Analysis of Ferrari and Porsche

April 2014
DE1208 Design Management | Sharimar Leman | W13034546
AN ANALYSIS OF FERRARI and PORSCHE IN DESIGN STRATEGY

Ferrari and Porsche 2014
1
CONTENTS
1 Background
Ferrari Product................................................................................2
Porsche Product...............................................................................3
Group Structure
Ferrari and Fiat...................................................................... 5
Porsche and Volkswagen............................................................6
Mission, Vision and Values..........................................................7
2 Design and Brand Strategy
Design in Ferrari............................................................................. 11
Design in Porsche........................................................................... 13
Total Process of Design within the Management....................................... 14
Branding by Design......................................................................... 16
Brand Identity Prism...................................................................... 18
Ferrari’s Brand and Marketing Communications Strategy........................... 24
Porsche’s Evolutionary Design Strategy in Marketing and Communications........ 25
Culture of Creativity in Human Resources............................................ .26
3 Research and Design Development
Environmental Sustainability and Hybrid Technology................................. 30
Design in Education......................................................................... 32
4 Finance
5 Design Strategy Implementation
a. Ansoff Matrix.........................................................................36
b. PESTLE................................................................................38
c. Porter’s Five Forces.................................................................40
d. SWOT Analysis........................................................................42
6 Summary
Observations and analysis...................................................................44
Recommendations............................................................................50
Conclusions....................................................................................52
References.................................................................................... 53

2
Background
Ferrari Product
Ferrari is a product-oriented luxury brand that offers high performance super cars. Ferrari is
also heavily into branding and merchandising.
History
Ferrari is founded by Enzo Ferrari in 1929, and its headquarters is based in Maranello, Italy.
Figure 1 Above L-R: LaFerrari(hybrid),California,Berlinetta Below L-R: FF, Spider and Italia
Pricing
Ferrari’s price starts at USD $200,000.
Place
Ferrari has exclusive dealerships in over 52 countries.
Process
Ferrari‘s research and development, innovation and technology process are continuously
evolving and adapting with what the environment around them demands.
Market Segmentation
Ferrari focuses on differentiation in luxury brand segment based on design, engine performance
and Formula 1.

3
Porsche Product
Porsche is a customer oriented luxury car brand, aligned with its parent company
Volkswagen’s signature taglineto design a car for the people1
.
History
Porsche was founded by Dr.Dr.Ing. h.c. F. Porsche, and it is located in Stuttgart, Germany.
Figure 2 Current product line. Above (L-R) :911, Boxter, Cayman, Panamera (hybrid) and Cayenne
(SUV). Below (L-R): 918 Spyder ,Macan (SUV)
Pricing
Porsche prices start at USD$46,475 and can go well over USD$200,000
Prototyping
Porsche has an independent design engineering office where prototypes demonstrated the
feasibility of radical new studies to the automobile industry.
Market Segmentation
Porsche has appealed to a focused differentiation of market segment of financially successful
people and succeeded in establishing a loyal brand community that is unique in the automotive
world.
1
Porsche (2013) Annual Report

4
Group Structure
Ferrari and Fiat
Fiat Group’s functions in Ferrari2
:
 Design, engineering, development, manufacturing, distribution and sale of luxury sport
cars under the Ferrari brand management of the Ferrari racing team and supply of
financial services offered in conjunction with the sale of Ferrari branded cars.
 Fiat Group’s investment in luxury automotive innovation in a sustainable manner is
essential to strengthening its positions.
Strategic Design Management in Ferrari/FIAT:
 Ferrari is the high competitor in motorsport and a catalyst for change and diversification
to the overall scope and direction of Fiat in general.
 Ferrari influences Fiat’s direction in terms of Ferrari’s brand extension, engineering and
R&D structure as part of their corporate strategy process.
 The link between the management of design of Ferrari and the management of
corporate strategy of Fiat creates value and makes Ferrari visible and profitable in the
luxury market.
2
Fiat (2013) Annual Report

5
Ferrari Organisational triangle3
3
Ferrari (2014) Official website
Senior Vice
President, Entertainmen
t & Events
Senior Vice
President, Commercial &
Marketing
Senior Vice
President, Communication
Chief Technology Officer
Senior Vice President, Human Resources
Senior Vice President, Design
CEO, Ferrari Brand
Senior Vice President, Production Processes
Competitiveness
Senior Vice President, Digital/IT
Board of Directors
Senior Management
Chairman
Vice Chairman
Luca di Montezemolo
Piero Ferrari
AmedeoFelisa
Marco Mattiacci
Matteo Anversa
Enrico Galliera
Stefano Cigarini
Stefano Lai
Michael Leiters
Mario Mairano
FlavioManzoni
Andrea Perrone
ErvinoRiccobon
PaoploTacconi
Senior Vice
President, F1
CEO
Senior Vice President,
Administration, Finance
& Control

6
Porsche and Volkswagen
Porsche’s position in Volkswagen’s Group Structure4
4
Head of Design
CEO, Porsche Design (Merchandise)
President, Strategy and Corporate
Development
Deputy Chairman of the Executive
Board-Human Resources
Member of the Executive Board -
Research and Development
Production and Logistics
Sales and Marketing
Finance and IT
Procurement
Matthias Müller
Thomas Edig
Wolfgang Hatz
Dr. Oliver Blume
Bernhard Maier
Lutz Meschke
Uwe-KarstenStädter
Executive Board
Michael Muller
JuergenGessler

