Tesla brand merchandise and the Ferrari model

[Ludus]

http://store.ferrari.com/en/

http://www.scuderiacollection.com/category_s/20.htm?gclid=CIzeysjgsrkCFSVgMgodhzUAGw

What about Tesla greatly expanding (while still being selective about) it's licensing and sale of other merchandise? Ferrari is an interesting model.

Ferrari like Tesla doen't do any advertising, but they take in considerable extra revenue from brand sales. I think Tesla is also less sensitive to diluting the "elite" quality of the brand because it aspires to mass sales. In that sense it's more like Apple, representing the best but not something unattainable.

It would also give Tesla stores more to actually sell.

 

[Raffy.Roma]

@Ludus

Sorry but I don't agree with you. Tesla is a full electric cars automaker, while Ferrari is only now starting to produce some hybrid cars (not even plug-in). So in my opinion the features of Tesla are much better than the features of Ferrari and you cannot even compare these two automakers.
When Ferrari will start producing pure electric cars, and we will have to wait a looooong time for this to happen since Montezomolo (Ferrari CEO) is against pure electric cars, I could agree with you.

 

[ToddRLockwood]

What about Tesla greatly expanding (while still being selective about) it's licensing and sale of other merchandise? Ferrari is an interesting model.

I think it's too early. For now, the best market for Tesla merchandise is owners and would-be-owners.

Ferrari has the second most recognizable trademark in the world, next to Coke. It's a unique case, given that Ferrari only sells a few thousand "products" per year. The Ferrari mystique reaches way beyond their customer base. As I recall, there have been periods in Ferrari's history when the largest part of their revenue came from licensing. The advertising space on their Formula 1 cars alone generates over $100 million a year.

The exclusivity of the Model S may help Tesla build mystique into its brand, but that may become diluted with Gen III. Tesla's merchandise potential might be a notch better than Audi or BWM, but I'd be surprised to see them in Ferrari territory. Unless... Tesla's logo goes on the Hyperloop!

 

[Raffy.Roma]

I think it's too early. For now, the best market for Tesla merchandise is owners and would-be-owners.

Agree 100%

 

[Ludus]

@Ludus

Sorry but I don't agree with you. Tesla is a full electric cars automaker, while Ferrari is only now starting to produce some hybrid cars (not even plug-in). So in my opinion the features of Tesla are much better than the features of Ferrari and you cannot even compare these two automakers.
When Ferrari will start producing pure electric cars, and we will have to wait a looooong time for this to happen since Montezomolo (Ferrari CEO) is against pure electric cars, I could agree with you.

I'm not at all trying to compare Tesla and Ferrari as cars or companies. I'm just talking about Ferrari's success at putting it's brand on other merchandise and enhancing it's brand value while actually making money. There are Ferrari stores all over the world that sell a wide range of Ferrari labeled merchandise: clothing, shoes, watches, jewelry, etc. Tesla has a lot of elegant stores already and they could use more stuff to actually sell.


Tesla lines of fine watches, athletic shoes, etc. like Ferrari's would be based ultimately on Tesla's reputation for building the best. A lot of people who can't afford a Tesla model S can afford other products with the brand. Like Ferrari, Tesla would not actually make any of this stuff, but would be careful not to license or brand anything that's not quality.


i agree that Tesla is in a sense better and more important than Ferrari since it has as mission promoting higher values than simply making quality elite cars. That only means Tesla as a brand ultimately has more potential than Ferrari...which is generally ranked along with Apple as one of the most valuable brands on the planet.

 

[Raffy.Roma]

@Ludus

I see that you agree with me in principles. That's the main thing. Then I have a different view with respect to you for what is concerning a strategy of market. But this is only my view. Of course then it's up to Tesla to decide what's the best thing to do.

 

[sublimaze1]

i agree that Tesla is in a sense better and more important than Ferrari since it has as mission promoting higher values than simply making quality elite cars. That only means Tesla as a brand ultimately has more potential than Ferrari...which is generally ranked along with Apple as one of the most valuable brands on the planet.

