Building Powerful Brands- Ferrari Case

ABSTRACT

This article uses a number of well known marketing models to explore the nature of the Ferrari

brand, its past heritage, its current definition and some market place factors which may impinge on

its future development in global markets. Based largely on published sources the article also draws

on depth interviews with Ferrari executives from the UK and Chinese distributors. The article

begins with a review of Ferrari's history, which is crucial for understanding the importance of

heritage to the nature of the brand. It then attempts to apply to Ferrari selected branding concepts

such as underpinning anchor values, brand personality, and brand positioning which, itself, is

further disaggregated into aspects such as target segments, differentiation and positioning by culture

and country of origin. The article also reviews the growth of the brand in terms of its potential for

extension and stretching and some of the issues faced as it strives for global brand status. The article

concludes by proposing a new acronym for summarising the key elements which must be carefully

managed in order to sustain and nurture brand equity.

Ferrari is a name that is synonymous with high performance cars, both on the raceway and on the

motorway. Building fine and exotic cars in a category that most car enthusiasts would call the

‘super car’ category, the worlds most famous racing car producer had churned up numerous power

laden cars that surprised the motor industry in terms of speed, performance and reliability. Ferrari

has become the leader of Italian auto manufacturers industry, and till today represents the finest of

Italian craft in the mechanics of auto propulsion.

Focusing on the sports car brand Ferrari, we analysed marketing strategies and their success in two

different markets, the Italian and the German one but especially the worldwide. For the

investigation we used business theories such as the marketing mix, product life cycle, the Boston

Consulting Group matrix, analysis of segmentation and positioning. Although these two large

economically stable countries are quite different, Ferrari doesn’t make many differences in the way

of seelling cars. We will explain the way the company works.

Key Words: Ferrari, marketing mix, marketind strategies, brand, brand strategies

CASE STUDY: FERRARI BRAND ANALYSIS

The Italian Stallion: A History of Ferrari

When Enzo Ferrari created his company Scuderia Ferrari in Italy in 1929 his intentions was to

sponsor amateur race car drivers and invent racing cars, and it would take more than 15 years before

Ferrari began to create their own road cars in 1946. Ferrari is still devoted to the creation of racing

cars and high performance sports cars and do not create other types of cars. Scuderia Ferrari is still

the widespread name for Gestione Sportiva, the part of the Ferrari company that works with racing.

Scuderia is an Italian word and means "stable", but Scuderia Ferrari is sometime also translated as

Team Ferrari.

During the early years, Scuderia Ferrari sponsored race car drivers that were driving Alfa Romeo

cars. Scuderia Ferrari would prepare Alfa Romeo cars before the race, and in 1938 Enzo Ferrari

became officially employed by Alfa Romeo's racing department. Two years later Enzo Ferrari found

out that Alfa Romeo was planning to absorb Scuderia Ferrari, a plan which Enzo Ferrari strongly

opposed. He instantly left his job at Alfa Romeo, but his contract restricted him from being involved

with racing for several years. He changed Scuderia Ferrari into "Auto Avio Costruzioni Ferrari" and

officially manufactured aircraft accessories for a few years. Enzo Ferrari did however create a race

car during this restricted period. The Tipo 815 debuted at the Mille Miglia race in 1940, but the race

was hampered due to World War II and Tipo 815 encountered no real competition. In 1943 Enzo

Ferrari moved his factory to Maranello in Italy and one year later the factory was bombed. After the

end of World War II, Enzo Ferrari rebuilt his factory and now the Ferrari factory was capable of

construction road cars as well.

Ferrari constructed its first road car in 1947. The 1947 125 S Ferrari had a 1.5 L V12 engine and the

whole car was considered very beautiful and well designed. Enzo Ferrari was still more interested in

race cars and the Ferrari road cars was merely a way for him to fund his work with the Scuderia

Ferrari. His distaste for the road car customers became famous and he even accused them of buying

Ferrari cars only as status symbols. It is true that the Ferrari road cars grow to fame not only due to

excellent performance but also thanks to their stylish elegance. Pininfarina, Bertone, Ghia,

Scagliette, Touring and Vignale are all examples of design houses that have worked with Ferrari.

In November 1961 a dispute between Enzo Ferrari and his sales manager, Girolamo Gardini, turned

into a crisis. Girolamo Gardini threatened to leave the company. Enzo Ferrari responded to the

threat by throwing out Girolamo Gardini, and several employees who agreed with Girolamo Gardini

were also ousted. Among them were Romolo Tavoni, manager for Scuderia Ferrari, Giotto

Bizzarrini, the chief of the experimental sports car development, and Carlo Chiti, the chief engineer.

This was naturally a huge loss for the Ferrari company and the crisis deepened when those who had

been thrown out formed their own company - Automobili Turismo e Sport (ATS). ATS even

managed to take over Scuderia Serenissima, a very successful racing team, from Ferrari.

A younger engineer, Mauro Forghieri, and an experienced racing bodyman, Sergio Scaglietti,

assumed responsibility and tried to finish the projects that the leaving employees had left behind.

One of the most important tasks was to finish the development of 250 GTO; a new 250-based

model that could compete with the Jaguar E-type. The 250 GTO was finished in time to participate

in the Sebring race and place itself first in class, driven by Phil Hill. Throughout 1962, the 250 GTO

continued to win the races and it is still one of the most well known race cars in history. The crisis

turned out to be something good for Ferrari and the 1960s became a very good decade for the

company.

Until the 1980s when Ferrari began to use fuel injection in the road cars, the Ferraris were known as

rather temperamental cars. They could be very unreliable, but would still attract a large group of

dedicated fans that viewed this unpredictability as "character" rather than a problem. Today, FIAT

controls 56 percent of the Ferrari stocks. The rest of stocks owned by Enzo's con Piero Ferrari and

by Commerzbank, Mediobanca and the Lehman Brothers. Maranello is still the home town for

Ferrari.

Unlike many similar yet independent companies, Fiat Group- owned Ferrari continued to thrive

after the death of its charismatic founder and is today one of the most successful sports car

companies in the world.

1947 - The beginning

The first Ferrari road car was the 125 Sport in 1947, powered by a 1.5 L V12 engine; Enzo

reluctantly built and sold his automobiles to fund the Scuderia. While his beautiful and blazingly

fast cars quickly gained a reputation for excellence, Enzo maintained a famous distaste for his

customers, most of whom he felt were buying his cars for the prestige and not the performance.

1961 - The great walkout

Enzo Ferrari's strong personality had served his company and racing team well for decades. But

internal tensions reached the boiling point in November 1961 Long-time sales manager, Giralomo

Gardini, had long chafed at Enzo's wife, Laura's, involvement in the company. The two frequently

argued, but their dispute became a crisis for the company when Gardini made an ultimatum to

Enzo; If tensions continued, he would leave the company. Enzo was never a man to accept a

challenge to his authority, and he dealt with the situation with a typically heavy hand. Gardini was

ousted, as was Scuderia Ferrari manager, Romolo Tavoni, chief engineer Carlo Chiti, experimental

sports car development chief, Giotto Bizzarrini, and a number of others who stood by them. All

were tremendous losses to the company, and many thought this might be the end of Ferrari. Indeed,

the defectors immediately formed a new company, ATS, to directly compete with Ferrari on the

street and the track, and took with them Scuderia Serenissima, one of Ferrari's best racing

customers. This "great walkout" came at an especially difficult time for Ferrari. At the urging of

Chiti, the company was developing a new 250- based model to defend its honor against the Jaguar

e- type. Development of this car, the 250 GTO, was at a critical point, with the chassis development

and styling left incomplete. Even if the car could be finished, it was unclear if it could be raced

successfully without Tavoni and his lieutenants.

Into this void stepped young engineer Mauro Forghieri and long- time racing bodyman, Sergio

Scaglietti. Both were up to the task, with Forghieri successfully honing the GTO's handling and

Scaglietti designing an all-new body for the car. The GTO went to Sebring with driver Phil Hill and

placed first in class. It continued winning through 1962, brushing aside the challenge from Jaguar

and becoming one of the most famous sports cars in history. This shakeup, and Forghieri's

engineering talent, made the 1960s even more successful for Ferrari than the previous decade. The

mid- engined Dino racers laid the foundation for Forghieri's dominant 250- powered 250 P. On the

street, the Dino road cars sold strongly, and legendary models like the 275 and Daytona were on the

way.

1963 / 1967 - The US rivals

The big V8- powered Shelby Corba developed and built by the American entrepreneur Carroll

Shelby challenged the Ferraris in the early 1960s. By mid 60's, Ford tried to buy Ferrari but no

agreement was reached. Instead, after being defeated in 1964 and 1965 races the Ford GT 40 ended

the dominance of Ferrari Prototypes at the 24 Hours of Le Mans in 1966 when the GT- 40 Mark II

dominated the race with a 1, 2, 3 finish.. Ford would win again in 1967, this time with its Mark IV

prototype and also in 1968 and 1969 with the Gulf- Wyer entered Ford GT- 40 Mk.I cars winning

both years to close out the decade against the new and upcoming Porsche 917.

1968 - Ferrari boycott

After the performance of the big V8-powered Ford at the 1967 Le Mans, the FIA banned prototypes

over 3000cc, which also affected the Ferrari 330P models. This was announced in late 1967 and

came in effect for 1968, and the Scuderia did not take part in Sports car racing in order to protest

this.

