The brand Ferrari needs no introduction. With the whose who of the world as its clientele, this 80-year-old brand continues to amaze people of all generations. In spite of its size of operations in rolling out cars, which is nominal when compared to other automakers, Ferrari is the most successful motorsport team. So much so, the Sports Authority pays the company a 5% bonus for Ferrari to be present in it. It was named as the world’s most powerful brand by Brand Finance in 2014.
Founded in 1929 by Enzo Ferrari, initially it functioned as a racing stable, by the name Scuderia Ferrari. This continued till 1947, when Ferrari sold its first road going car 125 S. The performance of the car at multiple races resulted in increased interest amongst buyers. However, though Enzo Ferrari did not want to manufacture road-going cars, he was forced to do so, in order keep his passion for motor sporting alive.
But due to small scale of operations, the company could only manufacture lesser number of cars, thereby prompting demand to be always more than the supply. For example, Ferrari could sell only two cars in 1947, and this attitude of limited selling of vehicles to maintain exclusivity still continues, which forms the very essence of the brand.
This thought process of maintaining exclusivity is taken so seriously, that even today, if a customer has the potential and interest to buy a Ferrari, the company refuses to sell, if they do not deem the buyer to be fit. Also, the customer has to be a prior owner of at least a second hand Ferrari, thereby increasing brand appeal for both customers and sellers in the new and used car segment.
The Veblen effect states that customers see high priced goods to be worth more just because they cost more. All luxury brands have been built on this notion. Thus, the demand increases with an increase in price. Ferrari has built its pricing strategy on this right from it was established.
Ferrari has always been equated with prestige and a feeling of pride. The company has continuously invested in maintaining and increasing its brand value. One way it does so, is by producing a limited number of cars, thereby maintaining exclusivity.
This investment is done in all aspects like even the logo and red color (rosso corsa). Its logo is instantly recognized by anyone in the world and the red color is the most sought after in car production. Though home to many auto giants like Maserati and Lamborghini, Italian people are crazy behind Ferrari and one of the most loyal fans in the world.
So, we see what maintaining exclusivity in production has done to this mega brand. It is unlikely that there will be a brand as magnanimous as Ferrari in history ever