I was with you - just about to this point. But I have to selfishly take a soapbox on this.

Comparing Tesla to Ferrari is like comparing an IUD to LoEstrin. They both do the same thing (in the endpoint: Cars = travel, OC = nulliparity) but their mechanism is far from similar.

Ferrari and The Dallas Cowboys ... now that is a fair marketing comparison, when it comes to accessories. Anyone who has spent time watching F1 over the years knows that the early/mid 90s was horrendous for Ferrari. Just like the Cowboys have been recently. But that doesn't stop the tifosi from buying umbrellas and the Cowboy fans buying Whitten jerseys. It is marketing that is based on numbers of people who have grown over decades to be enamoured with anything Ferrari. Doesn't matter if Raikkonen wins the Championship or Alesi leads a retirement laden team with a 4th place constructors - Tifosi will buy stuff: and lots of it.

I agree that if the Tesla Hyperloop goes from LA to Tokyo underwater in 2023, there's gonna be some serious support - certainly amidst Fans of the car (and the technology). But Tesla doesn't rally. They don't race in F1 or GP2. There is no Formula Tesla. We won't see the Yankees play the Teslas. The comparison is just not there ... and it is certainly likely NOT to be in the future.

However, my opinion (and that is ALL it is) is that Tesla does not belong in the Ferrari model of merchandising. I think it would be an ill advised marketing maneuvre. At this point in their development.

If they had Peyton Manning on the assembly line and Jeter in the front office, they may sell more Tesla jerseys than I give them credit for. But that is not the niche they need to be looking for.

<flame retardant suit donned>

 

[Ludus]

I know that Ferrari is an old brand that has gradually acquired cachet, but in 2013 that process can happen much more rapidly than ever before. Nobody expected the level of success that Tesla has had this year. Ten years ago Apple had no value in consumer electronics. It was a minor computer company. It had no global cachet at all.

I haven't done much study of it, but I suspect that some of the success of Ferrari as a general brand vs. a car is based on the pursuit of that general merchandise branding strategy rather than any inherent virtues in the company otherwise.

Take a look at the stuff on that Ferrari website, picture the same stuff with a Tesla brand. Would you find it kinda cool to have?

What's the downside to making licensing deals with clothing designers, athletic shoe companies, fine watch makers? What's the downside to having a website more like the Ferrari site?

If the main reaction is "Tesla isn't as famous or cool as Ferrari" so they won't sell as much stuff, it just doesn't seem like an argument against having Ferrari as a model for this.

As far as Tesla not having the publicity advantages of racing or pro-sports, Ferrari doesn't have an iconic leader like Musk who also moonlights building spaceships, Italy is nice but Cali is closer to the publicity center of the universe, what's cooler in Hollywood now Ferrari or Tesla? To trend setting people who might be seen in branded cloths or wearing watches...which on balance is something they want to be seen endorsing, Tesla or Ferrari? Also, this is Tesla's first year selling more cars than Ferrari but it's market cap is now about 6X as much.

Im not suggesting that Tesla would out of the gate be just as strong as the gold standard of this field...but do you think it's so obscure that it would have a hard time making licensing deals? What would failure look like? Tesla Movado watches aren't selling real well?

Sublimaze1....Of course this is just opinion, but WHY isn't it a niche they should be in? Do you just think Tesla brand stuff wouldn't sell as well? Or do you think there are potential negatives?

 

[sublimaze1]

Sublimaze1....Of course this is just opinion, but WHY isn't it a niche they should be in? Do you just think Tesla brand stuff wouldn't sell as well? Or do you think there are potential negatives?