1969/ 1971- Porsche

These years saw a new challenger. Formerly competing with smaller cars only, the Germans entered

the new 3 litre sports car prototype class in 1968 with the Porche 908, while Ferrari raced the

Ferrari 312P in only few events in 1969. In March of that year, the presentation of the 5 litre Porche

917, built in advance in 25 exemplars, had surprised also Ferrari, which answered later that year

with the production of 25 Ferrari 512S, funded from the money gained by the FIAT deal. At that

time, Porsche had almost a full season of experience with their new car, though, and also taken the

Worlds Sportscar Championship where Ferrari was only 4ᵗ G. The year 1970 saw epic battles between

the two teams and the many cars they entered, yet Porsche won all races except the 12 Hours of

Sebring, where the victorious car and its drivers Ignazio Giınti/ Nino Vaccarella/ Mario Andretti had

their origins in Italy. Ferrari decided to give up the 512 in 1971 in order to prepare the new Ferrari

312 PB for the 1972 season, when only 3 litre class would be allowed. In addition to Porsche, the

old national rival with its Alfa Romeo T33/ 3 also had won two races in 1971, and thus was ranked

2nd in the World Championship, above Ferrari.

1969 - Fiat

Early in 1969 Fiat took a 50% stake in Ferrari. An immediate result was an increase in available

investment funds, and work started at once on a factory extension intended to transfer production

from Fiat's Turin plant of the Ferrari engined Fiat Dino. New model investment further up in the

Ferrari range also received a boost. Less positive was the effect on industrial relations at Ferrari's

Maranello plant. In June a visiting journalist witnessed a group of workers suddenly running out of

a work-shop in response to the blast of a whistle: this was part of an industrial stoppage originating

at the main Fiat plant in Turin, and contrasted with the relatively smooth state of production that the

writer had witnessed at competitor plants nearby.

While increased Fiat influence was quickly felt in the development, production and marketing of

road cars, the racing department remained initially little touched by Fiat's new status within the

company as chief investor.

1972 / 1973 - dominance, defeats and fare- well

The Ferrari 312 PB models dominated the Worlds Sportscar Championship in 1972 against a rival

Alfa Romeo, as the Porsche factory did not compete after the rule changes, and Matra focused on

Le Mans only. In their home race, the French won, as Ferrari did not enter in 1972 due insufficient

reliability over 24 hours, in order not to blemish their otherwise perfect record in that season.

In 1973, though, the Matra team also challenged for the championship which Ferrari eventually lost

with two wins, compared to Matra's five, while Alfa Romeo had not entered that year. In addition,

Ferrari was now forced to race also at Le Mans, despite concerns that even the modified engine

would not last. Yet, one car survived and scored an unexpected and honourable 2nd place. Ferrari

then retired from sports car racing to focus on the ailing F1 effort.

1988 - The Death Of Enzo

When Enzo died in 1988, Ferrari finally became a mythos. The value of used cars rose, as well as

sales of current models. The last new model he commissioned was the specialist F40.

1996 - Champion Schumacher to Scuderia Ferrari

The hiring of Michael Schumacher and other members from Benetton triggered a comeback of the

F1 team, with three wins in 1996, and close yet eventually losing challenges to the driver's

championship in the years 1997 to 1999.

2000 / 2004 - Schumacher Dominates F1

In an unprecedented and record-setting fashion, Schumacher and Ferrari dominate F1 winning the

World Driver's championships from 2000 through 2004 and the Constructor's Championships from

1999 through 2004. 2006 saw him retire from F1.

Until 2008

As of 2008, Fiat Group owns 85% of Ferrari, Mubadala Development Company owns 5%, and

Enzo's second son Piero Ferrari owns 10%. Of these, Ferrari is under main control of the Fiat

Group, containing Alfa Romeo as well.

MARKETING REVIEW of FERRARI

I. Italy's Master of Marketing Strategy

What's red, Italian and goes from 0mph to 60mph in three-and-a-half seconds?

The answer is the Ferrari Enzo. It's the highest specification Ferrari ever manufactured for the road

and features a mid-mounted six- litre V12 engine, which makes 660 horsepower at 7800rpm and

485 pound-feet of torque at 5500rpm. While I don't actually know what anything in that previous

sentence means, it certainly sounds impressive.

In contrast, when it comes to the marketing of the Enzo I am able to appreciate the efforts of these

Italian maestros, because aside from technical expertise, Ferrari also understands how to go to

market.

Ferrari's targeting strategy offers an excellent example of its expertise. Not just anyone can buy an

Enzo. In fact, unless people are invited by Ferrari, people will not be able to get their hands on one.

Ferrari knows one of the biggest secrets of marketing: nobody ever made money trying to sell to

everyone.

The secret of profitability is not to sell a lot, but rather to sell a specific offering to a specific group

and, crucially, not to waste time or resources on customers who fall outside the target group.

Granted, Ferrari's invitation- only approach is at the extreme end of the spectrum. But too many

organisations believe that mass marketing offers them the biggest potential market and thus the

maximum possible sales.

These organisations discover that without a specific target market to design their products around

they are poorly positioned and vulnerable to competitors that adopt a more targeted niche approach.

Ferrari's pricing strategy also offers a marketing masterclass. If you are invited to buy an Enzo it

can be yours for £430,000. This is, by anyone's standards, a ludicrous amount of money. But by

targeting the world's most opulent customers and limiting production to 399 cars, Ferrari must

ensure that its pricing is contiguous with its overall marketing strategy.

Ferrari also understands the hidden dimensions of pricing. Prices are not just the means of

generating revenues. They also signal the quality and exclusivity of the product and the corporate

brand responsible for that product. Enzo will turn a handsome profit. The total production line has

already sold out. But the PR around the price tag will ensure that Ferrari's brand is reinvigorated

and reinforced with new associations of exclusivity essential to the marque's long-term health.

In truth, the value of the Enzo should not be measured in fiscal terms, but rather in the impact it will

have on the brand equity of all the vehicles marketed by Ferrari. Most of Ferrari's revenues are

generated by far more attainable models such as the 355 GTS - a snip at £75,000.

Very few of people will ever market a product as luxurious or exclusive as a Ferrari Enzo. The idea

of inviting only a select bunch of households to buy our yoghurt or watch our ad is patently

ridiculous. But too often we jump to the other extreme, the mass market. Somewhere in the middle

between the Enzo and the mass market lies a very happy medium.

At Ferrari, production is deliberately kept to fewer than 6,000 vehicles a year – rarity value sells. So

long, that is, as the customer understands why the product is rare and is prepared to wait. Rarity can

be managed just like the relationship with the clientele; so it is not a matter here of poor sales

forecasting but of a deliberate strategy of resisting demand in order to be master of it.

II. Positioning Strategy

Positioning is a composite of the first two principles– market segmentation and differential

advantage. Positioning is the image that they are trying to create in the eyes of their customers. It

helps in their market segmentation as their positioning will determine what market they are in (ie

low, medium or high end).

Positioning focuses on the target market segment the business seeks to serve and the differential

advantage with which it will compete with rivals in that segment. For example, Ferrari is positioned

in the prestige segment of the car market with a differential advantage based on high performance

and exclusivity.

The positioning strategy is critical to defining the marketing mix. It will dictate:

what type of product will be brought to market (ie high quality, low quality)

where it will be sold

how much it will cost

how you will reach its target audience.

Businesses that fail to clearly understand their positioning may have a disjointed marketing

approach and fail to reach their target segment.

The brand name Ferrari, for instance, likely activates nodes such as sport car, luxury, car races, red

color. The system of the nodes activated through the brand represents the domain of meanings given

to the product. The probability that the activation of a node will activate a connected node depends

on the strength of the tie. This strength is built by the organization through communication, events,

advertising. The subject becomes used to activate some nodes automatically when exposed to the

brand. The subject’s perceptions derives from the activated nodes.

Many consumers have it in their minds that Ferrari is the authentic luxury sports car. If we ask

people to name a safe car, many people in Europe would reply with Volvo. Therefore, Volvo has

gained the position of being a safe car.

The brand positioning perception of Ferrari is a “global brand,” so consumers spending may say, “I

am a global citizen – I can buy whatever anyone else in the world can buy”. Ferrari’s brand is a

status symbol consisting of extreme performance, driving, design, and power. Consumers perceive

Ferrari as “I’ve made it, but I’ve still got it”. So, it comes as no surprise that Ferrari is integrating in

India – the world’s next economic superpower. Ferrari’s presence towards the burgeoning super-rich

increases as, “the move marks the 58th market for the brand, which has steadily been growing its

presence in Asia”. Entering India causes key parts of the business plan to surface for this initiative;

accordingly market examination, operations, and social responsibility are examined. The target

market in India consists of an extremely narrow percentage of the population capable of affording a

supercar. Penetration of India’s market causes an even greater disparity in wealth in a country

where, according to the World Bank, “27.5% of the population lives below the national poverty line

and 16% do not have access to sufficient clean water”. Business operations should be considered in

terms of how Ferrari will deliver and produce the products in India; meanwhile, social

responsibility should be heightened as labour costs in India are significantly cheaper causing

consumers to question the ethics of the company.

II. Targeting Strategies

Ferrari lives its brand- through an emphasis on story-telling and an expectation that its legend is

known by all its audiences, says Jack Yan.

There are only a few sports car brands on the planet that stir emotions. Aston Martin, mainly for its

association with James Bond as well as a history of triumphing in the face of deep financial crisis;

Porsche, for its German-ness as well as its share of celebrity connections such as James Dean and

Steve McQueen; and Ferrari.

But what exactly makes Ferrari tick brand- wise? Examining its celebrities, there aren’t any that

really stand out. Tony Curtis drove a Dino 246 GT in The Persuaders. Don Johnson in Miami Vice

with his Daytona and, later, a Testarossa. Jeremy Clarkson owned a 355 in the 1990s. Chris Rea

made a fantasy called La Passione in 1997 with Shirley Bassey singing. For the longest period, it

was Tom Selleck driving the 308 GTS and its successors on Magnum, PI. None of these men are

particularly able to conjure up a heroic, romantic man image, at least not to the degree of the

fictional James Bond and the legendary Dean and McQueen.

