What is Ferrari's competitive position?

Question

What is Ferrari's competitive position and how has this changed over the years?

Answer

Ferrari is widely recognised as a leading automotive brand, synonymous with powerful sports cars and luxury. In many respects it can be considered as one of the leading mass-luxury brands, as Kapferer and Bastien (2009) argue that it was one of the first luxury automotive manufacturers to recognise the value of its brand, and how this could be used as a means of broadening the appeal and accessibility of Ferrari without undermining its competitive position. It meant that they moved from being a pure automotive manufacturer specialising in a niche field, into a powerful global brand. Ferrari has always occupied a position of market strength, as it is perceived to offer many benefits relative to its price, which is a key measure of strategic advantage in a competitive marketplace (Rugman and Collinson, 2004). However, Ferrari recognised that in order to maintain cash flows and global market appeal they could license their brand, endorsing an enormous range of affordable products from keyrings to clothing. This was strategically necessary given that so few people could afford to purchase their products, and this was strangling cash flows (MacNeill and Chanaron, 2005). By being one of the first luxury car manufacturers to realise their value in this way, they carved strategic niche for themselves, meaning that they could continue to occupy a valuable competitive position with a much broader global appeal. Even ownership of a very small Ferrari endorsed product confers a sense of luxury, which means that Ferrari remain differentiated from their competitors. This strategic approach means that they are able to maintain their market leading position in the luxury car segment, despite rising levels of competition.

References

Kapferer, J. N., and Bastien, V., (2009) The specificity of luxury management: Turning marketing upside down. The Journal of Brand Management, 16(5-6), 311-322. MacNeill, S., and Chanaron, J. J., (2005) Trends and drivers of change in the European automotive industry: (I) mapping the current situation. International Journal of Automotive Technology and Management, 5(1), 83-106. Rugman, A. M., and Collinson, S., (2004) The regional nature of the world’s automotive sector. European Management Journal, 22(5), 471-482.