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QUESTIONS If yo excl and you excl 1. Discuss the current global position of the Ferrari brand with the starting point in Figure 1. Should Fer- rari change their positioning? 2. Which screening criteria should Ferrari use in their international market selection (IMS)? 3. Which of the countries in Table 5 would you recom- mend as future Ferrari focus markets? Please rank 1, 2, 3. 4. Ian Fletcher, principal analyst at HIS Automotive (provides analysis to the automotive industry), said to The Guardian, that Ferrari may consider develop- ing a slightly cheaper model, although still costing 100,000 plus. What Should should Ferrari "Topham, NYSE shar com/busi new-york-st CASE STUDY 11.4 Ferrari: international market selection (IMS) for the exclusive sports car brand Source: Dutourdumondo Photography/Shutterstock.com Ferrari is among the world's leading luxury brands focused on the design, engineering, production and sale of the world's most admired cars. The brand is one of the most iconic and recognizable in the world. Ferrari believe that the Ferrari brand and the prancing horse logo symbolize luxury, exclusivity, innovation, state-of-the-art sporting performance and Italian design and engineering heritage and has regularly been ranked as one of the world's most powerful brands by independent surveyors. The Ferrari name, history and the image is closely associated with their Formula 1 racing team, Scuderia Ferrari, the most successful team in Formula 1 history, having won 222 Grand Prix races, 16 Constructor World titles and 15 Drivers' World titles. The history of excellence, technological innovation and defining style transcends the automotive industry, and is the founda- tion of the Ferrari brand and image. Ferrari designs, engineers and produces their cars in Maranello, Italy, and sells them in over 60 markets worldwide through a network of 182 authorized dealers. At the end of July 2015, Fiat Chrysler (former owner of Ferrari) announced a plan to spin off Ferrari as a separate business to fund future investment in Fiat. The initial public offering was expected to take place on the New York stock exchange by the end of 2015, so that Ferrari started off as a separate company at the begin. ning of 2016. The company expects to start with listing 10 per cent of the shares, and later distribute a further 80 per cent to its own shareholders, completing the separation. The Ferrari family will retain a 10 per cent interest, held by Piero Ferrari, the son of the firm's founder, Enzo Ferrari. Sergio Marchionne, the CEO of Fiat Chrysler, expected to reduce Fiat Chrysler's debt and fund a 48 billion investment programme to boost some of the company's other major brands worldwide: Jeep, Alfa Romeo and Maserati. He also indicated that he expected the listing to value Ferrari at more than 10 billion. Tables 1 and 2 show the total Ferrari sales (includ- ing shipments) and the geographical split of the 2013 and 2014 shipments, respectively. Ferrari's results on key metrics Table 1 also shows Ferrari's latest financial results. Table 1 Ferrari's development from 2010 to 2014 on key measures 2010 2012 2013 2014 6,573 1.831 Shipment (number) Revenues ( million) EBIT (Emilion) Number of employees 2011 7,195 2,067 298 2,709 7,405 2.225 335 2.708 7,000 2335 364 2.774 7.255 2,762 389 2,843 295 2,779 EBIT, coming before interest and we Source based on Fri francial reports CASE STUDY 14 FERRARI 45 Distribution Ferrari does not own Ferrari dealers and virtually all of the sales are made through the network of Ferrari dealerships located throughout the world. Ferrari sell their cars exclusively through a network of authorized dealers (with the exception of one-offs where they sell directly to end-customers). In larger markets, they have a wholly owned subsidiary or, in China, business is done through a joint venture with a local importer, and cars are sent to dealers for resale to end- customers. In smaller markets, Ferrari generally sells the cars to a single importer. At March 31, 2015, the network comprised 182 dealers operating 204 points of sale Ferrari makes a careful and strict selection of the dealers. The selection criteria are based on the candi- dates' reputation, financial solidity and track record. They select dealers who are able to provide an in-store experience and to market and promote the cars in a manner intended to preserve the Ferrari brand integrity and to ensure the highest level of customer satisfaction Marketing Ferrari promotes passion for the brand by fostering a community of enthusiasts and by rewarding loyal cli ents through various initiatives, such as driving events and client activities in Maranello and at motor shows and, more