DUCATI:TAKING ON THE

CHALLENGE
ATONU BHATTACHARYA-15PGHR10
JYOTI AGRAWAL-15PGHR03
AMANDEEP SINGH-15PGHR07
ISHITA GUPTA-15PGHR21
ABDUL BASIT KIRMANI-15PGHR02

The global Motorcycle Industry

Included motorcycles, scooters, mopeds and three-wheelers

Global motorcycle market - $48.3 billion as of 2004

Global motorcycle sales 28.2 million as of 2004

Ducati relevant market 642,000 units

Asia Pacific leading region 56.1% global markets value

Motorcycle categories

Touring

Cruisers

Sports Bike

Off-Road

Ducati : A Timeline

Started in 1926 in Bologna Italy

Began as a electronic radio components manufacturer

1946, post World War- Il Cucciolo: An attachable auxiliary motor

1954, Desmo valve distribution system for higher RPM

Subject of short movie The Italian Machine

1960s, supply to US Police forces

1980s, diversified into mechanical products like diesel enginesx

1983, Acquired by Cagiva Group

1990s, Monster and 916 launched

916- Awarded Motorcycle of the century

1996,on the brink of Bankruptcy

Texas Pacific Group controlling shareholder (72%)

As Ducati serves a niche motorcycle segment,

its market share is only ~1% by US Dollars

Honda; 18%

Other; 42%

Yamaha; 10%

Harley-Davidson; 10%

Kawasaki; 10%
Suzuki; 7%

Ducati; 1%
BMW; 3%

As of 2004

Ducati Sales by volume constitutes ~1% of its relevant

market

3% 2% 1% 1% 1%
25%
4%
9%
14%
20%
19%

Suzuki
Honda
Yamaha
Kawasaki
BMW
Ducati
Triumph
Buell
Aprilia
KTM
MV Agusta

Ducati saw a turnaround between

1996-2001 and doubled its revenues

1996 Federico Minoli Ducatis CEO

Top tier management, creativity, teamwork

3 top-notch attributes: Unique and differentiated product, highly skilled

engineers, brand with high loyalty

Two goals

Double digit revenue growth

EBITDA ratio comparable to Harley-Davidsons of 20%

Brand Ducati Ducati museum, apparel, accessories

Boosted R&D

Reinforcing loyalty with the loyal Ducatisti

Reduced Time to market

Expanded offerings within each family of products

Target older crowd

By 2001, outsourced 90% production

The Next Era: Ducatis financial

performance stagnated between 2002-2005

Drop in motorcycle volumes, revenues (by 13.1%)

Released the Multistrada to strong sales response

Experienced increased accessory sales and improvements in

production efficiencies

Accessories & apparels sales drop

Weakening of U.S. dollar against Euro

Product discontinuity

Trouble with customer acquisition model

999 replaced 998, style issue with new version

Threats to entry-level models from Japanese competitors

Halved U.S. volumes local mismanagement, disruption

Decline in sales by 39% from 2000 2003

Since 2000s, Ducatis revenues and Incomes have

been declining indicating a financial stagnation
500

400

300

200

100

-100

1997

1998

1999

2000

Revenues

2001

2002

EBITDA

EBIT

2003

Net Income

2004

2005

As of 2006, Ducati positions itself as

a Sports bike

Products

Sport segment across six families

Desmodromic valve control system

L-twin design lighter weight

Low-hum engine sound

Rigidity, speed enhancement, compact design frames

Italian styling

New Product Development

Invested ~26.5 million in R&D

Design and engineering for new models

Racing bikes for Grand Prix and World Superbike Championship

Feedback mechanism for initial design and style

Minoli wanted to get Ducati back on a

path of sustainable growth

Accessories & Spare parts

2005 Euro 29 million accessories sold

2004 : outsourced spare parts logistics/storage reduce cost

Accessories twice as profitable as motorcycles

Apparel

Collaborations with popular brands

2002-2005: Business decline, Growth in apparel sales

Website Ducati.com

Complete model specifications, virtual tour of HQ

2005: 10 million unique visitors

Sold 3,000 custom made bikes online alone

Surveys on new products, user satisfaction

Ducati has been involved in aggressive

tribal marketing

World of Ducati

Tribal advertising

Support enthusiasts clubs, brand name

Hosted events World Ducati Weekend

Ducatis museum and factory tours creating fans

Formal motorcycle training sessions

Touring events, races

Associations with Ducati brand art, design, luxury shows,

fashion

Celebrity endorsements

Marketing Mix : The 4 Ps

SWOT Analysis of Ducati

Strengths:

Weakness:

Superior Engineering
Quality products
Brand Loyalty
Innovation
R&D Capabilities
Heavy Outsourcing

High Production Costs

No presence in Asia-Pacific
Reluctance to improvise as
per demand
Limited distribution system

Opportunities:

Threats:

Expansion in apparel sales

Diversification of Product
range
Cost reduction
More global sourcing
Tap Asia-Pacific market

Threats from low cost

substitutes
Threat from new bike
makers
Over-dependence on
European market

Porters 5 force analysis of Ducati

Recommendations for the future

Remain niche producer Sports segment

Focus on gradual return to profitable growth

Collaborate with other brand for different segments

More global sourcing to cut costs

Better penetration into targeted market through advertising

Improved distribution network

Prime focus on European market

Introduce lower range bikes to Tap the huge Asian market

Target US markets by banding European brands together

Thank You