The Ferrari brand sells nearly as much merchandise as cars

Ferrari is one of the most desired luxury car brands in the world. To Italians around the world, the Ferrari brand screams the passion they hold for the Italian culture. As other brands hope to claim their value by selling more, They make their money by actually selling fewer cars. This is a great case study for marketers to build desire for your brand. With all the pent-up desires, Ferrari sells nearly as much merchandise as it does cars. Ferrari clearly understands their brand positioning

Ferrari case study for the Ferrari brand strategy

While most marketers ask “what consumers do we want to get” when thinking of a target market, I ask a slightly different question of “who wants us?” 

You should be looking for those who are already motivated and bringing them in first. Then use their energy to help fuel passion for your brand. 

Once you have the most motivated consumers, you can tap into their desires and build a tight bond with these brand fans. You will see the bond becomes a source of power for your brand to drive profits. 

The reason you want to create brand love: more profits.

Ferrari brand

Ferrari spends nothing on advertising, everything on the F1 race.

They put all their money into the Scuderia Ferrari F1 racing team, knowing that a win in front 500 million viewers each week fuels that desire for the brand. While Ferrari was the dominant winning team from 2000-2007, most recently they have struggled on the track behind Mercedes. Scuderia is Italian for a stable reserved for racing horses, closely linked the prancing horse in the Ferrari logo. Ferrari supplies engines for 4 of the F1 race teams. 

No matter what part of the world, whether in Australia, Britain or Brazil, it is the screaming Ferrari fans with their faces painted red, who are the most passionate among the crowd. The passion of these fans will continue to fuel Ferrari on the race track to catch up with Mercedes. They have to. It is crucial to the brand’s success.

Ferrari Race Team

Ferrari brand positioning

Ferrari stands for Italian passion.

The brand idea is “Italian Excellence that makes the world dream.” They clearly understand the brand’s role in tapping into the pride of Italians around the world. Most fans of Ferrari will never own a car. It will be a lifelong dream. Instead, these brand fans will buy tee shirts, hats, sunglasses, key chains and anything that projects their association with the brand. The branded merchandise accounts for $1.5 – $2 billion in sales each year. That’s a significant contribution to Ferrari’s $4 – $5 billion in revenue each year. 

A lot of this merchandise is anything but cheap. 

A model of the coveted Ferrari F14T at 1:8 scale costs $5,400. Ferrari sunglasses retail for more than $200. It all adds up and helps to make Ferrari one of the most valuable automotive companies in the world. Moreover, there is now a Ferrari theme park in UAE. 

Ferrari limits production on cars.

Since back in the 1990s, Ferrari has found tremendous success in using the pent-up desire to fuel their success. While everyone should want a Ferrari, not everyone should have one.  This keeps the price high. 

By focusing on extraordinary vehicle design and exclusivity, Ferrari is able to sell luxury cars with high-profit margins. Increasing profitability with high margins has been a key driver of revenue growth. They reported EBITDA margins of 25%, which is quite high as compared to other luxury car manufacturers as well as the industry average.

While they have allowed the car volumes to inch up, and it appears they are finally releasing their SUV at a $350,000 price point. 

Ferrari brand identity

The purpose behind the brand is clear

“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”.

Very motivating to consumers in the marketplace, as well as internally, for everyone who works on the Ferrari brand.

Luca Cordero di Montezemolo, the former Chairman of Ferrari talked about the link between the history and traditions. “I want to maintain the link with the past, with the tradition and with the history but don’t want to be in the prison of the history. I want to be in the prison of the future.”

Ferrari brand strategy

The two issues in the future:

Building out the marketing plan, these are their two biggest key issues that help frame their strategy statements for the future.

  • How will they improve their performance on the F1 track, to beat Mercedes, and keep the passion of their fans alive?
  • With changing regulations on fuel emissions, around the world, how can the brand advance on Hybrid technology so that it can maintain its standing as a modern car?

It looks like as we head into the F1 season, there will be pressure for the Ferrari brand to step up their performance on the track. All those fans with their faces painted red want victories.

For marketers, who are your most motivated consumers? And, how can you turn them into passionate brand fans?

Tesla brand

If you like cars, you will enjoy our Tesla Case StudyTesla has used the hype-style marketing style of Apple. Elon Musk has borrowed from the Steve Jobs playbook. He uses event-style marketing, an outspoken visionary voice, and he is continually challenging the status quo. Yes, he goes offside on Twitter all the time, but we might be glad that we never saw Steve Jobs tweet. 

 

 

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Contact Information

Graham Robertson

Email: graham@beloved-brands.com

Phone: 416–885–3911

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