outbreak and the family business collapsed.ExternalEnvironment – PESTLE Analysis (P4)Political FactorsPoliticalfactors generally affect the Ferrari automobile industry directly. The factorsgenerally revolve around environmental factors, which are obviously consideredby Ferrari. Policies set by the government, often affects the sales of Ferraricars meaning they have to change their marketing strategy. The laws and rulesset by the government have to be followed by Ferrari which influences change inthe sale and trade of Ferrari products. There would also be change inemployee’s contracts which would affect the Ferrari Company in profits.Political risks also include factors such as Gulf war and terrorism whichhugely damages consumer confidence.
Economic FactorsEconomicfactors generally help the growth of the Ferrari Company internationally.Exchange rates prevail the Ferrari automobile industry. The downturn ineconomics and growing cost in oil also affect the recession globally.
There is also a growing increase in fuelprices which dampens the buying and public demand for Ferrari products. Another prime factor that has influence onthe sales and marketing strategy in Ferrari is the economic crisis, any countrywill not be able to provide profit accordingly meaning the sales strategy is inmassive demand for change in each situation. The growth of emerging countriesalso influences the sales of Ferrari.Social FactorsSocialfactors tend to include demographic changes and also culture variation, whichhas a growing effect on the buying patterns on Ferrari. The increase inpopulation also affects the automobile industry as a whole. Age groups ofpeople 25 – 35 and over 65 groups are gradually increasing, so a potential agegroup drive means Ferrari sorts of cars are in its highest proportion. Theprioritised customer in Ferrari changes from time to time.
The impact Ferrarihas on the social generation is accordingly that it helps improve their livingstandards. The Ferrari products are adaptable with all living conditions andweather making it entirely user friendly.Technological FactorsTechnologyin today’s world keeps on evolving and changing. There tends to be a certainpattern which consumers follow. The advance in technology has allowed Ferrarito improve their products and give the best of what they can produce. Using newtechnology made Ferrari products unique and this resulted in more sales.
Anyupscale in the technology results in the influencing in its market. Peoplefollow the latest and new technology meaning Ferrari follows current demandsand uses dynamic technology to stay one step further from competitors. Legal FactorFerrari hasthe combination of high quality performance and unique design. Ferrari’s marketstrategy and adaptable nature makes it be used worldwide and being at the topof car brands means its price is reasonable for improving your standards andlifestyle.
Legal restrictions are applied on all Ferrari products taking careof all healthy and safety rules. This has an effect on the whole automobileindustry. The overall complete car manufacturing companies have to follow legallaws and regulations to maintain the brand name. Ferrari has a number onepriority to provide safety of the passenger. Emissions of fuel are also to beconsidered to users. Keeping the views of the laws that are passed to keepthings in check.
Environmental FactorsTheincreasing factors of the greenhouse effect and global warming have led todiversion of Ferrari to produce more eco-friendly cars and fuel cars. The rapidchange in preference and consumer taste allows Ferrari to focus on the changingpattern and demand. It is best for Ferrari to follow the dynamic behaviour andof the customers, which allows managing of resources efficiently. Ferrari hasbeen repeatedly contributing to the environment to keep it healthy and clean.Ferrari introduced the renewable energies and reduced polluting emissions. Notonly this, but it helps improve the lifestyle and health status of employees aswell. However, Ferrari also has to face some issues due to rapid changes in thegeographical environment of certain areas that has influence on sales and themarket of that area. InternalEnvironment (P4)Corporate culture Ferrari’sgreatest asset is having a workforce of 2900 people who work in the famous cityMaranello and Modena Scaglietti, two cities based in Italy.
The overall age ofa staff member is 28, with high levels of education, 60% of workers have adiploma, while 70% personnel have a degree. The percentage of non-Italians thatwork in the factories is just 5% and just over 20% office workers come from 29countries. Ferrari is symbolic company that has a thing for rewardingexcellence: those who show capability and ability will noticeably growthroughout the company. The culture of merit is part of the DNA at Ferrari,this is due because only excellent people can win challenges faced in themarket place and on the tracks around the world. This also mean Ferrari has toknow how to appreciate staff and marry expectations with specificorganizational demand.
