‘The Ferrari is a dream – people dream of owning this special vehicle, and for most people, it will remain a dream.’
There are very few brands that are on par with Ferrari; not just for their product, but also for their brand experience and the level of exclusivity that is tantamount to their image. There is luxury, and there is luxury; and Ferrari is in a league of its own. If Alleres’ theory was used to describe the luxury phenomenon, where there are 3 levels of luxury: accessible, intermediate and inaccessible, Ferrari would be in the latter category. Luxury brands satisfy functional and psychological needs, particularly social recognition and self-esteem. Typically, perceived characteristics of such brands include quality, aesthetics, scarcity and elitism, characteristics that Ferrari richly possesses.
While there is a sleuth of luxury brands in the fashion industry – Hermes, Louis Vuitton and Rolex etc. – none inspire the same cultish, fervent devotion that Ferrari does. While many women may aspire to own a Prada bag or a Chanel suit, the thousands of people that spectate at Formula One races wearing Rossa Corsa and waiving Ferrari flags will, as Enzo Ferrari said himself, never own a Ferrari. But they represent an emotional connection to the brand that is unparalleled worldwide. Much of this can be put down to scarcity. The capping of production ensures that there is a waiting list to merely purchase a Ferrari, and a 6-18 month waiting period for the customized vehicle to be delivered is standard. Similarly, Ferrari’s will never be on sale or visibly advertised. A recent move to further cap the production of some models, and focus on delivering an even more personalised service to consumers of the exotic supercars – such as cashmere seats and steering wheel details –highlights the scarcity approach in action.
Tailoring a strategy whereby the product must be accompanied by a rarity value is very common in luxury brands. However, none pursue it quite as exceptionally as Ferrari. For example, despite their luxury status, Moet & Chandon and Louis Vuitton almost give the impression they are mass-produced. These brands tread the fine line of brand extension coming at the expense of reduced perceived quality. But the difference between these brands and Ferrari is that while they are marketed to be beautiful, they are also attainable. Ferrari’s strategy is one of natural paucity whereas most other luxury brands in the fashion, automobile and wine industry adopt a tactical-driven paucity approach.
The challenges for luxury brands are immense; they must be fast growing, timeless, modern and highly profitable, all at once. A luxury brand has to become an institution but also remain current. A rich heritage is therefore commonly drawn on in luxury brands and integral to their success. Burberry harks back to its military heritage and Louis Vuitton to its luggage craftsmanship of the 19th Century. Ferrari’s history of racing and strong associations with the Formula One industry has become so iconic and renowned, it is almost synonymous with Italian pride itself. This has ensured that their passion for quality engines and beautiful vehicles is the dominant emotional connection with consumers. Trust and scarcity go hand in hand. If consumers feel that the product hasn’t delivered to meet their expectations, they are unlikely to trust the brand. Luckily for Ferrari, an exceptional pedigree and wealth of experience in the industry ensures the brand is reputable and trustworthy, even to non-discerning consumer.
Some luxury brand commentators point to potential opportunities for Ferrari, such as expanding their product base into high performance SUV’s – an avenue where rival Porsche has already had success with it’s ‘Cayenne’ model. Some also suggest that enlargement of their customer base through initiatives such as adding roominess or extra luggage space to their vehicles. But Ferrari hasn’t implemented any of these strategies, and it is unlikely that they will. While their scarcity strategy places a ceiling effect on their potential for revenue generation, the core values that uphold the essence of their brand has been a consistent pillar of their success. Moreover, they have proven that there are ample opportunities for generating revenue through other means, such as their licensing and retail division, which is worth upwards of US$1.5 billion. To make their brand appear more accessible or generic would be to undermine the very tenet of luxury itself.
Ferrari’s attainment of the coveted title of ‘World’s most Powerful Brand’ has seen Ferrari outperform its competitors in a range of criteria, including ‘sentiment index’ and the emotional component of the brand. The title does have its risks and implications. The most powerful brand does not equate to the most valuable brand. But realistically, title or no title, Ferrari’s dominance is unlikely to dissipate any time soon.
Jess Sutherland is currently studying a Commerce/Liberal Studies degree with the Univeristy of Sydney, majoring in Marketing, International Business and Psychology. This blog was originally submitted as assessment material for MKTG3120- Building and Managing Brands.