7
Missions, Visions and Values
Ferrari and Fiat Group5
5
Fiat (2014) Official website
Mission: To grow and create value by supplying innovative products and
services for maximum customer satisfaction with due respect to the legitimate
interests of all categories of stakeholders.
Vision: Born to innovate, stuck on sustainable development.
Values:
 To create an efficient, competitive global automaker through the
sharing of industrial and technological know-how, resources, projects,
targets and ambitions.
 Integrity, commitment to maintaining promises, transparency, respect,
rigor, reliability and passion.
 Core principles of leadership in leading people and leading change.
 Rewarding merit is a manifest and acknowledged principle at all
levels.
 Embrace and relish competition and constantly strive for the very
best.
 We aim to achieve best-in-class performance.
 Delivering on promises is fundamental to our goal of being a credible
and reliable organization.
Mission: To make unique sports cars that represents the finest in Italian
design and craftsmanship, both on the track and on the road.
Vision: To be the best in its class.
Values:
 Tradition and Innovation
 Individual and Team
 Passion and Sport Spirit
 Territorial and Internationality
 Ethics and Profit
 Excellence and Speed

8
Where are we now?
Ferrari’s independent
missions
Where we want to be?
2015
 Increasing profit margins
 Building greater brand equity
 Exploiting the premium
exclusivity positioning of
Ferrari.
How do we get there?
 Reduce car production until 2015
 To carry out more research and
development on packaging and design
innovations.
 Maintaining focus on sustaining current
car models, products, F1 and brand
extensions in the niche market
segment.
 Continuous R&D on product innovation
with environmental improvements such
as enhancing current hybrid engines and
safety.
Three year plan strategy
2013-2015

9
Porsche and Volkswagen Group6
6
VW (2013) Annual Report
Mission: To offer attractive, safe and environmentally sound vehicles which can
compete in an increasingly tough market and set world standards in their
respective class.
Vision:
 To be the most successful, fascinating and sustainable automaker in the
world.
Values:
 Innovative.
 Offering enduring value.
 Responsible.
Mission:
 We are committed to provide impeccable service to our demanding
clientele of premium cars.
 Pay our customers with the greatest possible attention and care in all
aspects of the business.
 To create a connection in the workplace, with shared passion for our
vision and goals.
 To have motivated, hard working and empowered employees.
 Maintain commitment to our corporate social responsibility.
Vision:
 ‘Look towards the future with the knowledge of our past.’
 Passion - our commitment touches our hearts and minds to develop our
company further with time.
 Leadership - the courage to shape a better future and be flexible and
proactive.
 Innovation - we search, we imagine, we create, we delight but at the same
time honour and protect the traditions and policies of our franchises.
 Our vision for the future is to represent both volume and premium brands
and be the number one company in terms of after sales and customer
service.
Values:
 Responsibility: Our responsibility is care for our customers and value our
employees and be sensitive towards social and environmental issues.
 Trust: Work hard daily to build mutual trust with our colleagues and
partners.
 Teamwork: Respecting and valuing our employees and creating a
positive work environment.

10
Where are we now?
VW and Porsche
incorporated Missions
Where we want to be?
Strategy 2018
 Secure band strength
 Increase product attractiveness
 Maintain profitability
 Master complexity
 Win the best employees and
increase loyalty
 Strengthen solid finances
 Value enhancing integration
into the VW group
How do we get there?
 Expansion of the exclusive customer
experience
 Staying true to Porsche identity
 Cope with tighter CO2 requirements
aligned with brand positioning
 Maintaining focus on costs and flexibility
 Implement cycle plan whilst maintaining
profitability standards
 Design and implement the use of the
modular toolkit system
 Ensure quality within growth
 Encourage achievers
 Find the right employees at the right
time
 Eliminating debt
 Solid funding of growth based on robust
balance sheet
 Ensure minimum liquidity as economic
cycle buffer
 Realize synergies without diluting the
brand identity.
Integration
Growth and technological change

11
Design Strategy
Design in Ferrari
 Ferrari's design office is located at Maranello headquarters which is the centre for all of
Ferrari design and production areas7
.
 The design office is currently working on Ferrari’s 2014 Formula 1 car.
 Ferrari uses autodesk 3D modelling software during the early phases of design
development prior to prototyping.
Innovation strategy approach
 Emphasis on comfort, speed, and enjoyment.
 All Ferrari vehicles can be customized by clients in almost every level of detail, which
can be explored on Ferrari’s website.
Ideation of Concept in Ferrari design
 The concept behind Ferrari is to maintain a level of exclusivity and high performance.
 More sustainable car for Ferrari’s future.
 Towards lightweight materials.
7
Designboom (2011) Ferrari factory tour: design
Figure 3(a)-(c)Custom interior in Ferrari cars

12
Figure 4.Ferrari factory at Maranello
Figure 5. Department layout planning at the design
office
Figure 7.The design process of Ferrari cars in Ferrari’s design office
Figure 6.Ferrari car models at the design office entrance

13
Design in Porsche
Figure 8. The design process of Porsche cars in Porsche's design studio
 Porsche applies experimentation in developing new design to acquire new knowledge
for future innovations8
.
 Converting a vision into reality based on the feasibility of the idea from both the
automobile industry‘s and the target market.
Key challenges and problem solving9
 Stays true to the brand's identity
 Engineered luxury by combining of design, function, and craftsmanship
 To balance the appeal of traditional retail channels experience by building brand
awareness along with innovative online channels.
 To remain flexible, stay abreast of trends and adapt quickly to new requirements and
standards.
 From 2003 to 2007, the company tried to position itself as a 'men only' brand. In 2010
Porsche Design expanded the market to female customers.
8
Shamiyeh, M. (2013) Porsche Principle Innovation
9
Tsang, Jacqueline(2014) Porsche Design’s CEO JuergenGessler keeps brand at the forefront of luxury

