Introduction
of the Business (P4)

Ferrari is
an Italian sports car manufacturer based in Maranello, Italy. Founded by Enzo
Ferrari in 1939 out of Alfa Romeo’s race division in Italy, the company built
its first car in 1940. However the company’s first manufactured and sourced car
was completed in 1947, this marked the first Ferrari-badged car was now
completed.

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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 private
transaction for £38.1 million.

Throughout
its history, the company has been noted for its continued participation in
racing, especially in Formula One, where it is the most successful racing team,
holding the most constructors championships (16) and having produced the
highest number of winning drivers (15).   Ferrari road cars are generally seen as a
symbol of speed, luxury and wealth. The legendary “prancing horse”
has also been a cornerstone of Formula One racing since the beginning of the
World Championship series in the 1950s. Purchased by the Fiat Group in 1969,
Ferrari has maintained a presence in motorsports, particularly Formula One. At
the same time, the Italian automaker has also produced such famous road cars as
the Dino, 288 GTO, F40, F50 and Enzo.

Enzo Ferrari – Founder of Ferrari

Enzo Ferrari
was a racing driver who founded the Italian sports car manufacturer bearing his
name. Ferrari cars are generally seen as a symbol of luxury and wealth

He was born
Enzo 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 car
races in the 1908 Circuit di Bologna, and he decided to become a race car
driver. He received little formal education, and in his youth during WWI he was
shoeing mules during his assignment to the Alpine Artillery division of the
Italian Army. Both his father and brother died in 1916 as a result of Italian
flu outbreak and the family business collapsed.

External
Environment – PESTLE Analysis (P4)

Political Factors

Political
factors generally affect the Ferrari automobile industry directly. The factors
generally revolve around environmental factors, which are obviously considered
by Ferrari. Policies set by the government, often affects the sales of Ferrari
cars meaning they have to change their marketing strategy. The laws and rules
set by the government have to be followed by Ferrari which influences change in
the sale and trade of Ferrari products. There would also be change in
employee’s contracts which would affect the Ferrari Company in profits.
Political risks also include factors such as Gulf war and terrorism which
hugely damages consumer confidence.

Economic Factors

Economic
factors generally help the growth of the Ferrari Company internationally.
Exchange rates prevail the Ferrari automobile industry. The downturn in
economics and growing cost in oil also affect the recession globally.  There is also a growing increase in fuel
prices which dampens the buying and public demand for Ferrari products.  Another prime factor that has influence on
the sales and marketing strategy in Ferrari is the economic crisis, any country
will not be able to provide profit accordingly meaning the sales strategy is in
massive demand for change in each situation. The growth of emerging countries
also influences the sales of Ferrari.

Social Factors

Social
factors tend to include demographic changes and also culture variation, which
has a growing effect on the buying patterns on Ferrari. The increase in
population also affects the automobile industry as a whole. Age groups of
people 25 – 35 and over 65 groups are gradually increasing, so a potential age
group drive means Ferrari sorts of cars are in its highest proportion. The
prioritised customer in Ferrari changes from time to time. The impact Ferrari
has on the social generation is accordingly that it helps improve their living
standards. The Ferrari products are adaptable with all living conditions and
weather making it entirely user friendly.

Technological Factors

Technology
in today’s world keeps on evolving and changing. There tends to be a certain
pattern which consumers follow. The advance in technology has allowed Ferrari
to improve their products and give the best of what they can produce. Using new
technology made Ferrari products unique and this resulted in more sales. Any
upscale in the technology results in the influencing in its market. People
follow the latest and new technology meaning Ferrari follows current demands
and uses dynamic technology to stay one step further from competitors. 

Legal Factor

Ferrari has
the combination of high quality performance and unique design. Ferrari’s market
strategy and adaptable nature makes it be used worldwide and being at the top
of car brands means its price is reasonable for improving your standards and
lifestyle. Legal restrictions are applied on all Ferrari products taking care
of all healthy and safety rules. This has an effect on the whole automobile
industry. The overall complete car manufacturing companies have to follow legal
laws and regulations to maintain the brand name. Ferrari has a number one
priority to provide safety of the passenger. Emissions of fuel are also to be
considered to users. Keeping the views of the laws that are passed to keep
things in check.

