Ducati Case Study
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Ducati became one of the most profitable motorcycle companies in the world despite their relatively small scale with an increase in market share from 3.9% to 6.7% and a quintupled EBITDA.
In the context of the value creation, value delivery and value capture framework, how has Minoli repositioned Ducati? Give a concise statement of his strategy and the core elements.T
The core elements of Ducatis strategy are comprised of the following elements.
Value creation through focused differentiation within its Sports bike niche allowing for higher premiums
Premium brand positioning allowing for a higher premium on motor cycles
Value chain efficiency through adoption of a platform production approach, higher outsourcing, supplier consolidation and increased quality control
Higher responsiveness to target audience through community marketing, expansion into lifestyle products and presence at racing events
Adoption of the Internet as a vehicle to grow brand awareness and direct channel sales
Using the Ducati stores to control end customer interaction and post sales service
A high performance attractive class of motor bikes, with high quality and proven pedigree is how Ducati delivers value to its customers. The Hambrick-Frederickson model shown below illustrates the core elements of Ducatis strategy as it repositioned to align itself to its strengths as a high performance sports motor cycle maker.
Arena (Where will we be active?): Since Ducati had a 4% market share in the sports category (a category where they had strong brand recognition, a proud legacy, excellent design and R&D skills), it made sense to increase their foot print in this market. Since they sold around 50% of their vehicles in Italy and Europe combined, it made sense to appeal to the same target audience in US and Japan (both of them are developed receptive markets for Ducati to enter into)
Vehicles (How will we get there?): The primary vehicles that Minoli used were the strong design and R&D skills within the company, Ducatis legacy as a maker of high performance vehicles, introducing community marketing through the Ducati world experience, presence in various sports meets, the museum and the Internet (to some extent). By moving away from multi-franchise outlets and focusing on Ducati owned stores, they used a high touch customer experience to improve their customer acquisition and post sales experience.
Differentiators (Winning in the market place): It is safe to say that Minoli leveraged the companys core strengths as differentiators, and did a good job of shining the light on those strengths to prospects and customers alike.
Staging (Speed and Sequencing): In 1996, their core constituency had concerns about reliability, and the first thing he did was shore up that front. Later it made sense to grow market share within Europe and expand to the US and Japan, use the internet for special promotions (very successfully) and growing the market size by adding new models that their core audience was interested in.
Economic Logic (How will we obtain our returns?): This is an area where we see Minoli bringing his turn around skills into play. By increasing quality, and building up the Ducati legend, Ducati was able to grow their market share. Minoli also brought in cost structure improvements through adoption of