Ducati:

Creating Advantage through Positioning

Ducatis Future Growth

Should Ducati enter Harleys Segment
(Lifestyle Cruiser segment)
to seek future growth?
YES
NO
Competitive Position: Main Options
Low-Cost
Leadership
Differentiation
Source of Competitive Advantage
Based on Cost Leadership Based on Distinctiveness
Target
Market
Industry wide
(Broad)
Specific Niche
or Segment
(Narrow)
Cost
Leadership
Focused
Differentiation
The Basis of Differentiation

Sources of Differentiation
Tangible Dimensions
(Observable aspects)
Intangible Dimensions
(Motivational aspects)
- Physical attributes
of the product (size, color)
- Product technology
- Product performance
- Desire for status by
customers
- Desire for exclusivity
- Desire of individuality, etc.

The Basis of Ducatis Differentiation

A Distinctive
Product

- Distribution system
-L-twin engine
-Tubular frame
-Italian styling
-Unique sound
Tie-Ups
With other
Luxury
Brands
Specialized
Advertising
Ducati
Mono-
Franchise
Stores
Racing
Events
Ducati
Clubs
World
Ducati
Weekend
Ducati
Museum
Ducatis Business System and Competitive Position

- higher R&D
spend
-Design center
-Ext. R&D
partners
Design/Dev
- Supplier
rationalization
- Emilia district
suppliers
-
Operations
- Spl. Advt
- Unique Ducati
Stores
-Luxury Brand
Tie-Ups
Sales/Marketing
- GP Racing
- Ducati Clubs
- Company Day
- Ducati Museum
- Apparel
Support Activities
Distinctive/Consistent Activities across the Business System
Differentiation Advantage
Higher Costs
Focus on Select Customers
- Performance Sports segment
- Emphasis on lifestyle, exclusivity, image
Higher Prices?
Reasonable Profits
The Evolution of
Ducatis Competitive Position

Performance
Comfort
Function
Lifestyle
Harley BMW
Japanese
Ducatis
Original Position
Ducatis
New Position
The Main Logic of Ducatis Strategy

Further differentiate the product by highlighting
the intangible attributes associated with it
(This will increase customers willingness to pay)
Retain distinctiveness of the product
In terms of its tangible/physical attributes
(To retain customers existing willingness to pay)c
Take certain actions to reduce some of the costs
of the product without affecting customers
willingness to pay for the physical product
+
+
Sustainability of Ducatis Success

Sustainability of Ducatis Success
Can it sustain
Competitive advantage
by protecting itself
from competitive imitation
in its current segment?
Can it achieve future
Growth in current segment
Or by expanding
Into new segments?
(e.g. the cruiser segment)

Differentiation Strategy:
Some Challenges

It may require constant upgrading of the product (to prevent imitation)


Differentiation may limit a companys ability to fully enjoy benefits associated
with economies of scale or size.


Is the size of its target market large enough to support higher costs of
differentiation?


It can limit future growth opportunities
Growth limited by size of the target segment?
Attempts to enter new segments may blur/dilute current position
Southwest and Ducati
Differences and Similarities
Whats the Difference?

The two companies chose very different strategies and/or competitive
positions to gain advantage in their respective industries.

Given their different strategies, they face different challenges going ahead



Whats the Similarity?

They both configured a system of distinctive activities across their
entire business system (value chain)

They both configured their business system in a way what was consistent
with their chosen competitive position.