Bearing this in mind there are clearly defined made tomeasure routes Ferrari go to for growth based characteristics of theindividual; whilst also considering the aims of the company and this is allsupported by significant investment throughout training. Over the last threeyears in the Ferrari workforce, they have had over 120,000 hours of training,as part of a five year personal training plan known as “Progetto Tailor Made,”in which the company invests 3 million Euros per year.Corporate CultureFerrari’sefforts regarding property come back to fruition within the polluting emissionsreduction programme, through the advance of potency within the cars themselvesand within the production method. Ferrari has invested with heavily within thestrategic space of the setting since 2001, once the corporate was given the ISOcertification.
In 2007, it received the Integrated Environmental Authorisation,whereas 2008 saw the beginning of self-generated energy with the primary starpanels fitted over the machining building at the Ferrari industrial plant. From2009, the most important energy manufacturing plant in European nation wentinto operation, manufacturing electricity and hot and cold water, exploitationfossil fuel. additional to the present in 2011 was a second electrical deviceinstallation over the construction offices. With the linking of all itsbuildings Ferrari is currently utterly freelance in terms of energy production,achieving a discount in CO2 emissions of forty second.As for theparticular cars, in 2007, Ferrari set itself the target of achieving afour-hundredth reduction in consumption and emissions for the vary of cars bythe top of 2012, through the appliance of a road map that aimed for Associatein Nursing improvement in energy potency, increasing the energy created andtherefore the vehicle as a full, reducing its energy necessities. hit thesetargets in conditions of real use of the cars by their homeowners positivelyfailed to stop the analysis in these areas distributed by the Maranelloengineers, with the result that the primary months of 2013 saw the introductionof the primary Ferrari that produces use of hybrid technology.An ISO certification isn’t a license thatallows Associate in Nursing activity. It just certifies that a managementsystem, producing method, service or documentation procedure has all the wantsfor standardization and quality assurance.
Corporate SocialResponsibilityThe qualityof the cars produced at Ferrari cannot be drawn away from the quality of life of those who work atFerrari factories, offices etc. Good lighting, air conditioning, a lowenvironmental impact, safety, noise control, green and restful areas, alongwith the most advanced technologies in today’s world, are the stand outfeatures of an organisation based on the principles of Formula Uomo. Theproject was established to allow all employees to best express their talent,creativity and passion from the skills they have gathered throughout their lifeof education.
Over thepast few years, further significant investment has been made to increase thegreen areas. These can be found both inside and out of the various factorybuildings and today cover a surface area of 165,000 square metres. Aloearborescens, buddleja blue and dianthus carthusianorum are just some of thehundreds of plant species than one can admire when strolling through thegrounds of Maranello. Sitting on a bench surrounded by greenery during a break,looking out the window drawn by the sound of an engine and even on theproduction line, it’s inevitable that one’s eyes are drawn to a bush in flower,some ferns or an evergreen tree. The engine assembly line boasts orangepoppies, while the mechanical department has tropical lilies, gems of rarebeauty that flower within the buildings. And that’s not all, with 25,000flowerbeds, gardens and all sorts of trees, the Ferrari campus is an innovativeworkplace where people’s wellbeing and the quality of the working environmentalways come first.There hasalso been a huge investment in safety at work, through the actual structuresand specific training, which has achieved significant results in all sectionsof the company.
Particularly effective has been the programme to highlight socalled near misses, which is to say, events that could have caused accidents,thanks to an effective involvement of the employees. Still on the topic ofsafety, there are defibrillators in every building. CompetitiveEnvironment – International (P4) Listed below are the main competitors that Ferrari faces intoday’s world. · Bugatti· Lamborghini· Porsche· BMW· Mercedes BenzFerrarisuccess cannot be measured in terms of revenues and sales, or in terms ofmarket capitalization. Ferrari never made an IPO and is not even quoted in anystock exchange market. Ferrari success has to be measured only in terms ofbrand value and product value.