14
Total Process of Design within the management (Ferrari)10
10
Walters, David and Lancaster, Geoff (2000) Implementing value strategy through the value chain.
Cooper, R. and Press, M. (1995) The Design Agenda: A Guide to Successful Design Management.
Group/Corporate
Objectives/Project
Management
Design & Concept
R&D/New Product
Development Centre
Manufacturing &
Design
Process/Engineering
Logistics
Branding , Sales &
Marketing
Design, Innovation and Technology, Design Engineering
Design functions at the
Operational level
Assembly, Production, Distribution
Creative advertising, Product
launch, After sales service
Creativity & Design Thinking in
Human Resources, Financial
Services, Information Systems
Design Brief,Proposals
Design Strategy, Creative Direction, Group Strategic Planning
Reassess, perceived
value, customers’
feedback
Distribution
FRAME
BUILD
MarketResponse
DISCOVER
IDEATE
Design&Development

15
Total Process of Design within the Management (Porsche)
Porsche shared product development with Volkswagen, built a flexible supply chain program
for the vehicle, and outsourced most of the components to update and optimize the pricing,
performance, quality and promotion.Volkswagen and Porsche are at the most profitable at
pushing new products through their value chain in synchronizing the processes of product
development, supply chain, and the customer operations of marketing, sales and services11
.
11
Deloitte Research (2005) Mastering Innovation: Exploiting Ideas for Profitable Growth
FRAME
BUILD
Customer, Market, Sell , Service,
After sales service
Plan, Source, Make ,Deliver
Design, Innovate,
Develop, Transition
Design Brief, Proposals
Design, Styling, Innovation and Technology, Production Engineering
Logistics
Reassess, perceived
value , customers
feedback
Assembly, Production, Distribution
Design Strategy, Creative Direction, Group Strategic Planning
Embodiment
MarketResponse
Design&Development
IDEATE
DISCOVER
Corporate
Strategy/ Project
Management
Design Process
and Product
Transition
R&D/New Product
Development
Centre
Quality,
Manufacturing &
Engineering
Supply chain
Branding , Sales &
Marketing

16
Branding by Design
Ferrari Brand Value12
12
Interbrand (2013)Best Global Brands by Sector
Brand
Essence
Brand
Personality
Emotional
Benefits
Functional Benefits
Features and Attributes
Core Concepts  The essence of speed
 Italian luxury heritage
 Loud, aggressive, fantasy
 Strong statement on design
 Exclusivity
 Passion
 Imposing presence and identity in
motorsports and niche market
 High performance
 Quality material and engines

17
Porsche Brand Value13
13
Interbrand (2013) Best Global Brands by Sector
Brand
Essence
Brand
Personality
Emotional
Benefits
Functional Benefits
Features and Attributes
Core Concepts
 Germany heritage and automotive icon
 Sophisticated
 Classic luxury
 Accomplishment, successful
 Freedom and independent
 Imposing prestigious sporty car
in luxury market
 Excellence innovation in design
engineering technology
 Dream and aspiration

18
Brand Identity Prism
Ferrari Design Identity Prism14
Porsche Branding Identity Prism
14
Kapferer, J.N (2012) The New Strategic Brand Management: Advanced Insights and Strategic Thinking
Classy
Ambitious
Athletic
Dominant
Flamboyant
Formula 1
Luxury
Italian
Elite
The best in its
class
Wealthy
Middle age
Showing off
Social status
Famous
Exclusive
Bonding
Prancing horse
Red
Italian flag
Yellow shield
Self-image
Culture
Personality
Physique
Relationship
Reflection
Physique Culture
Masculine
Upper class
Charming Made in
Germany
Excellent
quality
Tradition
Achievement
Obligation to
push the
limitsMale
Snobbish
Arrogant
High income
Dream
Aspiration
Dynamism
Excitement
Flagship
product-
Porsche 911
Relationship
Personality
Self-image
Reflection

19
Brand Strategy
Ferrari
Expanding to new markets as well as versatility in design, such as the hatchback FF.In 2013,
Ferrari began to implement their three year plan to reduce car production until at least 2015 to
focus on increasing profit margins15
.
Brand exclusivity
Ferrari cultivates exclusivity by limiting production and enforcing wait lists. Limiting supply
was a deliberate strategy to maintain a high level of exclusivity and increase Ferrari cars’ value
over time.
Brand Awareness and Promotional Strategy
The strongest promotion for Ferrari is in its merchandising that comes from the brand itself
such as the stores, theme parks, museum, royalty and license basis to other brands (Eg. Puma
selling Ferrari-Puma branded shoes).
Physical presence
i. Ferrari Store - Key target markets in London, Abu Dhabi and Dubai stores were
created in major shopping destinations to ensure maximum visibility and to strengthen brand
equity.
ii. Formula 1
15
Physioc, Felice (2013) Keeping the Dream Alive: Ferrari’s Strategy to Success

20
Sport sponsorship is proven helpful as Ferrari’s main communication platform for selling its
cars:16
 Creates an internal source of mobilization (brands are made by people)
 Creates good image in the immediate environment(social, political, economic)
 Boosts its image of social responsibility
 Provides a source of PR invitations for VIPs.
 Formula 1 is a medium whose business model is based on broadcasting rights and
sponsors.
 Brand values – Exclusivity, Customizability, Luxury,F1 Experience
16
Kapferer, J.N (2012) The New Strategic Brand Management: Advanced Insights and Strategic Thinking
Figure 11. Collaboration with Vertu smartphones
Figure 9. Ferrari store in London
Figure 10. Some Ferrari merchandise

21
Ferrari theme park Abu Dhabi
Ferrari grows its business and delivers higher
revenues and margins with theme park at Abu
Dhabi17
.
 Target audience – Families, fans and
enthusiasts.
 Brand strategy throughout the park
including the largest Ferrari red roof
logo.
 Promoting Italian cuisine and tourism through Italian dining experience.
Future strategy and brand extensions
 Ferrari‘s second theme park and first hotel will be opened at PortAventura, Spain in
2016 as part of their branding extension strategy.
17
Interbrand (2013) Best Global Brands
Figure 12(b). Ferrari’s proposed hotel in Barcelona Spain
Figure 12(a). Ferrari theme park, Abu Dhabi

