Ducati Case Study

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- Brand loyalty build by extensive marketing activities like defeating the Japanese in superbike championship (purchase factor 27%)

- Outsourcing of components and standardization of products which led to high quality and reliability

- Technical superiority achieved by top notch engineers and strong R&D (Ducati motorcycles had longer lifespan than typical competitors’ machines) (Exhibit 4)

Ducati has extreme product differentiation due to above value chain activities. Their market share increased from the year 1996 to 2000 (Exhibit 2). Their revenue also rose and were the highest in 2001(Exhibit 1). The strategy that I would follow is to capitalize and maintain the current strengths and explore activities in other market segments like cruiser or off – road. Also focus on a different customer demography, for e.g, focus on potential market segment of female riders. To increase presence in US and Europe Ducati should focus on entering off road market as cruiser’s market is highly dominated by Harley Davidson. They should also conduct extensive research to enter female market and explore the opportunities. They should leverage internet and invest in data analytics in order to understand their needs and psychology. They should also continue to realize increase in revenue through apparel and accessories business. All these activities will in turn lead to increase in Ducati’s brand presence globally. Apart from this development it is necessary for Ducati to maintain its current value chain by continuing to invest in R&D and by focusing on growth in current sports market. They should also continue to offer high quality product in order to maintain an upper hand over the Japanese competitors. Ducati is capable of achieving dual advantage through product differentiation that is maintaining premium prices and reducing the production cost by outsourcing and rigorous technological development.

Plan in a nutshell:

- Conduct market research to understand competitor’s competencies and entry barriers

- Conduct demographic research of consumers in off road market

- Allocate resources in R&D, establish supplier networks and standardize parts for new off road motorcycles

- Build brand and generate product awareness by organizing off road events, museums, Ducati clubs etc

- Heavily advertise the product by designing an influential ad-campaign

- Evaluate the execution and compare the estimates with actual turnover, financially

- Implement change in processes or quality control systems

This strategy is most suitable for Ducati as it capitalizes on Ducati’s current brand image and establishes its operation in two market segments. It also diversifies the product portfolio without facing competition from Harley Davidson.

Appendices:

Exhibit 1: Increase in Ducati’s total revenue

[pic 1]

Exhibit 2: Increase in Ducati’s market share

[pic 2]

Exhibit 3: Product Standardization in 1988

Crank Cases

Cylinder Heads

Engines

Models

Segment/Families

Ducati

2

3

7

15

4

Harley-Davidson

3

3

5

21

4

BMW

5

5

7

15

4

Honda

12

12

20

26

6

Exhibit 4: Cost Structure (% of total revenues)

Ducati 2000

Ducati 1996

Harley-Davidson

1. Motorcycles Material

43.4

55.8

45.0

2. R&Dc

1.1

0.1

2.0

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