1.

0 Introduction In the following report, the author will briefly identify the Ferrari existing marketing strategy and their existing marketing. Then the author will discuss the segment market that Ferrari should emphasize on. Also the target market approaches that the company need to practice on the new segment. After that, the author will discuss and also change some of the Ferrari existing marketing strategy and also their marketing mix to achieve the objective of entering the new segment. Lastly, the author will listed down the budget that needed to operate this plan. 1.1 Background of Company In 1929, Scuderia Ferrari is founded by Enzo Ferrari. At that period, Ferraris main activity is sponsoring drivers and manufactured in-track racing cars. In 1946, the company has moved itself into manufacturing legal street vehicle industry by renaming itself as Ferrari SpA. In the 1969, Ferrari SpA joined Fiat Group through agreement of give out 50 percent of Ferraris shares to Fiat Group and let Fiat Group to in charge in their passenger car operation, while Ferrari himself retained the other 50 percent and complete control over the motor racing operation. Currently, Ferrari is a world well-known luxury brand which are also the number: 93 worlds top brand in year 2008 (businessweek.com, 2008). Existing Marketing Strategy Ferrari is a well known luxury brand around the world which produced high quality, high tech, high performance and high speed street racing vehicle to the market. Ferrari has also created high brand awareness then other luxury brand. Although Ferrari got high reputation and awareness, the company still practices the ansoft growth matrix

strategy. Ferrari is currently using market penetration and product development to maintain it growth and increase it sales. Market penetration is common use for

maintain or increase the market share of current products. The main purpose of market
penetration is used for the companys existing product in their existing market to generate more sales. According to their CEO, Mr. Amedeo Felisa said that Ferrari will maintain its four main model lines, consisting of the California and 612 Scaglietti in the GT division and the 458 Italia and 599 GTB Fiorano in the sports car division(motorauthority.com, 2009). Another strategy that Ferrari practice is product development. It is aimed on introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets. According to motortrend.com, every model in Ferrari will be replaced with an M or modificato model every four years and after roughly 8 years of the initial launching of the model, the entire model which include the M model and the original model will be replaced with a whole new model. Besides that, Ferrari has practices differentiation and focus differentiation strategy which fall under porter generics strategy. Differentiation strategy is used to created uniqueness of the companys product in the sector (Porter, 1985). Ferrari has differentiated themselves with their competitor from the perspective of design, brand name and product performance. For over half century, Ferrari has used the Italian red as its main colour for every model and they had successfully linked the term of red sport car to their name. When the subject about red sport cars is raised, the first impression of most consumers is Ferrari (zigwheels.com, 2011). This shows that Ferrari has a high

brand awareness which differentiates them from their competitor and has the unique attractiveness of its product. Another strategy is focus differentiation which concentrates on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers within it, develop uniquely well-specified products for the market (mindtools.com, 2011). An example for this is strategy is the Ferrari FF, which targeted on the family segment. Due to the need of consumer, they provided four seats and four wheel drive four-wheel-drive system to consumer which can satisfy the desires of sportiness and also the family-oriented person. Marketing Mix Ferrari Product Products are the goods or services that provided into the market to fulfil the needs and wants. For Ferrari, they are positioning them as a high performance and technology luxury street racing vehicle manufacturer. The products ranges of Ferrari are divided in to two sectors, first is GT (Gran-Turismo) sector another one is Sport-car sector and each sector has at least 2 models. There are Ferrari California, 458 Spider, FF, 599 GTO 458 Italia, and 599 GTBto SA Aperta which is a limited edition (www.ferrari.com). According to motortrend.com, Ferrari alleged that their product life cycle of each model is roughly four years from the cars initial launched. Products are divided into 3 basic levels which are the core, actual, and augmented. The author will discuss these levels of product based on Ferrari FF. The core product is the benefit or satisfaction that a customer expected to get through what they had brought. For