22
Porsche Design Branding Strategy
Porsche designs a range of Porsche merchandise products including watches, eyewear, luggage
and sports equipment. Porsche Design has started to cut down the licenses under the Porsche
Design name to sharpen the image for its brand core18
.
Strategic alliances19
 Shares distribution network for Volkswagen and Porsche.
 Secures Porsche‘s basic funding without external investors.
 Porsche strengthens its brand essence strategy by increasing control over its competitors
with mergers, acquisitions and take overs.
Figure 13.Porsche Design store, Los Angeles
Tourism as Marketing Medium
 The Porsche visitors’ centre creates ‘consumption experiences’ in support of its retail
dealerships and Leipzig city as a potential urban tourism destination.
 Porsche Travel Club is not exclusively reserved for Porsche owners.
Figure 15.Porsche Travel Club
18
Tsang, Jacqueline(2014) Porsche Design’s CEO Juergen Gessler keeps brand at the forefront of luxury
19
Shamiyeh, M. (2013) Porsche Principle Innovation
Figure 14. Porsche Pavilion in Wolfsburg, Germany

23
Partnership
Figure 17. Porsche's engineered built in system Figure 18. Porsche's limited edition Blackberry
Porsche’s engineered built in system in its car models is called Porsche Communication
Management(PCM) with all latest technology features such as ipod, touch screen, USB, audio,
and navigation. Other collaboration including the limited edition Blackberry smartphone.
Figure 16(a) and (b) Porsche Museum

24
Marketing and Communications
Marketing and Innovation Strategy
 Ferrari incorporates design into its marketing strategy.
 It follows strategies based on market dominance by which the company became the
leader amongst its competitors.
 The world's fastest Ferrari, the F60, constituted as an innovation strategy for Ferrari.
Product Life Cycle
 In the growth phase, Ferrari attracts its customers by using a lot of marketing strategies
such as manufacturing a limited edition, which increases the interest of the consumers.
Ferrari's Brand
and Marketing
Communication
Strategy
Formula 1
Sponsorships
and
Competitions
Merchandising/
Brand licensing
Limited
edition/brand
exclusivity
Design,
speed and
luxury

25
Porsche brand evolution20
The core business of Porsche is the development, production, and marketing of performance
cars. Porsche provides complete solutions for the car market and has constructed products such
as aeroplane engines, forklift trucks, billboard systems in their evolutionary design strategy.
(Marketwatch, 2006).
20
Zhechev, V. (2013) The Impact of Brand Extensions on Brand Image Dilution Related to Nichemanship
Porsche's
Evolutionary
Design
Strategy
Brand
identity
Differentiation
Conservative
and matured
buyers
Sportiness
and
Performance
Product
Diversification
Complete
vehicle
competence

26
Creativity in Human Resources
Ferrari
Creativity in Ferrari’s Human Resources21
1. Formula Uomo
 An internal initiative launched in 2001
to improve the lives and work of Ferrari
people.
Formula Uomo covers three basic areas:
 Work places and structures
 Professional training and international
growth
 Personal and family benefits
It is designed to stimulate creativity across the
business by offering participation in company
events such as launching of new car models,
VIP seats at various Grand Prix, sports groups,
and discounts with different parties.
2. Ferrari Creative Club
Most popular initiatives that bring together artists, painters, sculptors, musicians and writers to
introduce new skills and encouraging employees to think more creatively.
21
Fisk, P. (2010) Customer Genius

27
Porsche Human Resources Strategy
 New training center at its Stuttgart-Zuffenhausen headquarters22
.
 Expanding the human resources infrastructure.
 Collaborations and culture of innovation.
 Each member represented a step in the design process to value both excellence and
individuality to think creatively and cooperatively.
 Recruitment strategy by hiring another 3,000 new employees in the next few years.
Figure 19.Porsche headquarters in Wolfsburg
22
13,159
15,307
17,502
2010 2011 2012
Number of Employees in the Porsche Group as of 31 December 2012

28
Research and Design Development
New Product Development Centre - Operational level strategy23
Ferrari undergoes and applies various operation strategies such as:
i. Internal growth / expansion strategy
 Under intensification strategy Ferrari undergoes product development policy.
 Under diversification strategy Ferrari follows vertical diversification in terms of
forward integration as it manufactures and sells its cars only via their own car
showroom outlets across numerous nations in different continents.
ii. External growth
In 1997, Ferrari merged with Maserati. This was the only merger that Ferrari had in the
last two decades.
iii. Assembly Line
 Implementing new photovoltaic and trigeneration systems
 Fully self-sufficient in terms of energy production and has reduced its overall CO2
emissions by around 40%.
iv. Ferrari’s involvement of research and development facilities
 NASA with its Facility Building at Cape
Canaveral
 DOE (Department of Energy of the United
States).
 German EnOB.
 Ferrari also invested in sound strategy where its
engine tones are composed by a musician24
. Figure 20.The Fiorano track
23
Ferrari (2012) Annual Report
24
Alderman, Liz (2011)‘Sex on Wheels’? Now It’s ‘Room for Groceries,’ Too

29
Porsche
Research and Development Centre25
 Porsche’s research and development center is located in Weissach.
 The objectives are not just to provide advice and develop mature products but also
using technologies that are designed to improve efficiency without detracting from
performance.
New Product Development
To improve the product development processes and develops new ones, while ensuring a good
rate of return on investment, Porsche is implementing these strategies:
 emerging markets
 fascinating vehicles
 highly motivated staff
Porsche Operational level Strategy
Porsche’s medium term strategy including developing a mid-range model using the classic
Porsche 959 design from the 1980s to compete Ferrari26
and to increase cooperation with its
parent company Volkswagen.Some of the ongoing R&D projects include:
 New design center at the Weissach Development Center
 Modernization of the main production facility in Zuffenhausen.
 The construction of a new manufacturing plant at the existing premises in Leipzig
 Producing the Macan sport utility vehicle in Saxony.
 Using Audi LED technology27
.
25
26
The Local (2011) Porsche wants piece of Ferrari market
27
Callow, Ed (2014) Bentley and Porsche set to use Audi LED technology