To really get Ferrari, you have to get to two things: its competition histories, in which the company

effectively replaced Alfa Romeo as the national champion after the war; and its styling, notably cars

such as the 250 GTO. Ferrari has relied on these two ideas constantly through its 60-plus year

history, using them to strengthen the brand. Ferrari stands for the best of the Italian national image,

rather than the utility of the Fiat brand which, arguably, more Italians have actually had contact

with. Go to the Ferrari testing ground at Modena and the staff are pretty content driving Fiats to

work- even here Ferrari is not the daily drive. A select few, of course, get to drive them at work,

seven- time Formula One world champion Michael Schumacher being the latest addition to the test-

driver team.

The idea of legends and stories to tell the brand story is common among the most successful

marques. Here, it stems from founder Enzo Ferrari, il Commendatore, who witnessed first-hand

some of the earliest developments in motor racing in Italy when his Dad took him to see a race in

1908. He became a driver for Alfa Romeo and even placed second at the 1920 Targa Florio. In

1929, Ferrari formed his own racing team, Scuderia Ferrari.

It was thanks to Ferrari that Alfas got anywhere. Due to a non-competitive clause, Ferrari could not

use his own name, but the Alfas that benefited from his tinkering after the factory itself retired from

racing at the end of the 1920s, won some of the great European races in what was a golden age of

automotive motorsports. Nuvolari, Varzi and Chiron drove, and the Italians dominated till the Nazi-

financed teams of Mercedes-Benz and Auto Union began cleaning up. When Alfa took the team

under its wing in 1938, Ferrari formed his own automotive workshop, Auto-Avio Costruzioni

Ferrari, by 1940. The first car, without the Ferrari name, raced that year and was not successful.

However, as all legends go, few dwell on the also-rans, so the first Ferrari is usually credited as a

postwar model, the 125 Sport, the first car to bear the Ferrari brand, with the anti-competitive clause

no longer effective.

It could have all ended with World War II when the works were bombed (Ferrari was involved in

war production), but they were rebuilt in 1946 in Modena. The 125 Sport, designed by former Alfa

man Giacchino Columbo, was released in Piacenza on May 11, 1947, in a race, piloted by Franco

Cortese. The legend began and il Commendatore began hiring the best drivers in Italy: Ascari,

Farina, Sommer.

It wouldn’t have worked if Ferraris weren’t any good. And Ferrari never really wanted to get into

road car production: the 125 Sport was only released to the public to help fund the Scuderia. While

Ferraris did not do that well (second and third placings were common), it strove to develop a car

that would take the championship, which the company would by 1952. Juan Manuel Fangio joined

the scuderia in the mid- 1950s.

The Ferrari prancing horse symbol is also the stuff of legend. In 1923, the parents of the heroic

Italian pilot Francesco Baracca, Count Enrico and Countess Paolina Baracca, gave Ferrari their

son’s squadron badge on the charred remains of his plane, featuring the family coat of arms of a

black horse rampant on a yellow shield. Baracca had notched up 35 enemy hits before crashing to

his death.

Back in those days, men raced under their national colors, and for the Italians it was red. The

connection continues today, a throwback to the heroic prewar era when Ferrari himself was

tinkering with Alfas and seeing them win on the tracks. Few companies can claim a colour that

conjures its brand’s heritage. Ferrari can, almost exclusively: Maserati may have some share, but

Lamborghini, which has virtually no competition history, cannot.

For most of the years of Enzo Ferrari’s life- he died in 1988-the story of the company reads like a

soap opera, with family disputes, an illegitimate child and the death of his first son, Alfredo,

nicknamed Dino. It was said that Enzo Ferrari wore sunglasses every day after his son’s death in

memoriam. The Commendatore himself enjoyed the dramatic, refusing to kiss up to the powers in

Roma and preferring to be the outsider who did things himself.

Ferrari developed one of its most famous road cars after a challenge from Jaguar, another heroic

brand at the time-perhaps less so now after decades away from racing and a period under British

Leyland. Then, however, Jaguar had had Le Mans successes and was selling the XKSS, with the E-

type on the way. Ferrari, as a question of honour, responded with a model that some regard as the

company’s most beautiful car: the 250 GTO, released in 1962.

Others regard the Daytona, or 365 GTB/4, as the most beautiful, in the late 1960s; the Dino 246 GT

(it never carried a Ferrari badge) is rated as among the finest now, its lineage continuing with the

F430 today-this deserves its own story. Still others point to more modern machinery such as the 456

GT. Ferrari whetted collectors’ appetites with F40, F50 and Enzo specials, cars that brought racing

technology to the (highly privileged) masses. Of all these cars, with their Pininfarina bodywork, no

one detects any hand of a mass market producer.

What people do not mention too loudly is that Ferrari sold 50 percent of his share holding to the

Fiat group in 1969, after a decade of poor financial management. Fiat’s share increased to 90

percent in 1988. There were dark days, when people suspected Ferrari would not last through the

1960s after the temperamental founder fired a great deal of his team, and its failure to win any

championships for a period until 1975, when Niki Lauda won. There was a dry spell in the 1980s,

too, and it took Schumacher to bring it back from the brink.

But since the mid-1990s, the scuderia and the automobile manufacturing arm have ridden a high

and no one mentions the dampeners, just as few consumers really care who owns Donna Karan or

Chanel. The Ferrari brand is what stirs passions, thanks to the familiarity of the legend inside and

outside the firm.

Even the quirky Ferraris, the 365 GT4 2+2, the Testarossa and the Dino 308 GT4 by Bertone seem

to be shielded from criticism by the simple fact that they are from such an evocative firm. Even

these cars have their admirers thanks to the halo effect of the brand.

Fiat, whether consciously or not, has allowed Ferrari the luxury to develop as an independent unit.

While there have been some crossovers-the Fiat Dino had an engine from Maranello-the brand has

never been abused. Tied in with the idea of Italian machismo is the notion that anyone who comes

into contact with the cars must know of the history. The brand is living just as the company-and its

audiences-live its brand, whether it is a member of a royal Arabic house blasting his F50 through

the desert or a child cheering on the red cars in the Grand Prix on TV.

Management in Torino has allowed the brand to appear defiant, independent and legendary,

synonymous with the success of Italian pride itself. It readily plays on this in external marketing-but

never in so many words. The cars sell themselves: when was the last time you saw an advertisement

for the 612 or the F430 that was not from a dealer?

In branding terms, the story- telling aspect is strong, and in the leanest times Ferrari can still call on

the images of il Commendatore, Francesco Baracca and the belief that the cars themselves have

nobility through a bloodline made of petrol.

III. Segmentation Strategies

Consumer Analysis When looking at the typical age segments beginning with the age group of 18-

24 year olds, there aren't many Ferrari owners to be found. This is mainly due to the cars' high

price. A sports-car is also not the typical learner's car. However, in said age group many consumers

opt to buy Ferrari merchandise instead to be able to own a product with the prestigious Ferrari logo.

Most Ferrari owners will be high income earners found in the 25-49 and 50+ age segments. This is

rather typical for all premium sports-cars. Additionally, there is an obvious male bias to sports-car

owners, and most of these cars are held as leisure vehicles to be driven on race tracks or on

weekends. The average Ferrari owner is probably male in their mid-fifties. Hardly any Ferrari will

be bought because the consumer is in need of a transport vehicle, in fact most Ferraris are only the

second or third car owned in a household.

It’s not uncommon for buyers of exotic super cars to have to wait up to two years for their new baby

to arrive due to the limited production capacity and overwhelming demand the builders of such fine

machines are faced with. One of the worst offenders is Ferrari whose latest must-have, the FF

supercar, already has an 18 month waiting list despite being unveiled just one month ago.

Understandably, this is too long to wait for pretty much anyone. But how do you tell that to

someone who’s paying hundreds of thousands of dollars?

Well, it turns out, some Ferrari clientele are so impatient that they just purchase the first model

that’s available and then trade it in, sometimes after just several months, when a car built to their

exact specifications arrives.

Edward Rowe, a spokesman for Ferrari’s official distributor in Australia, says the more keen

customers will avoid a wait for a car kitted out with the accessories they want by temporarily

buying a more plain specification car.

‘‘We had our first trade-in swaps on 458s barely four months after the car was bought,’’ he said.

One customer, for example, actually ordered two 458s--one with a very straightforward

specification that would come straight down the production line as early as possible, and another

with the unique spec they actually wanted. When the unique car turned up, they traded in the first

one.

Apparently this isn’t a rare occurrence, which all makes sense as most people buying a Ferrari

aren’t saving up every last penny to afford it but rather they have more than enough wealth to

accommodate such a lifestyle.

Ferrari indicates benefit segmentation in the niche marketing. Benefit segmentation is one of the

most commonly used types of segmentation. It identifies the different benefits a product offers, then

targets different marketing strategies against the different benefits. Take a Ferrari, for example. Two

of the benefits associated with Ferraris are status and performance. The advertiser can position the

Ferrari in both the status and performance market segments differently, and in doing so will gain a

greater response than they would were they to take a single more generic market position.

IV. Marketing Communication Strategies

Ferrari Marketing Strategy

Ferrari is a myth and a legend in the automotive industry.

The Ferrari tale is one of an astounding and unique worldwide success.

An unparalleled one.

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.

Probably the Ferrari brand is worth more than the Google brand, the Apple brand, Nike, GE, IBM,

BMW, Mercedes, Exxon, Shell, or any other brand.

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.

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, during WW II. The first Ferrari premises were bombed

and heavily damaged.

Enzo Ferrari was not an Engineer, nor he was an enterpreneur. Enzo Ferrari never went to college,

not even high school, no PhD, never made and MBA.

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.

Ferrari Passion

The first Ferrari car was the 125 S. It was built in1947. Only 3 of them were produced. None

survived to our days, yet a 125 S engine is on display in Galleria Ferrari in Maranello, Ferrari

dynamic museum. Galleria Ferrari is the Louvre, the Guggenheim, the Moma of Car Racing. You

feel the thrill, an overwhelming excitement and admiration when you are inside. A unique, amazing

experience.