I guess, after reading this thread through again, I don't want to come across saying that Tesla should not merchandize (I mean, I look at the website and say "I wish they had this and I wish they had that"). But I feel that as a fledgeling company, prove themselves. They have already proved themselves to me, to you, to the forum members (for the most part) and to the several thousand who bought TSLA at $41 a share back in the day. But if you do the math, that is a mere one half of one half of a percent of the people who would be targeted to buy this type of gear.

So, sure, experiment in the niche. Put feelers in the niche. But (IMHO alert) don't throw resources into this sector quite yet. I do think that Tesla brand stuff would sell well. But I also think that one potential negative is that TSLA needs to keep their focus on putting cars on the road right now. Sure they outsell the Luxury Cars that we have seen in the news from BMW Audi and Porsche. Get the X on the road and get the III (or E, or whatever) on the road. Then say "we have arrived, here is our schwag"

Apologies to you, Ludus, and others - if I have come across as a downer or negative nilly. I guess my realism (in my own mind) prohibits me from seeing Tesla in this light. Perhaps it is a weakness and a shortcoming for me individually.

My 2¢

 

[texex91]

Personally I like their schwag--I only wish they had more to choose from. Keep it coming Tesla--we want MORE!

 

[ToddRLockwood]

I imagine Tesla already is selling quite a bit of merchandise through their mall stores, probably even more than Ferrari sells through their retail stores on a per-store basis. Ferrari sells the bulk of its clothing products at Formula 1 races around the world, through local retailers. While they do handle retail sales on their web site, it's much easier for Ferrari to sell wholesale than deal with individual customers in many different countries. Tesla's mall galleries are a perfect way to sell this stuff.

 

[brianman]

I don't want/need Tesla to offer more merchandise. What I would like them to do is work out their licensing plan. There are a number of products (floor mats for example) that I'd like to purchase once there's an official licensing mechanism for logo'd merchandise.

 

[ToddRLockwood]

I don't want/need Tesla to offer more merchandise. What I would like them to do is work out their licensing plan. There are a number of products (floor mats for example) that I'd like to purchase once there's an official licensing mechanism for logo'd merchandise.

Potential licensees might still think Tesla's market is still too small to bother with. A good example is Weather Tech. They still haven't added the Model S to the list of standard vehicles they make floor mats for—even without the logo. They have even less incentive to tool up for it since Tesla is producing their own version in-house. I think we're still years away from the point where substantial licensees are approaching Tesla for licensing deals.

 

[Ludus]

Licensing aftermarket products for Tesla vehicles is an entirely different field and not what the comparison is about. 99%+ of Ferrari logo merchandise sells to people who don't own a Ferrari....and never will. While growth in aftermarket products is necessarily limited by Tesla's production and will take many years to make a dent in global market share, the brand can grow in global standing much faster.

I agree this shouldn't be a distraction for the company. I like the zero advertising approach Tesla (and Ferrari) take. The cool thing about this is that it doesn't cost the company anything, it actually makes money while it promotes the brand. In the case of Ferrari that doesn't serve any larger ambition. Ferrari isn't trying to change the world so it's success at selling logo merchandise has no synergy with a larger agenda, but it does look like a very effective approach.

 

[texex91]

Licensing aftermarket products for Tesla vehicles is an entirely different field and not what the comparison is about. 99%+ of Ferrari logo merchandise sells to people who don't own a Ferrari....and never will. While growth in aftermarket products is necessarily limited by Tesla's production and will take many years to make a dent in global market share, the brand can grow in global standing much faster.

I agree this shouldn't be a distraction for the company. I like the zero advertising approach Tesla (and Ferrari) take. The cool thing about this is that it doesn't cost the company anything, it actually makes money while it promotes the brand. In the case of Ferrari that doesn't serve any larger ambition. Ferrari isn't trying to change the world so it's success at selling logo merchandise has no synergy with a larger agenda, but it does look like a very effective approach.

BINGO--hit the nail on the head.

