LaFerrari shows LeWayForward

It is made from the same carbon fibre as the uranium centrifuges at the heart of most nuclear power plants. It can accelerate from a standing start to 60 miles per hour in less than the time than it took you to read this sentence, and it will retail for about £1.5m.

Mark Ritson

But, the best bit of all? It’s a hybrid.

Next to its ridiculously powerful V12 petrol engine sit a pair of re-chargeable electric motors that help the car attain an amazing power threshold of 950bhp - the combined power of 10 Ford Fiestas.

Any way you look at it, the new Ferrari, intriguingly named LaFerrari, is an amazing machine. But what really caught my attention was its targeting strategy.

At the recent Geneva Motor Show, Top Gear magazine interviewed Ferrari chief executive Luca Di Montezemolo about the launch. One might imagine that a car that costs more than £1m might be challenging to sell but Di Montezemolo was clear that he would apply a very clear “criteria of ownership” to all potential customers.

First, he is only interested in existing Ferrari owners - ideally, people who already have at least five Ferraris. In addition, Di Montezemolo will insist on a “gentleman’s agreement” with all LaFerrari owners that says if they tire of their car, they can only sell it back to the mother company. “I want to avoid speculation,” explained Di Montezemolo. “When there are so many people interested in buying a car, the temptation might be to sell at a profit.” Heaven forbid.

At this stage, if you market paper clips, potato crisps or industrial welding equipment, you may be tempted to mutter “wanker” and click on something more interesting. But let me assure you that Ferrari is doing the right thing and, furthermore, it offers a fruitful lesson to every marketer - irrespective of their business.

It is easy to assume that Ferrari is so precious about its target customers because it has such amazing brand equity and market demand. But reverse the causality of that last sentence. Ferrari has a strong brand and such amazing market power because it has exercised such a tight and focused approach to targeting for so long.

Like all great marketers, Ferrari has worked out that it is one thing to segment a market into distinct customer types and something quite different to target just one extremely small segment for sales. I meet marketers all the time who do sterling work when it comes to segmentation but arse it all up because they cannot make the leap of faith that demands only going after one target segment with all their subsequent tactics.

This is a tragedy because a single tight target segment confers amazing strategic advantages. For starters, a small proportion of the total market almost certainly accounts for most of your potential sales. In Ferrari’s case, there are only about 400 people who actually fit the targeting criteria. And yet this group probably accounts for 80 per cent of the potential market for LaFerrari anyway.

Second, with such a tight and homogenous target segment in mind, you can design a product and position it to perfection. The reason most crap brand managers are looking at a positioning statement that says integrity, excellence and innovation is because they are crap and are targeting everyone. These vacuous, entirely meaningless positioning concepts only appeal to a broad swathe of the population.

Third, the marketing execution that a tight, target segment and distinctive positioning inspires is always better than the generic stuff that comes from the usual mass marketing approach. Buy your ad agency’s account manager six beers and then ask them what it’s really like to be an “agency partner” to a brand that targets 18- to 35-year-old, ABC1 women who “like fashion”. You’ll soon get an honest appraisal of why their ads have been disappointing. It’s because you are.

Four, when you target and then execute properly, you can charge a lot more for your product because it fits your market exactly and it is positioned where price insensitivity lives. When you go after everyone, your volumes might look good, but your profits stink.

I appreciate that you are not marketing a brand like Ferrari but you might as well start somewhere. As the task of marketing planning for 2014 appears on the horizon, I challenge you to be more selective, more Ferrari about things. What criteria will you apply to the segment you want to target next year? And, more importantly, what criteria will you apply to those who you don’t target?

Readers' comments (3)

  • Sure Mark - and I agree with you - but the left hand of the company is still pumping out seven kinds of stupidity like this Macaunese pimpmobile:

    Willing to sacrifice iconic colour, animal emblem and the usability of the car itself so it can bling things up.

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  • Mark Ritson's piece is a brave one. In my eyes as battle-hardened marketer of many years, spot on. Targeting a real niche customer has always been the key. In military terms that's why laser guided bombs exist so we hit the target plus avoid superfluous collateral damage. Great band managers are like great generals. They do this well. Jay Kurtz taught us all that back in the early 80's
    The difference is that we now have the internet. That allows us the marketeers version of a laser guided message. Well done the marketing people behind the bridle of The Prancing Horse!

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  • I did of course mean Brand Manager not band manager.

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