The Ferrari brand is worth more than the Teslabrand, Major retailers such as Dior and Prada and even Smirnoff. No other brandhas the allure of the Ferrari Brand.Ferrari isknown and is highly valued everywhere in the world. From the US to Japan, fromGermany and Switzerland to India, to France, Australia, New Zealand, Russia,Brazil and Argentina. Yet, Ferrari never spent a penny in advertisement and thereasoning behind this is because the people who can afford the luxuriousFerrari aren’t sat around watching TV.Ferrari Main Markets As you cansee, Ferrari’s main markets are based all over the globe, making them aninternational competitor. Ferrari exceedin sales from all the across the globe as they have such an extinct productrange with F1 engines, making their product range unique. Having sales all overthe world looks good on Ferrari as it comes off worrying for major competitorssuch as Lamborghini, Mercedes.
Enzo Ferrari Achievement.The Ferraricase is of maximum interest in marketing strategy. To understand how Ferrariachieved this stunning result, we must review the beginning of Ferrari, and itsdevelopment.
Enzo Ferrari founded Ferrari back in 1943 Enzo Ferrari was not anEngineer, nor he was an entrepreneur. Enzo Ferrari never went to college, noteven high school; no PhD. Enzo Ferrari was just a mechanic at Alfa Romeo, witha strong passion for engines, speed and racing. He was a tough guy, and he hadhis own ideas on engines and cars. Passionhas always been the “drive” of Ferrari and its only marketing tool.
Situational Analysis SWOT: Strengths,Weaknesses, Opportunities and ThreatsStrengths:· Only premium sports-car maker with true racing heritagebehind there branding, car making etc.· Implementation of technology developed in F1 into road carsallowing the public to experience the feel of a F1 car and being the only carmake to do so.· F1 team serves as promotional platform making the brandmore out there in public terms.· Success of F1 team projected onto road cars.
Meaning moresales of Ferrari cars as only brand to have F1 technology imported into roadcars.· 15% revenue jump in 2007 thanks to strong sales of 599GTBand F430.· 45% trading profit increase over previous year in 2007.
· Sales rise in all markets in 2007 especially in emerging Asianand Middle-Eastern market. · Loyal customer base with high repeat purchasetendency. · High brand strength in the car industry.Weaknesses:· Limited production capacity within each model Ferrariproduces. Making each model harder to get for the public.· Long waiting lists, due to their “waiting list” model, theylose out on customers to the competition.· High servicing costs.
· Ferrari’sbusiness model, based around low volumes, removes the possibility of employingcertain technological solutions· Thatsame business model also limits their sales volumes even though a lot moredemand is present in the market.· A bigchallenge lying in wait is fuel efficiency & emissions which are growing inimportance every day, thanks to spreading concerns over the environment.Opportunities:· Off-road/SUV market entry possible with newfour-wheel-drive system in development to add to Ferrari’s product range.
· Possible release of new Millechili lightweight model, promising42% less fuel consumption, lower emissions, less weight, and size than currentmodels.· Release of the Fioravanti-patented rotating roof conceptcould further drive sales up and strengthen competitive advantage and helpdifferentiate brand. · Growth in the global market forhigh-performance super-cars due to growing economies & developing nations.· Expansion of the brand throughentering into new & important automotive markets like India whereincompetitors like Porsche have already set up base.Threats:· Possible problems with F1 team could be projected onto roadcars.· New EU requirements for emissions target to be implementedby 2012 are a fourth of what Ferrari cars emit now.
· Pressure to improve fuel economy as the cars has highemission when on roads.· Counterfeiting business could be damaging to image and takesome revenue to make Ferrari look bad.· Tries to reduce fuel consumption and emissions could affectperformance of the vehicle. · Talks about an implementation of four-wheel-drive in futurecars might deter traditional Ferraris used to rear-wheel-drive. · Tough competition from other iconicsuper car brands like Lamborghini and Porsche. MarketStructure:· Perfect competition : a market structure in which the following five criteria are met: 1) Allfirms sell an identical product; 2) All firms are price takers – they cannotcontrol the market price of their product; 3) All firms have a relatively smallmarket share; 4) Buyers have complete information about the product.