Environmental Factors

The
increasing factors of the greenhouse effect and global warming have led to
diversion of Ferrari to produce more eco-friendly cars and fuel cars. The rapid
change in preference and consumer taste allows Ferrari to focus on the changing
pattern and demand. It is best for Ferrari to follow the dynamic behaviour and
of the customers, which allows managing of resources efficiently. Ferrari has
been repeatedly contributing to the environment to keep it healthy and clean.
Ferrari introduced the renewable energies and reduced polluting emissions. Not
only this, but it helps improve the lifestyle and health status of employees as
well. However, Ferrari also has to face some issues due to rapid changes in the
geographical environment of certain areas that has influence on sales and the
market of that area.

Internal
Environment (P4)

Corporate culture

Ferrari’s
greatest asset is having a workforce of 2900 people who work in the famous city
Maranello and Modena Scaglietti, two cities based in Italy. The overall age of
a staff member is 28, with high levels of education, 60% of workers have a
diploma, while 70% personnel have a degree. The percentage of non-Italians that
work in the factories is just 5% and just over 20% office workers come from 29
countries. Ferrari is symbolic company that has a thing for rewarding
excellence: those who show capability and ability will noticeably grow
throughout 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 the
market place and on the tracks around the world. This also mean Ferrari has to
know how to appreciate staff and marry expectations with specific
organizational demand. Bearing this in mind there are clearly defined made to
measure routes Ferrari go to for growth based characteristics of the
individual; whilst also considering the aims of the company and this is all
supported by significant investment throughout training. Over the last three
years 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 Culture

Ferrari’s
efforts regarding property come back to fruition within the polluting emissions
reduction programme, through the advance of potency within the cars themselves
and within the production method. Ferrari has invested with heavily within the
strategic space of the setting since 2001, once the corporate was given the ISO
certification. In 2007, it received the Integrated Environmental Authorisation,
whereas 2008 saw the beginning of self-generated energy with the primary star
panels fitted over the machining building at the Ferrari industrial plant. From
2009, the most important energy manufacturing plant in European nation went
into operation, manufacturing electricity and hot and cold water, exploitation
fossil fuel. additional to the present in 2011 was a second electrical device
installation over the construction offices. With the linking of all its
buildings Ferrari is currently utterly freelance in terms of energy production,
achieving a discount in CO2 emissions of forty second.

As for the
particular cars, in 2007, Ferrari set itself the target of achieving a
four-hundredth reduction in consumption and emissions for the vary of cars by
the top of 2012, through the appliance of a road map that aimed for Associate
in Nursing improvement in energy potency, increasing the energy created and
therefore the vehicle as a full, reducing its energy necessities. hit these
targets in conditions of real use of the cars by their homeowners positively
failed to stop the analysis in these areas distributed by the Maranello
engineers, with the result that the primary months of 2013 saw the introduction
of the primary Ferrari that produces use of hybrid technology.

An ISO certification isn’t a license that
allows Associate in Nursing activity. It just certifies that a management
system, producing method, service or documentation procedure has all the wants
for standardization and quality assurance.

Corporate Social
Responsibility

The quality
of the cars produced at Ferrari cannot be drawn away  from the quality of life of those who work at
Ferrari factories, offices etc. Good lighting, air conditioning, a low
environmental impact, safety, noise control, green and restful areas, along
with the most advanced technologies in today’s world, are the stand out
features of an organisation based on the principles of Formula Uomo. The
project was established to allow all employees to best express their talent,
creativity and passion from the skills they have gathered throughout their life
of education.

Over the
past few years, further significant investment has been made to increase the
green areas. These can be found both inside and out of the various factory
buildings and today cover a surface area of 165,000 square metres. Aloe
arborescens, buddleja blue and dianthus carthusianorum are just some of the
hundreds of plant species than one can admire when strolling through the
grounds 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 the
production 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 orange
poppies, while the mechanical department has tropical lilies, gems of rare
beauty that flower within the buildings. And that’s not all, with 25,000
flowerbeds, gardens and all sorts of trees, the Ferrari campus is an innovative
workplace where people’s wellbeing and the quality of the working environment
always come first.

