Ferrari's Market Position and Competitive Strategies

This assignment involves a market research of Ferrari, analyzing its competitors in the sports car market. It also includes an evaluation of the strategies and tactics of Ferrari's competitors like Bugatti and Lamborghini. The report studies the environment of Ferrari using Porter's five forces model and determines its position in the market in terms of revenue. A comprehensive study is conducted to understand the performance of Ferrari, including its strengths and weaknesses.

FERRARI

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
About Ferrari and its major competitors................................................................................1
Porter's five forces analysis of Ferrari....................................................................................3
Change of position in the recent years...................................................................................5
Own opinion on the success of Ferrari in next 2- 5 years......................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
APPENDICES.................................................................................................................................1

INTRODUCTION
Ferrari is an italic sports car producer company. It is the most powerful brand in all over
the world. It is an auto mobile manufacturer and in the history of automotive and it also produces
the most expensive cars. Ferrari manufactures only sports cars and it has an oldest championship
team. Present report mentions about the key competitors of Ferrari in the automotive sector. This
business industry positions itself in the automotive market to gain competitive advantage. In this
report, it also mentions that the competitive position of this organisation should be relevant such
as pricing, supply chain, marketing, etc.
About Ferrari and its major competitors
Ferrari is a big and international brand in the automotive sector. Owner of this company
is Enzo Ferrari and firm was established in the year 1947. Firm’s main focus is on manufacturing
the racing cars and also finding new and innovative ideas to make cars attractive with adding
some new features. Owner of Ferrari does not have any interest in manufacturing the road cars.
But in the present scenario, it produces road and sports car both. The first car of Ferrari was 1947
125, S and it was powered through the 1.5 LV12 engine. Along with earning profit, this business
works for the welfare of society. The main strength of this company is that it has most
inspirational brand and better advertisement. Consumers need changes in cars after short period
of time and the uniqueness of Ferrari is that it persuades users to purchase the same because of
its style, design, cost, speed, elegance and luxury which are totally different from others (Avni
and Rotem, 2015). In the United Kingdom country, sale of Ferrari sports car is very high.
In the automotive sector, there is big competition and each organisations of cars are
trying to give better features at reasonable price. In the large competition time, Ferrari faces
many issues or problems. The main USP (Unique selling position) of Ferrari is to make the best
sports car with the latest or advanced technology and unique engines (Fgill, 2017). The main
competitors of Ferrari in automotive sector are Bugatti, Porsche, BMW, Lamborghini and
Mercedes Benz.
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Like it is an international brand and provides cars in different countries, it wants to
expand its business more in new sectors. Ferrari targets only elite class of people to give a sporty
experience of driving. This firm always wants to gain the competitive advantage in marketplace.
Also, it is successful and product oriented business firm. To gain the competitive advantage,
Ferrari uses an effective marketing mix strategy in which 4 p's are included:
Product- The main product of this company is sports car. The luxurious cars of Ferrari
are Ferrari 125, Ferrari 159 S and Ferrari 166, etc. Luxurious cars are the main advantage for
Ferrari.
Price- It mainly targets the niche market or can say those people who are willing to spend
or pay more money for cars (Aad and et. al., 2012). Cost of every Ferrari is different and also
based on the type of engine and luxurious model. On its vintage cars, company invests a huge
money.
Place- The cars of Ferrari are found everywhere such as Asia Pacific, America, Middle
Africa and East country (Eriksson, Rosenberg and Bisgaard, 2014). It has around 52 dealerships
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Illustration 1: Competitors of Ferrari
(Source: Fgill, 2017)

