PESTEL AND SWAT ANALYSIS OF FERRARI

PROFILE:

Ferrari S.p.A. is an Italian sports car manufacturer based in Maranello, Italy. Founded by Enzo Ferrari in 1929, as Scuderia Ferrari, the company sponsored drivers and manufactured race cars before moving into production of street-legal vehicles as Ferrari S.p.A. in 1947. Throughout its history, the company has been noted for its continued participation in racing, especially in Formula One, where it has had great success.

Ferrari has produced a number of concept cars, such as the Ferrari Mythos. While some of these were quite radical (such as the Ferrari Modulo) and never intended for production, others such as the Ferrari Mythos have shown styling elements which were later incorporated into production models.

The most recent concept car to be produced by Ferrari themselves was the 2010 Ferrari Millechili.

A number of one-off special versions of Ferrari road cars have also been produced, some of which have been commissioned by wealthy owners. One of the examples is the Ferrari P4/5.

The Special Projects program is a collaboration by Ferrari with Italian automobile coachbuilders such as Fioravanti, Pininfarina, and Zagato to build custom cars using selected Ferrari models as a structural base. The first car under this program is the SP1, commissioned by a Japanese business executive. The second is the P540 Superfast Aperta, commissioned by an American enthusiast.

Ferrari has considered making hybrids. A F430 Spider that runs on ethanol was displayed at the 2008 Detroit Auto Show. Ferrari has announced that a hybrid will be in production by 2015. At the 2010 Geneva Motor Show, Ferrari unveiled a hybrid version of their flagship 599. Called the “HY-KERS Concept”, Ferrari’s hybrid system adds more than 100 horsepower on top of the 599 Fiorano’s 612 HP.

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. Yet, Ferrari never spent a penny in advertisement.

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, and 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 did not even exist 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.

HISTORY:

No history of Ferrari is complete without mentioning that Enzo Ferrari worked for Alfa Romeo from 1920 to 1929 (he wanted to get a job at Fiat after WWI, but restrictions on civilian auto traffic in Italy meant the company wasn’t hiring), and that he raced Alfas for another 10 years after that. From the time he was 12, according to Ferrari: the Man and His Machines, Enzo knew he wanted be a race driver. At Alfa, he achieved that dream, and adopted the cavallino, or prancing horse, insignia for his Alfa race car. In 1929, he left Alfa to start Scudery Ferrari in Modena, his privately owned Alfa Romeo racing team.

The 1930s – Scuderia Ferrari:

In 1929, Enzo Ferrari left Alfa Romeo’s employment to start his own racing stable (scuderia in Italian). Scuderia Ferrari did not race cars with the Ferrari name, though the Alfas they used on the track did sport the prancing horse. Race cars came to the scuderia from Alfa for tuning for almost a decade, and the Ferrari shop in Modena built its first car, the Alfa Romeo 158 Grand Prix racer, in 1937. In 1938, Alfa took its racing program in-house, and Enzo Ferrari went with it. After 10 years on his own, though, working for someone else proved difficult. He left Alfa (or was dismissed) for the last time in 1939.

The 1940s – Ferrari Survives the War:

When Enzo Ferrari left Alfa Romeo, he agreed to not use his name in connection with racing for four years. That wasn’t so bad; WWII curtailed racing for most of those four years anyway. Ferrari moved from Modena to Maranello during the war, where it remains today. In 1945, Ferrari began work on the 12-cylinder engine the company would be famous for, and in 1947, Enzo Ferrari drove the first 125 S out of the factory gates. Post-war racing was Ferrari’s finest hour on the track. Driver Luigi Chinetti was the first to import Ferrari cars to the U.S. in the late 1940s, including the first highway Ferrari, the 166 Inter.

The 1950s – Race- and Road-Ready:

During the 1950s, Ferrari had legendary engineers like Lampredi and Jano on the payroll, and bodies designed by the legendary Pinin Farina. Every time a race car was improved, the road car was the beneficiary. In 1951, a Ferrari 375 brought the team its first victory — over Alfa Romeo, no less. The 357 America hit the market in 1953, as did the first in the long line of 250 GTs. Production of all Ferrari cars grew from 70 or 80 a year in 1950 to more than 300 by 1960. Enzo suffered a personal tragedy in 1956, when his son Dino, who had helped develop Ferrari’s V6 engine, died of muscular dystrophy at the age of 24.

