Car news

08 June 2014

What's going on with the Ferrari brand?

Ferrari sells fantastic cars. It also sells teddy bears. Brand dilution or marketing genius? Discuss...

TopGear.com
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Sam Philip Let's start with something we agree on. There's not much to fault about Ferrari's current range of cars, is there?

Paul Haurell No, they're fabulous. That's why we filled last month's magazine with them. They look and sound and go and handle better than ever. They're better-made and more usable. Heck, even the ones that have been criticised as off-brand - FF, Cali - are far and away the raciest cars of their kind.

SP But you must admit some of Ferrari's wider business activities have more than a whiff of Stilton about them. There are now some two dozen Ferrari stores around the world, flogging everything from Prancing Horse-branded leather jackets to bathing shorts to domino sets to cigar boxes to carbon-fibre photo frames and any other Maranello-infested nonsense you can imagine. There's even - and I'm not making this up - a rosso corsa Ferrari hatbox. Anyone who buys a rosso corsa Ferrari hatbox is not someone I want to have a drink with.

PH Unless it's their round.

SP Or how about the must-have ‘F1 Pad Line' charm? Yep, it's a pendant, to hang from a necklace or somesuch, in the shape of an F1 steering wheel. It's the perfect way to say to your other half: "I love you, but not as much as I love F1 steering wheels."

PH OK, you've sniffed out the crap. It does exist in the Ferrari Store. But, to be honest, there's less of it every year. Most of the stuff they sell is branded clothing and watches, just like Porsche and Aston and every other big brand. For myself, I wouldn't be seen dead wearing Ferrari-branded leisurewear, but then I don't care for anything conspicuously logo'd. But this is 2014 and most people don't think that way. People want their choices validated by having a large square footage of brand. This is ‘brand' not just in the modern definition of the symbol and spirit of a commercial entity, but in its more primitive sense of a stamp of ownership. Just as a rancher would buy and mark his herd of cattle, Ferrari has gained ownership of its followers. That is Ferrari's brilliance.

SP Thing is, I'm not against merchandise per se, but you have to concede that selling a Ferrari race-suit Babygro might undermine the exclusivity of Maranello's road cars.

PH The road cars have little to do with it. People aren't wearing Ferrari T-shirts to align themselves with an expensive road-car manufacturer, but with a sports outfit. It's like wearing Manchester United gear.

SP Ferrari has a football team?

PH No, it has an F1 team. See, if the race team has supporters, and they promote the team through their leisurewear, that doesn't just feed profits to Ferrari through selling the clothes. It also provides a long-term marketing lever, because the visibility of the Ferrari name is raised, and the promotion of the road cars is accomplished with a lower budget. That leaves more to spend on engineering. And by making its merchandise reassuringly expensive, Ferrari is making sure it's promoted only on the burnished bodies of a suitably wealthy and brand-aligned clientele. The lumpen poor are excluded from wearing the Prancing Horse.

SP Pretty zealously excluded. Don't I remember a story of Ferrari buying up truckloads of counterfeit Prancing Horse merch, spreading it all out on the road and running it over with a steamroller? Did that really happen?

PH Many years ago. But diplomacy was never Maranello's strong suit. Their lawyers recently smothered someone's Ferrari Facebook fan page that had taken years to build.

SP Not much evidence of levity or humour, is there? Unless, that is, Ferrari World Abu Dhabi is the finest practical joke of the decade. Have you seen this place? Yes, it's a theme park - the world's largest indoor theme park, no less - entirely dedicated to the wonder of all things Prancing Horse. You can - and believe me, researching this caused me actual physical pain - take a trip on the Speed of Magic 4D fantasy dreamscape ride, and ‘go in search of Nello, a mischievous little driver'. Maximum speed 8kph. Or how about Tyre Twist, where you take a seat inside one of Ferrari's ‘F1 inspired tyres' and hold on tight? It's the traditional teacup ride with a brand-defiling twist! And when you can take no more excitement, go stuff your face at the Ristorante Cavallino.

PH Don't get hung up. Yes, the Ferrari theme park requires you leave your sense of irony at the entrance, but then Abu Dhabi's tourist industry doesn't make much of the country's serious and ancient heritage. It attracts people for its golf and shopping malls. Ferrari World is more of the synthetic same.

SP That's exactly the point. I don't have a problem with theme parks. I'm not even sure I have a problem with Ferrari theme parks. The problem lurks in the disconnect between a flog-the-brand-for-every-last-penny theme park and the quasi-religious cult that Ferrari builds around its cars that you're not just owning a vehicle, that you're somehow being initiated into a venerable, Masonic band. How can you maintain the shtick about the sanctity of the Ferrari badge when punters can rock up to Ferrari World and take part in Fast Lane: The Interactive Game Show?

PH Agreed. Ferrari loves to tell its car owners that they're the most discerning and high-minded persons to walk the planet. Some are, but some are self-satisfied, greedy, inconsiderate and quite without taste. In other words, Ferrari owners are a cross-section of humanity. If Ferrari stopped the pretence about its owners being minor deities, we wouldn't mind so much about the merchandise and the tatty theme parks.

SP Quite. I assume that, in Ferrari's defence, you're going to recite a bunch of numbers that show precisely how much profit all the tat and roller coasters allow Ferrari to plough back into its annoyingly brilliant engineering department?

PH Actually, I'm not. There's a popular assumption that the branding activities undertaken by Ferrari are a necessary evil. That, if you will, Ferrari's stores and theme parks are its Cayenne, the thing that funds the sports-car company. But they aren't. Sure they generate huge percentage returns - in other words, they're easy money - but the absolute profit isn't that great. Last year, 15 per cent of Ferrari turnover (excluding that of the F1 team, whose finances are never published) was put back into R&D and investment. That's over £1m for every weekday of the year, or a total of £280m. Meanwhile, the total profit from merchandising and licensing was £45m - a sixth of what would be needed to cover that engineering investment. In all, Ferrari's road-car and branding activities made a profit of £203 million. So it could actually live perfectly well without the merchandising or the big dippers.

SP So we're agreeing? Ditch the extracurricular brand activities, and stick to building lovely cars?

PH To be fair, some of the non-core stuff is commendable. The museum in Maranello is brilliant, and they just took over the running of the one at Enzo's birthplace in Modena too. The Classiche department is a world centre for documentation and restoration of the old road and race cars. And you've got to love the factory support that keeps the old F1 cars out on track at classic meetings. Can't begrudge them making a profit from all that, or indeed leveraging their brand, because it keeps the wonderful old metal out in view. Once again, as long as Ferrari sticks to the actual cars, all will be well...

 

Tags: ferrari

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