After the 125 S, the Ferrari 166 came, and the races. Formula 1 was not even existing at that time.

Since the beginning Ferrari was doing both things it still does today: Car Racing and constructing

extraordinary sports cars for exacting car and speed lovers. How can you call them just clients?

This has been the marketing strategy of Ferrari. The unaware, unstudied, unplanned marketing

strategy of Ferrari. The Passion for speed, the Passion for engines, the Passion for Car Racing. And

this Passion and excitement goes through to every racing sport lover all around the world.

And this Passion and excitement goes through in each Ferrari 360 Modena, in each Ferrari Enzo, in

each 575 Maranello, in each F430 you drive or simply encounter in the streets. Winning races,

losing races, fiercely fighting in car racing has built the brand.

V. Marketing Activities: Advertising, Public Relations, Sponsorship

Ferrari has formed a new Commercial and Brand Department, a structure which integrates the

dealership network, brand management and brand positioning into a single area. The Division is

headed by Dany Bahar who is currently at the helm of Ferrari's Global Brand Department.

A 35 year old Swiss national, Dany Bahar is married with one son. He has a degree in economics

and a MBA from the MC Institute of Vevey/Lausanne. Bahar began his career in finance in

Switzerland. He worked for the Fritz Kaiser Group before moving to Red Bull in 2003 where in

addition to being given a broad operating canvas by the CEO, he was also appointed a member of

the executive management board. Bahar has experience in promotion and sponsorship as well as in

sales and marketing. His youth, solid experience and international flair (he speaks Italian, English,

French and German) make him the ideal person for Ferrari in its new approach to its dealership

network and client relationship.

Meanwhile further recent personnel changes at Ferrari have seen Marco Mattiacci, who has been

with the Maranello concern for 8 years, appointed as President and CEO of Ferrari’s Asia Pacific

Region.

This region includes the fastest growing markets for the legendary supercar maker as well as

Australia and New Zealand in an appointment confirmed by Jean Todt, CEO of Ferrari SpA. Marco

Mattiacci, originally from Rome, has spent most of his 37 years abroad, and is one of Ferrari’s

youngest senior managers.

After joining Ferrari in 1999, Mr Mattiacci worked in senior roles in markets that are central to

Ferrari’s success. Prior his to the Asia Pacific Region posting in China, he was assigned to the

Ferrari USA Branch, where, within just five years, he rose to the position of Vice President Sales,

Marketing and Business Development. Posted to Shanghai from the end of 2006, Mr Mattiacci,

after having successfully completing the launch phase of the new Asia Pacific headquarters, is

taking over the position of outgoing Mario Micheli, assuming the leadership of the entire Region-

Ferrari APAC- which includes the responsibility for the China importer.

As Commercial and Brand Director, Al Clarke was responsible for all sales and marketing activities

within Ferrari GB driving growth through the provision and sale of products and services.

Initially brought on board in 2004 as Communications Director he was tasked with helping to

manage media relations during a complex and highly sensitive transition process.

Achievements following the successful completion of this project included re-positioning and

developing the Ferrari brand in the UK. The aim of which was to introduce a real sense of

individuality and emphasise the unique quality of the product at all points of client contact.

At the same time he established an international framework of criteria that enabled assessment and

analysis of the impact made, and enabled effective benchmarking against other luxury automotive

brands.

The role progressed in 2005 to encompass responsibility for sponsorship, identifying new revenue

streams, building partnerships and driving opportunities on a large scale.

By 2006, it had developed further to include full responsibility for marketing and subsequently

sales, developing the event-based strategy, including the highly successful range of international

driving activities for Ferrari owners. These events simply did not exist in the first half of the decade

and now add considerably to market perceptions and the ‘desirability’ of the brand.

In addition to deputising for the Managing Director the role included responsibility for all sales

through the network of official Ferrari dealerships, including dealer and customer finance.

“Bridgestone & Ferrari Social Responsibility Project Regarding Traffic Accidents” that

mplementing one of the most successful projects ever in preventing the traffic accidents with

“Farım da Hep Açık Yolum da” (Daytime Running Light) campaign, Bridgestone draw the attention

to conscious driving with its new project “Yola Güvenli Çık, Yolun Hep Açık” (Think Before You

Drive). Bridgestone brought out its sensitivity about the traffic accidents, vehicle safety measures

and traffic awareness through various social responsibility projects and the launch of Bridgestone’s

new project “Yola Güvenli Çık, Yolun Hep Açık” was held with a press conference where Sabancı

Holding CEO Ahmet Dördüncü, Brisa Bridgestone General Manager Hakan Bayman and Formula

1™ Scuderia Ferrari Pilot Felipe Massa attended.

Moreover, Ferrari has raised $601,000 for relief efforts in Haiti. At a gala event, Ferrari, the world's

leading luxury brand, auctioned the first Ferrari 458 Italia to arrive in the United States for

$530,000.

Party was hosted by Piero Ferrari, Deputy Chairman, Amedeo Felisa, worldwide CEO of the

company, and Marco Mattiacci,North America CEO.

In choosing recipient organizations which would deliver the highest caliber of aid to the people of

Haiti and in the long- term, Ferrari focused its ongoing commitment to social responsibility to a

cause that is close to everybody's hearts and still in need of tremendous support.

V. Performance Analysis

SWOT Analysis of Ferrari

Strengths of Ferrari :

Extremely strong brand image.

Products that are a fine combination of beauty & aesthetics combined with unforgettable

performance.

The brand has connected to itself an aura of mystique

Is looked upon as a status symbol

Takes on new challenges on a constant basis with a head on attitude.

Innovation & technology are key drivers behind every product.

A very inspired, well taken care of & satisfied work-force who are proud to be attached with

the brand. This was further expressed publicly when Ferrari was voted the “Best Place to

Work in Europe 2007″.

Weaknesses of Ferrari :

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.

Due to their “waiting list” model, they lose out on customers to the competition.

A big challenge lying in wait is fuel efficiency & emissions which are growing in

importance everyday, thanks to spreading concerns over the environment.

Opportunities Ferrari :

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.

Enlargement of customer base (increase appeal of their products to a more variety of buyers)

through adding comfort, roominess, luggage space, engines that are more user friendly, and

so on, while at the same time maintaining traditional Ferrari characteristics–performance,

style, exclusivity. Ferrari has been exploiting this aspect for a while & it has been a key

contributor to their success in the past 15 years.

Development of technology (for example interfacing electronics with mechanical systems)

has opened up new avenues to explore for their products.

Packaging i.e. the concept of the car, is another area which still has years to explore.

Threats of Ferrari :

Automotive policies being pushed by countries & continents all over the world which are

being strictly enforced like the emission norms of 130g/km of CO2 are very difficult to keep

up with due to the performance oriented nature of the engines built by Ferrari.

Tough competition from other iconic super car brands like Lamborghini & Porsche

A competing brand like Porsche does not follow the same low volumes, high on exclusivity

model which is followed by Ferrari & hence sells a lot more of its products & captures a

large chunk of the market share.

Once again, competitors like Lamborghini & Porsche are expanding their product range to

high performance SUV’s wherein Porsche has already been very successful with its

“Cayenne” model, all over the world & in particular, in India, which has lead to its success

in the Indian market. Ferrari has not announced any plans for such a product (high-

performance SUV) as of yet i.e.-2009.

BRANDING STRATEGIES

I. Brand Image/ Brand Identity

The brand name Ferrari, for instance, likely activates nodes such as sport car, luxury, car races, red

color. The system of the nodes activated through the brand represents the domain of meanings given

to the product. The probability that the activation of a node will activate a connected node depends

on the strength of the tie. This strength is built by the organization through communication, events,

advertising. The subject becomes used to activate some nodes automatically when exposed to the

brand. The subject’s perceptions derives from the activated nodes.

II. Brand Positioning

Although the definition of a ‘luxury’ brand is open for debate, the natural evolution of luxury, with

luxury brands first being adopted by the affluent and wealthy before inevitably being translated and

reinterpreted down to mass markets, raises new challenges for marketing strategists. Luxury brands

need to stay in front of luxury consumers, through the discovery of new and different ways to give

expression to their desires. This paper discusses the fundamental difference between

communication and connection, and identifies a means of assuring the greatest long-term success

for luxury marketers by connecting with the luxury consumer using brand- related experiences.

Brand positioning guides marketing strategy by telling the world where the brand stands with

relation to its competing brands. Hence it is the starting point for identifying the target markets.

A brand communicates, and it wants to communicate to its target market. Hence the brand must

have a theme. This is what differentiates it from a product. Every pizza is a pizza, but Hell Pizza is a

different sort of a pizza. Every reliable car will help you get from point A to point B, but a Ferrari or

a Rolls is more than just a car.

Positioning can be compared to renting a place in the customer's brain. Brands only 'rent' the place

& as long as they (at least) satisfy the customers , there is a happy tenant -owner relationship. The

day the brand trust is lost, it is the beginning of the end. If the brand is not careful , competing

brands , always jolsting and rugbying their way to take this room on rent by meeting the needs of

customer more favorably & thus pushing the original brand out.

Of course the customer may overlook a few minor hiccups in the brand relationship. Depends on

how irritating the stone in the shoe is . Hence while a small & minor hiccup in the relationship/trust

may be overlooked, it does not take much for the brand to be pushed out. Think of the brands you

loved & yet replaced by other brands . Not only products, services are even more precarious.

III. Brand Associations in terms of Competitors

We summarize these cliques, looking for the qualities they have in common (i.e., factoring the

cliques for their common and unique associations). Cliques 1- 4 identify a core set of {Benz, Jaguar,

Mazda} associations. Cliques 5- 7 contain Benz, Jeep, classic, and faster. Cliques 8- 12 describe the

Benz as fast and sporty while cliques 13- 18 associate Ferrari with fast. Cliques 20- 28 describe

both Jeeps and Mazdas as fast sports cars with common shapes.