Ferrari FF, the core benefit that consumer buy for is family useable and fulfilment of mens dreams. Second is the actual product. This consists of the performance and specification
of the product itself. For Ferrari, the actual product is the high speed and technology

performance. The last level of product is augmented product; it is the non-physical part of

the product which consist the added value of the product. For Ferrari, they had extra ordinary long period after-sales program which called Genuine Maintenance which offered their client with complimentary scheduled maintenance for the first seven years. Price According to Chartered Institute of Marketing, price is the unit of revenue combining costs and profit at which a satisfactory exchange takes place in a transaction. This included the point of exchange of both customer and supplier. Besides, it is also used to generate revenues and profit for the company and also help to position the product and to create competitive advantage. For Ferrari, their price is set at premium price by using market skimming and psychological pricing strategy to maintain it. For Ferrari, they use market skimming strategy when introducing a new model. This strategy emphasizes on setting a high price during the period of introducing new product. It will help Ferrari to regain its research and development cost faster and effectively. Beside that, Ferrari also uses the psychologically pricing practices to set their price. Since Ferrari has successfully positioned itself as a luxury brand that has high price which come with high quality and performance vehicle. If Ferrari had set their product at low price, it will directly influence customers perception towards their new model, which will think the performance sure not good or there is something wrong with the

company. Like Ferrari FF has set it price at 260000 compare with Ferrari California (146960), it has about 40% of price differences. Place The place consists if the distribution channel of the product from manufacturer to the final consumers which include the coverage, delivery period, demographic of consumer and etc. The most efficient place is located at the place that is convenience for customers to acquire the product or after-sales service. In Ferrari, they have only one level channel lengths which are to distribute products from manufacturer to authorised dealer to final consumer. The dealership of Ferrari has covered over 52 countries which included USA, UK, China, Malaysia, Russia, Australia and etc. Promotion Promotion is activities used to increase the awareness or sales of the product (www.investorwords.com). The promotion tool that Ferrari used is maintaining a good relationship with press and media. Ferrari always invite all the media attend their new product announcements and other big events. Ferrari has set up one press release page on their official website which only allow authorised journalist to login for the information that they want to release to the media. Besides that, Ferrari also uses pull strategy to attract consumer which are attending motor shows. In Fiat annual report 2010 stated Ferrari had presents the HY-Kers which known as a hybrid GT employing eco-smart technologies in Geneva auto show 2010. They claimed that this is the biggest event they did in year 2010 but this system has not yet begun in their production line which means it is still in experimental period and the company alleged that within 4 or 5 years this system will be widely use in their production. This is a kind of pull strategy which

emphasizes on separating information from the manufacturer to create awareness of the product but it is not available at the market yet. People This marketing mix is important as this involves all the personnel in the organization dealing with all its activities. It is important to hire the right persons at the right job (Tracy, 2004). In year 2010, Ferrari has over 2721 employees working with them. The minimum requirement to be their staff is they must be innovative, passionate about Ferrari, professional, excellent technically, academically and in automotive as well as compatible with the values and principles of Ferrari (www.ferrari.com). Beside that, Ferrari has an employment philosophy which called Ferrari UOMO. It is emphasize on the working environment and welfare of the people working at their factory. This philosophy had help them being awarded as the Best Place to Work in Europe 2007. Process Process means the delivery period of the product and the procedure that needed to be taken during purchasing a product. An efficient process will create a strong competitive advantage when customers were satisfied. Efficient process includes conduct and helpfulness of staff, waiting hours from customers and efficiency of service. For Ferrari, their client required to wait for at least 18 months after they register with the dealer and paid their down payment.

Physical Evidence Physical evidence refers to the packaging of the product and how customers view the product. Although the Headquarter of Ferrari is located at Maranello since 1947, but customers include their dealer can still get the latest information about the companys upcoming activities and services through its official website (www.ferrari.com). Besides that, customer can also view the latest models through a 360-degree viewing system in their website. Furthermore, their dealers will give client who visit their showcase with a sense of lounge than any ordinary showroom experience MARKETING MIX INTEGRATION Integration of Product, Price and People Ferrari has a great integration in between their product and price. As we know that, Ferrari is position their product as luxury sport-car in the market. As a luxury car manufacturer, Ferrari has the worlds fifth expensive luxury sport-car in their production line that is Ferrari Enzo, which only limited 400 units to commemorate the founder of Ferrari, Mr. Enzo Anselmo Ferrari. It cost US$ 670,000 as it base price and currently auctioned at minimum price of US$1.6 million. Besides having high price and awareness of the product, the development of a great product are also important and Ferrari has done it well. The designer for Ferrari Enzos is Mr. Ken Okuyama, whose is a former Pininfarinas head designer which has won The Best Concept Car of The Year award in year 2000. This shows that Ferrari has integrated well with it luxury brand position, high luxury price segment and the collaboration from the talented designers.