30
Environmental Sustainability and Hybrid Technology
Ferrari
 To innovate and develop solutions to produce environmental benefits along with engine
performance28
.
 New photovoltaic system-under manufacturing and enginnering division.
 Installation of a tri-generation plant to cut CO2 emmissions by 25-30% compared to the
present levels.
 Investments of green area at the workplace and factory buildings.
Products and Awards
 Awarded ISO14001 certification and Integrated Environmental Authorisation in 2007.
 Best Performance Engine of the Year”, for the third consecutive year, for Berlinetta.
 ‘Supercar of the Year’ from Top Gear for the 458 Speciale.
Future goals with car models and hybrid
As announced by Fiat CEO in 2012, Fiat planned to launch 6 new Ferrari cars by 2013, one or
two new models annually and add a hybrid by 2015 (Ferrari AR 2012). This plan might have
been contradicted with Ferrari’s strategy on low volume to maintain its exclusivity. To date,
Ferrari has retained four core models 458 Italia, California, 599 Fiorano GTO and 612
Scaglietti. Consequently, Ferrari had launched its first hybrid of using HY-KERS technology
with LaFerrari in 2013, and planning to expand its long term hybrid technology with a revised
612 Scagletti.
28

31
Porsche
Long term strategy for future hybrid
 Porsche Principle Cayenne S Hybrid.
 Porsche Panamera SE-Hybrid
 911 GT3 R
 918 Spyder.
Figure 21.Hybrid technology that aligned with Volkswagen’s strategy 2010-2013
Innovative concept product
Figure 22. 919 Spyder super sports car that entices with the performance
and efficiency of its plug-in hybrid drive.

32
Design in Education
Ferrari
Collaboration with academic institutions
 Ferrari World Design Contest29
in 2010-2011 for design students of universities and
schools from around the world.
Ferrari Millechili30
 Collaboration on ‘Mille Chilli’ Laboratory with the Engineering Department at
University of Modena and Reggio Emilia, Italy which is related to the research and
development projects of new models, weight reduction and less fuel consumption and
reduced emissions.
 Ferrari finances six scholarships in the area of research by young
graduates/undergraduates in Engineering, Physics, Architecture and Human Studies at
Italian and international universities to increase the value of creativity and competence.
Figure 23. Collaboration on ‘Mille Chilli’ Laboratory with the Engineering Department at
University of Modena and Reggio Emilia, Italy
29
Designboom (2011) Ferrari World Design Contest
30
Joseph, Noah (2009) Ferrari establishes lightweight research lab at Italian university

33
Porsche
Collaborations with academic and research institutions
 Collaboration with The Institute of Applied Arts and Design – Turin, Italy MSc. in
Transportation Design31
.
 Under the long-standing collaboration between Porsche China and the Sichuan Fine
Arts Institute (SFAI), the Porsche "Empowering the Future" Art Contest32
.
 Five-year partnership with the School of Engineering at Ngee Ann Polytechnic, Porsche
Centre Singapore will provide internship placements for students and industrial
attachment opportunities for staff of Ngee Ann Polytechnic to spend periods of time
working in its offices33
.
31
Car Body Design (2013) IAAD Master 2013-2014: details and scholarships
32
Shanghai Daily (2012) Porsche empowers young talented artists
33
Tam, Joel (2013) Stuttgart Auto Supports Automotive Education In Singapore

34
Finance
Ferrari
Ferrari Financial Services provides car financing to customers in Europe, North America and
Japan through its subsidiaries FFS S.p.A.(Italy), FFS AG (Germany, U.K., Switzerland,
France, Belgium and Austria), FFS Inc. (U.S. and Canada) and FFS KK (Japan)34
.
Ferrari production was down last year, consistent with the 2013 announcement that production
would be maintained below the prior year’s level to preserve brand exclusivity. Since record
sales in 2012 the company’s strategy has been to increase the value of its products by limiting
their numbers.
USA is the largest market for Ferrari, with 1, 800 cars, and is followed by Germany, UK, and
China.
34

35
Porsche
Porsche 2013 Sales35
Fiscal year 2012 was the most successful year in its history of Porsche with sales of 143,096
vehicles, which was 22 percent more than the previous year, sales of euro 13.9 billion, which
represented a 27 percent increase over the previous year.
35
Interbrand (2013)

36
a. Ansoff’s Matrix
Ferrari
Market/Customers
New
Current
Product/Service
Current New
Focus on sustaining
current car models,
products, F1 and
brand extensions in
the niche market
segment.
Continuous R&D
on product
innovation with
environmental
improvements such
as enhancing
current hybrid
engines and safety.
Geographic
expansion and
targeting new
segment e.g. cultural
proximity in
identifying groups
which take Ferrari
heritage/leaders as
their aspirations.
Expansion of
potential
collaboration with
universities e.g.
design engineering
course of Ferrari in
developing design
knowledge.
Market Penetration Product Development
Market Development Diversification

37
Porsche
Product/Service
Market/Customers
NewCurrent
Market Development Diversification
Current New
Market Penetration Product Development
Maintain and
improve product
quality of current
models and develop
new models through
continued innovation
and technological
advancement
R&D and innovation
focusing on fuel
efficiency through
hybrid and electric
vehicles
Increase efforts into
emerging markets
especially China and
Asia Pacific and
expand product line
to match new
customer bases’
preference.
Primary focus back on
niche market segment and
further brand extensions
to challenge competitors-
matured loyal customers
will further appreciate
that the brand name
remains prestigious, and
this strategy will attract
newyoung customers e.g.
billionaires under 35.