There has
also been a huge investment in safety at work, through the actual structures
and specific training, which has achieved significant results in all sections
of the company. Particularly effective has been the programme to highlight so
called near misses, which is to say, events that could have caused accidents,
thanks to an effective involvement of the employees. Still on the topic of
safety, there are defibrillators in every building.

 

Competitive
Environment – International (P4)

Listed below are the main competitors that Ferrari faces in
today’s world.

·       Bugatti

·       Lamborghini

·       Porsche

·       BMW

·       Mercedes Benz

Ferrari
success cannot be measured in terms of revenues and sales, or in terms of
market capitalization. Ferrari never made an IPO and is not even quoted in any
stock exchange market. Ferrari success has to be measured only in terms of
brand value and product value. The Ferrari brand is worth more than the Tesla
brand, Major retailers such as Dior and Prada and even Smirnoff. No other brand
has the allure of the Ferrari Brand.

Ferrari is
known and is highly valued everywhere in the world. From the US to Japan, from
Germany and Switzerland to India, to France, Australia, New Zealand, Russia,
Brazil and Argentina. Yet, Ferrari never spent a penny in advertisement and the
reasoning behind this is because the people who can afford the luxurious
Ferrari aren’t sat around watching TV.

Ferrari Main Markets                       

As you can
see, Ferrari’s main markets are based all over the globe, making them an
international competitor.  Ferrari exceed
in sales from all the across the globe as they have such an extinct product
range with F1 engines, making their product range unique. Having sales all over
the world looks good on Ferrari as it comes off worrying for major competitors
such as Lamborghini, Mercedes.

Enzo Ferrari Achievement.

The Ferrari
case is of maximum interest in marketing strategy. To understand how Ferrari
achieved this stunning result, we must review the beginning of Ferrari, and its
development. Enzo Ferrari founded Ferrari back in 1943 Enzo Ferrari was not an
Engineer, nor he was an entrepreneur. Enzo Ferrari never went to college, not
even high school; no PhD. Enzo Ferrari was just a mechanic at Alfa Romeo, with
a strong passion for engines, speed and racing. He was a tough guy, and he had
his own ideas on engines and cars.  Passion
has always been the “drive” of Ferrari and its only marketing tool.

Situational Analysis SWOT: Strengths,
Weaknesses, Opportunities and Threats

Strengths:

·       Only premium sports-car maker with true racing heritage
behind there branding, car making etc.

·       Implementation of technology developed in F1 into road cars
allowing the public to experience the feel of a F1 car and being the only car
make to do so.

·       F1 team serves as promotional platform making the brand
more out there in public terms.

·       Success of F1 team projected onto road cars. Meaning more
sales of Ferrari cars as only brand to have F1 technology imported into road
cars.

·       15% revenue jump in 2007 thanks to strong sales of 599GTB
and F430.

·       45% trading profit increase over previous year in 2007.

·       Sales rise in all markets in 2007 especially in emerging Asian
and Middle-Eastern market.

·       Loyal customer base with high repeat purchase
tendency. 

·       High brand strength in the car industry.

Weaknesses:

·       Limited production capacity within each model Ferrari
produces. Making each model harder to get for the public.

·       Long waiting lists, due to their “waiting list” model, they
lose out on customers to the competition.

·       High servicing costs.

·       Ferrari’s
business model, based around low volumes, removes the possibility of employing
certain technological solutions

·       That
same business model also limits their sales volumes even though a lot more
demand is present in the market.

·       A big
challenge lying in wait is fuel efficiency & emissions which are growing in
importance every day, thanks to spreading concerns over the environment.

Opportunities:

·       Off-road/SUV market entry possible with new
four-wheel-drive system in development to add to Ferrari’s product range.

·       Possible release of new Millechili lightweight model, promising
42% less fuel consumption, lower emissions, less weight, and size than current
models.

·       Release of the Fioravanti-patented rotating roof concept
could further drive sales up and strengthen competitive advantage and help
differentiate brand.

·       Growth in the 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.

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.

·       Pressure to improve fuel economy as the cars has high
emission when on roads.

·       Counterfeiting business could be damaging to image and take
some revenue to make Ferrari look bad.

·       Tries to reduce fuel consumption and emissions could affect
performance of the vehicle.

