So, what does the latest flagship vehicle from Ferrari, the $3.7 million F80, have in common with a $60,000 limited-edition Birkin, a designer handbag from Hermès? Though autos and purses are very different categories, luxury positioning works for both based on a few principles. The methods used by these brands to entice their customers to commit to big dollar purchases are strikingly similar.
How do they do it?
Exceptional quality: Luxury positioning cannot exist without a reasonable claim of superiority. Ferrari’s new vehicle is a hybrid, offering nearly 1200 horsepower, significantly higher than the latest supercars from important rivals like McLaren and Porsche. The F80 incorporates technology coming straight from its highly successful F1 racing team. Hermès products are made by hand with careful attention to stitching and design. Buyers claim that the products are more like pieces of art than simple utilitarian goods. Its retail stores offer private shopping sessions with personal consultations to ensure customer needs are met.
Exclusivity and scarcity: Both brands use a constrained supply to their advantage. The Ferrari F80 will have a production run of just 799 vehicles. Even before the vehicles are available later this year, all have been sold. Hermès makes its bags by hand, where artisan production might be 15 units per month. These handbags may be constructed of rare materials like ostrich and crocodile. Though the number produced for a limited-edition product is kept secret, it is low enough to create scarcity. The brand limits purchasing of the bags to two per year per customer. A very high price further develops exclusivity for both brands, which provides emotional benefits for customers that shop for status and identity.
Insider game: But maybe what sets these ultra-luxury makers apart is their ability to cultivate an in-group mentality among purchasers. These brands demand more from customers in return for granting access to purchase their most exclusive offerings. Yes, that’s right. Even if you have the money to spend, you cannot just drop by the Ferrari dealership or the Hermès shop to purchase what you want. Ferrari has promised all of the new F80s to its most loyal customers, with centralized decision-making about who gets them. Those selected often own multiple Ferraris and have made a previous Ferrari purchase in the last three years. The company tracks customer participation in events and encourages them to bring friends, all of it adding to their likelihood of being invited to acquire this new car. A new customer cannot just pick up a Birkin on a whim either. Typically, she is required to build up a relationship with the brand over a number of purchases. Even then she may end up on a year-long wait list, hoping to be personally invited by a Hermès salesperson to buy the desired bag. For both brands, simply being offered the opportunity to buy can feel like recognition and success.
These tactics work quite well for a company like Ferrari. Though it sells fewer than 14,000 vehicles a year, the automaker is valued at $90 billion. By comparison, Volkswagen sells 9 million cars annually and is worth less than half that. Ferrari’s CEO Benedetto Vigna understands the critical nature of luxury to his business, saying in a recent interview, “We are not—we are not—an automotive company. We are a luxury company that is also doing cars.”
Activities:
- Ask students: Do you aspire to purchase a luxury product like the Ferrari F80? Why or why not? What are the qualities you might ascribe to the typical buyer?
- Have students visit the Ferrari website: https://www.ferrari.com/en-US/. How successful is the website in terms of appealing to its typical buyer? A buyer of the F80?
- Ask students to form small groups and come up with a product that could be developed into an ultra-luxury offering (even if it is not positioned that way right now). Briefly describe the marketing mix that might work to appeal to this type of customer. How would the customer demonstrate their relationship or loyalty so that they were invited to buy?
Sources: Wilmot, Stephen, The Wild Economics Behind Ferrari’s Domination of the Luxury Car Market, Wall Street Journal, February 20, 2025; How Hermès Delivers a Luxury Customer Experience (CX) with Exclusivity and Personalized Services, renascence.io, September 7, 2024.