internationally and also expands more money to new markets. This company has many online
stores on its official website.
Promotion- Ferrari business firm invests more money on the promotional activities. Its
strategy of promotion is totally different from any other automotive company. For promotion, it
provides the courses related to driving.
The other competitive advantage of Ferrari is that engines of its cars are different. In cars,
they used many unique engines which are different from any other cars such as fV12 and flat-12,
v10, V8 engines, etc. The uniqueness and advantage for Ferrari is that it expands more on
research and development for keeping its services and products unique or can say different from
any other cars (Ferraris, 2014). On the basis of research, Ferrari allocated among 19-21% of the
net income in research and development. It uses Formula 1 in its racing cars and spend more in
development in the prototype and models of GT as well as sports cars.
From many years, Ferrari continuously invests to develop new innovative car products.
Company uses new raw materials in its products and also, introduces some constructive
solutions, innovative services and the latest or advanced technology. It provides the cars through
online and quick delivery. Designs of Ferrari cars are different from any other companies. In this,
consumers are ready to pay more cost for its cars. Ferrari adopts new strategy which helps in
increasing the productivity and growth of business in a particular period of time. This company
always try to minimize its cost of production for improving and increasing the quality of cars.
Porter's five forces analysis of Ferrari
It is a framework for determining competition in auto mobile industry. With the help of
this, company can know its competitive advantage. This helps in creating a big perspective for
analysing the firm that is used for many purposes (Jenkins, 2010). Ferrari can use Porter's five
forces in the form of strategy or develop many plans to create some effective decisions on
finance and to understand and make a strong position in the car industry in context to
international markets and competition. In context to Ferrari, Porter's five forces model evaluation
is developed through identifying five competitive forces. These forces are given as below:
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Bargaining Power of the Buyer- The strengths, capabilities and bargaining power
through customers have a big effect on supplier. From this, the weakness of suppliers is shown
but there are many different factors that Ferrari take into the consideration from the view and
thinking point of customers (Marketing – Porter’s 5 Forces, 2017). The capability of customers
totally depends on the knowledge and number of orders of cars of customers which are hold by
the suppliers. Cost of its cars is high while customers demand cars on minimum cost from the
suppliers. The profitability and productivity of Ferrari is for the long time period. This business
industry has large number of customers and it tries to provide good features in cars. Overall, it
can be said that bargaining power of customers of this firm is low but, if company will decrease
its cost then in this case, buyer’s bargaining power will become high.
Bargaining power of suppliers- Bargaining power of suppliers is high as there are many
competitors of Ferrari to whom they can switch as they are also paying them an attractive
amount. The power of suppliers at the time when Ferrari proves to its consumers that this
company will always sell its cars or can say products at higher costs in comparison to other
competitor firms in the market place. The company challenge itself to give luxurious and also
quality sports as well as road cars. The major strength of Ferrari its suppliers (Kucklick, 2015).
Its suppliers are in large numbers as comparison to other car industry. Ferrari can tackle the
bargaining power of suppliers by developing and maintaining the effective supply chain with
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Illustration 2: Porter’s 5 Forces Model
(Source: Marketing – Porter’s 5 Forces, 2017)

