Executive summary

Bugatti is a luxury car manufacturer founded by an Italian designer Etorre Bugatti (Bradley 1948). The company is renowned worldwide for its unique design coupled by the high level of engineering incorporated in the production process. Bugatti has experienced great success over the years due to the laser sharp attention it places in the development of unique fast cars that are designed by some of the best engineers around the world (Bradley 1948).  This explains the company’s racing success during the early and mid 1900s.

Introduction

Bugatti is among the few high-end car automakers with distinctive brand comprising a blend of advanced engineering and unique artistry. The company brand derives inspiration from architectural design and unique sculptures. Bugatti produces between 30-40 cars a year and are specially designed to meet the needs of its clientele that mostly comprises of affluent individuals with unique taste and preferences (Annual Report 2017). Over the years, the company has strived to ensure that it develops some of the best supercars with a blend of unique artistry and advanced motorsport technology. It is within this context that the paper will explore the company brand management in detail. Recommendations and proposals will also be provided that will help the company improve its brand further.

Figure 1: Bugatti veyron Grand sport

Brand analysis

Brand identity

Each year, Bugatti strives to build its brand to differentiate itself from its competitors by intergrating upcoming motorsport technology and unique architectural designs. To achieve this, it recruits some of the best engineers and designers from across the world.  Despite the fact that Bugatti is currently  owned by a renowned  German automaker, the company has managed to maintains its original ethos- a brand that majorly focuses on the enhanced motorsport  technology and  unique artistry.  Bugatti Chiron is the most recent model and is considered as the among the most powerful supercar surpassing its predecessor model Bugatti Veyron.  Based on a recent report, Bugatti has managed to produced approximately 500 units of this model whose market price is way above $2 million (Interactive 2017). The company exploits its brand identity to stay ahead of its competitors in the Luxury car industry.  As indicated by Young and Warell (2008), the company subscribes to the mantra Nothing is too beautiful, Nothing is too expensive (Kapferer 2012). The company continually strives to develop and produce some of the best supercars with superior engine system and unique design and are customized to meet the needs of some of its clientele who preorder.

Brand image

Glamour, prestige and uniqueness are some of the few aesthetic aspects commonly associated with Bugatti. As earlier indicated, the company is highly revered for its integration of unique exterior design and advanced motorsport technology.   Given the incredible level of engineering involved in the development of Bugatti supercars, most of its recent models have inconceivable specs (Berthon, Pitt, Parent and Berthon 2009). In addition, the company makes use of highly innovative technologies and this has elevated further its brand image. Bugatti also focuses on value creation and this allows it to provide the best quality to its exclusive clientele that can fork out any amount for a product that meets superlative standards.

Brand personality

Over the years, Bugatti has strived to remain unique like most of its affluent international customers who are enthralled by class, perfection, elegance, and glamour. As Beverland (2009) opines, Bugatti brand represents all these personalities since most of its customers are more concerned with class and sophistication. In addition, given that most of the Bugatti models have incredulous speed with latest model Bugatti Chironi topping a speed of 288m/h (Interactive 2017). As such, the the company brand personify most of the attributes common among wealthy class-conscious individuals.

Figure 2: bugatti Chiro

SWOT Analysis

Strengths

Bugatti has numerous strengths that provides it with a competitive advantage over other Luxury car companies. First, the company is renowned for its adoption of highly advanced innovative technologies that allows it to create value for its international customers.  In addition, this has elevated the company’s brand image and reputation in the international market (Uggla 2016). To achieve this, the company has invested heavily in research and development and also maintains a team of highly qualified engineers and product designers. Another key strength of the company is its brand exclusivity that allows it to capture international clientele with high disposable income. This in turn increases its revenue despite its low sale volume approximated to be between 30-40 units yearly (Interactive 2017). As Riesenbeck and Perrey (2009) opine, the company’s brand exclusivity also differentiates it from its international competitors. Finally, the company dominates the luxury car market of developed countries such as the USA and Europeans countries.

Weaknesses

Despite the strengths discussed above, Bugatti has some weaknesses that affect its business negatively. To begin with, the company does not benefit from economies of scales and thus it cannot minimize it operation cost. This is in the sense that, the company does not mass-produce but rather produces a small number of luxury cars approximately 30-40 units yearly (Bialdyga 2013). Due to this reason, it does not benefit from reduced operational and production cost emanating from mass production. This explains the high market price of most of its latest models that are specially designed for individuals with high disposable income. Secondly, the high prices of most of its luxury cars are also a major weakness of the company. As such, only a selected few with high disposable income can afford the supercars. Therefore, this means low revenue due to diminished sales volume. Lastly, Bugatti has a limited product range since it usually launches a single model at a go and it may take a while before a new model is released (Young and Warell 2008). In addition, the company only produces pricey luxurious super cars and thus it is restricted to consumers with high net worth.

Opportunities

One of the key opportunities that Bugatti can exploit to expand its operations is the growing demand of luxurious cars particularly in developed nations. The growing demand is propelled by the rise in the number of high-income households due to the favorable economic policies in the developed countries. Based on a recent research, the number of high networth individuals has increased considerable particularly in the US in the past few years (Young and Warell 2008). Currently, most of the high nets worth individuals are mostly in the technology industry in which recent technological advancement have provided additional opportunities. As such, due to the growth in demand of the luxury products, Bugatti is likely to benefit from improved sales revenue. Another major opportunity beneficial to the company is the development of new safer roads particularly in developed nations. This is likely to reduce the maintenance cost associated with servicing pricey cars and thus benefit both the company and its consumers (Gerlach and Witt 2012). In addition, the new safer roads are also likely to increase the demand for Bugatti supercars. Lastly, the global luxury car market has grown considerably in the recent past. As such, this is likely to lead to the growth of the demand of the company’s products.

