In October 2015, legendary luxury auto manufacturer Ferrari offered shares of the company to public investors in an IPO expected to achieve an eventual valuation of more than $9 billion, with individual shares priced between $48 and $52.
It also began trading on the New York Stock Exchange (NYSE) in October, and is now positioned to earn considerable dividends for investors in its stock shares. Marketing gurus for businesses everywhere would do well to learn from some of the lessons provided by the success of Ferrari, and the tremendous appeal of its IPO.
There are few companies in the world that have as powerful a brand recognition as does . Known throughout the world as the one auto manufacturer to have achieved the epitome of performance, luxury. and styling, Ferrari today has a stranglehold on nearly 25% of the upper echelon car market all around the globe. Despite intentionally limited production, and of course the potential for greater profits, the company annually achieves revenues in excess of $3.14 billion.
According to Louis M.J.M. Plattel, CMO of Trade24, “All race car and motorsports enthusiasts recognize the Prancing Horse as the symbol of racing excellence and supremacy, and this is what branding is really all about – a single symbol which can conjure up the image of a highly desirable product, manufactured by a company legendary for its excellence and its success.”
The Prancing Horse As An Asset
The iconic Prancing Horse is unquestionably invaluable to the company as a symbol of its own excellence and historic racing achievements, but just being associated with the Prancing Horse is a privilege that other companies will gladly pay for. Much of the company’s revenue is actually generated through licensing agreements with other companies that license usage of the Prancing Horse so as to enjoy some of the same benefits of its universal popularity and imagery.
During the first three months of 2015, almost 18% of Ferrari’s net revenue came from brand sponsorship and commercial sponsorship, which includes merchandising, licensing, and royalties. Just a few of the companies involved in these licensing arrangements are Puma, Lego, Microsoft, Oakley sunglasses, and several lines of watches and sportswear.
Limited Production Can Be A
Bucking the trend of almost every auto manufacturer in the world (and probably almost all manufacturers of anything), Ferrari has made it a company policy to deliberately limit the number of autos made each year. The most number of vehicles the company has ever sold is slightly over 7,000, and that figure remains a target number for production each year.
The thinking behind this strategy is twofold: to maintain the exclusivity of the Ferrari brand name, and to sustain the resale value of second-hand Ferraris. While this approach is questioned and even criticized by many, the results it has achieved for the company are nearly impossible to argue with. With relatively few of the iconic luxury automobiles being made each year, each one has become desirable far beyond the appeal of its operational and aesthetic qualities.
One of Ferrari’s crucial sources of marketing is through its racing team, which has won 224 Grand Prix races and 15 drivers’ world championships since Formula One began in 1950. Teaming up with a different brand, or even one of your own, is a great way to market a product.
This article was written by Steve Olenski from Forbes and was legally licensed through the NewsCred publisher network.