The 1960s – Turbulent Times :

The ’60s started out pretty good for Ferrari: Phil Hill won the Formula 1 championship in 1961 using a 1.5-liter V6 race car nicknamed “Dino.” It was the era of the sexy, swooping 250 Testa Rossa. But things got rough for the Prancing Horse, like when Carroll Shelby brought his Cobra to European race tracks. After years of rivalry, the Texan beat the Italian in 1964. Ferrari was having financial troubles as well, but that was nothing new. There were talks with Ford about a buyout, but Enzo Ferrari instead walked out on that deal and sold part of the company to Fiat in 1969.

The 1970s – What Gas Crisis? :

The V6 engine made it to a production model in the Dino 246 of the early ’70s. In 1972, the company built the Fiorano test circuit next to the factory. Ferrari introduced the Berlinetta Boxer flat-12 engine to the world at the 1971 Turin Motor Show in the 365 GT/4 Berlinetta Boxer, and the car hit showrooms in 1976. The next year, Carozzeria Scaglietti di Modena, Ferrari’s design house, was officially incorporated into the company. Cars were churned out, by Ferrari standards, with some models being built in the thousands. But the ’70s ended on an odd note with the introduction of the automatic–but still V12–400i.

The 1980s – Greed Is Good — for Ferrari:

Let’s skip to 1985, when one of the most iconic of all Ferraris appeared on posters across the world: the Testarossa (note that this time, the model name is one word, not two). The ’80s also saw the convertible Mondial and the realization of Enzo Ferrari’s dream, the F40. It was built to commemorate the company’s 40th anniversary, with a carbon-fiber body, a giant wing, and Kevlar panels. Ferrari’s brand recognition was at an all-time high, with a (replica) 1961 250 GT starring in Ferris Bueller’s Day Off. But in 1988, Enzo Ferrari died, at the age of 90. Fiat’s share of Ferrari rose to 90%, and son Piero became VP.

The 1990s to Current – A New Era:

In 1991, Luca di Montezemolo took the reins of the Prancing Horse. The supercar streak continued with the F50, but the ’90s had a wider offering of smaller engines, like the V8 in the F355 series. There were still V12s to be had, of course, like the Testarossas that continued to be built through the mid-90s. In 2003, Enzo Ferrari got his due, with a 230-mph supercar named for the company’s founder. On the track, the hot-blooded Ferrari cars met their match in the cool German driving of Michael Schumacher, who raced Ferraris to seven F1 championships between 1994 and 2004.

SWOT ANALYSIS:

STREANGHT 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″.

WEEKNESS 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.

OPPERTUNITES FOR 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 FOR 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.

MARKETING MIX:

Product:

High Performance super cars. Though the company is also heavily into 3rd party merchandising.

Pricing

Priced at a premium, they start at prices upwardly of 175,000 $US. Vintage Ferrari cars are also a great investment as Vintage Ferraris appreciate in value & are known to cost millions of US Dollars.

Promotions

The strongest promotion for Ferrari is in its merchandising. It already enjoys immense awareness throughout the world; even in places it doesn’t do any promotion. To the extent that in India, wherein the brand is not even present as of yet, it is very well known. Furthermore, the merchandising is done on a royalty & license basis to other brands (E.g. Puma selling Ferrari-Puma branded shoes).

Place

It has its exclusive Ferrari dealerships spread over 52 countries as of yet with plans to expand it’s dealerships to other countries & markets.

People

A very inspired, well taken care of & satisfied work-force who are proud to be attached with the brand is what Ferrari offers its “people”. With factories, production units & workplaces built around the safety & health of its workers, Ferrari was voted the “Best Place to Work in Europe 2007″.

Process

They are reliant heavily into R&D, innovation & staying at the cutting edge of technology. Therefore, their process is in a constant state of flux which is forever changing & adapting with what the environment around them demands.

Physical Evidence

Dealerships across the globe showcasing their cars along with merchandise offering the customer a lounge sort of experience rather than that of a showroom. This is done keeping in mind the lifestyle of their potential customers