particularly, through providing the most loyal and active clients with preferential access to the newest and highest value cars. As a result, in 2014 approximately 60 per cent of the new Ferrari cars were sold to existing Ferrari owners and 34 per cent of Ferrari customers own more than one Ferrari car. As a testament to the enduring power of the brand, vintage Ferraris are among the most sought after cars in the collector market, with nine Ferraris ranking in the top 10 most valuable cars ever sold in public auctions. An important factor in promoting connection to the Ferrari brand is the strong relationship with the active global community of automotive collectors and enthusi- asts, particularly collectors and enthusiasts of Ferrari automobiles. This is influenced by close ties to the automotive collectors' community and by Ferrari's sup- port of related events (such as car shows and driving events), at the company headquarters in Maranello and through the dealers, the Ferrari museum and affiliations with regional Ferrari clubs. The support of this com munity also depends upon the perception of the cars as collectibles, which is also supported through the Ferrari Classic services, and the active resale market for the automobiles which encourages interest over the long term. Ferrari organizes a number of client events at Maranello and elsewhere. The factory in Maranello is the core of their customer engagement strategy and a symbolic hub attracting customers and prospects worldwide. Upon invitation, clients and prospects can visit the factory, witness some of its workings and experience several Ferrari core values such as herit- age, exclusivity and customization. At the factory, cus- tomers have the opportunity to configure their cars through their personalization. Customers are also invited to celebrations and other events that Ferrari organizes in various markets. Some recent examples include the celebration of Ferrari North America's 60th Anniversary in Beverly Hills, Los Angeles, where over 1,000 Ferraris paraded on the streets, and Ferrari's participation in the celebrations of the Year of the Horse in China. Participation in the Formula 1 world championship with Scuderia Ferrari is the core element of Ferrari's marketing effort. The Formula 1 world championship is the highest class for single-seat auto races, attracting the best drivers, engineers and designers. Importantly, with over 425 million television viewers in 2014, it is the most watched annual sport series in the world. In return for their participation in Formula 1, the teams receive a share of the annual profits earned from Formula 1, related commercial activities. Approximately 60 per cent of earnings before interest, tax, depreciation and amorti- zation from commercial activities and broadcasting rights are distributed to the Formula 1 teams, largely based on the relative ranking of each team in the championship More generally, Formula 1 racing allows Ferrari to promote and market their brand and technology to a global audience without resorting to traditional advertis- ing activities, thereby preserving the aura of exclusivity around the brand and limiting the marketing costs that Ferrari, as a company operating in the luxury space, would otherwise incur. As mentioned before, Ferrari enters into licence agreements with a number of licensees for the design, development and production of Ferrari branded products. Here are some examples from the licensing me accessories: Oakley sunglasses, Tod's shoes: sportswear Puma theme parks: Ferrari World (Abu Dhabi): toys LEGO toys, video games: Electronic Arts, Microsoft, Ubisoft; watches: Hublot (co-branded high-luxury watches). PART DECIDING WHICH MARKETS TO ENTER A significant portion of revenues from licensing (12 per cent of the total amount) activities consists of royal ties Ferrari receive in connection with the Ferrari World theme park in Abu Dhabi In 2014, Ferrari reached an agreement with PortAventura Entertain ment S.A.U to open Ferrari's first European theme park at the PortAventura resort near Barcelona in Spain. PortAventura Entertainment SAU has announced a planned investment of 100 million and the park is expected to open in 2016. In the long term, Ferrari aims to open one theme park in each of the main geographic areas where they operate, including North America and Asia. Marketing and selling costs (including sales person nel costs) in 2014, 2013 and 2012 amounted to 132 million, 123 million and 114 million, respectively. These costs mainly comprise marketing and events expenses, consisting primarily of costs in connection with trade and auto shows, media and client events for the launch of new models and sponsorship and indirect marketing costs incurred through