The integration of product, place and process The integration of Ferrari with it product, place and process is not good. A whole new Ferrari can only be purchased at certain authorised dealer which might not be convenient for customers to visit the store. Beside that, their client need to wait for at least 18 months to receive the car after paid their down payment. Although Ferrari has always input impressive and innovative features into its new models but needed to wait for 18 months long has make their customers anxious about their purchase. Because in today environment, technology are changing quickly and marketer cant easily trace it. For example; hybrid car is the trend of current technology, if maybe the next day the full electricity vehicle technology has been invented then that time hybrid car will be obsolescence. Eighteen months of waiting period will affect the competitive advantage of Ferrari because other luxury sport car can provide the latest technology with a shorter period of delivering. Marketing Plan To ensure the companys profitability and to exceed the past years sales, the author would like to discuss few recommendation to achieve these goals. The author thinks that Ferrari should market their product through profile segmentation. This segmentation consists of the consumers demographic, social-economic and geographic. An incredible achievement has just done by Ferrari FF which has received 1000 orders within one year by just switching their target to family-lane consumer. The author suggests that Ferrari should switch their target to females that have high social status and income which like to consumer luxury products. According to the annual World Wealth

Report from Merill Lynch and Capgemini, there are 3.1 million of millionaires in 2010 in U.S. where 37% of them are females. This shows that females are getting richer than males, so Ferrari should target the female segment. In China, 25% of Ferrari owners are women which prove that sports-cars overs do not only consists of men but also the women (Hogan, 2010). In this marketing plan, the author recommends that the company should use concentrated marketing to approach the targeted female segment. Concentrated marketing is a marketing approach that emphasize on connecting selling products to a specific consumer group. Ferrari should develop a suitable size, design and performances sport-car to fulfil the female market. The author suggests that Ferrari start the research and development (R&D) on females needs and wants. For example, girls like pink colour so the interior design of the car can put in some pink colour elements. To enter female market, Ferrari should also reposition the new product as a comfortable and stable street racing vehicle because it will make the female consumers feel confident towards the product. Ferrari has always been successful in its positioning as an expensive brand producing exotic sports cars with advanced technologies and innovations. Therefore, Ferrari should able to produce advanced and innovative technologies to ensure the comfort that the female consumers can experienced. Toward this targeted segment, the author suggests that Ferrari to change their strategy to the diversification strategy which creates a new product into a whole new market. The author thinks that the company needs come out something with more small, gently, comfortable and more user friendly products. Beside that, company should also use focus differentiation to maintain a better relationship with the customers. Ferrari need

to provide all kinds of customized service for the interior design of the car with a reasonable price. The current marketing mix in the company is maintainable in the segment that the author suggested because the product, price, place, promotion tools and physical evidence of Ferrari had integrate well toward the company objective. However, some changes need to be taken especially on the people and process. First of all, the process of Ferrari needs to change or improve. This is because the 18 months waiting period are too long for customer. As mention earlier, technologies are unpredictable items which are a high risk for consumer to wait so long. So the author recommends the company to shorter their delivery period to 10 month but due to all production is needed manpower to operate. The human resources of the company are also needed to be increase and due to the new segmentation; suitable and talented personnel need to be hired to run the plans. As a summary of the plan, the author has recommended that Ferrari should target on profile segment which targets on female market. Ferrari should use concentrated marketing to approach this segment of consumers. Ferrari needs to reposition the new product as a comfortable and stable street racing vehicle. The marketing strategy that Ferrari should use in this segment is diversification and focus differentiation. Lastly, Ferrari needs to change their process and people and maintain other marketing mix.

Budget Estimating a budget is an important procedure which helps the management to plan strategically and coordinates activities across departments. The table 1 is the budget that the author estimated for this marketing plan in the upcoming one year. Objective title Cost () R&D Expenditure 120,000,000 Capital Expenditure 100,000,000 Cost of good sale 600,000,000 Staff expenditure (2900 peoples) 300,000,000 Total budget 1120,000,000 The total budget of the marketing plan is 1120,000,000 and the author can ensure that after one year time, the revenue of the company will be exceed 2000, 000,000.

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