After describing the economy Porsche, the clique structure changed quite a bit. The Benz-Jaguar

was activated less frequently. Instead, cliques 1B4 show a connection between the brands: Benz,

Ferrari, Jeep, and the regular Porsche and its new Model X. Cliques 5 and 6 classify Benz and non-

Japanese togetherCa focus on European makes. Similarly cliques 8 and 9 contrast

European/German with American, together with the attribute of common shape. Finally, cliques 10

and 11 describe that common shape is associated with perceptions of high quality.

IV. Brand Parity/ Confusion/ Cannibalization in terms of Substitutability

In the pre- economy condition, Mazda, Jaguar, and Jeep were the most similar interchangeable

brands. The attributes of non-Japanese and common shape were seen as similar. Less- variety and

faster were also attributes that factored together as similar, which is also sensible given that several

auto manufacturers were included in the network with specialties in sports cars.

After introducing the inexpensive Porsche, the brands and attributes perceived to be similar change

somewhat. Mazda and Jeep are now grouped with Ferrari. Jaguar is grouped with Chrysler. The

attributes of non-Japanese and common shape still correlate, and now less-variety joins the cluster.

Finally, sedan bodies are seen to be similar to the quality of high price.

In the family equivalence groups, there are again similarities among Jaguar, Benz, Mazda, and Jeep.

There are also similarities between the attributes of less-variety and common shape, and non-

Japanese and fast. After the introduction of a big, bulky family Porsche, respondents cluster

together {non- Japanese, less-variety, sedan}, {Corvette, Mazda}, and {Chrysler, Jaguar, Ferrari}.

Finally, in the pre-regular condition, again, we see some concordance with the pre- perceptions in

the other conditions: Mazda and Jeep are similar, as are fast, non-Japanese, and less-variety, and

finally common shape is grouped with classic. After simply thinking more about Porsches, Benz is

grouped with relatively high prices, Mazda and Jeep retain their similarity, and Lexus is grouped

with fast and high status. Less-variety and sedan are grouped, as well as the group of non-Japanese

and British (presumably in contrast to American and European makes).

V. Brand Presence

The new unit signals a fresh push into product development, including shop openings. Ferrari

already operates 15 stand-alone stores worldwide. In September last year, the brand's ninth official

outlet in Italy began trading in Venice.

Exclusive Ferrari Stores have opened in Maranello (the car company's Italian headquarters - two

stores), Rome, Milan, Venice, Shanghai, Hangzhou, Beijing, Los Angeles and Las Vegas. In travel

retail, there are Ferrari Stores at Bologna, Milan Malpensa (two outlets) and Rome Fiumicino

airports (two shops).

At the time of the Venice store opening, Ferrari had an ambitious development plan to set up more

than 40 stores across Europe, America and Asia over the next five years.

The 170sq m Venice store offers a wide range of Ferrari products, most of which are exclusive to

Ferrari Stores.

Its five main categories - Fans, Luxury, Vintage, Children’s and Publishing – are home to over

1,500 products, ranging from men’s, women’s and children’s clothing to leathergoods, memorabilia,

publications, toys and gadgets.

VI. Brand Channel Proposal

Basic concept : A dream fulfilling game and its key components

1. By virtue of its unique family and corporate culture binding together knowledge and perfection,

Ferrari has achieved both prominence and fame in an almost unprecedented manner. Its continuous

success over decades has built up into a worldwide myth, unabatedly inflaming throughout the

world-the imaginations of endless legions of viewers of all kinds, secretly gambling to turn dreams

into reality.

2. Spurred by Mr Jo de Raco (JDR), one of its key advisers in the media fields, Ferrari has got

convinced that keeping a tight control over the communication and media content of such a

powerful myth together with its ingrained worldwide acclaim is of the essence.

3. The point has now been reached where a creative and well structured concept has been forged by

JDR who has proposed to Ferrari launching a dedicated multi folded media channel, an approach

which has been "in principle" accepted by the latter.

4. On this occasion the key components which have effectively turned Ferrari into a legend alive

and strong, this almost since the inception, have been clearly identified. It has also been well noted

that, over time and recurring excellence, all these elements have been increasingly infused into the

subconscious of millions (if not billions) of viewers in an ongoing process stretching over several

generations all around the planet earth.

5. Bringing these viewers back to surface into sort of media consumer models by launching a

dedicated media channel could be highly rewarding, while assuming an effective control of the

continuous flow of images whirling around the aforesaid myth.

6. From a practical standpoint JDR and Ferrari are of the opinion that this should start by:

" Broadcasting not only by DTT (Digital Terrestrial Television) with an emphasis on the vastly and

swiftly expending Internet and mobile phones...”

VII. Brand Value of Ferrari: The Magic Brand

Ferrari is quite simply one of the world’s most recognizable brands. But the legendary Italian

manufacturer no longer relies simply on selling cars and winning races to generate revenues. Its US

$1.5 billion licensing and retail division has become the model for sports properties around the

world.

In terms of results it has been a less than stellar season for Ferrari, perhaps the most famous of all

the world’s car manufacturers. In early September, the Italian firm announced that it had sold eight

per cent fewer cars in the first six months of 2009 than in the same period the previous year,

resulting in an overall drop in revenues to around US $1.3 billion. On the track, meanwhile, its

Formula One team has had a dismal year. After winning last year’s constructors’ championship and

narrowly losing out on the driver’s title, this season has yielded only one victory – Kimi

Raikkonen’s brilliant win in Belgium – and has seen the team having to cope with the severe head

injuries suffered by Felipe Massa during qualifying for July’s Hungarian Grand Prix.

More positively, the race team appears in excellent shape for the 2010 season, with the team’s long-

term target Fernando Alonso finally secured to partner the returning Massa. And despite the

financial dip, the general consensus is that Ferrari as a company is doing better than most

manufacturers during the global recession – it described the half-year figures as “a positive result,

given the particularly negative conditions currently on the world markets.”

The company’s resolute performance is, in no small part, down to its ever-expanding licensing and

retail departments, designed to exploit and broaden the Ferrari brand around the world. It has

become a huge part of Ferrari’s business. Stefano Lai, Ferrari’s director of communications, puts it

this way: “The brand is getting more and more important. Licensing and branding accounts for

roughly 25 per cent of our trading profit, so it’s important. In the last six months – the first six

months of the year– the licensing and retail grew by something like 27 per cent. It’s really a market

that is doing well and what we are doing there is maintaining exclusivity, so we are very careful in

the partners we select.”

Retail and licensing is particularly important to a company like Ferrari because, in global terms, the

company is a tiny car manufacturer, employing only around 3,000 people in its road car and race

team. Remarkably, despite having been in the car building business since 1947, throughout its

history the firm has only produced the same number of cars as Porsche produces in a year –

estimated by the Italians to be around 100,000. As the company’s appropriately named licensing and

retail director, Massimiliano Ferrari puts it: “That’s exclusivity; it’s a true luxury. When we talk

about luxury, this is it.”

He adds: “Ferrari is a style brand. We have more than 60 years of very successful history, always

consistent in red, in racing, and the brand allows us to generate a lot of profit. We have ‘two souls’.

One is the racing soul, with the racing shield logo, and the other is the GT part – both with Il

Cavallino logo, the prancing horse that everybody knows. We reach both targets: we reach the

millions of fans who are in love with the Ferrari brand – and we have seen all the numbers – but at

the same time we also reach a very exclusive elite of Ferrari owners or aspirational Ferrari owners.”

Ferrari is currently present in 52 countries around the world; it sold 6,587 cars in 2008, which was

the company’s best ever year in terms of sales. Says Lai: “The growth is not because we sell more

cars in each market; it’s because we enlarged our markets. China has become a booming market for

us; the Middle East is growing, South America is doing well. The United States is still our best

market. Our production goes 95 per cent abroad.”

Ferrari has 200 dedicated dealerships, split across four separate geographical business areas: North

America; Asia-Pacific (China, Middle East, South Africa, Australia and New Zealand); west

Europe; and east Europe. “We don’t want to have too many Ferraris. We are not really into the

numbers, apart from the profitability of the company. Last year we had a return on investment of

around 17 percent which, for a car manufacturer, is amazing.”

The comparatively small number of cars produced undoubtedly helps to heighten the mystique of

the brand, something that Lai is happy to elaborate on: “We have a business model that we always

sell less than the market demands. If the market has a certain amount of cars, we sell less. We have

a waiting list, we don’t touch the waiting list, so if you want a Ferrari you have to desire it.”

Particularly through its racing exploits in Formula One, the company has been able to exploit retail

and merchandising opportunities perhaps better than any other major sports property. It is therefore

no surprise that when Massimiliano Ferrari attempts to convey exactly what the brand means, he

becomes almost evangelical: “The core values of Ferrari are competition, passion and, if you go

more in the exclusive part, you have the uniqueness of the style, the Italian style, the dolce vita.

Foremost, and this is something that is in common with both target groups, is the quality – the

absolute excellence. It’s a magic brand. It’s performance and technical but it’s a warm and

emotional brand. What Ferrari gives, and we have seen it in our sponsorship and licensing partners,

is emotion to the brand. This is unique and very important especially on the sponsorship side. We

are absolutely one of the top sporting properties in the world, ahead of Manchester United and Real

Madrid in terms of the power of the brand. This is key on the sponsorship side.”

Overall, Ferrari estimates that the retail value of all Ferrari products excluding the actual cars –

merchandise and licensed products – totals US$1.5 billion annually worldwide. “It has become a

very big part of the business,” Ferrari says. “This part of the business is very international, very

balanced between all the different countries. Our core business is of course cars but we are

stretching the brand, but very carefully. We are faithful to the Ferrari name.” Some 45 per cent of

retail sales occur in Europe; 14 per cent in the Middle East; 21 per cent in the Americas; and 22 per

cent in the Asia-Pacific region.

