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Ducati considers whether it should expand into the lifestyle cruiser motorcycle segment currently dominated by Harley-Davidson to pursue future growth. Ducati has achieved success through a differentiation strategy, offering distinctive high-performance motorcycles. It focuses on specific customer segments and emphasizes lifestyle, exclusivity, and image through its product design, racing activities, specialized stores, and ties to luxury brands. To sustain its advantage, Ducati must balance further differentiating its intangible attributes to increase prices while retaining tangible product distinctiveness and reducing costs without impacting customer willingness to pay. Expanding into new segments risks diluting its current strong position.
Ducati considers whether it should expand into the lifestyle cruiser motorcycle segment currently dominated by Harley-Davidson to pursue future growth. Ducati has achieved success through a differentiation strategy, offering distinctive high-performance motorcycles. It focuses on specific customer segments and emphasizes lifestyle, exclusivity, and image through its product design, racing activities, specialized stores, and ties to luxury brands. To sustain its advantage, Ducati must balance further differentiating its intangible attributes to increase prices while retaining tangible product distinctiveness and reducing costs without impacting customer willingness to pay. Expanding into new segments risks diluting its current strong position.
Ducati considers whether it should expand into the lifestyle cruiser motorcycle segment currently dominated by Harley-Davidson to pursue future growth. Ducati has achieved success through a differentiation strategy, offering distinctive high-performance motorcycles. It focuses on specific customer segments and emphasizes lifestyle, exclusivity, and image through its product design, racing activities, specialized stores, and ties to luxury brands. To sustain its advantage, Ducati must balance further differentiating its intangible attributes to increase prices while retaining tangible product distinctiveness and reducing costs without impacting customer willingness to pay. Expanding into new segments risks diluting its current strong position.
Should Ducati enter Harleys Segment (Lifestyle Cruiser segment) to seek future growth? YES NO Competitive Position: Main Options Low-Cost Leadership Differentiation Source of Competitive Advantage Based on Cost Leadership Based on Distinctiveness Target Market Industry wide (Broad) Specific Niche or Segment (Narrow) Cost Leadership Focused Differentiation The Basis of Differentiation
Sources of Differentiation Tangible Dimensions (Observable aspects) Intangible Dimensions (Motivational aspects) - Physical attributes of the product (size, color) - Product technology - Product performance - Desire for status by customers - Desire for exclusivity - Desire of individuality, etc.
The Basis of Ducatis Differentiation
A Distinctive Product
- Distribution system -L-twin engine -Tubular frame -Italian styling -Unique sound Tie-Ups With other Luxury Brands Specialized Advertising Ducati Mono- Franchise Stores Racing Events Ducati Clubs World Ducati Weekend Ducati Museum Ducatis Business System and Competitive Position
- higher R&D spend -Design center -Ext. R&D partners Design/Dev - Supplier rationalization - Emilia district suppliers - Operations - Spl. Advt - Unique Ducati Stores -Luxury Brand Tie-Ups Sales/Marketing - GP Racing - Ducati Clubs - Company Day - Ducati Museum - Apparel Support Activities Distinctive/Consistent Activities across the Business System Differentiation Advantage Higher Costs Focus on Select Customers - Performance Sports segment - Emphasis on lifestyle, exclusivity, image Higher Prices? Reasonable Profits The Evolution of Ducatis Competitive Position
Performance Comfort Function Lifestyle Harley BMW Japanese Ducatis Original Position Ducatis New Position The Main Logic of Ducatis Strategy
Further differentiate the product by highlighting the intangible attributes associated with it (This will increase customers willingness to pay) Retain distinctiveness of the product In terms of its tangible/physical attributes (To retain customers existing willingness to pay)c Take certain actions to reduce some of the costs of the product without affecting customers willingness to pay for the physical product + + Sustainability of Ducatis Success
Sustainability of Ducatis Success Can it sustain Competitive advantage by protecting itself from competitive imitation in its current segment? Can it achieve future Growth in current segment Or by expanding Into new segments? (e.g. the cruiser segment)
Differentiation Strategy: Some Challenges
It may require constant upgrading of the product (to prevent imitation)
Differentiation may limit a companys ability to fully enjoy benefits associated with economies of scale or size.
Is the size of its target market large enough to support higher costs of differentiation?
It can limit future growth opportunities Growth limited by size of the target segment? Attempts to enter new segments may blur/dilute current position Southwest and Ducati Differences and Similarities Whats the Difference?
The two companies chose very different strategies and/or competitive positions to gain advantage in their respective industries.
Given their different strategies, they face different challenges going ahead
Whats the Similarity?
They both configured a system of distinctive activities across their entire business system (value chain)
They both configured their business system in a way what was consistent with their chosen competitive position.