It was in October 2015 that the luxury car manufacturer Ferrari offered its shares to public investors in the form of an IPO. This IPO was expected to raise more than $9 billion with individual shares set between $48 and $52 each. Ferrari also started trading on the New York Stock Exchange (NYSE) in October 2015, and is currently positioned to earn noteworthy dividends for investors who choose to invest in its stock. The success of Ferrari is more than just an inspiration for marketing gurus and brand managers. Brand managers can gain valuable insight from the popularity of Ferrari and the staggering appeal of its IPO.
Creating a powerful brand image – Company branding
Ferrari is one of the few global companies that has successfully created a powerful brand image. As a result, Ferrari enjoys a monopoly on nearly 25% of the global upper echelon automobile market. Ferrari is also known throughout the globe as the only manufacturer that has achieved the embodiment of luxury, performance and styling. In spite of their policy of limiting production and thereby limiting the potential for increased profits, the company annually earns revenues which exceed $3.15 billion. As stated in the article What The Ferrari IPO can Teach Marketers by Steve Olenksi: “All race car and motorsports enthusiasts recognize the Prancing Horse as the symbol of racing excellence and supremacy.” He believes that Ferrari epitomizes the very essence of branding and states that “a single symbly which can conjure up the image of a highly desirable product.”
The Prancing Horse – An asset of Ferrari?
The famous Prancing Horse is undoubtedly invaluable to the company as a symbol of its own distinction and historic racing achievements, but just being associated with the Prancing Horse is a privilege that most companies will gladly pay for. Much of Ferarri’s revenue is generated through different licensing arrangements with other companies, legalizing their use of the Prancing Horse.
During the initial 3 months of 2015, around 20% of the net revenue of Ferrari was derived from commercial and brand sponsorship. This included licensing and merchandising agreements, as well as royalties from using the Prancing Horse brand. Lego, Oakley sunglasses, Puma, and Microsoft are just a few of the companies that have participated in these licensing arrangements with Ferrari.
Limited production – Is this a strategy of Ferrari?
Not abiding by the trend of every other vehicle manufacturer in the world, Ferrari has made it a part of its company policy to limit the number of vehicles manufactured each year, so that the exclusivity of its brand is maintained. Ferarri has never sold more than 7000 vehicles annually. Limiting annual production also sustains the high resale value of second-hand vehicles.
Team Work – Another one of Ferrari’s Strategies?
One of Ferrari’s crucial marketing channels is via its racing team. This team has won 224 Formula 1 Grand Prix races and 15 drivers’ world championships since Formula 1 started in 1950. This shows that teaming up with another brand, or even with one of your own is a great way of marketing your products and services.