the Formula 1 racing team, Scuderia Ferrari Ferrari's low volume strategy may limit potential profits A key to the appeal of the Ferrari brand and the com. pany's marketing strategy is the aura of exclusivity and the sense of luxury which the brand conveys. A central determinant to this exclusivity is the limited number of models and cars Ferrari produces and the strategy of maintaining the car waiting lists to reach the optimal combination of exclusivity and client ser vice. The low volume strategy is also an important factor in the prices that customers are willing to pay for the cars. While important to the current marketing strategy, the focus on maintaining low volumes and exclusivity limits Ferrari's potential sales growth and profitability Conversely, it Ferrari was to increase car production they might not be able to maintain the exclusivity of the Ferrari brand. If they are unable to balance brand exclu sivity with increased production, they may erode the desirability and ultimately the consumer demand for the Ferrari brand. Ferrari's competitive position The worldwide automotive market is highly competi- tive. Competition in the luxury performance car mar. ket is concentrated in a fairly small number of producers, including both large automotive compa- nies as well as small producers exclusively focused Service All dealers must conform to rigorous store design, lay. out and corporate identity guidelines ensuring uniform- ity of the image and client interface. Through the Ferrari Academy, they provide training to dealers for sales after-sales and technical activities to ensure that their dealer network delivers a consistent level of market leading standards across diverse cultural environ ments. They train and monitor dealers intensively and they collect and observe data relating to their profitabil ity and financial health in order to prevent financial dit ficulties among dealers. Ferrari representatives visit dealerships regularly to measure compliance with the company's operating standards. They have the right to terminate dealer relationships in a variety of circum- stances including failure to meet performance or finan- cial standards, or failure to comply with the Ferrari guidelines. Ferrari HQ provide a suggested retail price or a maximum retail price for all of the cars, but each dealer is free to negotiate different prices with clients and to provide financing. Although most Ferrari clients in certain markets purchase cars from dealers without financing, Ferrari provide direct or indirect finance and leasing services to retail customers and to dealers Ferrari faces strong competition from automotive manufacturers in its various markets. The competition among various auto players is likely to intensity in light of continuing globalization and consolidation in the worldwide automotive industry. The company's main competitors include main car manufacturers like WW/Audi, Toyota, General Motors, Daimler, Ford, among others. Ferrari's position in the car market is shown in Figure 1. Among the pure sports car brands, Ferrari is no. 2 in revenue and profits after Porsche (see also Table 4). Competition in the luxury performance car market is driven by the strength of the brand, and the appeal of the products in terms of performance, styling, nov. elty and innovation as well as on the manufacturer's ability to renew its product offerings regularly in order to continue to stimulate customer demand. Increased competition may lead to lower vehicle unit sales and CASE STUDY LA FERRARI 47 Sportines Bu Maserat Bentley Rolls- Royce Basic model Luxury Renault PSA ww OPEL Ford Suitability for daily use Figure 1 Ferrari's global positioning against other sports car brands and car brands in general Table 4 Comparison of sports car manufacturers Competitor Profit ( million) 2014 Units sold 2014 Porsche Ferrari Maserati Lamborghini Aston Martin Bugatti Revenue ( million) 2014 17,205 2,762 2.780 629 189 849 7.255 35.500 2.430 3,700 30 555 -30 100 increased inventory, which may result in a further downward price. Larger car manufacturers like the above-mentioned) with a product offering in the luxury performance car market typically have larger financial resources compared to the small luxury car produc ers and therefore may have more flexibility in planning for product launches and capital spending over time. Competition among similarly positioned luxury per formance cars is also driven by price and total cost of ownership. The customers' appreciation of the value of Ferrari cars after a period of ownership is an impor tant competitive factor because it decreases the total cost of ownership for clients and promotes repeat purchases. 