Ducati Case Analysis

Topics: Marketing, Motorcycle, Harley-Davidson Pages: 13 (3754 words) Published: July 19, 2014

Ducati Case Analysis

Table of Contents
Executive Summary2
Evaluation of Global Motorcycle Industry3
Ducati’s Current Strategy4
Recommendations and Specific Actions7
Major Internal and External Risks9
Exhibit 1: Porter’s Five Forces Diagram11
Exhibit 2: Strategy Diamond Analysis12
Exhibit 3: Projected Sales13

Executive Summary
As of year 2000, global motorcycle market is dominated by a handful of players. Japanese manufacturers such as Honda, Yamaha, and Kawasaki are low cost players while Harley and Ducati are in the high end of the spectrum and have been able to successfully establish themselves as a premium brand. Harley dominates the cruiser motorbike segment and is a really strong player in the US, where it has a big fan following and loyal customer base. However Ducati has been struggling to increase market share and reach to Harley’s level of profit margin that is highest in industry. Ducati is self discovering itself with Minoli to target right customer segments, retaining its core competencies and establishing its brand image for which Ducati stands for. Minoli’s consideration of entering into Harley’s niche market of cruisers is an excellent choice for Ducati’s future growth, as it reinforces the premium flagship of products that Ducati is famous for. We recommend Ducati develop a “sports-cruiser” motorbike that offers the riding style and comfort of a cruiser such as Harley Davidson, and yet be fast and nimble. We also recommend offering customization capabilities through Ducati.com and company-owned stores as well as single franchise stores that would continue to offer the same legacy and brand association that Ducati loyalists prefer. The motorbike will be priced at E12,000 (USD 16,200) which is right in the range of Harley’s custom cruiser motorbikes and will take a step away from Ducati’s current line of sports bikes. This move may seem a bit risky at first, but the fact that Ducati’s R&D expenses will be fairly low due to availability of high quality engines and large supplier pool; this will not require significant new investment to the current setup. Additionally, the company will be able to entice new customers in a niche segment with high margins and get a significant opportunity for gaining market share. Also, Introduction of these motorbikes in Europe initially will also reduce the possibility of a backlash from Harley who is the leader in the US market. Ducati can then expand to US once they have acquired some sales momentum. Ducati does not expect retaliation from the low-cost Japanese players as it is still positioning itself as a premium manufacturer. However, there is still possibility of new entrants or Japanese makers to introduce a knock-off model in which case Ducati will be able to distinguish itself on attributes including high performance, customization, brand image and the prestige that it has historically enjoyed and is respected for in the industry as well as the global market.

Evaluation of Global Motorcycle Industry
Honda, Yamaha, Suzuki, Kawasaki and few of high end premium manufactures that include BMW, Harley-Davidson, Triumph and Ducati comprised the Global motorcycle Industry. These manufacturers compete in different market segments and select demographics based on different attributes and styles of motorcycles across the product offerings. Our analysis of the industry is summarized using Porter’s Five Forces analysis (Exhibit 1) Suppliers: Recent trends in the motorcycle manufacturing have been leaning towards outsourcing of most motorcycle components and the companies doing the final assembly in-house. Most manufacturers have multiple choices of component suppliers that they may switch at will. This strategy provides them with high negotiation power, reduced fixed assets, and greater flexibility to meet changing market conditions quickly. However, the companies need strong...
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