Threats

The growing competition particularly in the global luxury market is a key threat that faces the company. The entry of electric carmakers in the luxury car market poses a great challenge to Bugatti. Among the key competitors of Bugatti include Mercedes Benz, Tesla, Ferrari and Lexus. These brands retail at a relatively lower price as compared to Bugatti and thus capture a sizeable portion of the luxury market. Based on the Porters five forces model, in the luxury car industry, there are high barriers of entry due to the high initial capital cost. In addition, the supplier power is low though the consumer power is moderate due to the presence of numerous brand substitutes.  Another key threat relates to the public opinion of the wealthy owners of pricey cars. Most people perceive wealthy individuals with pricey supercars such as Bugatti as wasteful and extravagant.

Recommended strategy for Luxury Brand Development

Bugatti can exploit the opportunities prevailing in emerging markets. As Gerlach and Witt (2012) points out, over the recent past, the demand for luxury products have expanded considerably due to the increase in the number of high net worth individuals. The luxury market in major cities in Asian economic giants such as China and Japan are yet to be fully exploited by luxury car companies such as Bugatti.  The company should launch their latest model, Bugatti Chiron in these emerging markets in an attempt to expand their market reach. In addition, the company should also consider establishing assembly plants in these emerging markets to capture the growing population of high net worth individuals with a taste for finer things. Through this, the company will be in a position to elevate its brand in the global market.

Secondly, with the increasing competition in the luxury market particularly following the entry of electric carmakers such Tesla, the company should consider building its own electric bugatti model. With the growing concern of global warming due to the increased carbon emission from the use of fossil fuel, it is projected that in the future, the adoption of the electric cars will be inevitable in an attempt to reduce the level of carbon emission. In addition, by developing an electric Bugatti model, the company will be in a position to compete with upcoming electric carmakers that appear to be gaining a footing in the luxury car market. As such, to further improve its brand, Bugatti should invest in building an additional plant for electric luxury car models that are fuel efficient and environmental friendly.

The final strategy that the company can use to augment its brand is through brand extension. The company can diversify its product range by designing luxury furniture that go hand in hand with the interior of the Bugatti luxury cars. Through this, the company can expand its market reach and also propel the growth of its revenue and profits. In addition, through such brand extension the company will also be able minimize its operation cost since it will be in a position to generate additional revenue (Uggla 2016).

Proposal for international event to support Luxury Brand Growth

Hosting international events particularly in emerging market can greatly benefit the growth of the luxury brands such as Bugatti. A good example of such an event is an international motor show. The company can host an international motor show of the recent Bugatti models such as Bugatti Chironi in emerging markets such as Dubai, Hong Kong or Tokyo. Such auto shows can attracts both fast car enthusiasts and potential buyer from across world. For such to be successful, those interested in purchasing the luxury cars from the motor shows should be offered discounts. This will not only boost the sales of the company but also facilitate exposure of the latest models to more people around the world. Through this, the company can expand its market reach and be in a position to penetrate emerging markets and in turn propel the growth of the company’s brand.

Hosting international racing competition is another event that the company can utilize to propel the growth of its brands. Most of the Bugatti luxury car models have powerful engine system and reach a top speed of over 200m/h.  Such cars are highly preferred by professional racers who can afford them. Through racing competitions, fast car enthusiasts can compare the company’s models with those of its competitors to determine the most superior models. Such events greatly benefits efforts that support the growth of the company’s brand.

Summary of the key success factors

Some of the key success factors for the growth and development of the Bugatti brand include, people, passion and product.  As explained by Gutzmer (2011), the value of the people in the success of the company’s brand cannot be overlooked.  As such, the company human resources are important since each one serves as the brand ambassador. Bugatti should invest in training its workforce. The success of the Bugatti brand particularly in emerging market is reliant on the ability of the employees to develop an affective relationship with the clients (Uggla 2016).  In the luxury market, a customer is usually in search of advice from people he/she perceive as trustworthy. As such, company employees while serving as brand ambassadors can fill this void and thus the success of the brand (Bugatti) will depend on the quality of the ambassadors.

Passion is the main driving force of most consumers of luxury goods. Additionally, passion informs the client decision to purchase a particular model of Bugatti since most its consumers are often pay attention to detail. As such, passion drives most affluent people to maintain a collection of luxury cars. The success of the company brand is dependent on its ability to be attentive to detail since its target market is made up of passionate consumers who command great influence (Uggla 2016). The company products are also a key success factor of the brand. As such, Bugatti focuses on developing luxury car models with outstanding quality. This is only achieved through intergrating innovative motorsport technology and unique artistry in the production process.

References

Annual Report,V.2017. [online] Available at: https://www.volkswagenag.com/ir/Y_2014_e.pdf    [Accessed 23 Mar. 2017].

Bradley, W.F., 1948. Ettore Bugatti: a biography. Motor Racing Publications.

Interactive, B. 2017. Bugatti Chiron For Sale UK, Price and Specs. [online] Hrowen.co.uk.          Available at: http://www.hrowen.co.uk/bugatti/chiron/ [Accessed 23 Mar. 2017].

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