48 PART II DECIDING WHICH MARKETS TO ENTER Ferrari's future international market selection (IMS) In order to secure future international growth for Fer- rari, the company is interested in focusing on the most attractive international markets. Ferrari's market research department has provided some data that could provide the first indication for the selection of the most attractive markets for Ferrari. Table 5 shows the number and percentage of million aires among households in different countries. Table 5 Number of millionaire households in top 15 countries Millionaire households Proportion of milli98.638 ptonaire households (9) No. Country and Region Number of millionaire households - 2013 Proportion of millionaire households (%) - 2013 US China 7,135 2,378 1.240 513 Country and Region Qatar Switzerland Singapore China Hong Kong Kuwait Bahrain 17.5 12.7 10.0 9.6 Japan UX 386 384 US 5.9 329 281 4.6 42 Switzerland Germany Canada China Taiwan Italy France China Hong Kong Netherlands Russia Australia India Israel China Taiwan Oman Belgium 274 11. 238 12 221 UAE 13. 213 Saudi Arabia Netherlands Canada 15. 175 Milc hoods is defined as hoods with more than US$1 milion in Source: based on different source among others BOS Global With Market assets. Database 2014 If you sold 10,000 units a year that would still be exclusive - how many handbags do Louis Vuitton and Chanel sell? As Ferrari's bosses have said, if you sell one less than the market wants, you're stil exclusive QUESTIONS 1. Discuss the current global position of the Ferrari brand with the starting point in Figure 1. Should Fer- rari change their positioning? 2. Which screening criteria should Ferrari use in their international market selection (IMS)? 3. Which of the countries in Table 5 would you recom- mend as future Ferrari focus markets? Please rank 1, 2, 3. 4. Ian Fletcher, principal analyst at HIS Automotive (provides analysis to the automotive industry), said to The Guardian, that Ferrari may consider develop ing a slightly cheaper model, although still costing 100,000 plus. What do you think of this statement? Do you agree? Should Ferrari launch a cheaper Ferrari model? How should this model be positioned against the other Ferrari models? *Topham, G. (2015) Ferrari kickstarts split from Fiat Chrysler by filing for NYSE share listing! The Guardian 23 Jy http://www.theguardian com/business/2015/ /23/ferrari-separation-fiat-Chrysler new-york-stock-exchange-public-offering QUESTIONS If yo excl and you excl 1. Discuss the current global position of the Ferrari brand with the starting point in Figure 1. Should Fer- rari change their positioning? 2. Which screening criteria should Ferrari use in their international market selection (IMS)? 3. Which of the countries in Table 5 would you recom- mend as future Ferrari focus markets? Please rank 1, 2, 3. 4. Ian Fletcher, principal analyst at HIS Automotive (provides analysis to the automotive industry), said to The Guardian, that Ferrari may consider develop- ing a slightly cheaper model, although still costing 100,000 plus. What Should should Ferrari "Topham, NYSE shar com/busi new-york-st CASE STUDY 11.4 Ferrari: international market selection (IMS) for the exclusive sports car brand Source: Dutourdumondo Photography/Shutterstock.com Ferrari is among the world's leading luxury brands focused on the design, engineering, production and sale of the world's most admired cars. The brand is one of the most iconic and recognizable in the world. Ferrari believe that the Ferrari brand and the prancing horse logo symbolize luxury, exclusivity, innovation, state-of-the-art sporting performance and Italian design and engineering heritage and has regularly been ranked as one of the world's most powerful brands by independent surveyors. The Ferrari name, history and the image is closely associated with their Formula 1 racing team, Scuderia Ferrari, the most successful team in Formula 1 history, having won 222 Grand Prix races, 16 Constructor World titles and 15 Drivers' World titles. The history of excellence, technological innovation and defining style transcends the automotive industry, and is the founda- tion of the Ferrari brand and image. Ferrari designs, engineers and produces their cars in Maranello, Italy, and sells them in over 60 markets worldwide through a network of 182 authorized dealers. At the end of July 2015, Fiat Chrysler (former owner of Ferrari) announced a plan to spin off Ferrari as a separate business to fund future investment in Fiat. The initial public offering was expected to take place on the New York stock exchange by the end of 2015, so that Ferrari started off as a separate company at the begin. ning of 2016. The company expects to start with listing 10 per cent of the shares, and later distribute a further 80 per cent to its