Case Ducati
What is Ducati’s business scope?
Geographic
Europe(Italy), USA
Customer
Young people (-30), male (90%)
Product
Sport motorcycles (niche market)
Higher segment: more expensive
Experience
o Racing track
o People don’t buy a motorcycle; they buy an experience (‘Italian racing family’)
intangible is important as well
High performance, quality & very functional
The scope is consistent, which is important:
In Asia motorcycle is primary way of transport, whereas in US and EU it’s a secondary way: go driving
in the weekend with friends. So, they mostly target US and EU as usage situation is similar.
How does Ducati create value(Minoli)?
Strategic decisions should always create value
Willingness to pay
Tangible
o New products
o Smaller time-to-market
o Lots of R&D (to keep up with racing)
Intangible
o Museum
→ They need to balance tangible & intangible
Costs
Outsourcing
o So you can focus on your core business
o Yet it still has to be an Italian motor cycle (don’t lose its heritage)
o Economies of scale
o Higher quality
Because you don’t have to remake mistakes, avoid inefficiencies
Affects the willingness to pay
How does Ducati capture value?
Apparel & accessories/Merchandising
Customization of your motor: nieuwe uitlaat van 3-6K
Owned by private equity, in 5 years time they sell so they want to do an IPO to create more
enterprise value (general strategy of private equity). 3 levers of EV: margin, resource utilization
and growth. Ducati focuses on the last two.
ROIC is combination of margin and resource utilization.
Price changes “(WTP-P) -> clients and (P-costs)-> value to Ducati”
If P↘, the value is captured by the customers, and if P↗ by Ducati
Premium price stays +- the same (consistent)
o Becomes a lot more attractive for customers as more value to the C (no Ducati clients
buy one, q↗) and we spread (P-costs) over a larger q.
o Ducati is capturing more value because there are more units sold
1
What is Ducati’s business scope?
Geographic
Europe(Italy), USA
Customer
Young people (-30), male (90%)
Product
Sport motorcycles (niche market)
Higher segment: more expensive
Experience
o Racing track
o People don’t buy a motorcycle; they buy an experience (‘Italian racing family’)
intangible is important as well
High performance, quality & very functional
The scope is consistent, which is important:
In Asia motorcycle is primary way of transport, whereas in US and EU it’s a secondary way: go driving
in the weekend with friends. So, they mostly target US and EU as usage situation is similar.
How does Ducati create value(Minoli)?
Strategic decisions should always create value
Willingness to pay
Tangible
o New products
o Smaller time-to-market
o Lots of R&D (to keep up with racing)
Intangible
o Museum
→ They need to balance tangible & intangible
Costs
Outsourcing
o So you can focus on your core business
o Yet it still has to be an Italian motor cycle (don’t lose its heritage)
o Economies of scale
o Higher quality
Because you don’t have to remake mistakes, avoid inefficiencies
Affects the willingness to pay
How does Ducati capture value?
Apparel & accessories/Merchandising
Customization of your motor: nieuwe uitlaat van 3-6K
Owned by private equity, in 5 years time they sell so they want to do an IPO to create more
enterprise value (general strategy of private equity). 3 levers of EV: margin, resource utilization
and growth. Ducati focuses on the last two.
ROIC is combination of margin and resource utilization.
Price changes “(WTP-P) -> clients and (P-costs)-> value to Ducati”
If P↘, the value is captured by the customers, and if P↗ by Ducati
Premium price stays +- the same (consistent)
o Becomes a lot more attractive for customers as more value to the C (no Ducati clients
buy one, q↗) and we spread (P-costs) over a larger q.
o Ducati is capturing more value because there are more units sold
1