 

[Ludus]

Ferrari non automotive total sales are in the area of $1 billion, though Ferrari just takes in a fraction of that through licensing fees it still accounts for more than 25% of profits. I think Tesla store merchandise sales are good but they just have a small fraction of the product lines. With a more Ferrari like approach I think many Tesla stores could be profitable on their own rather than a marketing expense. It would be great to sell Tesla branded stuff through other retailers as well.

 

[ToddRLockwood]

Ferrari non automotive total sales are in the area of $1 billion, though Ferrari just takes in a fraction of that through licensing fees it still accounts for more than 25% of profits. I think Tesla store merchandise sales are good but they just have a small fraction of the product lines. With a more Ferrari like approach I think many Tesla stores could be profitable on their own rather than a marketing expense. It would be great to sell Tesla branded stuff through other retailers as well.

I think that could happen, eventually. Since Tesla doesn't do any mainstream advertising, there is still a large portion of the American public that does not recognize the logo or even the name Tesla. It would be interesting to know whether Tesla sells more logo'd merchandise through their web site or in their stores. I would predict that the stores do the lion's share of the business. I've spent time in three different Tesla stores in large shopping malls, and the volume of foot traffic is astounding.

 

[Ludus]

I think that could happen, eventually. Since Tesla doesn't do any mainstream advertising, there is still a large portion of the American public that does not recognize the logo or even the name Tesla. It would be interesting to know whether Tesla sells more logo'd merchandise through their web site or in their stores. I would predict that the stores do the lion's share of the business. I've spent time in three different Tesla stores in large shopping malls, and the volume of foot traffic is astounding.

I think you're completely right that the Tesla stores are the tip of the spear for this. They are there already for other reasons and if somebody walks in and is excited about Tesla there should be more ways for them to "buy in". If there are more ways for people to associate with the brand identity than actually buying the car, there are more ways to become an evangelist for it. Online and other retailers are just a follow-up to this.

 

[Ludus]

Formula E - Home

Formula E racing is starting this year and might fit with the branding idea in the Ferrari model. To address concerns about this sort of thing being a distraction from the core business, Tesla could like Ferrari create a Tesla Racing subsidiary that would fund itself through licensing and brand merchandise. Tesla racing teams would of course also be funded by other sponsors.

Formula E is just starting up and participation costs are a small fraction of F1. The level of participation would be proportionate to revenues available from licensing and merchandise sales.

As it is the FIA has a pretty odd sounding plan for drivers to switch cars at pit stops rather than swap batteries. Tesla Racing could be a dominant player in this new game.

Tesla Racing could also handle the other distracting fun stuff that doesn't fit with Tesla Motors core focus. If Elon wants to make the 007 Submarine transforming car actually functional, that's a good fit. People ask about ultra performance mods of Model S, why not? Tesla racing boats? Cool. This stuff fits with a brand image promotion/ licensing-merchandising subsidiary.

 

[SwedishAdvocate]

…/ Formula E racing is starting this year and might fit with the branding idea in the Ferrari model. /…

Sure, Formla E is in IMO better than F1 or Indycar et. al. But there are not only rewards associated with racing. There are risks as well. See for example the injury involving Felipe Massa in F1 in 2009.

http://en.wikipedia.org/wiki/Felipe_Massa#Injury

And judging from the kind of media coverage a fire in a Tesla gets, what would the media coverage be if someone got permanently injured in a Tesla-branded racing car?

And making comparisons to the current Ferrari F1 endeavor is one thing, but becoming that successful in a completely new racing series seems like something completely different.

And neither BMW, Audi, Porsche, Jaguar, Lamborghini or Aston Martin are in F1 (or Formula E), and they seem to be doing pretty good financially...

And lastly [and perhaps y’all better sit down and hold on tight for this one]: If you take a strictly logical approach a la Spock in Star Trek (or other Vulcans for that matter), ultimately all forms of racing are pointless. Basically engineering resources spent that could have been used in a much more meaningful way. And unfortunately – today and for the foreseeable future – there will be no shortage of challenging and literally life changing engineering tasks.