own shareholders, completing the separation. The Ferrari family will retain a 10 per cent interest, held by Piero Ferrari, the son of the firm's founder, Enzo Ferrari. Sergio Marchionne, the CEO of Fiat Chrysler, expected to reduce Fiat Chrysler's debt and fund a 48 billion investment programme to boost some of the company's other major brands worldwide: Jeep, Alfa Romeo and Maserati. He also indicated that he expected the listing to value Ferrari at more than 10 billion. Tables 1 and 2 show the total Ferrari sales (includ- ing shipments) and the geographical split of the 2013 and 2014 shipments, respectively. Ferrari's results on key metrics Table 1 also shows Ferrari's latest financial results. Table 1 Ferrari's development from 2010 to 2014 on key measures 2010 2012 2013 2014 6,573 1.831 Shipment (number) Revenues ( million) EBIT (Emilion) Number of employees 2011 7,195 2,067 298 2,709 7,405 2.225 335 2.708 7,000 2335 364 2.774 7.255 2,762 389 2,843 295 2,779 EBIT, coming before interest and we Source based on Fri francial reports CASE STUDY 14 FERRARI 45 Distribution Ferrari does not own Ferrari dealers and virtually all of the sales are made through the network of Ferrari dealerships located throughout the world. Ferrari sell their cars exclusively through a network of authorized dealers (with the exception of one-offs where they sell directly to end-customers). In larger markets, they have a wholly owned subsidiary or, in China, business is done through a joint venture with a local importer, and cars are sent to dealers for resale to end- customers. In smaller markets, Ferrari generally sells the cars to a single importer. At March 31, 2015, the network comprised 182 dealers operating 204 points of sale Ferrari makes a careful and strict selection of the dealers. The selection criteria are based on the candi- dates' reputation, financial solidity and track record. They select dealers who are able to provide an in-store experience and to market and promote the cars in a manner intended to preserve the Ferrari brand integrity and to ensure the highest level of customer satisfaction Marketing Ferrari promotes passion for the brand by fostering a community of enthusiasts and by rewarding loyal cli ents through various initiatives, such as driving events and client activities in Maranello and at motor shows and, more particularly, through providing the most loyal and active clients with preferential access to the newest and highest value cars. As a result, in 2014 approximately 60 per cent of the new Ferrari cars were sold to existing Ferrari owners and 34 per cent of Ferrari customers own more than one Ferrari car. As a testament to the enduring power of the brand, vintage Ferraris are among the most sought after cars in the collector market, with nine Ferraris ranking in the top 10 most valuable cars ever sold in public auctions. An important factor in promoting connection to the Ferrari brand is the strong relationship with the active global community of automotive collectors and enthusi- asts, particularly collectors and enthusiasts of Ferrari automobiles. This is influenced by close ties to the automotive collectors' community and by Ferrari's sup- port of related events (such as car shows and driving events), at the company headquarters in Maranello and through the dealers, the Ferrari museum and affiliations with regional Ferrari clubs. The support of this com munity also depends upon the perception of the cars as collectibles, which is also supported through the Ferrari Classic services, and the active resale market for the automobiles which encourages interest over the long term. Ferrari organizes a number of client events at Maranello and elsewhere. The factory in Maranello is the core of their customer engagement strategy and a symbolic hub attracting customers and prospects worldwide. Upon invitation, clients and prospects can visit the factory, witness some of its workings and experience several Ferrari core values such as herit- age, exclusivity and customization. At the factory, cus- tomers have the opportunity to configure their cars through their personalization. Customers are also invited to celebrations and other events that Ferrari organizes in various markets. Some recent examples include the celebration of Ferrari North America's 60th Anniversary in Beverly Hills, Los Angeles, where over 1,000 Ferraris paraded on the streets, and Ferrari's participation in the celebrations of the Year of the Horse in China. Participation in the Formula 1 world championship with Scuderia Ferrari is the core element of Ferrari's marketing effort. The Formula 1 world championship is the highest class for single-seat auto races, attracting the best drivers, engineers and designers. Importantly, with