38
b. PESTLE
Ferrari and Porsche
In general, Ferrari and Porsche compete in a focused market segment where relatively few
competitors can compete in short and medium term due to their established and successful
luxury brands in automotive industry.
Political / Legal
 Political climate in different countries producing buying automobiles regarding policies
on import, export and manufacture of automobiles and automobile components.
 Policies on allowing setting up of manufacturing plants by foreign companies.
 Stability of governments and future conditions in a country.
 New Corporate Average Fuel Economy (CAFE) regulation that will affect the
automotive industry US market. Under the regulation made by the US Congress, the
National Highway Traffic Safety Administration and the EPA increased the mpg
requirements for all cars in the US through CAFE policy36
.
Economic
 Global economy struggle and recession, unemployment in US and Europe have made
consumers extremely sensitive about car prices.
 Taxation policies.
 Global recession in US and Europe and increase in fuel prices.
Sociological
 Current customers’ demands are high technology features and built in systems, reliable,
comfortable and stylish design.
 Trends, lifestyles and preferences of people that impact their choices of cars.
 Some consumers also consider that the cars should be environment friendly.
36
NHTSA (2014) Corporate Average Fuel Economy

39
Technology
 Continuous R&D on technology and keep up-to-date of the technological change in the
automotive industry because technological shifts can affect costs, quality, and lead to
innovation.
Ecological
 More environmentally conscious population Co2 emissions.
In brief,the key success for every PESTLE strategy is designed to meet objectives and achieve
targets in the industry.
In turbulent times, auto companies must have strategies that are flexible, focused, responsive,
variable and resilient in other areas as well such as brand identity and preserving the brand
while pushing innovation37
.
37
CNBC (2011) Ferrari’s Business Strategy

40
c. Porter’s Five Forces
Ferrari

41
Porsche

42
SWOT Analysis
Ferrari 38
38
Bevolo, M. et al. ( 2011) Premium by Design: How to understand, Design and Market High End Product.
Hoffmann, Jonas; Coste-Manière, Ivan (2012) Luxury Strategy in Action. Basingstoke : Palgrave Macmillan
STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
Strong brand image
in luxury market and
sportracingworld.
Low volumes despite
more demand is
present in the luxury
marketsegment.
Growth in the luxury market for high
performance supercarsdue toeconomic
growthanddevelopingnations.
To keep up with the automotive policies in some
countries on the emission norms of 130g/km of CO2
due to the performance oriented nature of the
enginesbuiltbytheFerrari.
Product combination
of design and
performance.
Losing out to
competitors due to
waitinglistmodels
Expansionofthebrandthroughentering
new market i.e. India where Porsche
havealreadysetupamarketinIndia.
Toughcompetitionfrom Porsche in frugalengineering
andproductinnovations.
Luxury status symbol-
lifestyle.
Growing concern of
fuel efficiency and
emmisions over the
environment.
Expansion of customerbase in entering
hybrid and hatch back market segment
withuserfriendlyengines.
A competing brand like Porsche does not follow the
same low volumes and high on exclusivity which is
practisingbyFerrariandthereforeitcansellalotmore
of its product andcapture alarge portionof theluxury
automotivemarket.
Innovation and
engine technology
are key drivers in
everyproduct.
Extremelyhighpriced. Differentiating its product portfolio to
accommodatevariants.
Porsche is expanding its product range to high
performance SUVs i.e. Porsche's Cayenne hybrid,
whereas Ferrari has not annouced any plan for SUV
range.
FERRARI

43
Porsche39
39
Bevolo, M. et al. (2011) Premium by Design: How to understand, Design and Market High End Products
STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
Best quality for
comparatively low
prices – long-term
reliability for high-
performance cars,
sedans, SUVs and
trucks.
Legal contingencies
andlitigations.
Strong economic support in homeland
Germany.
Alienationofcustomerbase.
Diversification – SUV
(Cayenne), 4-door
sedan(Panamera)
Brandequitydilution Expansion of Volkswagen business in
China.
Competitionintheglobalautomotivemarket.
Customer loyalty –
those who value
innovation and
independence
Lapses in product
quality impacts the
reputation.
Global strategy – same models for the
whole world leads to bigger
internationalmarket.
CAFÉ regulations to be enforced in 2020 will cause
PorschetoloseitsUSmarketshare.
Strategic integration
withVolkswagen.
Limited decision
power due to
acquiring control by
Volkswagen.
Wealth of resources upon joining the
Volkswagen.
Environmentalprotectionregulations.
PORSCHE

44
Summary
Observations and analysis
Design as framework for value
This is an analysis of Ferrari and Porsche brands that play a key role in the automotive world’s
corporate strategies, agendas and actions of present and future direction using design and
innovation, and how design adds value to these prestige brands.
Another way to look at the brands is to assess their level of volume40
versus one another.
Ferrari volumes against Porsche (2013)41
40

45
Ferrari and Porsche fall in all of these segments where design generates brands, and meets
premium and luxury.The four segments of premium and luxury customers are:42
 Experience, which is the reward.
 Exclusivity and fun.
 Status through style.
 Perception of craftsmanship which creates emotions.
Distinctive design characteristics
 There are certain distinctive characteristics such as the matte-metallic feel used in most
Porsche design products, while red is an important element for a Ferrari car.
 Both Ferrari and Porsche are identifiable products through their design and
workmanship and appearance.
41
42
Gofman, Alex, Howard R. Moskowitz, Marco Bevolo, Tõnis Mets (2010) Decoding consumer perceptions of
premium products with rule-developing experimentation

