Analysis of the Marketing outlook of Ferrari4MARK001W Mark.docx

Analysis of the Marketing outlook of Ferrari
4MARK001W Marketing
Principles: Report
Company Coursework 1: Apple Inc.
Company Coursework 2: Ferrari S.p.A.
Module Leader: Norman Peng
Seminar Tutor: Norman Peng
Student: Paolo Savio Foderaro W1616642
Marketing Report �1
Norman
Highlight
I. Introduction 3
II. PEST Analysis 4
III. Porter’s Five Forces Analysis 6
IV. SWOT and Positioning Strategy Analysis 8
V. Ansoff Matrix 10

VI. Ferrari’s Social Responsibility 11
VII.Referencing List 12
Ferrari S.p.A
(Ferrari Corporate)
“Give a kid a paper sheet and some colours and ask him to
draw a car, for certain the car will be red” (Enzo Ferrari)
I. Introduction
A prancing black horse on a yellow background is not
something that could pass unnoticed.
Destined to become an icon of style, luxury and speed, the first
Ferrari made its appearance to the
public in 1947, eight years after the foundation by the Italian
entrepreneur Enzo Ferrari of Auto
Avio Costruzioni, what would come to be, later on, the well-
known brand Ferrari.
Throughout the history the company divided itself into the
developing and production of
racing cars, becoming one of the most successful racing
team in the world, and of luxury cars

distinguishing itself for the excellence of the Italian
manufacture. As a matter of fact Ferrari’s cars
are build following the ideal of perfection in terms of design,
power and elegance conveyed by the
founder, Enzo Ferrari, who was used to say: “The best Ferrari is
the next one” (Enzo Ferrari, no
date).
From its foundation till today Ferrari’s mission statement
has been to build unique sport
cars, symbols of Italian excellence both on the road and on
track. At the end of 2015 the Italian
sport car manufacturer can praise more than 7500 cars
sold with a presence in 62 worldwide
markets and a net revenues of 2,854 millions of euros (Ferrari,
Annual Report 2015).
Herein, the purpose of the report will be to analyse in the first
part the external factors that
influence the company’s business. Then I will take into
account the industry within which the
company operates in. After that, I will examine the strategic

position of the company in the market
and the marketing strategy utilised for its products, namely
sport cars. Finally I will conclude taking
into consideration sustainability and ethic-related issues that the
company is dealing with.
(Ferrari Corporate)
II. PEST Analysis
The first concern for a company’s business is to understand and
deal with all the external
factors that could affect the company’s future performance.
It is worth saying that all possible
external factors are not under control of the company, this
means that the firm must monitor them
and change its strategy accordingly (Baines, Fill and Page,
2013).
Above all, the political environment can constitute a huge
problem if the company does not
detect any possible changes in government regulations and
requirements associated with the car

industry. The company has to mediate with the government to
avoid or at least reduce the impact of
future political decisions. From Ferrari’s perspective the
political threats are, for instance, the
possibility of more severe EU or US regulations on CO2
emissions or minimum wages that could
affect its business (Ferrari, Annual Report 2015). For
instance, eco-friendly government
policies, applied in order to preserve the environment, are
expected to be followed by cars
manufacturers. It’s very difficult to impede or alter this kind of
regulations because most of
them are socially cared and may also influence consumer’s
purchasing decisions. Other legal
aspects, formal consequence of political decisions, that Ferrari
has to deal with are laws upon
passengers safety and maximum fuel emissions. For a
luxury car brand, which stresses the
design and performance of the vehicle these regulations
can deeply affect the company’s
business in terms of financial revenues.
Global economic changes could deeply alter the business
performances, as well. On
the one hand, for instance, economic uncertainty could

lead consumers to save instead of
spending their money and, as a consequence, luxury brands
would be the first ones to suffer
losses in revenues (Ferrari, Annual Report 2015). Albeit
there always be wealthy people
willing to buy luxury products, economic uncertainty will
certainly affect their willingness to
spend money. On the other hand, growing markets represent
new possibilities for expansions
of the firm. Indeed raising economies, like India or China,
may constitute new profitable
investment opportunities for the company.
In terms of social environment the company must keep track of
people’s preferences
and values. Ferraris’s main clients are automobile collectors and
enthusiasts who are willing
to pay premium prices to own a great piece of
craftsmanship. Moreover it’s worth
mentioning the two main value sought by consumers,
hedonic and experiential value. The
former is about the feeling of pleasure due to the ownership of a
luxury product. The latter
consists in all subjective feelings the consumer has
towards the luxury good that help