· Monopoly: Amarket structure characterized by a single seller, selling a unique product inthe market. In a monopoly market, the seller faces no competition, as he is thesole seller of goods with no close substitute.· Oligopoly: amarket structure in which a few firms dominate.
When a market is shared betweena few firms, it is said to be highly concentrated. Although only a few firmsdominate, it is possible that many small firms may also operate in the market.· Imperfect Competition: a type of market structure showing some but not all features ofcompetitive markets. Forms of imperfect competition include: Oligopoly,competition among 10.Ferrari isan oligopoly because it produces cars that are one of a kind. Also there isonly a smaller amount of car distributors which makes it different than amonopoly.
Since their cars are one of a kind, no one can reproduce the same caras them, which makes them an oligopoly. If there is a market with limitedcompetition, in which a market is shared by a small number of producers orsellers. An oligopoly is similar to a monopoly, except that rather than onefirm, two or more firms dominate the market. Few Numbers of Firms – In the desired market that Ferrari isin, there are a few other firms which match Ferrari and can be called a viablecompetitor, these firms vary from Lamborghini, Maserati, Mercedes and manymore.
The industry Ferrari is in is very narrowin competition; every competitor is vastly popular and changing the standardday by day.Standardized or differentiatedProducts – Ferrariis very unique in the motorsport and car industry. They have developed engines,car shape, and interiors that have stunned the world. Red is the colour ofblood, the colour of passion, the colour of love. It´s also the motorsportcolour for Italy. So of course it’s also the colour for Ferrari, which hasalways raced in red. And if you think about it, the majority of Ferraris yousee on the streets are red. Ferrari isin the section of differentiated products; if another brand copies them theyhave the power to copyright them and sue for millions; that is how powerful andexclusive Ferrari is.
Limited control over price – It’s an expensive car. No way aroundit. However it has the desired effect.
Only rich people buy Ferrari’s. And thatgives the brand a touch of exclusivity, luxury, wealth and of course a bit ofsnugness. This creates a feeling in those who can’t afford one that can be onlybeing fulfilled with Ferrari merchandise. Eye-wear, perfumes, clothes, cellphones, portable computers and even versions of other cars. The cheapestFerrari is at the cost of £180,000 brand new from the dealership and the mostexpensive is £1.7 million; defying Ferrari has a very expensive product line tooffer to the wealthy customers.Significant obstacles of entry – It depends on the model of Ferrari weare talking about as each model has much more capability than others, thereforemore requirements are needed to go for that specific model:· V8 models – you can walk into anyFerrari dealership and go through the normal process of buying a car.· V12 models – with a V12 model, youneed more experience as a driver and it will be a bit more difficult topurchase the car as there will be more to cover.
· Limited editions (Speciale A,F12tdf): You need to own a Ferrari in your garage to purchase this productrange.· The Big Five (288GTO to LaFerrari):At this point we are looking at several Ferraris in your garage, including somethird and fourth stage models. And then Ferrari will let you hand in 1 millionUSD to buy the LaFerrari.· The XX Programme (599XX and FerrariXX): Well, you need to be pretty important for Ferrari to “sell” you onevehicle at this stage.· The F1 programs (ex-F1 car): this isthe final stage of owning a Ferrari, you are not even considered a customer;you are considered a client of Ferrari themselves.
Relationshipbetween Supply, Demand and PriceIsFerrari inelastic or elastic?Ferrari is avery expensive company in today’s generation. In my own opinion I would not sayit is a necessity for the people of today’s world however there is a marketthat stays very up to date with supercars and Ferrari being a very talked aboutsuper car brand are a brand that is highly followed in that market. Some wouldsay Ferrari is elastic, on the other hand if Ferrari lowered the price of theLaFerrari by £1000, it wouldn’t change the demand dramatically arguing thatFerrari is inelastic too. There are alot of alternatives to Ferrari, such as Lamborghini, Maserati and MercedesBenz.
Customers would fight for the best price on the products they will buy;therefore if Ferrari had a price increase some customers may consider switchingto their alternative options. Buying a supercar is a very expensive step,therefore getting the best value is a key stage in the process of purchasing,if alternatives are serving better value, this could decrease Ferrari’s sales.