46
Design Engineering Process
a. Breakthrough-engineering orientation43
These brands hold that a winning product is one that is innovative, stylish, commands a
premium price and is able to sell itself.
b. Cultural Creativity orientation
Porsche and Ferrari are product-innovation companies that believe employees need creativity
and risk taking to produce the diversity of concepts and outstanding results.
c. Visionary and entrepreneurial orientation
Visionary, entrepreneurial companies like Ferrari and Porsche strive to change the luxury
automotive market through product innovation as their root source of success.
d. Commodity-marketing orientation
 Product functionality and standards are clear.
 Product styling and branding also become important differentiators for both Ferrari and
Porsche.
e. Creativity is the most important leadership quality
Ferrari and Porsche’s parents namely Fiat and Volkswagen encourage experimentation, plan to
make deeper business model changes to realize their strategies, take more calculated risks and
keep innovating in how they lead and communicate.
f. Embody creative leadership
Fiat and Volkswagen appear to be taking advantage of the ongoing trends such as hybrid
technology, fuel emission,social media and government policies to make changes in their
brands, organizations and governance.
43
IBM (2010) Capitalizing on Complexity : Insights from the Global Chief Executive Officer Study

47
Creative Leadership, Strategic Design Management and Design Driven Innovation
Creative Leadership44
Ferrari and Porsche have embraced the idea of creative leadership by building culture of
creativity and experiment with arts to improvise their car designs.
Strategic Design Management45
Catalyst –applying design management to control a creative process, and to think and plan for
the future.
Evaluator – Design management should be an advocate of new designs in both automotive
brands.
Strategic Implementation – at the end of the project, design management should be able to
transform tested prototypes into final productto align with corporate strategy.
Design Driven Innovation46
Continuous research and development is defined in every step of Fiat and Volkswagen design
management and process by interpreting design concepts, being faithful to the corporate
visions and invested in radical innovations through designto improvise innovation and
technology.
44
IBM (2010) Capitalizing on Complexity : Insights from the Global Chief Executive Officer Study
45
Walton, T. and Lockwood, T. (2008) Building Design Strategy: Using Design to Achieve Key Business Objectives
46
Verganti, R. (2009) Design-driven Innovation
Creative Leadership
•Embrace ambiguity
•Building a culture of
creativity
•Leadership as an
improvisational and
experimental art
Strategic Design
Management
•Catalyst
•Evaluator
•Implementor
Design Driven Innovation
•Interpreting design
concepts
•Faithful to the vision
•Investing in radical
innovations through
design

48
Differentiation strategy
To stay leaders, Ferrari and Porsche need to improve differentiation strategies to take positions
on a scale of value and competitive advantage47
.
Differentiation strategies involve revaluing product, positioning ideas through design-driven
researchwhere the skill, experience and creativity of design team are used to generate designs
which address the identified needs of the clients and the users to create a ‘wow factor’48
, and
approaching suppliers/segments in a creative way, either individually or in combination for
product development.
Both Ferrari and Porsche possess some of the following attributes:
 production efficiency
 focused strategy
 well-respected brands and products
Production efficiency has played a significant role in making Ferrari and Porsche as the two
key players in the automotive world. Ferrari, on brand image communication, stays away from
daily use approach, to differentiate from Porsche49
.
Focused strategy seems to be an essential principle of these two brands.
 Porsche, for example is not able to compete with Ferrari in the car racing sport due to
Ferrari’ brand name and prestige. However, recognizing this limitation, Porsche has
instead focused their efforts on producing reliable, relatively luxury sedans and SUVs.
47
AIC Forum (2013) Differentiation as a strategy for the automotive industry
48
Industrial Design Consultancy Ltd (2014) Concept Generation
49
Bradley, D. et al. (2005) Automotive Industry Analysis
•Idea focus
•Design-driven
research
Positioning
•Concept
generation
Expectations
•Product
development
Mandatory
Elements

49
 Ferrari does not plan to compete with Porsche in the SUV market because of Porsche’s
strong consumers’ loyalty with Volkswagen’s strong image.
There are also clear examples of the effectiveness of identifying and exploiting niche
markets50
:
 Both brands have established by being one of the first luxury brands to develop hybrid
vehicles.
 Ferrari strategy which focuses on producing fewer cars to maintain its exclusivity
responsiveness and consumer needs has proven successful.
 It is necessary that luxury automotive companies produce well-respected brands and
products since automobiles are expensive long-term consumer investments. Brand
loyalty takes time to build, but it can be done as evidenced by the successes of Ferrari
or Porsche luxury brand market.
 Volkswagen’s revenues have steadily increased over recent years and demand for its
vehicles has also been on the rise. It is also focusing on expanding into emerging
markets worldwide. These positive aspects suggest that Porsche is in a good position
for future success.
 Porsche while not as revolutionary or trend-setting as Ferrari, has presented steady,
reliable growth within Volkswagen Group.
 Porsche‘s aligned vision with Volkswagen’s goal of creating the ‘people’s car’ is
thought to be popular.
50
Bradley, D. et al. (2005) Automotive Industry Analysis

50
Recommendations
Recommendations for Ferrari
 Ferrari has to decrease the standard 12 months waiting list to meet growing output
demand, without compromising on quality. Therefore it needs a very responsive and
flexible manufacturing setup, supported by agile business technology and innovation
that could help the company achieve its targets for new production output.
 A separate division has to be set up quickly to handle its growing brand activities
because Ferrari is based on product-oriented luxury brand.
 Ferrari’s chief designer admitted Ferrari’s lack of built in system features, infotainment
technologies, connectivity, and navigation compared to Porsche is intentionally because
they want to focus on engine performance, design and speed which are the key
essentials to the Ferrari brand as it is not designed for daily use51
. Nevertheless, Ferrari
needs to be a fast follower to build their image on existing clients by embracing and to
innovate the latest technology.
51
Horrell, Paul (2013) Ferrari Interview: On SUVs, Suppressing Sales Volume, NA V-12s