perceiving it as rare and unique (Hung et al., 2011).
Therefore, the main concern for the
company would be about changes in life style and taste
of this small group of costumers,
especially those linked to this two values.
Technological issues also play a major role in an industry where
quality is the queen.
All car manufacturers take these concerns very seriously
since they have a huge impact on
such sectors like automobile manufacture. For instance,
developing a new hybrid system
reducing emissions while maintaining high performances
can be a breakthrough in the
market and will constitute a huge competitive advantage.
That is why Ferrari invests
massively in research and development to stay at the pace with
the newest technology in the
market, offering in this way the best product to its costumers.
(Appnova, 2014)

III. Porter’s Five Forces Analysis
The further step in our analysis is to examine and investigate
the industry within which our
company operates, taking into account the five force acting
within the market: the bargaining power
of buyers; the bargaining power of suppliers; the threats of new
entrants; the threat of substitutes
and the rivalry among existing competitors.
First of all, the customer’s bargaining power can be considered
as medium. This is linked to
the fact that the niche segment that buys sport cars isn’t price
sensitive, i.e. consumers are willing to
spend great amounts of money to own a specific product. This
can be explained by the consumer’s
awareness of the luxury brand superior quality, well-known
design, and exclusivity (Hung et al.,
2011). For this reason they could not influence the price of the
products and Ferrari could charge
high prices for its cars. On the other hand, wealthy people have

bargaining power to some extend;
as matter of fact they can choose wether to buy a Lamborghini
rather than a Ferrari (Brugnoni,
2015). Nevertheless it must be said that more than often when a
person buys a Ferrari, it’s very
common for him to develop a feeling of loyalty to the brand.
This mainly happens because of the
intrinsic value related to the luxury car brand.
Supplier’s bargaining power is generally weak in this kind of
markets. This can be explained
by the great amount of suppliers compared to the actual number
of car manufacturers. Nonetheless
if we consider only the luxury car market, the supplier’s power
become less and less weak. As a
matter of fact, luxury car brands, like Ferrari, look for specific
material and most of the times they
choose the same dealer, albeit it isn’t the cheapest one (Leruste,
2013). It does that to guarantee a
certain level of quality for the product to be offered to the
public.
The threat of new entrants is relatively low since there are many
barriers to enter this kind of
market. The main one is the brand itself; in the luxury market
all of the competitors have a history

behind the brand that talks by itself (Brugnoni, 2015).
This contributes to create the sense of
exclusivity linked to the product that the consumer is looking
for. The owner of car feels a sense of
belonging to the history of that specific brand. Another huge
barrier is the initial capital required to
enter into the market. That is why many luxury brand are
owned, and in this way supported, by non-
luxury brand, like Fiat for Ferrari or Volkswagen for Porsche.
To understand the risk of substitutes we shall start saying that a
luxury car satisfies two main
needs of the consumers; a Ferrari is not only a means of
transportations, but also and especially a
status symbol (Leruste, 2013). Indeed, the ownership of a
Ferrari comes with a privileged status for
their owner. Therefore, even though there are a lot of
substitutes in terms of means of
transportations, like trains or public transportations, the owner
of a Ferrari buys this kind of product
for the pleasure to drive a powerful car and to “own” a symbol.
Then, the threat will mainly consist
in all the other luxury cars that can offer the same thing, like
Lamborghini, Porsche or Bentley.

Thus, the risk of substitutes is high not because of the possible
different means of transport, but due
to the consistent amount of automobile brands that have a
similar offer.
In the end, the competition between firms is very high. This can
be explain by the already
mentioned great deal of substitutes among which the costumer
can make his choice. As a matter of
fact the almost identical car manufacturers strive to gain the
same market segmentation. Moreover
the presence of high sunk cost constitute a barrier to exit that
contributes to enhance even more the
competition within the industry.
IV. SWOT and Positioning Strategy Analysis
The first thing that distinguishes Ferrari from other car
brands is the symbolic value
associated to the company itself. Broadly speaking most luxury
cars possess a strong brand image,
but Ferrari’s brand is way more well-known than the others
(Bhashin, 2016). A Ferrari is considered