Ferrari’s approach to licensing and retail is divided into three areas: premium fan merchandising;

the toy market; and luxury. “The fan merchandise is all the red and yellow caps and t-shirts – what

you see at Monza and all over the world,” says Ferrari. “Our approach is always a premium

approach. We have premium merchandise; our merchandise is always a little bit above, for instance,

Manchester United. Then of course we have the luxury side. We are a luxury brand and we develop

products like leather products made in Italy – we try and incorporate the deep, deep value of the

brand, both technological as well as in terms of lifestyle.

Arguably, however, it is the toy market that is most valuable to Ferrari, not financially but from a

brand- building perspective. “The magic of the brand comes from children; when you are a child

you always have as a gift a little model of the car, and each year we are selling more than 25 million

pieces. That is very important because they grow with us – the emotion, the magic and the positive

value are linked to that. Attracting the Formula One fan creates the aspiration.”

More often than not, Ferrari licensees are also Ferrari Formula One team sponsors or suppliers. As

Ferrari puts it: “We like very much to do sponsorship and activate the sponsorship through

products; Puma is one, as is Acer. We are looking for global partners. We are a global brand so we

look for global partners that will stay with us for a long time. Of course we also have the lifestyle

and luxury part, which is really inspired by our GT cars. An example is the Vertu mobile phone –

they are a sponsor and a licensee. We talk to our fans in one language but we also talk the language

of luxury with our products.”

With its three product areas firmly established, the next step in expanding the brand was a fairly

obvious one: establishing dedicated Ferrari retail outlets. That concept was born in 2002. Now there

are 30 outlets around world, sited in premium locations often in major cities. In May, for example,

Ferrari opened its London store on the city’s renowned Regent Street. Of the Ferrari Store concept,

Ferrari says: “It’s unique, and for us it is the most important part of the non-car business because it’s

the best shopping experience you can have with our brand. There are exclusive products. We had a

little team that developed the design internally to make it a top experience.”

“We always look for top locations around the world. We are very selective,” Ferrari adds. “We

started in Maranello, Milan and Rome, in Italy. That was a pilot test but we are now moving

internationally. We are in Singapore, in Macau, and we just opened in London and Abu Dhabi. We

have a list for expansion. By the end of the year we will be in New York.”

But Ferrari insists that the company will retain the exclusivity of the brand by not opening shops

anywhere and everywhere but, instead, choosing locations that match the prestige of the brand

itself. “We don’t want to open 500 stores,” he says. “We currently have 30 and we want to grow

little by little in top locations. It’s something we are developing; in the next two years we would like

about 60. It’s a reasonable number that maintains the exclusivity but gives a wider visibility to the

brand all over the world.”

Future plans include new stores in Barcelona and Madrid, which will prove timely as Spanish

double world champion Alonso joins Ferrari’s Formula One team from next season. Massimiliano

Ferrari calls Spain “a priority country for us,” adding: “We feel our brand is very sympathetic and

close to Spain.” The racing team is also benefiting from Spanish investment next year, when

Santander bank joins as a major sponsor. “We started with the airport store in Barcelona, which is

very important. Now we are pushing the envelope, and the partnership with Santander will

accelerate that in Spain and all over the Latin countries. We also plan to open in Sao Paulo, Brazil.”

The interiors of each store are carefully divided into three specific areas to match the three product

areas. “We have a fan area for our tifosi,” Ferrari explains. “Then we have a kids area and then a

lifestyle area. The kids area is more playful with a lot of entertainment, and the luxury area has the

high end products.”

It is the fan- targeted products that currently yield the biggest returns for the company. “The most

important is the fans,” Ferrari confirms, “because we are talking about millions of fans; in terms of

volume that is huge. In terms of value, the high side of the brand is becoming more and more

important. In Ferrari stores, for example, the turnover is 50- 50 in value, which is interesting. The

‘kids universe’ is about 35 to 40 per cent of the total, so that’s very important as well. So its fans,

toys and lifestyle, but lifestyle is growing very quickly.”

Aside from direct licensing and merchandising, Ferrari has also embarked on what it terms “special

projects”. Most notably this means the development and construction of a Ferrari theme park –

Ferrari World in Abu Dhabi. Mooted for several years, construction is now well underway on Yas

Island, a USD $40 billion lifestyle, leisure and retail development being built in the emirate that was

also the site for the inaugural Abu Dhabi Grand Prix in November. Ferrari expects the park, being

built by Aldar Properties, to be open between June and September next year. The distinctive roof –

Ferrari red with the prancing horse logo so large it will be visible from aircraft landing at nearby

Abu Dhabi airport – is modeled in the shape of a Ferrari GT car.

Ferrari World will be the largest indoor theme park ever built and will include 24 rides and

attractions, including what is set to be the fastest rollercoaster in the world. “It will be a multimedia

experience and the ultimate experience of Ferrari – the rollercoaster, the history, the hall of fame of

Ferrari. It is family-targeted but it will be a huge Ferrari experience.” He adds: “Ferrari is a very

emotional brand and this is another way to develop in a very nice way our very powerful brand.”

This is a subjective estimate of Mr. Sergio Marchionne, CEO of Fiat Group, the parent company of

Ferrari. People love cars all know Ferrari is one of the brands, unique and admirable in the world.

However, not everyone can be estimated for specific values of the Ferrari brand. According to

Sergio Marchionne, CEO of Fiat, Ferrari brand value of more than 5 billion euros, or about $ 7.3

billion. This is a big figure for the Italian supercar brand. In 2010, pretax profit was up 23% of

Ferrari to the $ 430 million in total revenue 2.73 billion.

Nothing suspicious when Ferrari confirmed that marks the most profit for the Fiat Group. Ferrari

earned the money that makes up 63% of total sales of both the Fiat Group in 2010. The reason Mr.

Marchionne is rated as Ferrari brand very important. If his estimates are accurate Marchionne value

of the Ferrari brand will be almost 17 times annual revenue. On average, the only brand of luxury

property value was 12.7 times annual revenue.

CEO at Fiat Group, the parent company of Ferrari, so he naturally Marchionne will appreciate the

value of the brand “horse constellation. ” Meanwhile, according to analysts, the Ferrari brand only

worth about $ 4.3 billion. Currently, banks are eager to urge the Fiat Group to issue shares for initial

public (IPO) for Ferrari. Previously, Fiat had been considering IPO for Ferrari as a way to make

money and cover debt. Also, in an interview with Bloomberg reporter, Mr. Marchionne also

mention ordering a Ferrari FF White. Under the plan, Ferrari will begin delivering samples FF 4

seats car to customers next month for $ 359,000 USD.

VIII. Brand Equity

A Ferrari branded ashtray could sell for five times the amount of an ashtray of exactly the same size

and materials, but with no branding. The company has a huge fan base which extends much further

than the owners of Ferrari cars - also known as Ferraristi. Apparently, the most fanatical of fans are

found in Italy, Ferrari's home. The local priest in the town of Maranello where the factory is situated

is said to sound the church bells when Ferrari celebrates a win. After financial problems the

company was bought by Fiat in 1969, which currently owns 85%, 10% are owned by the founder's

son Piero Ferrari and 5% stake belong to Mubadala Development Co (Hoovers Inc., 2008). The

industry: The automotive industry is the industry responsible for the production of motor vehicles

including their design, assembly, marketing and trade. It is a highly concentrated industry with the

eight largest companies accounting for more than 90% of the sales. Ferrari, being a small company,

has to compete by focusing on a specialised niche market (Hoovers Inc., 2008 b). Ferrari's main

product are sports-cars, of which it produced 5 875 units in 2006 (OICA, 2008). This is a very small

number, making the cars very exclusive, compared to most of the automotive industry. Italy's

automotive industry as a whole ranks on the fourteenth place worldwide, with about 1.2m units sold

in 2006 compared to over 69m worldwide in 2006. The turnover of the worldwide automotive

industry currently approaches the- 2 trillion mark. Globally over- 85 billion are invested in R&D

annually and over eight million people earn their living from the production of cars (OICA, 2008).

Also, many Ferraris are part of collections and are rarely driven due to their high value. The high

emissions and fuel consumption of a Ferrari will not be of much concern to its buyers. The main

incentives for buying such a car are its design, its exclusivity, its racing heritage and its

performance, and probably its ability to act as a luxury status symbol

Finally, a brand with significant brand equity can lead consumers to generate a more positive

association with product itself. As such, many companies looking to strengthen a product’s

performance will often focus on the underlying brand. For example, Skoda has recently improved

its sales performance by looking to reposition its brand from being a symbol of inferiority to being a

symbol of high quality manufacturing and engineering. This has enabled the company to expand the

sales of its cars without needing to change the cars themselves.

Given the marketing resources required to build and sustain brand equity, many companies are

increasingly looking for alternative means to achieve the benefits of brand equity without the cost

and risks. This is increasingly being achieved by the licensing of brand extensions, with companies

looking to extend the successful brands of some companies onto their own products. For example, a

company in Thailand opened a Manchester United branded restaurant to take advantage of the

football club’s brand, and the clothing company LaPassione focuses exclusively on manufacturing

and selling Ferrari branded clothing. However, it is important to manage these, and other,

extensions carefully; as if they are unsuccessful they can harm the original brand and its equity.

IX. Brand Benefit

Complementary competence co-branding is the more advanced form of co-branding in which each

brand builds on the other's brand values and competencies to create maximum brand synergy. In

order to maximize the synergistic effect both participating companies agree to work together long

term and share expertise and knowledge in order to build combined brand value constantly.

There are very few brands which have a top of the mind presence amongst all the brands competing

in the same sector. For e.g. Coca cola comes as a first name when thinking of beverages,

McDonald’s comes to mind when one thinks of quality fast food etc. Similarly there is one brand in

the automobile sector, which with its sheer design, power, speed and style, has managed to fascinate

all people in the world. And the best way of identifying this engineering marvel is by its “Red

Italian Sports Car” image and the “Prancing Horse” logo, which is none other than Ferrari.

