Business Lessons From Ferrari
Business Lessons From Ferrari
By Mark Wager
Just think of the word Ferrari and what comes to mind? Quality, expensive, fast, exclusive are just some of the common words that are associated with Ferrari. The Italian car manufacturers are one of the most profitable car manufacturers in the world with its chairman Sergio Marchionne stating that the company is worth over 10 billion Euros which is approximately $11.4 billion U.S. Dollars. This is remarkable when you consider the type of product that Ferrari makes.
Imagine if I approached you with a business plan that states that I will make you billions. I'm sure you would be incredibly interested. So imagine if I then explained my plan. Together we are going to make a car, it's not going to be any car it's going to be a car that the vast majority of the population can't afford, the car is also going to have very poor fuel efficiency, it's also only going to have two seats so you can't use it to drive your family around and it's going to have a very small trunk so you can't really use it for your trip to the supermarket. Are you still convinced this plan is going to make you billions? While this plan sounds crazy, at first glance Ferrari has achieved the impossible and it's down to one reason and that is the power of its brand.
The brand of Ferrari is so strong that it makes approximately €60 million euros a year from its branding alone. Without selling a single car Ferrari makes €60 million euros from companies that want to put the Ferrari logo on sunglasses, T-shirts, posters, calendars and many more items. You name it and just add a Ferrari logo on it and watch it sell. The Ferrari brand is consistently regarded as one of the top three most valuable brands in the world along with Apple and Lego. The quality and marketing of their brand creates an image that people want to be associated with and are willing to pay money to do so.
If I told you I had a Ferrari, what impression would you have of me? You may think that I'm rich, you may think I'm successful and you will think that I like to drive fast and I'm a bit of a playboy. You make also think I'm flashy and poor with money in order to spend so much money on a car. I don't actually have a Ferrari but in fact, the nearest I have is a small remote control Ferrari model car but I've seen first hand the impact the Ferrari brand has. I remember when I worked in a Finance House in London during the nineties I was in the process of renting a new flat in London and I had to go and see the landlord to pitch my case and explain why he should let the property to me. I was running late so one of the Directors kindly offered to drop me off. He of course was driving a Ferrari. As I excitedly got into the car to meet the landlord I didn't have to say a word because the landlord offered me the flat immediately just at the site of the Ferrari and me in it despite just being in the passenger's seat was enough to tell him all he wanted to know about the kind of person I was and the kind of company I worked for.
The question is what does your brand say about its consumers
The power of a brand doesn't come from the quality of the product or service, the power of the brand comes from what does it say about its consumer. Enzo Ferrari, a former racing car driver manufactured the first Ferrari branded car in 1947. His philosophy was simple he believed that life should be lived fast and wanted his product to reflect that philosophy. In essence that is the power of the Ferrari brand, it reflects a simple philosophy of life that people which attracts people who also believe in the same philosophy. Look at any marketing campaign that Ferrari releases and you see it's philosophy and the wild horse logo with the bright red colour that is so closely associated with. Ferrari clearly states who it is and what it stand for and waits for its consumers to come to them. When this happens, price almost becomes irrelevant. Last year, sales of Ferrari cars went down but profits actually went up, due to the power of its brand and its ability to raise prices.
Your company may never be Ferrari but the lessons from its success are there for all of us to learn. To start building your brand, ask yourself these questions.
What does your company stand for?
What does your brand say about your consumers?
Why should anyone care?
Success in business branding comes from identifying a core philosophy that the business lives and breathes each and every single day. If you decide that today you will revaluate your branding then there's no guarantee where this journey will take you. In the same way the racing car driver Enzo Ferrari didn't know where his journey would lead but he knew one thing. It would be a fun journey.
"Everyone dreams of driving a Ferrari, it was my intent form the start" - Enzo Ferrari
Posted: Monday 11 April 2016