over 425 million television viewers in 2014, it is the most watched annual sport series in the world. In return for their participation in Formula 1, the teams receive a share of the annual profits earned from Formula 1, related commercial activities. Approximately 60 per cent of earnings before interest, tax, depreciation and amorti- zation from commercial activities and broadcasting rights are distributed to the Formula 1 teams, largely based on the relative ranking of each team in the championship More generally, Formula 1 racing allows Ferrari to promote and market their brand and technology to a global audience without resorting to traditional advertis- ing activities, thereby preserving the aura of exclusivity around the brand and limiting the marketing costs that Ferrari, as a company operating in the luxury space, would otherwise incur. As mentioned before, Ferrari enters into licence agreements with a number of licensees for the design, development and production of Ferrari branded products. Here are some examples from the licensing me accessories: Oakley sunglasses, Tod's shoes: sportswear Puma theme parks: Ferrari World (Abu Dhabi): toys LEGO toys, video games: Electronic Arts, Microsoft, Ubisoft; watches: Hublot (co-branded high-luxury watches). PART DECIDING WHICH MARKETS TO ENTER A significant portion of revenues from licensing (12 per cent of the total amount) activities consists of royal ties Ferrari receive in connection with the Ferrari World theme park in Abu Dhabi In 2014, Ferrari reached an agreement with PortAventura Entertain ment S.A.U to open Ferrari's first European theme park at the PortAventura resort near Barcelona in Spain. PortAventura Entertainment SAU has announced a planned investment of 100 million and the park is expected to open in 2016. In the long term, Ferrari aims to open one theme park in each of the main geographic areas where they operate, including North America and Asia. Marketing and selling costs (including sales person nel costs) in 2014, 2013 and 2012 amounted to 132 million, 123 million and 114 million, respectively. These costs mainly comprise marketing and events expenses, consisting primarily of costs in connection with trade and auto shows, media and client events for the launch of new models and sponsorship and indirect marketing costs incurred through the Formula 1 racing team, Scuderia Ferrari Ferrari's low volume strategy may limit potential profits A key to the appeal of the Ferrari brand and the com. pany's marketing strategy is the aura of exclusivity and the sense of luxury which the brand conveys. A central determinant to this exclusivity is the limited number of models and cars Ferrari produces and the strategy of maintaining the car waiting lists to reach the optimal combination of exclusivity and client ser vice. The low volume strategy is also an important factor in the prices that customers are willing to pay for the cars. While important to the current marketing strategy, the focus on maintaining low volumes and exclusivity limits Ferrari's potential sales growth and profitability Conversely, it Ferrari was to increase car production they might not be able to maintain the exclusivity of the Ferrari brand. If they are unable to balance brand exclu sivity with increased production, they may erode the desirability and ultimately the consumer demand for the Ferrari brand. Ferrari's competitive position The worldwide automotive market is highly competi- tive. Competition in the luxury performance car mar. ket is concentrated in a fairly small number of producers, including both large automotive compa- nies as well as small producers exclusively focused Service All dealers must conform to rigorous store design, lay. out and corporate identity guidelines ensuring uniform- ity of the image and client interface. Through the Ferrari Academy, they provide training to dealers for sales after-sales and technical activities to ensure that their dealer network delivers a consistent level of market leading standards across diverse cultural environ ments. They train and monitor dealers intensively and they collect and observe data relating to their profitabil ity and financial health in order to prevent financial dit ficulties among dealers. Ferrari representatives visit dealerships regularly to measure compliance with the company's operating standards. They have the right to terminate dealer relationships in a variety of circum- stances including failure to meet performance or finan- cial standards, or failure to comply with the Ferrari guidelines. Ferrari HQ provide a suggested retail price or a maximum retail price for all of the cars, but each dealer is free to negotiate different prices with clients and to provide