Ferrari is one car which has captured the imagination of billions of people all across the world.

Ferrari’s brand presence makes it easily the most popular and dreamt about car. With its powerful

engines, strong brand associations and excellent designs, Ferrari stands out most uniquely amongst

all cars.

Initially, it used to sponsor drivers and participated in manufacturing cars only for races. However,

after two decades after leaving a mark in the field of racing, Ferrari decided to manufacture cars for

the streets. And this is where an unbelievable and memorable journey of one of the strongest brands

began.

Ferrari has always been associated with motorsport especially with Formula One. Competing with

other big names in F1, Team Ferrari has always succeeded and gave a great performance, especially

with the sports legend Michael Schumacher. Success in the fast and competitive formula one has

also added to the ever increasing brand equity of Ferrari.

Ferrari makes sure that each of its brands gives the customer an experience unparalleled. Ferrari has

a wide range of cars, all for the premium niche market, and it sells only about 5,000 cars a year. The

interior of every Ferrari is customised so as to give exactly what the customer wants. Each Ferrari

car in itself becomes a brand name due to the presence of the ‘Ferrari’ name attached to it. Some of

the Ferrari models which have made waves in the automobile industry are Ferrari 360 Modena,

Ferrari 360 Spider, Ferrari 550 Barchetta, Ferrari 550 Maranello, Ferrari Enzo, Ferrari F40, Ferrari

California, 458 Italia and Ferrari F50.

Apart from being one of the finest in the automobile industry, Ferrari has also managed to create a

strong market presence through merchandise products. Ferrari products like jackets, caps, perfumes,

apparel, watches etc also add to the legacy and brand value of the automobile giant. The prancing

horse logo on the yellow shield is one of the most recognisable logos and designs, which increases

the brand value of any product manifold. Ferrari also indulges in organising events, races etc which

helps in increasing brand visibility. More than that, it gives opportunity to people and corporate to

be associated with a powerful and popular brand name like Ferrari. Ferrari World, a theme park, is

another initiative to showcase to the world this brand of dreams.

Ferrari has also associated itself other brands by having corporate partnerships and tie-ups with

them. Some of the major brands which have formed a partnership with Ferrari are Bridgestone,

Shell, Michelin, Pirelli, Bosch etc. Such brand associations also enhances the images of all the

brands and it’s a win-win situation for all.

Many brands will come and go. Sports cars will become faster and sleeker. Technology would

change. But one brand which has been there, and which would remain forever, is brand Ferrari.

In that context, a good example of this type of co-branding is the alliance between Acer and Ferrari.

In this case, Acer produces a laptop computer in cooperation with Ferrari with all the features and

attributes of the Ferrari brand, like the typical Ferrari "red" color. In so doing, Acer built on Ferrari's

brand values of "fast", "exciting" and "fun".

In contrast to ingredient branding, this form of co-branding does not involve the absorption of one

brand into the other but still leads to mutual brand benefits. Even as we look at the various types of

branding it is also important to understand the important success factors in a branding exercise.

Co-branding, however, does not come without risk. Extremely careful scrutiny and due diligence

needs to take place of any possible brand alliance partners. In addition, cross- border brand alliances

will only work if there is appreciation and understanding of very different national and corporate

cultures. Consequently, it can be stated that Ferrari is successful to create value for customer

benefit.

X. Perceptions of Brand Category

Many products in these categories are brands such as Ferrari, champagne, Colgate and Her- shey.

All brands are therefore products but not all products are branded. There are product categories,

particularly those of natural kinds such as rice, potatoes or lettuce, where generic products

predominate, though there is also ‘Uncle Ben’s’ rice and there are Idaho potatoes.26 In other

product categories, such as those of automobiles, technical appliances or mineral water, all products

may at the same time be brands. The less differentiated a product can be - or, in ontological terms:

the fewer constituent moments can be identified in the corresponding whole - the less it affords

branding (Smith 1982).

Some brands are ‘natural’ (or category) brands with a geographical or historical identity, e.g.

champagne, cognac, Parma ham, Louis XVI furniture, or Georgian architecture. Others are

corporate brands such as Ferrari, Chippendale furniture or Hershey’s chocolate bars. With category

brands, the adjective- noun composite as in ‘Venetian glass’ does not consist of two independent

concepts of which one modifies the other. This is the case in the composite ‘red apple’, where ‘red’

is the modifier and ‘apple’ is the header (Murphy 1988). Venetian glass is one type of glass

distinguished by color and form, similar rather to Granny Smith or Mackintosh apples than to red

apples.

The head of Italian sports car manufacturer Ferrari told Germany’s Süddeutsche Zeitung newspaper

yesterday, Ferrari's boss spent 650 million Euros on 25 trains. Montezemolo said he decided to

make the investment as a reaction to the liberalisation of high-speed train services in Italy. The

Ferrari chief said the latest endeavour of his company and business partners was the "most

ambitious private project in Italy in the past 10 years".

Montezemolo said private railroad company Nuovo Transporto Viaggiatori (NTV) would connect

Naples and Milan and other cities from next month. He said the plan was to offer services to Austria

– where Austrian Railways (ÖBB) dominates the market – and Germany. Speaking about his plans,

he said: "You have never seen such trains before. We got the best Italian food and a great cinema. It

would be fantastic to offer services to Vienna."

The Ferrari boss promised that NTV’s service would be significantly faster than Trenitalia’s links.

Trenitalia is owned by the state. It was founded in 2000 and has nearly 40,000 employees, around as

many as ÖBB. The Austrian railroad firm has around 250 million passengers a year. Its Vienna –

Salzburg Railjet service is widely considered as excellent while ÖBB’s regional services and

southward connections are less acclaimed.

People opting for ÖBB’s connections to travel from Vienna to Italy often have to change trains

several times before eventually reaching their destination – a strong contrast to the firm’s service

between the capital and the city of Salzburg. Some of ÖBB’s Railjet trains take people from Vienna

to Munich in southern Germany without forcing them to change trains en route.

Construction industry tycoon Hans Peter Haselsteiner founded private railway enterprise Westbahn

to challenge ÖBB between Vienna and Salzburg, one of its most popular services. Westbahn started

operating between the cities in December 2011. The company hoped to achieve an operating profit

as early as in 2012. Now Westbahn boss Stefan Wehinger said the firm might miss its target.

Wehinger told Die Presse today that the intense price war between Westbahn and ÖBB could avert

his company from meeting its initially envisaged goal. He explained that Westbahn’s turnover was

20 percent lower at the moment than planned. ÖBB and Westbahn presented various special

promotions during the final weeks of 2011 and the first few weeks of this year in their battle for

passengers.

Westbahn not only entered the tracks but also Austrian roads last year. The firm’s affiliate Westbus

launched several coach services, including a Graz – Linz link, in December. Westbus announced

last month that its service between Salzburg station and Franz Josef Strauss International Airport

(MUC) in Munich would be abandoned due to meagre public demand. The company said that the

poor location of its bus stop was to blame. Westbus said customers experienced difficulties in

finding the station due to the current construction work at Salzburg station.

XI. Brand Destiny

Destiny and its reason to exist, personality helps distinguish one brand from another. We can all

name companies we recognize and describe their associate companies. At the same time think about

those companies lacking such clarity or definition-most companies are this way. Yet they don’t have

to be this way.

A senior Fiat source told me when it came to John and Lapo, it was as if Gianni's spirit had been

split in two: John inherited his cool business vision, while Lapo got the creative dynamism and

panache. For a while, it was a description to which neither man would have objected. Lately,

however, Elkann has been anxious to demonstrate another, rather more level-headed side. It's an

ongoing project, and he remains a much-discussed figure in Italy, but his business empire continues

to expand rapidly, and although he concedes he owes much to Fiat and the Agnelli legacy, his new

businesses are his vision. Being independent of family and political influence is vital to him.

"Working for Fiat was tricky, like it is working in any large corporation. Things don't always go the

way you want them to and they're usually more complicated than they look from the outside. You

should make compromises. And I'm not a good compromiser. I tend to be quite purist, which makes

life more difficult in a big company.

"Italia Independent is about writing your own story every day, in an independent way, which means

not making compromises. Doing what you believe to be the best for your end customer, in terms of

cloth, material, cut and collaborations. We don't impose looks of a certain kind. We want our clients

to build up their own personal taste and mix things. We are a brand of contamination, we are not a

brand of imposition. We like to see our suits potentially worn with a pair of Nikes or a pair of

Church's."

If Italia Independent is the day job, taking control of his own destiny is the bigger picture. But the

family back-story is as extraordinary as it is inescapable. Gianni Agnelli was the epitome of the

20th-century tycoon. According to some sources, Fiat at its peak under his command accounted for

five per cent of Italy's GDP and employed three per cent of its workforce. Assuming control of Fiat

in 1966, at a time when Italy was still pulling itself out of a post-war funk, and would soon be

rocked by massive industrial unrest, Agnelli - widely known as "L'Avvocato" (the lawyer) - proved

an unusually instinctive operator. He steered Fiat to unprecedented global influence and success.

XII. Brand Loyalty

Ferrari provides brand loyalty for its cutomers with exclusive product categories but also exclusive

services. Ferrari serve their customers with their stores that they are very expanded.

Ferrari Store doubles its presence in South Africa, located in Sandton City on the Nelson Mandela

Bridge, joining its sister branch at or Tambo International Airport. The store embodies the history

and spirit of Ferrari itself: each area of the Ferrari Store is carefully designed as a special, one- off

space in which passionate and fans can truly embrace the Ferrari experience.

