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Ferrari has a unique marketing system for their product. Since Mr. Ferrari passed on, the company continues with his plan. Sell cars only to finance racing. A buyer of the car is secondary.

This is a most different approach to selling ones service or product. Buyers normally are sought after. With Ferrari, one goes into the seller with hat in hand. “Would you please sell me one of your cars?” If their say “Yes”, I have at the very least two years before delivery.

Man, I wish I had such a great thing that the world would be at my doorstep trying to give me some serious money.

8)

Only drive 12 cylinders
 

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Bart,

Excellent post and excellent point. It is not far from the truth which makes it all the more fun to read your post. I think it is every marketers dream but only Ferrari has achieved it.
 

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Enzo250GTO said:
Bart,

Excellent post and excellent point. It is not far from the truth which makes it all the more fun to read your post. I think it is every marketers dream but only Ferrari has achieved it.
Absolutely brilliant marketing by Enzo. A few of the Swiss watch makers have also achieved this but only on certain models (Patek, Rolex - Dive Watches)
 

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I beg to differ.
The only true measure of a business model is profitability, and Ferrari's profitability is abysmal, they barely break even.
One can argue that it is a strong brand, but the purpose of a brand is long term shareholder return. Consider to which extremes Ferrari is over-merchandised, and whether milking the Cavallino that way is ultimately detrimental.
The old man may have started the commercial car biz to fund his hobby, but I think that claiming that this model applies today is naive.

Ferrari belongs to shareholders who expect a return. This return will probably only come once they eventually manage this long delayed IPO. You can then expect cold-blooded economic criteria to apply, and by such standards, Ferrari appears to be a very troubled company.

Sure, some blame it on R&D expenses on the Maserati line-up, we'll see in FY05 how true that is now that Maserati has been spun off to join Alfa Romeo. Btw who would argue that the integration followed by a spin-off a couple years later is a sound, well planned strategy ?

So how can profitability improve ?
Going to higher volumes is risky.
Charging higher ASPs is not viable due to competition.
Squeezing higher margins from commercial cars will be a challenge, volumes are everything.
Stretching merchandizing further hardly sounds possible.
Extending income from services (driving courses, test days, corse clienti, paddock access) has a limited potential which has already been largely tapped IMO.

Want benchmarks in the auto industry ? Look at Renault, Nissan or Porsche.
 

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ze_shark said:
I beg to differ.

Ferrari belongs to shareholders who expect a return. This return will probably only come once they eventually manage this long delayed IPO. You can then expect cold-blooded economic criteria to apply, and by such standards, Ferrari appears to be a very troubled company.

Sure, some blame it on R&D expenses on the Maserati line-up, we'll see in FY05 how true that is now that Maserati has been spun off to join Alfa Romeo. Btw who would argue that the integration followed by a spin-off a couple years later is a sound, well planned strategy ?
Very valid point. Ferrari's troubles today are due to it still being tied to Fiat which has led to the lack of a long term strategy. I do not believe you will get the long term vision until you have full independence. In terms of Brand value, Ferrari has to be one of the worlds most recognized brands. What it needs today is better strategic marketing to properly leverage this asset (vs slapping a Prancing Horse on any and all red items that will pay a commision).
 

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I am not sure (that means I have no element to judge either way) if Gruppo Fiat is to blame for absence of a clear strategy.
Gruppo Fiat is a major shareholder beside Mediobanca and Piero Ferrari, but they barely have the majority and will lose it once or if Ferrari goes public.
Ferrari has a board and a CEO like any other company, so they have the strategy (or lack thereof) that the board allowed them to have. LdM being a prominent figure in Italy and Ferrari a popular icon, I would be surprised if Ferrari had had their wings clipped by Fiat Group.

To me that Maserati in Maserati out is a symptom of a lack of vision. The disruptions this will create are probably going to be significant. Most PR focused on R&D, but what about sales channels ?
Maserati painfully rebuilt a dealer network through Ferrari outlets, but are they now going to move to the Alfa-Romeo dealer network ? What impact will that have on Ferrari dealerships ? On the Maserati customer base ?

Back to Ferrari, how can this company have a bottom line growth strategy if they can't increase the top line and can't increase margins ? A strong brand is an asset if you put it at work. The rumours about the Dino project may be part of the answer. The Boxster saved Porsche after all.
 
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