a status symbol more than any other luxury car. Consumers
know they own a great piece of the
Italian craftsmanship, a powerful car with a great design.
This feeling can be explained by the
recognition gained by Ferrari in his racing history,
counting 15 drivers’ world titles and 16
constructors’ world titles (Ferrari Corporate, 2016), which
contributes to support the costumer’s
awareness about the quality of a Ferrari. Another important
strength is the working environment, to
which Ferrari gives a lot of importance. It does care
about the happiness and satisfaction of its
employees; in this way all the people involved in the
production process will do their best to
produce the best product in the market.
Nonetheless, there are some factors that weaken our
company. First of all, the very low
volume of production, while creating the sense of
exclusivity linked to the product, it also
constitutes a huge weakness (Bhashin, 2016). Being the demand
for a Ferrari very high compared to
the actual supply, many possible costumers won’t be able to buy
a Ferrari and, as a consequence,

they may turn towards a competitor. Besides that, the
need of specialised workers necessary to
guarantee a high standard of production comes at high costs for
the firm. Indeed, to build highly
performing cars Ferrari needs skilled engineers and designers,
very difficult to find or train.
Going through the opportunities for the Italian car manufacturer
it’s worth mentioning the
new possibilities offered by the development of new
technologies. As a matter of fact, R&D
programs helps finding new unexploited technologic frontiers
that the firm could explore and gain a
profit from them. Besides that, growing markets represent a
further opportunity for expansion for
the brand (Shah, 2012).
Finally, the main menaces that Ferrari has to face are
common to all car manufacturing
brand. In the first place the likelihood of more severe
emission restrictions can threaten the
company’s business. Then, the fear of an economic crisis that
would primarily affect luxury goods
can also constitute a great risk for this kind of brands.

Now, to introduce the position of Ferrari in the market, we will
rely on a perceptual map,
which constitutes a visual and straightforward tool to
understand where the firm is located in the
market. As it can be seen from the diagram, the two main
attributes taken into consideration are
prestige and exclusivity. From the diagram it’s clear that Ferrari
is the leader in the market for two
main reasons: it has a higher prestige compared to the others,
thanks to his racing history and the
symbolic value associated to the black horse brand; with his
“waiting list” marketing strategy it
enhances its exclusivity till the excess, since the brand produces
very few cars of the same model
compared to the actual demand. Furthermore this two reasons
support the premium pricing strategy
of the firm; Ferrari prices his car way too much
compared to their real value. This can also be
justified by the price insensitivity of the target segment.
PERCEPTUAL MAP

Prestige
Exclusivity
Ferrari
Porsche
JaguarBMW
Volkswagen
Fiat
Audi
Ford
Mercedes-Benz
Toyota
�
(Ferrari, Annual Report 2015)
V. Ansoff Matrix
At this point of our report Ferrari’s approach to the
conception of a marketing strategy
should be considere. The tool we will be using is the

Ansoff matrix because it is a useful and
strategic instrument to develop a well-structured strategy for the
company’s growth. As a matter of
fact, the Ansoff matrix gives the opportunity to compare current
and new products with current and
new markets so that the company can choose the right approach
for each of its products. The matrix
is then divided into four parts according to the combination of
products and markets; the four parts
are market penetration, market development, product
development and diversification.
Market penetration is about improving existing product in
existing market. It is not easy to
increase the market penetration of a product within the market.
Ferrari could increase its market
shares continuously improving its product or decreasing the
price in order to get more consumers.
As a consequence, the rivalry within the market will increase
because the other firms would try to
counteract Ferrari’s new strategy.
Market development is typically riskier than the previous
one because it deals with the
introduction of an existing product in a new market in order to
increase the sales volume. Ferrari

could do that in three different ways: it can expand
geographically, seeking growing economies, e.g.
India or China, and enter those markets; it can target new
segment, i.e. finding new group of people
willing to share the Ferrari vision, or it can find new users to
sell its cars to (Leman, 2015).
Product development means entering an existing market but
with a slightly changed or
completely new product. In this part, the firm makes use of
innovation and research in order to
continuously design and manufacture products that will
effectively meet consumer’s needs and
preferences. This doesn't merely refer to introducing new cars
in the market, but also utilising new
technologies, like hybrid engines, to create a properly different
car (Leman, 2015). In addition to
that, Ferrari yearly participates to the Formula One racing
competition to give a direct
demonstration of the improvements they made on their product.