financing. Although most Ferrari clients in certain markets purchase cars from dealers without financing, Ferrari provide direct or indirect finance and leasing services to retail customers and to dealers Ferrari faces strong competition from automotive manufacturers in its various markets. The competition among various auto players is likely to intensity in light of continuing globalization and consolidation in the worldwide automotive industry. The company's main competitors include main car manufacturers like WW/Audi, Toyota, General Motors, Daimler, Ford, among others. Ferrari's position in the car market is shown in Figure 1. Among the pure sports car brands, Ferrari is no. 2 in revenue and profits after Porsche (see also Table 4). Competition in the luxury performance car market is driven by the strength of the brand, and the appeal of the products in terms of performance, styling, nov. elty and innovation as well as on the manufacturer's ability to renew its product offerings regularly in order to continue to stimulate customer demand. Increased competition may lead to lower vehicle unit sales and CASE STUDY LA FERRARI 47 Sportines Bu Maserat Bentley Rolls- Royce Basic model Luxury Renault PSA ww OPEL Ford Suitability for daily use Figure 1 Ferrari's global positioning against other sports car brands and car brands in general Table 4 Comparison of sports car manufacturers Competitor Profit ( million) 2014 Units sold 2014 Porsche Ferrari Maserati Lamborghini Aston Martin Bugatti Revenue ( million) 2014 17,205 2,762 2.780 629 189 849 7.255 35.500 2.430 3,700 30 555 -30 100 increased inventory, which may result in a further downward price. Larger car manufacturers like the above-mentioned) with a product offering in the luxury performance car market typically have larger financial resources compared to the small luxury car produc ers and therefore may have more flexibility in planning for product launches and capital spending over time. Competition among similarly positioned luxury per formance cars is also driven by price and total cost of ownership. The customers' appreciation of the value of Ferrari cars after a period of ownership is an impor tant competitive factor because it decreases the total cost of ownership for clients and promotes repeat purchases. 48 PART II DECIDING WHICH MARKETS TO ENTER Ferrari's future international market selection (IMS) In order to secure future international growth for Fer- rari, the company is interested in focusing on the most attractive international markets. Ferrari's market research department has provided some data that could provide the first indication for the selection of the most attractive markets for Ferrari. Table 5 shows the number and percentage of million aires among households in different countries. Table 5 Number of millionaire households in top 15 countries Millionaire households Proportion of milli98.638 ptonaire households (9) No. Country and Region Number of millionaire households - 2013 Proportion of millionaire households (%) - 2013 US China 7,135 2,378 1.240 513 Country and Region Qatar Switzerland Singapore China Hong Kong Kuwait Bahrain 17.5 12.7 10.0 9.6 Japan UX 386 384 US 5.9 329 281 4.6 42 Switzerland Germany Canada China Taiwan Italy France China Hong Kong Netherlands Russia Australia India Israel China Taiwan Oman Belgium 274 11. 238 12 221 UAE 13. 213 Saudi Arabia Netherlands Canada 15. 175 Milc hoods is defined as hoods with more than US$1 milion in Source: based on different source among others BOS Global With Market assets. Database 2014 If you sold 10,000 units a year that would still be exclusive - how many handbags do Louis Vuitton and Chanel sell? As Ferrari's bosses have said, if you sell one less than the market wants, you're stil exclusive QUESTIONS 1. Discuss the current global position of the Ferrari brand with the starting point in Figure 1. Should Fer- rari change their positioning? 2. Which screening criteria should Ferrari use in their international market selection (IMS)? 3. Which of the countries in Table 5 would you recom- mend as future Ferrari focus markets? Please rank 1, 2, 3. 4. Ian Fletcher, principal analyst at HIS Automotive (provides analysis to the automotive industry), said to The Guardian, that Ferrari may consider develop ing a slightly cheaper model, although still costing 100,000 plus. What do you think of this statement? Do you agree? Should Ferrari launch a cheaper Ferrari model? How should this model be positioned against the other Ferrari models? *Topham, G. (2015) Ferrari kickstarts split from Fiat Chrysler by filing for NYSE share listing! The Guardian 23 Jy http://www.theguardian com/business/2015/ /23/ferrari-separation-fiat-Chrysler new-york-stock-exchange-public-offering