·       Talks about an implementation of four-wheel-drive in future
cars might deter traditional Ferraris used to rear-wheel-drive.

·       Tough competition from other iconic
super car brands like Lamborghini and Porsche.

 

 

 

 

Market
Structure:

·       Perfect competition : a market structure in which the following five criteria are met: 1) All
firms sell an identical product; 2) All firms are price takers – they cannot
control the market price of their product; 3) All firms have a relatively small
market share; 4) Buyers have complete information about the product.

·       Monopoly: A
market structure characterized by a single seller, selling a unique product in
the market. In a monopoly market, the seller faces no competition, as he is the
sole seller of goods with no close substitute.

·       Oligopoly: a
market structure in which a few firms dominate. When a market is shared between
a few firms, it is said to be highly concentrated. Although only a few firms
dominate, 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 of
competitive markets. Forms of imperfect competition include: Oligopoly,
competition among 10.

Ferrari is
an oligopoly because it produces cars that are one of a kind. Also there is
only a smaller amount of car distributors which makes it different than a
monopoly. Since their cars are one of a kind, no one can reproduce the same car
as them, which makes them an oligopoly. If there is a market with limited
competition, in which a market is shared by a small number of producers or
sellers. An oligopoly is similar to a monopoly, except that rather than one
firm, two or more firms dominate the market.

Few Numbers of Firms – In the desired market that Ferrari is
in, there are a few other firms which match Ferrari and can be called a viable
competitor, these firms vary from Lamborghini, Maserati, Mercedes and many
more.  The industry Ferrari is in is very narrow
in competition; every competitor is vastly popular and changing the standard
day by day.

Standardized or differentiated
Products – Ferrari
is 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 of
blood, the colour of passion, the colour of love. It´s also the motorsport
colour for Italy. So of course it’s also the colour for Ferrari, which has
always raced in red. And if you think about it, the majority of Ferraris you
see on the streets are red.  Ferrari is
in the section of differentiated products; if another brand copies them they
have the power to copyright them and sue for millions; that is how powerful and
exclusive Ferrari is.

Limited control over price – It’s an expensive car. No way around
it. However it has the desired effect. Only rich people buy Ferrari’s. And that
gives the brand a touch of exclusivity, luxury, wealth and of course a bit of
snugness. This creates a feeling in those who can’t afford one that can be only
being fulfilled with Ferrari merchandise. Eye-wear, perfumes, clothes, cell
phones, portable computers and even versions of other cars. The cheapest
Ferrari is at the cost of £180,000 brand new from the dealership and the most
expensive is £1.7 million; defying Ferrari has a very expensive product line to
offer to the wealthy customers.

Significant obstacles of entry – It depends on the model of Ferrari we
are talking about as each model has much more capability than others, therefore
more requirements are needed to go for that specific model:

·       V8 models – you can walk into any
Ferrari dealership and go through the normal process of buying a car.

·       V12 models – with a V12 model, you
need more experience as a driver and it will be a bit more difficult to
purchase 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 product
range.

·       The Big Five (288GTO to LaFerrari):
At this point we are looking at several Ferraris in your garage, including some
third and fourth stage models. And then Ferrari will let you hand in 1 million
USD to buy the LaFerrari.

·       The XX Programme (599XX and Ferrari
XX): Well, you need to be pretty important for Ferrari to “sell” you one
vehicle at this stage.

·       The F1 programs (ex-F1 car): this is
the final stage of owning a Ferrari, you are not even considered a customer;
you are considered a client of Ferrari themselves.

Relationship
between Supply, Demand and Price

Is
Ferrari inelastic or elastic?

Ferrari is a
very expensive company in today’s generation. In my own opinion I would not say
it is a necessity for the people of today’s world however there is a market
that stays very up to date with supercars and Ferrari being a very talked about
super car brand are a brand that is highly followed in that market. Some would
say Ferrari is elastic, on the other hand if Ferrari lowered the price of the
LaFerrari by £1000, it wouldn’t change the demand dramatically arguing that
Ferrari is inelastic too.

There are a
lot of alternatives to Ferrari, such as Lamborghini, Maserati and Mercedes
Benz. Customers would fight for the best price on the products they will buy;
therefore if Ferrari had a price increase some customers may consider switching
to 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. 

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