Finally diversification involves the developing of new products
for different markets. Ferrari
achieves this objective by sponsoring universities to create,
for instance, specified engineering
courses of Ferrari (Leman, 2015). Moreover, the company also
invested in the creation of Ferrari-
themed parks and hotels increasing its offer. This is a
good way to increase the value of the
company but can be very costly due to the lack of experience in
new markets.
VI. Ferrari’s Social Responsibility
Before concluding this report an evaluation of the social
commitment of Ferrari’s brand
must be carried out. Firstly, Ferrari follows a program,
called “Go Green project”, to reduce
polluting emissions caused by the production of
components for their cars. Then, thanks to the
project “Formula Uomo” it managed to create an eco-friendly
and safe work environment for its
employees. Moreover, in 2011 the firm became independent in
terms of energy; it actually installed
solar panels in order to use renewable energies instead of other
sources. Doing so, it managed to
reduce its CO2 emissions of 42.1% (Ferrari, Sustainability). As

far as cars are concerned, Ferrari
aims to reduce by 40% consumptions and emissions; it would
succeed in doing so by applying a
road map to improve energy efficiency and, in this way, the
entire car. Moreover engineers are at
work to develop the first Ferrari hybrid; the firm is investing to
build the infrastructures that will be
utilised to achieve this goal and the first Ferrari hybrid is
planned to be issued in 2015 (Newton,
2014).
On a 360 degrees perspective Ferrari participates actively and
organises initiatives in order
to help people. In 2012, the company managed to raise more
than 80 million yen to support families
hit by the Great Eastern Earthquake in Ishinomaki. In the same
year Ferrari arranged an auction,
called “Ferrari for Emilia”, in order to help Italian families
victims of an earthquake. The auction
was about selling Ferrari’s rare item and it succeeded in raising
over 1.8 million euros, all donated

to the victims (Newton, 2014). In addition to that, the
company, in cooperation with Starlight
Children’s Foundation, also organised a project called “The ride
of your life”; this consisted to give
passenger rides to terminally or seriously ill children (Newton,
2014).
Finally, it is clear that the main ethical issues the firm
has to face are linked to CO2
emissions, dangerous for the environment. To cope with
environmentalists Ferrari not only is
investing in hybrid technology but also supports different
no-profit organisations, like Ferrari
Owners Charity Organization, which aim to raise funds and
awareness about people living in poor
conditions and environmental problems.
In my opinion this kind of approach to solve ethical issues can
be very profitable because
even though the company might not succeed in solving directly
the problem, namely reducing CO2
emissions, consumers are aware about the efforts of the
company dealing with its emissions and
about the fact that it is balancing it with initiatives to help the
environment. On the other hand the

sponsorship to many events gives also a great deal of visibility
to the company.
(Virtual Car, 2012)
VII.Referencing List
- Aforisticamente (2015). Le più belle frasi di Enzo Ferrari.
Aforisticamente. Available at http://
aforisticamente.com/2015/10/14/le-piu-belle-frasi-di-enzo-
ferrari/ [Accessed 12 December
2016].
- Bhashin, H. (2016). SWOT Ferrari. Marketing91.com.
Available at http://www.marketing91.com/
swot-ferrari/ [Accessed 8 December 2016].
http://aforisticamente.com/2015/10/14/le-piu-belle-frasi-di-
enzo-ferrari/
http://aforisticamente.com/2015/10/14/le-piu-belle-frasi-di-
enzo-ferrari/
http://www.marketing91.com/swot-ferrari/
http://www.marketing91.com/swot-ferrari/
- Brugnoni, Y. (2015). Ferrari Strategy Analysis. Share and
Discover Knowledge on LinkedIn
SlideShare. Available at
http://www.slideshare.net/yari1912/ferrari-strategy-analysis
[Accessed 8

December 2016].
- Chierici, S. (2012). Ferrari per l’Emilia. Virtual Car.
Available at http://www.virtualcar.it/alle-16-
di-oggi-6-giugno-2012-al-via-lasta-ferrari-per-il-terremoto-in-
emilia/ [Accessed 12 December
2016].
- Deviprasad Goenka Management college of Media Studies
(2014). Brand Positioning. Share and
Discover Knowledge on LinkedIn SlideShare. Available at
http://www.slideshare.net/
DGMediaSchool/brand-positioning-42507748 [Accessed 8
December 2016].
- Ferrari (2015). Annual Report, 2015. Ferrari.com.
Available at http://corporate.ferrari.com/it/
annual-report [Accessed 8 December 2016].
- Ferrari (2016). At A Glance. Ferrari Corporate. Available
at http://corporate.ferrari.com/en/
about-us/glance [Accessed 8 December 2016].
- Ferrari (2016). Ferrari DNA. Ferrari Corporate. Available
at http://corporate.ferrari.com/en/
about-us/ferrari-dna [Accessed 12 December 2016]
- Ferrari (2016). Ferrari Sustainability: All-Round Energy
Efficiency. Ferrari.com. Available at
http://auto.ferrari.com/en_EN/ongoing-
heritage/company/maranello/sustainability/ [Accessed 8
December 2016].

