In a different phase for the luxury automotive sector, where marketing diversification is changing for different brands (as discussed in Is luxury automotive marketing changing?), at the beginning of the year Ferrari released a statement that changes things quite a bit once more.
It is of a few years ago the announcement that Ferrari was cutting back significantly on its marketing diversification by reducing its licensing agreements by 50% and the product categories offered by 30%. This decision came along with the creation of a proper department dedicated to the creation of fashion items and apparel. High-quality, limited edition items entirely created in-house for a division that is expected to eventually account for 10% of the company’s total revenues.
This time the initiative could be of the same magnitude if not greater. CEO Benedetto Vigna stated that the Italian automaker will enter the sport-sailing segment. While this is not the first time that the brand has been associated with the world of sailing (an example is the longstanding partnership with yacht maker Riva) and, definitely not the only one (many companies such as Aston Martin, Lamborghini, Maserati, and Bugatti realised speedboats in collaboration with industry partners, or sponsored sailing competitions), this one seems different.
*Tecnomar & Lamborghini 63
What and how
First of all this one will not just be a sponsorship, a marketing collaboration, and not even a limited run of luxury boats made for clients.
The joint statement by Ferrari’s chairman John Elkann and Vice President Piero Ferrari read:
“We are about to embark on a thrilling journey that will expand our racing heritage. With this new competitive challenge, motivated by our capability to innovate, and our commitment to sustainability, we will push ourselves beyond our current limits. We are happy to be able to rely on Giovanni’s extraordinary experience, determination, and team spirit.”
In the statement, they are referring to famous Italian sailor Giovanni Soldini who will participate in this project acting as team principal of this new division. The competition is aimed at achieving records such as the Jules Verne Trophy for the fastest unassisted world circumnavigation by any type of boat.
This one by Ferrari in particular, despite the scarce details so far, is expected to be a state-of-the-art hydrofoil sailboat with next-generation technical solutions that will be realized in a dedicated facility in Pisa, Tuscany. It is said it will likely be a monohull sailboat close to the AC75s for the America’s Cup.
Focused expansion
From a business perspective, this is an interesting initiative for several reasons.
First of all, it does not just represent a marketing opportunity, and it is unlikely to be the start of a “reopening” of Ferrari’s strategy after it scaled back its activities. So far, it looks more like a focused expansion in an industry that is closely associated with luxury and (as mentioned previously) with luxury automotive. This would mean that Ferrari will expand but in a very controlled manner, which can be resource intensive but if successful would grant even greater visibility and learning opportunities as well regardless of the final outcome. This is enabled also by Ferrari’s financial performance that, over quite a few years now, has comfortably exceeded that of any competitor. In 2024, once more the company improves reaching an operating profit of €1,8 billion in a year when most of its direct competitors struggled to even remain profitable and those who did not were still far from such results.
The second aspect that is potentially extremely valuable about this initiative, (might seem obvious to write it) is its uniqueness. This project sets Ferrari apart from the rest of the industry. As mentioned, other projects in the same industry were all focused on either sponsorships or collaborations with industry manufacturers to produce motor yachts, never a hydrofoil boat with a dedicated team. With no competition on the same level, this initiative can substantially increase its brand equity expanding it to new audiences as well.
Last but not least, as for many projects within this industry, this will not just be about sailing for the sake of it, but it will also target the development of both racing (likely aerodynamics) and sustainability technologies development. In performance luxury automotive, innovation can come from the most diverse sources and industries. The project then has the opportunity to become for Ferrari something similar to the XX Program. A development platform which, even if on quite a different scale, and in a very different context, might actually be even more helpful in providing new solutions and ideas.
Ultimately, this initial endeavour could lead to more initiatives in the same industry establishing Ferrari as a true “player” in this market as well. This would contribute to its racing reputation and potentially also to new product opportunities in the future.
In Marketing
Two well-known Brand Equity Models from Aaker and Keller look at brand equity from different perspectives, and both can be useful to frame Ferrari’s latest initiative in a competitive ecosystem.
The first one looks at assets and liabilities in terms of brand awareness, loyalty, perceived quality, brand association, and proprietary assets, while the second, also known as the Customer-Based Brand Equity (CBBE) Model, looks at creating brand image by building ideal touch points with customers to shape their perception through four key phases, or levels, Identity, Meaning, Response, and Relationships.
*Aaker (left) and Keller (right) Brand Equity Models
In terms of brand extension or diversification, one should look at Leverage, how much core brand equity transfers, and Fit, or whether the new field feels natural to consumers.
Ferrari’s initiative leverages similar principles of research of peak performance with lightweight construction, use of composite materials, carbon fibre, study of aerodynamics, and computational fluid dynamics. These are present in racing whether it is Formula 1, Endurance (recently reintroduced with the WEC LMH program), and even in the luxury performance car development and production.
As for Fit, sailboats are naturally very different from cars, and the target audience might differ significantly as well. Core values of the brand and value proposition of its product such as sound, smell, and quality, for example, could risk dilution or simply not fit entirely. On the other hand, however, we know that sailboats and the world around them are culturally linked to luxury automotive, even in key places like Monaco, and as demonstrated by the many industry crossovers so far. Beyond this though, it is clear to understand why Ferrari focused this new challenge on racing. Racing and its success are at the core of Ferrari’s brand value, and this endeavour’s execution choices, by involving Italy’s Luna Rossa successful skipper Giovanni Soldini, and other Maranello’s key figures, ultimately consolidate that perception.