Margaret DeWitt Ducati Turnaround The turnaround success of Ducati was the direct result of Federico Minoli’s implementation of a differentiation strategy. As a company that was heading towards bankruptcy, Ducati was saved and revamped by Minoli’s specific vision for the company that were precisely presented in an extremely realistic manner. These goals for the company included double-digit growth for Ducati and equaling Harley-Davidson’s profit level. After reading the success of this turnaround, one point that I found very interesting and contributed to the company’s success is Minoli’s staffing method for Ducati.
Not only did he strive to acquire intelligent and qualified workers, but also he emphasized passion and creativity in the workplace. The article refers to this “structured chaos” as the primary source of creativity. Another unique staffing method using by Minoli was that none of the new staff had previous experience in the motorcycle industry. According to Minoli, even though they had no previous experience they were still capable of becoming passionate about this company and its products and would therefore be a successful management team.
It is apparent Minoli views everyone involved in the production of Ducati’s products as a key success factor in its turnaround. In choosing the right strategy for Ducati, Minoli debated between standardizing the engine, which would result in better efficiency, or to remain true to what the motorcycle represented. He wanted the brand name to appeal not only to extreme motorcycle riders but also so other segments of buyers. By implementing a differentiation strategy, Minoli was able to position Ducati in a way that showcased its uniqueness as a motorcycle.
It was also a way to separate it from other motorcycle companies such as Harley-Davidson and Honda. The specific features of their product are so unique to the brand name that it would be difficult and expensive for competitors to try to mimic. The company has moved from a “product-centered” company, as many of its competitors are categorized as, to an “experience-centered” company. It is not only focused on producing and selling motorcycles, but also focused on selling the lifestyle benefits of owning a Ducati motorcycle and being part of the Ducati organization.
This was a smart move on behalf of Ducati for two main reasons: to increase sales due to product uniqueness and the building of customer loyalty through repeat customers. As customers buy into a lifestyle, they are more likely to continue to purchase that product. Two of the factors that Ducati possess that contributes to its differentiation from other companies are its top engineering team and increased investment in research and development.
As a result of the company ‘s product development and research and development sectors become more open structures, there have been tremendous cost savings and quicker product launches. Also, as technology is a growing asset to the motorcycle industry, Ducati’s success can be a direct result of the expertise taken from their racing division. Another attribute that supports the differentiation strategy of Ducati motorcycles is the creation of the “World of Ducati” in addition to “Ducati Stores”.
Through the several activities including racing, advertising in specialized magazines, the Ducati museum, Ducati owners clubs, and Ducati special events, the company successfully built an atmosphere unique to Ducati that customers can buy into. This not only creates brand loyalty for the product but also gives the owners of Ducati motorcycles the feeling that they have something special or unique that cannot be purchased elsewhere. By using the differentiation strategy to position itself as “the sport bike company”, Ducati, in my opinion, will be able to sustain its position in the market.
By strictly competing in the sport bike segment of the market, Ducati makes it difficult for threats by all other competition. Even though companies such as Honda and Harley- Davidson also produce motorcycles, they are not specialized in sport bikes and do not sell “the lifestyle” of having their particular product. I think by sticking to one specialty, Ducati has more power over its customers than all other competing companies. This does not however eliminate rivalries between companies altogether.
Even though Ducati may have the advantage of differentiation, this particular industry is continuing to grow and with that comes more competition for customers. I think that one tradeoff that Ducati has to face is staying focused on the sport bike segment rather than branching off into other segments of the market. Even though branching into other product lines may be beneficial in the short-term aspect, I think that by sticking to what they have already successfully built and expanding their current market segment will eventually lead to higher long-term profitability.
They could possibly achieve this by expanding distribution. Ducati can offer its product and all of the benefits that come with purchasing one in more locations. The only thing Ducati should be careful of is that they do not over-expand. They want to make their product more available for new customers but not in a way that makes the lifestyle of owning a Ducati as “normal” as owning maybe a Harley-Davidson. They need to make sure they still have the advantage of having that differentiation factor that sets them apart from the competition.
Overall, Minoli’s implementation of the differentiation strategy was critical to the turnaround of Ducati. By focusing in on what they are good at and building a brand upon those elements, this company was able to go from almost bankruptcy to an extremely profitable company in the sports bike industry. Also, by distinguishing itself from just a motorcycle company to an “experienced-centered” company that offers customers a particular lifestyle and the chance to be part of a community also plays a role in the success of its turnaround.
This important element brought in new customers and increased the likelihood of repeat customers. Even though competition in the motorcycle industry is tough and continues to get even more competitive, Ducati will continue to set itself apart from the rest with it’s ability to sell not only a sports bike but a product lifestyle as well. I think that if Ducati continues to successfully use its resources in the future, they will sustain their share in the market and have the opportunity to even expand it.
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