Bugatti’s Business Model Alignment
If you happen to have $1.5 Million in spare cash, you might consider picking up a Bugatti Veyron — the fastest production car every made (cool video here). Forbes Life profiles the Bugatti Veyron here – revealing a very powerful alignment between the Bugatti business model and their business processes. How do they do it? …
TopGear's Greatest Race: Bugatti Veyron Vs Eurofighter Typhoon – Click here for more amazing videos
The business model starts with the customer. In the case of the Veyron, they appeal to an extremely selective group of customers — only a few thousand prospects in the world. These customers are superwealthy, avid car collectors who typically own between 20 and 40 supercars already. They aren't choosing between a Mercedes, Porchse, or Ferrari — they already have several of these. They Veyron is simply the latest, coveted addition to their collection.
The marketing and sales process is entirely designed to appeal to this select group. Marketing is focused on creating awareness among this target group that such a magnificent car like the Veyron exists. The sales process starts with an application process, then vetting through a security background check, and finally a test drive of the Veyron — but not your typical test drive. Instead of strolling to the dealer, they ship the car to you, along with a professional racing driver to show it off for you. Due to the expense of this step, the pre-qualification is rigorous.
The manufacturing process is entirely make-to-order. No orders, no inventory. Bugatti has delivered 200 Veyrons so far — 71 in 2008, and claims to have an order book full for a year. Not bad for a recession.
One business model question relates to the value of Bugatti to the corporate parent — Volkswagen. Some say that the Veyron is a waste of money on an extravagant niche market. VW reportedly spent $1.7B to develop the Veyron — to sell only a few hundred units. But they are selling quite well now. Most car companies develop high end race cars as part of their advanced R&D — to continually push the state of the art. After all, if you are passionate about cars, you live for the opportunity to build something like the Veyron.
How about you? Can you clearly trace the alignment between your target customer, your business model, and your sales, marketing, and delivery processes?