It represents more than a pure shopping experience. It is a mean to communicate the Ferrari history

and values, a tribute to its dual soul made of racing and lifestyle. The over 100 square metre Ferrari

Store Johannesburg concept is developed entirely by the Studio Iosa Ghini. It offers a wide ion of

products from the Prancing Horse ranges for owners and enthusiasts, to those dedicated to Ferrari

fans. An important ion of memorabilia, unique and original parts of Ferrari F1 cars, enriches the

offer: in particular the full front wing from the 2005 F1 single-seater 1997 F1 single-seater

nosecone. Ferrari Store Nelson Mandela Square - Sandton City is open from 9am to 6pm daily.

Terms and Conditions:

• Voucher not redeemable for cash

• Only one voucher can be used per order

• Voucher cannot be used in conjunction with any other partner promotions and/or discounts.

XIII. Brand Culture

Some global brands are strongly associated with their country of origin. Indeed, in certain cate-

gories this is part of the essence of the brand. Automobiles are the most obvious example.

The German cultural psyche is embodied in Mercedes-Benz, Porsche, and BMW—and what is

more Italian than a Ferrari?

Beyond the product or service itself, the visual identity of the brand also faces problems of

acceptance. A color or a design that achieves a positive result in one country may not have the same

effect in another. Although the package or logo must portray the product’s or company’s values,

attributes, personality, and positioning, it must also ensure that cultural tastes and dif- ferences are

taken into account. In other words, a global brand must retain its autonomy while also adhering to

local sensitivities.

XIV. Creating Value for Customers

Competitive advantage is based on how value is created or arrived at in carrying out a competitive

strategy. Value is determined by the unique combination of attributes—in a product or service—

which are important to a customer. For example, in terms of automobiles, the value of a Ferrari or a

Fiat is determined only by customer perception. Whether Ferrari or Fiat, the value must exceed the

firm’s cost of creating it. Value is added as specific activities or functions are performed to provide

a product (or service). Competitive strategy and competitive advantage can result from any number

of different configurations of activities within the firm. For a firm in the automobile industry with

expertise in design, this activity may be combined with an array of activities. For example, those

responsible for styling may work closely with such disparate activities as materials procurement or

advertising.

XV. Brand Gender

TrueCar.com has released a study examining gender differences in automotive buying. The study

was based on more than 8 million retail purchases in 2010 and found that women are more swayed

by cost and fuel efficiency, while men answer to the oppositional pulls of big-and-brawny versus

high- priced, high- performance.

Key findings include:

• The brand with the highest percentage of retail sales to females in 2010 was MINI (47.9 percent),

followed by Kia (46.8 percent) and Honda (46.0 percent). There were 15 brands with a female ratio

over 40 percent in both 2009 and 2010.

• The highest percentage of male buyers primarily purchased exotic brands. There were five brands

in 2010 at 10 percent or less for retail sales to women, including Ferrari (6.4 percent), Lotus (7.2

percent), Lamborghini (7.4 percent), Maybach (8.0 percent), and Rolls Royce (9.3 percent).

XVI. Brand Proposition/ Brand Promise

Ferrari provides brand promise with emotional connection that Scuderia Ferrari is a great example

to show what a strong emotional connection can do. Ferrari retail division (US$1.5 billion revenue)

capitalizes on the strong emotional connection that Ferrari brand has with its fans. Ferrari Store

retail outlets operated by retail division are a masterpiece of branding and marketing sophistication.

For example, in every Ferrari Store, cordoned off by a steel rope, there is an example of the Ferrari

team's single-seater race car. At the entrance visitors are welcomed by the roar of a Formula 1

engine. These audio-visual elements quickly establish an emotional connection with a visitor and

that's all the marketing and advertising Ferrari needs.

XVI. XVII. Brand Relationship/ Brand as a Social Phenomena

Members of this brand interest group may form various relationships with a brand. Up until now,

brand relationships in the literature have been primarily viewed from a dyadic, consumer towards

branded object, view. However, those brand relationships are forming in the private, as well as in

the public domain (Richins 1994), which leads to different implications with regard to brand

relationship building and private and symbolic consumption. Whereas private relationships may

form independently from other members of the brand interest group, relationships which are public

are used for social interaction and may derive much of their meanings from being a core member of

the brand interest group. Ferrari fans, for instance, build up strong relationships with the Ferrari

brand, have become part of the brand by publicly displaying their fandom through the use of rituals,

showing up in ‘red masses’, expressing their love and passion for Ferrari with a number of totemic

merchandise items. Moreover, with regard to brand manifestations, members of the interest group

might build up relationships with different manifestations of a brand. They might even produce their

own brand manifestations, for instance in the form of fetishes and shrines.

Category- brand relations are not symmetrical, i.e. a strong brand-to-category associa- tion (e.g., the

Ferrari brand with the category of sports cars) does not imply a strong category-to-brand association

(e.g., the sports car category does not necessarily activate ‘Ferrari’ but may also activate ‘Porsche’

or ‘BMW Z’) (Tversky/Gati 1978; Farquhar/ Herr/Fazio 1990; Farquhar/Herr 1993; Boush 1993,

1997). Thus, a brand with a strong association toward the product category is likely to be preferred

if no other brand owns the association from the category. This is the case, for example, for Kleenex

but not for Ferrari.

XVIII. Brand Personality

Personalities of people are similar to the way the general population thinks of brand personalities

whether it is positive or negative (Meyers, Lubliner). For example, when one hears peoples’ names

such as Bill Clinton, President Obama, Steve Jobs or Marilyn Monroe, one associates them with

some sort of imagery or feeling. Now, think of brands such as Nike, Apple, Hewlett- Packard, and

Ferrari. Each of these examples mentioned, has a brand identity, a brand personality that defines it

in one’s mind.

F1 is a high-profile sport, with a 100 million global audience for each race (AGP 2007). F1 teams

can spend $US350 million a year, facing a constant challenge to raise funding (Hoyle 2006).

Sponsorship accounts for 80-85% of an F1 team’s income, yet is relatively expensive. Minor F1

sponsorships cost $US1-3 million per year and principal (or title) sponsorships cost £25-£50 million

per year for major teams, such as Ferrari (Anonymous 2006a, Anonymous 2006b, Barrand 2006,

BBC 2006). The high F1 sponsorship costs and global exposure make it imperative that sponsors

match their brand with a suitable F1 team. This will maximise their investments and leverage the

potential for the positive brand image and attribute associations fans hold about the team to be

transferred to their own brand (Ferrand & Pages 1999, Gwinner & Eaton 1999, Madrigal 2001,

Donahay & Rosenberger 2007, Woisetschlager 2007). An area of growing interest is brand

personality, which sponsorship can be valuable in building (Aaker 1996, Cornwell, Roy & Steinard

2001).

Brand personality is “the set of human characteristics associated with a brand” (Aaker 1997, p.

347). BP is a strategically important construct that can help firms achieve enduring differentiation

and sustainable competitive advantage (Biel 1993, Aaker 1996, Diamantopoulos, Smith & Grime

2005, Freling & Forbes 2005a). However, despite the value of the F1 sponsorship market, little

research has examined the extent to which F1 team brands are differentiated on personality

dimensions, if at all. This gap is surprising considering that sports sponsorship can be a valuable

tool to communicate symbolic brand associations as part of a process to build or change the

personality of a sponsor’s brand (Aaker 1996, Speed & Thompson 2000, Cornwell, Roy & Steinard

2001, Cliffe & Motion 2005, Sirgy et al 2008). Therefore, this paper investigates the potential of

Aaker’s (1997) BP construct for detecting F1-team BP differences and the extent to which F1 teams

have established clear and distinct BPs in an Australian context. This paper also identifies the

influence, if any, that a team’s winning performance and fan identification may have on F1-team BP

perceptions.

Anyone who studies brands is familiar with Jen Aaker’s work - The Dimensions of Brand

Personality. In this ’97 classic, Aaker suggests that brands take on human traits and characteristics.

Using the psych literature as her launchpad, Aaker argued brand personality can be broken into 5

distinct dimensions: Sincerity (down-to-earth, honest, wholesome, cheerful); Excitement (daring,

spirited, imaginative, up-to-date); Competence (reliable, intelligent, successful); Sophistication

(upper class, charming); and Ruggedness (outdoorsy, tough). To hear that brand personality is the

key differentiator between Lambo and Ferrari - from a technical expert – shows just how relevant

brand personality is. From Peter’s “quick and dirty” response, we can project that Ferrari would

score higher on competence and sophistication dimensions- and Lamborghini would rank higher on

the “excitement” scale.

Of course, brand personality is not only relevant to automobile brands. Consumers have clear

perceptions, associations, and attitudes towards intangible aspects of many brands. The intangible

stuff is the stuff that makes the brand valuable. Just think of some competing brands and do some

quick brand personality comparisons (e.g.Energizer vs. Duracell, Nike vs. Adidas, Apple vs.

Microsoft...) Very quickly we see just how relevant and common brand personality is in creating

brand differentiation.

Brand personality is undoubtedly one of the key elements in marketing luxurious cars successfully.

Here, it is a combination of both the personality of the product as well as the targeted customer. In

fact it is a kind of a positive symbiotic relationship. Hence, the endorsers -- celebrities, like artists,

sportsmen and so forth- used for advertisements have to exude the appropriate brand personality to

further strengthen it in the minds of the customers. Ferrari cars, for example, uses the world famous

racer Michael Schumacher. Obviously, his numerous victories contribute immensely to the car's

image.

XIX. Brand Perception

In conducting the research a holistic view was taken. Initial interviews were with opinion formers,

leading up to a series of in-depth interviews with owners of the new Mini, owners of the old one (or

“classic”), opinion leaders and enthusiasts from the motor trade, opinion formers (racing drivers and

car magazine editors).

As long as Ferrari doesn’t start chasing niches they don’t belong in – just to be clear, the FF is

dangerously close to that – and start cranking out too much product in emerging markets, they’ll be

fine. But I’m not so sure the company can resist that temptation. As a matter of fact, all indications

suggest that they can’t. Brand Perception? What passionate motoring is all about. At least for now.