many number of suppliers. The goodness of this company is that it d many experiments with the
designs of cars by using the good quality raw materials. If company will increase its cost then in
this case the bargaining power of buyers will be low and suppliers will also be high.
Threat of new entrants- If any other company enters into the marketplace then it is a
serious consideration as Ferrari has already invested its capital on a large scale. Thus, because of
the high risk, start-ups can get failure (Mačković, 2015). The market share of Ferrari is large
which makes it predominant in the car industry. But if any other car manufacturer enters in the
market then it is a big threat for Ferrari. It is a big brand and to accomplish high level of
satisfaction of customers, company increases the awareness of brand name at market price. Thus,
threat to new entrants in the market is high.
Threat of substitute products and services- At the market place, the competitors of
Ferrari are in large number and its main competitors are Mercedes Benz GP Ltd and McLaren-
Mercedes. Any type of controversy can impact the Ferrari adversely and it provides an easy way
to its competitors to come forward in the market. Ferrari makes sports and luxurious cars and in
the market there are many substitutes of luxury transportation for an instance yacht, private jet
and many more. Thus, in this case, the threat of substitutes is high.
Competition level in industry- In the luxurious car industry, there is high level of
competition and many brands which are already in the market manufacture new car models every
year (Westerman and et. al., 2012). Many companies have a discipline with another automotive
organisations. But when this discipline is broken, then other organisations come up and try to be
competitive to prove itself in the market. As in the market there are many competitors, from this,
profitability of company gets reduced. Overall, it can be said that competition level is high in
automotive industry as rivalry firms of Ferrari are Lamborghini, Bugatti and Mercedes. Thus, it
is clear that there is intense competition which firm is facing and so, it has to concentrate on
providing differentiation in its product.
Change of position in the recent years
In terms of sports car, the main competitors of Ferrari are Lamborghini and Bugatti.
Among these three, in terms of revenue, in recent years, Ferrari is at the number 1 position,
Bugatti is on the number 2 and Lamborghini is at 3rd positions. Ferrari is on the first position
because it makes attractive or capable designs and it’s the Research and development department
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ids capable (Ferrari and Ferrari, 2011). The main reason of its number one position is that it has a
good and strong brand and it conducts programmes to facilitate the hand selling from enhancing
the customers. Bugatti is on the 2nd position because it has a weak brand portfolio and the
marketing of its cars is in less number. The Lamborghini is at the 3rd position in terms of revenue
because the fuel consumption of its cars is more and because of it, consumer feel that it is
expensive. Because of the macro environment, its sales affected badly and it also impact a lot on
its sales or revenue. So, it is necessary to Ferrari to make its position better by producing good
quality, luxurious and unique cars. From this, Ferrari will always on 1st position in terms of
sports.
Own opinion on the success of Ferrari in next 2- 5 years
The most important and necessary change Ferrari needs to bring is in its policy and
strategy related to marketing and also promotion. According to my opinion, this company has to
give more attention in other remaining countries (Stein, 2016). Company should make itself
stronger to compete with other competitors and try to become no. 1 in terms of sales and
revenue. In sports cars, it is on the number one postilion but in terms of road cars, Ferrari should
produce effective and unique cars to beat competition. If it expands the business in new areas or
country, then in this case, profitability of company can be increased. Ferrari should not decrease
the cost of cars but also set a standard in the competitive market (Stilla and Hedman, 2010).
They should develop new strategies and also use new and different tactics to make a good brand
image in the competitive market. Management of Ferrari should try to enhance the sales to sports
as well as road cars by making unique, effective and strong strategy.
CONCLUSION
It has been concluded from the above report that Ferrari produces unique sports cars and
it has many competitors in market such as Mercedes Benz, Bugatti and Lamborghini. In terms of
Sports cars, Ferrari is at the number 1st position among Lamborghini and Bugatti. In this report,
in-depth has been made regarding competitive advantage of Ferrari and its positioning at the
marketplace. Also, Porter's five forces model has been assessed with respect to Ferrari for
making it gain good competitive position in the automotive industry. Overall, it can be
articulated that in the next 2-3 years, company should do some necessary things to be successful.
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REFERENCES
Books and Journals
Aad, G. and et. al., 2012. Observation of a new particle in the search for the Standard Model
Higgs boson with the ATLAS detector at the LHC. Physics Letters B. 716(1). pp.1-29.
Avni, E. and Rotem, A., 2015. Digital Competence: A Net of Literacies. Handbook of Research
on Technology Tools for Real-World Skill Development. p.13.
Eriksson, A., Rosenberg, J. and Bisgaard, T., 2014. Surgical treatment for giant incisional hernia:
a qualitative systematic review. Hernia. 18(1). pp.31-38.
Ferraris, A., 2014. Rethinking the literature on “multiple embeddedness” and subsidiary-specific
advantages. Multinational Business Review. 22(1). pp.15-33.
Jenkins, M., 2010. Technological discontinuities and competitive advantage: A historical
perspective on Formula 1 motor racing 1950–2006. Journal of Management Studies.
47(5). pp.884-910.
Kucklick, T. R. ed., 2012. The medical device R&D handbook. CRC Press.
Ferrari, M. and Ferrari, G., 2011. Building robots with LEGO Mindstorms NXT. Syngress.
Stein, E. M., 2016. Do I have enough time? The effects of perceived test difficulty and perceived
time pressure on cognitive performance (Doctoral dissertation).
Stilla, U. and Hedman, K., 2010. Feature fusion based on Bayesian network theory for automatic
road extraction. In Radar Remote Sensing of Urban Areas (pp. 69-86).
Westerman, G. and et.al., 2012. The Digital Advantage: How digital leaders outperform their
peers in every industry. MITSloan Management and Capgemini Consulting, MA. pp.2-23.
Online
Fgill, 2017. Annual Car Sales. [Online]. Available through: <https://dashroad.com/blog/this-
week-in-connected-cars-april-10/>. [Accessed on 9th September, 2017].
Marketing – Porter’s 5 Forces. 2017. [Online]. Available through:
<http://petrolsmell.com/2012/06/18/marketing-porters-5-forces/>. [Accessed on 9th
September, 2017].
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APPENDICES
Week 1
Target of work Days
Market research of Ferrari 5 days of beginning week
To analyse the competitors in market Last 2 days
Work done Days
I conducted a market research of sports car. 4 days of first week.
Searched the main competitors of Ferrari Remaining 3 days.
Week 2
Target Work Days
To know the strategies of competitors of
automotive company
4 days of starting
To search the different competitive benefits for
Ferrari
Remaining 3 days
Work done Days
To evaluate the strategies and tactics of Ferrari
competitors like Bugatti and Lamborghini
3 days of starting days
I found the competitive benefit In the next 4 remaining days.
Week 3
Target Work Days
Understand the environment of Ferrari Initial 5 days
To analyse the Porter's five force 2 remaining days
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Work done Days
Worked on many different methods to know
the environment of Ferrari
5 days
Analyse the 5 forces of Porter 2 days
Week 4
Target Days
Determine the position of Ferrari 3 days of starting
Study about data 4 remaining days
Work done Days
To know about the earn 1st position in sports
car in terms of revenue
4 days
To evaluate Competitors position Last 3 days
Week 5
Target work No. of days
Collect more data and information about
Ferrari
3 days of starting
My opinion about performance Last 4 days
Work done Days
Saw reports and articles about Ferrari 2 days
My views about the strategies of Ferrari 5 days
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