- Ferrari (2015). Product Range. Ferrari Corporate.
Available at http://corporate.ferrari.com/en/
media/media-gallery/photos/range [Accessed 12 December
2016].
- Hung, K-p., Chen, A.H., Peng, N., Hackley, C., Tiwsakul,
R.A. Chen, C-l., (2011), "Antecedents
of luxury brand purchase intention", Journal of Product & Brand
Management, Vol. 20, Iss. 6, pp.
457 - 467.
- Leman, S. Analysis of Ferrari and Porsche. Share and
Discover Knowledge on LinkedIn
SlideShare. Available at
http://www.slideshare.net/SharimarLeman/analysis-of-ferrari-
and-
porsche [Accessed 8 December 2016].
- Leruste, V. (2013). A Porter’s Five Forces Analysis of the
Luxury Cars Industry. Audi AG vs.
Mercedes-Benz. Available at http://dasauto-
skema.blogspot.co.uk/2013/11/a-porters-five-forces-
analysis-of.html [Accessed 8 December 2016].
- Newton, E. (2014). Ferrari’s CSR. Prezi. Available at
https://prezi.com/hq53in1jvpzg/ferraris-csr/
[Accessed 12 December 2016].
- Shah, S. (2012). Ferrari. Share and Discover Knowledge on
LinkedIn SlideShare. Available at
http://www.slideshare.net/sagar0013/ferrari-11398733

http://www.slideshare.net/yari1912/ferrari-strategy-analysis
http://www.virtualcar.it/alle-16-di-oggi-6-giugno-2012-al-via-
lasta-ferrari-per-il-terremoto-in-emilia/
http://www.slideshare.net/DGMediaSchool/brand-positioning-
42507748
http://www.slideshare.net/DGMediaSchool/brand-positioning-
42507748
http://corporate.ferrari.com/it/annual-report
http://corporate.ferrari.com/it/annual-report
http://corporate.ferrari.com/en/about-us/glance
http://corporate.ferrari.com/en/about-us/glance
http://corporate.ferrari.com/en/about-us/ferrari-dna
http://corporate.ferrari.com/en/about-us/ferrari-dna
http://auto.ferrari.com/en_EN/ongoing-
heritage/company/maranello/sustainability/
http://corporate.ferrari.com/en/media/media-
gallery/photos/range
http://corporate.ferrari.com/en/media/media-
gallery/photos/range
and-porsche
and-porsche
http://dasauto-skema.blogspot.co.uk/2013/11/a-porters-five-
forces-analysis-of.html
http://dasauto-skema.blogspot.co.uk/2013/11/a-porters-five-
forces-analysis-of.html
https://prezi.com/hq53in1jvpzg/ferraris-csr/
http://www.slideshare.net/sagar0013/ferrari-11398733

- UKEssays (No Date). Ferrari sports cars manufacturer.
UKEssays. Available at https://
www.ukessays.com/essays/management/ferrari-sports-cars-
manufacturer.php [Accessed 8
December 2016].
- UKEssays (No Date). Marketing strategies in different markets
of Ferrari. UKEssays. Available
at https://www.ukessays.com/essays/marketing/marketing-
strategies-in-different-markets-of-
ferrari-marketing-essay.php [Accessed 8 December 2016].
- Waka, W. (2014). 5 Most Inspirational Car Slogans.
Appnova. Available at http://
www.appnova.com/5-inspirational-car-slogans/ [Accessed 12
December 2016].
- Wikipedia (No Date). Ferrari. Wikipedia. Available at
https://en.wikipedia.org/wiki/Ferrari
https://www.ukessays.com/essays/management/ferrari-sports-
cars-manufacturer.php
https://www.ukessays.com/essays/management/ferrari-sports-
cars-manufacturer.php
https://www.ukessays.com/essays/marketing/marketing-
strategies-in-different-markets-of-ferrari-marketing-essay.php

http://www.appnova.com/5-inspirational-car-slogans/
http://www.appnova.com/5-inspirational-car-slogans/
https://en.wikipedia.org/wiki/Ferrari

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