Analyzing a brand is sometimes confused with analyzing the company. Over the past year, I had the pleasure of engaging with arguably one of the world’s most iconic manufacturer of sports cars: Ferrari! It is, I believe, worthwhile contemplating some of the core branding principles with broader applicability for any marketer, communications professional and business leader looking to fine-tune or indeed re-think their brand.
How does Ferrari turbocharge its brand? What are some of the challenges it faces today? Where does the brand get the power from to command a leading edge over other competitive cars? What are some of the key lessons Ferrari can teach us?
Musing on Ferrari’s success as a powerful brand, there are three ideas that are deeply engrained in the very genetics of the Ferrari marque: Luxury, Formula 1 and Italy.
Lifting the hood
The power of Ferrari doesn’t just come from its mechanical performance. That’s only one aspect of the total power it commands. The majority of Ferrari’s power comes from its iconic appeal. If we analyze the visual codes and the design identity of the luxury brand, we can easily see that it encapsulates and carries more Italian masculine identity than any other Italian super-high-end brands.
“Ferrari’s design language exudes Italian vivacity and elements of ‘la dolce vita’.”
Ferrari is a luxury car brand that is famous for its organized scarcity strategies, which are at the heart of a very profitable perception management equation. As a case in point, consider 2013, when the paradigmatic builder of super sports cars publicly announced that it was cutting its production to less than 7000 cars per year. The effect? Sales for the brand rose by 5% and profits surged 9% [1]. Deliberately creating scarcity also means that the ability to pay a large amount of cash does not automatically qualify for ownership. Instead, one must join lengthy waiting lists, which are subject to a close-knit screening system. Having to wait may seem to fly in the face of today’s consumerist culture of instant gratification. But ‘having to wait’ fuels exclusivity and plays on the idea that ‘good things take time’. As Kyle Stock from Bloomberg writes: “As in any thoroughbred business, net worth is merely a prerequisite for ownership: commitment and decorum are the only true considerations.” [2]
The Ferrari Owners’ Club is like a cult of exclusive fraternal organization. It offers a perfect meeting space, both physically and intellectually, for like-minded enthusiasts gravitating around a shared territory of passion. True, status purchase is important, but the further up the value chain the brand aims (think V12, or La Ferrari), the truer the spirit of what Ferrari stands for. A holistic, all-stakeholder encompassing event management system further strengthens post-purchase P.R. (Powerful Relations) for the brand. If you thought Customer Centricity and Co-Creation of value are inventions of recent technological advances, think again. Just like many other luxury brands, companies such as Ferrari have been integrating their most loyal expert-customers into powerful, company-facilitated eco-systems long before the rise of social media and its respective opportunities.
Super Acceleration & Carbon-Ceramic Braking Power
From a brand management standpoint, Ferrari on the track adds brand value to Ferrari on the road. When it comes to competing, anything other than the first place in Formula 1 is a loss for Ferrari.[3] The emblem of the prancing horse needs to move up the rankings, and anything other than getting to number #1 isn’t going to cut it. To leverage the brand successfully, this will have to be true outside the core, too.
“In order to avoid diluting the brand in the future, managed scarcity may not be enough.”
I’ve recently written on the changing nature of luxury consumers [4] proposing that values, sophistication and taste offer a new frontier that brands need to master in order to remain (and flourish) at the epitome of aspiration. For a power-brand like Ferrari, strategic brand reflections will also have to focus on consumer segments outside its traditional core (Grand Touring, to name one), as well as on very simple levers, such as colour for instance. And whilst Tom Selleck (Magnum) and Don Johnson (Miami Vice) embodied and transported the brand perfectly well in the 80’s to places like the US (Ferrari’s largest market today), the purist Ferrari-in-red appearance may no longer connect with younger consumers or non-core-sports-car audiences. Non-red Ferraris that still capture attention, but in a less pretentious manner, offer one great way to create tasteful relevance underneath the brand’s umbrella of aspiration.
The Drive
The structural drive of the HNWI-segment [5] purchasing Ferraris is often summarized as “Big Toys for Big Boys”, though this is a populist viewpoint at best. Ferrari is certainly not an expression of mere status. It is an extension of power. The roaring engine is the indication of its power. The manifestation, not the exertion or assertion, of its brand power is clear even when only cruising along at 60 km/h. It is meant to be an extension of its driver’s pre-existing power.
“Ferrari’s brand has the opportunity to increasingly create relevance beyond the expression of status.”
Overlaying the brand’s past and future ambitions with the notion of the increasing sophistication and taste of its target audience, a train of thought worth pursuing is to look at the change in perceptions of ‘power’. Specifically, what is the difference between ‘exerting power’ and ‘owning power’? It is a subtle difference, yet it has broad implications. For instance, how often, would you say, do Ferrari owners actually use their car’s power? How often is the car driven at 350 km/h? The response to this would suggest that the drive behind purchasing into the world of Ferrari is more about owning power than about using or exerting it in everyday life, albeit unconsciously. It is about having the means to make oneself powerful. But actually using these means isn’t necessary to be recognized as a person of power. The magic is in the belief others hold in regards to one’s will to use these means: underneath that brand-iceberg lays a lot of Ferrari’s unwavering power.
Sharpening powerful engines and delivering peak performance on the Grand Prix track is the visible DNA of Ferrari: a brand that stands proud in a realm of success. Just as marketers refine their value propositions in contemporary times, Ferrari adjusts its products and brand in subtle, yet relevant ways. Turbocharging its latest cars with sub-four liter engines, for example, isn’t just an engineering feat, but an adjustment to the world at large, making sure the brand stays in business and fascinates future generations to come.
What are you doing to achieve a higher dimension for your own brand strategy?
Would you pay $150,000 for a handbag? In TEDxYouth@Zurich 2016 Markus talks about how we can find the real-life fairy dust that exists all around us. He explains the power and allure of the brand and of luxury goods. You can watch the video here…
Markus is a recognized thought leader, speaker and facilitator in the fast paced world of cutting edge brand management. In his most recent undertakings Markus helped Aston Martin, Harley-Davidson and Ferrari build, scale and deliver their fascinating brands to more people in more places around the world. Markus holds an MBA from Oxford University and is an Honorary Senior Visiting Fellow at CASS Business School in London. He engages in workshops and lectures at conferences and leading business schools around the world. Chat to our team if you’d like enquire about having Markus at an upcoming event.
Resources & References
- http://www.bloomberg.com/news/articles/2014-08-14/rare-ferrari-expected-to-fetch-up-to-75-million
- http://www.bloomberg.com/news/articles/2016-04-13/we-applied-to-buy-a-400-000-ford-gt-here-s-what-we-learned?bcomANews=true
- https://www.formula1.com/en/latest/features/2016/6/winners-and-losers—europe.html
- http://www.markuskramer.net/the-changing-nature-of-luxury-customers/
- http://www.nielsen.com/eu/en/solutions/high-net-worth-individuals.html
Image Courtesy Ferrari.com
Views are subjective are my own.