51
Recommendations for Porsche
Porsche represents a transformation of its niche strategy, which has a major impact on the
image of the brand52
.
Although Porsche is traditionally associated with the production of sports cars, throughout the
last two decades it has evolved from a single-product company to a broad, market-oriented
sports car manufacturer which targets a larger customer base.
There is brand image dilution in Porsche, given the remarkable business transition in the
framework of many changes in core company values.
Porsche has put its brand heritage at high risk by introducing the four-door Panamera. Success
is believed to come from two main reasons - a strong focus on performance sports cars, and
sole control over its operations. Both these factors are now undergoing transformation, and the
question of whether the company can sustain its image persists.
Porsche needs to maintain its image within a reasonable scope with significant market changes
caused by globalisation and further catalysed by the internationalisation by creating new
market segments, rethinking of marketing and brand extension strategies.
52
Zhechev, V. (2013) The Impact of Brand Extensions on Brand Image Dilution Related to nichemanship

52
Conclusions
There are some common themes that characterise most successful, sustainable manufacturing
in the core design knowledge and capability within luxury automotive businesses that drives
differentiation in the market, and focus on keeping this to world-class standards:
 A strong focus on R&D.
 Focusing on design knowledge, not just products.
 Strong partnerships throughout the value chain, with suppliers, customers, and
competitors.
Be a champion for the business and the industry
Luxury automotive brands increasingly visible role.In recent years the European government
has taken an increasingly visible role in seeking to support automotive manufacturing. At an
Automotive Summit in January 200953
, for example, UK Business Secretary Lord Mandelson
stated that UK needs ‘less financial engineering and more real engineering’.
Awareness on the three major trends that are already reshaping global manufacturing
• The growing importance of investment in intangibles, such as design, branding,innovation
and R&D.
• An increased recognition of the importance of investment in people and skills.
• The move to a low-carbon economy, as climate change creates new risks and opportunities.
53
PricewaterhouseCoopers (2009) The future of UK manufacturing: Reports of its death are greatly exaggerated

53
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on 10.04.2014)
Zhechev, V. (2013)The Impact of Brand Extensions on Brand Image Dilution Related to
Nichemanship: An Example of Porsche in Bulgaria In: International Journal of Professional
Management Volume 8, Issue 6, pp.1-35
List of Illustrations
Figure 1.LaFerrari(hybrid),California,Berlinetta FF, Spider and Italia[Photographs]
At:http://www.autoevolution.com/ferrari/
Figure 2.Current product line.911, Boxter, Cayman, Panamera(hybrid) and Cayenne
(SUV)918 Spyder , Macan (SUV)[Photographs] At:http://www.porsche-mania.com/porsche-
models/
Figure 3(a)-(c).Custom interior in Ferrari car.[Photograph]
At:http://www.designboom.com/design/ferrari-factory-tour-design
Figure 4.Ferrari factory at Maranello[Photograph]
Figure 5.Department layout planning at the design office[Photograph]
Figure 6.Ferrari car models at the design office entrance. [Photograph]
Figure 7.The design process of Ferrari cars in Ferrari’s design office.[Photograph]
Figure 8.Porsche design studio[Photograph] At:http://www.auto-
medienportal.net/artikel/detail/7044
Figure 9.Ferrari store in London.[Photograph]
At:http://www.autoweek.com/article/20130417/CARNEWS01/130419853

60
Figure 10.Some Ferrari merchandise.[Photograph]
At:http://www.celcomgroup.co.za/index_f1%20racing%20retail.html
Figure 11.Collaboration with Vertu smartphones.[Photograph] At:http://www.n-droid.de/vertu-
ti-ferrari-android-4-0-smartphone-fur-11-400-euro-anyone.html
Figure 12(a). Ferrari theme park, Abu Dhabi.[Photograph] At:http://www.prlog.org/11368249-
ferrari-branded-products-ferrari-theme-park-in-abu-dhabi.html
Figure 12(b). Ferrari’s proposed hotel in Barcelona, Spain. [Illustration]
At:http://www.businessinsider.com/ferrari-hotel-barcelona-2014-4
Figure 13.Porsche Design store, Los Angeles.[Photograph] At:http://retail-
mannequindisplay.blogspot.co.uk/2012/07/porsche-design_26.html#!/2012/07/porsche-
design_26.html
Figure 14. Porsche Pavilion in Wolfsburg, Germany. [Photograph]
At:http://www.autoblog.com/2012/06/17/porsche-gets-its-own-pavilion-at-autostadt/
Figure 15.Porsche Travel Club.[Photographs] At:
http://www.porsche.com/international/motorsportandevents/travelclub/tours/provence/
Figure 16(a) and (b).Porsche Museum. [Photograph]
At:http://press.porsche.com/news/release.php?id=460
Figure 17.Porsche's engineered built in system. [Photograph]
At:http://www.cardekho.com/interior-pictures/porsche-911/steerio-57.htm
Figure 18. Porsche's limited edition Blackberry. [Photograph]
At:http://allyoucanlove.com/2012/01/backberry-back-with-porsche-designed-p9981/
Figure 19.Porsche headquarters in Wolfsburg. [Photograph]
At:http://teamspeed.com/forums/porsches-past-general-porsche-news/72388-porsche-fefi-
coming-late-2015-a.html
Figure 20.The Fiorano track. [Photograph] At:http://www.designboom.com/design/ferrari-
factory-tour-design
Figure 21.Hybrid technology that aligned with Volkswagen’s strategy 2010-
2013.[Photographs]
At:http://www.volkswagenag.com/content/vwcorp/info_center/en/talks_and_presentations/201
4/03/JPK_1.bin.html/binarystorageitem/file2/02+Rede+Prof.+Winterkorn+englisch.pdf

61
Figure 22. 919 Spyder super sports car that entices with the performance
and efficiency of its plug-in hybrid drive.[Photograph] At:http://www.hybridcars.com/porsche-
919-hybrid-race-car-unveiled-in-geneva/
Figure 23.Collaboration on ‘Mille Chilli’ Laboratory with the Engineering Department at
University of Modena and Reggio Emilia, Italy.[Photograph]
At:http://www.autoblog.com/2009/02/19/a-balanced-education-ferrari-dedicates-mille-chili-
lab-at-loc/

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