In a crowded, competitive world where time is an ever-scarcer resource, people desire filters that can help them quickly identify high-value collaborators. By creating belief networks that connect their brands to certain characteristics, luxury goods companies provide consumers with valuable filtering tools. Ferrari has created one of the most robust luxury goods belief networks ever. Through savvy marketing, impressive craftsmanship, and a storied heritage, Ferrari has cultivated a brand that many consumers believe stands for the epitome of wealth, speed, artistry, and status. The strength of this brand is evidenced by both its size and scope. The Ferrari brand is globally recognized and, in fact, is almost akin to a global luxury language. Moreover, the company has a storied heritage connected to racing excellence, celebrities, royalty, and centers of culture going back to its founding in Italy in 1947. This heritage aspect is particularly important since new brands can’t go back in time and create a heritage, putting them at a huge disadvantage versus incumbents such as Ferrari. As a result of its strength as a people filter, we believe Ferrari is likely to grow both its volume and pricing over time, particularly as billions more people are added to the global middle class and the value of the brand’s belief network likely grows even stronger. In fact, we believe its pricing outlook is among the most favorable in our whole portfolio. Even if an engineering team from Ferrari left the company and manufactured an identical car under a different brand, it would sell at a fraction of the price because it would not be part of Ferrari’s global belief network. Furthermore, because the Ferrari brand serves as a signal of wealth, culture, and status, and this signal is only reliable if it is costly to send, Ferrari has to raise its prices as wealth increases in order to maintain the brand’s value proposition.
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