Ducati’s Deal with the Devil: A Business Case for the Diavel

03/07/2011 @ 4:38 pm, by Jensen Beeler35 COMMENTS

Ducatis Deal with the Devil: A Business Case for the Diavel Ducati Diavel key 635x424

If you had told me a few years ago that Ducati would build a cruiser-segment motorcycle, I probably would have called you a couple cylinders short of a v-twin. Up until recently, mentioning the thought of the Bologna brand chasing after Harley-Davidson riders would have invited fisticuffs in most Italian motorcycle cafés. And even despite the launch of the Ducati Diavel, you can start a heated debate among loyal Ducatisti by bringing up Italy’s latest power cruiser.

Make no mistake, the 2011 Ducati Diavel is a controversial motorcycle…and that’s putting things lightly (at worst it’s a complete dilution of the Ducati brand). If the Diavel is Ducati’s deal with the Devil, then let me play the Devil’s advocate for a moment, and put forth the business case about why this motorcycle had to be built, and what it means to the Ducati brand — minus the pandering to the Ducati faithful.

It’s easy to hate the Diavel before it even hits the streets (we’ll get to the actual ride report a bit later in another piece). The idea of a Ducati power cruiser is offensive to many, and that sentiment is easy to capitalize on when searching for headlines, clicks, buzz, or whatever metric you’re trying to boost. That’s not to say that the push-back leading up to the Diavel was unwarranted, just perhaps “overly passionate” under the best of light. The truth of the matter is that Ducati is doing something that very few brands in the motorcycle industry are willing to do: change.

An issue I’ve derided companies like Harley-Davidson for ad nauseam, it’s an incredibly difficult proposition for a corporation that’s long made its hallmark on being good at one particular thing to actually change or re-invent itself later in its life. While Harley-Davidson seems content for now to continue making the same bikes it made in the 1990′s (I think I’m being generous with that timeframe), Ducati sees the paint drying much earlier in the process, as it slowly backs itself into its superbike-branded corner.

Being a brand that caters to only one market segment rarely pays off in the long-run, and it’s no coincidence that the most successful companies adopt a well-rounded portfolio approach (this is at least what my stockbroker tells me when he rolls around in the dollar bills funded by my trading transaction fees). Realizing its need to be more than a company that sells bikes that look a lot like a World Superbike winner, Ducati long ago embarked on a strategy to enter gracefully into new motorcycle segments.

Ducatis Deal with the Devil: A Business Case for the Diavel Ducati Hypermotard 1100 EVO SP 635x422

Building Bridges: The Ducati Way
We can debate on when the transformation began in earnest, but the defining moment when the shift actually became feasible occurred with the Hypermotard series. Capitalizing on the trendy supermoto aesthetic, Ducati with the help of Terblanche successfully made a motorcycle that wasn’t a Monster, and wasn’t a Superbike, but was entirely a Ducati. While the short-term payoff on the Hypermotard was that it brought in new riders to the brand, the real value of the Italian company’s take on the supermoto was the graceful stretching of how we interpret what is and is not a Ducati motorcycle.

If the Hypermotard was yoga workout for Ducati, then the Multistrada 1200 was full-on pilates. The push-back from Ducatisti was noticeable, especially with spy shots showing the MTS1200 jumping off small inclines and sporting a protruding bird’s beak broke cover. Spend some time with the Multistrada 1200 though, and the front fender grows on you (perhaps my favorite part of the bike now), and one twist of the throttle eases your senses and tells you the bike is another Bologna Bullet.

Another crisis seemingly averted, and each of these bikes has setup Ducati to release the Diavel with success. They’ve each built a section of a bridge that extends Ducati’s brand onto a shore where things aren’t all race-bred sport bikes, but instead stylish, powerful, and elite enthusiast machines. Each time Ducati enters a new segment, it doesn’t aim to meet the status quo, its intent is instead to apply its own iteration of what should be in these markets, and that’s the key difference and reason for success.

The keyboard critics who are quick to worry about Ducati’s brand dilution have this concern because they’re expecting a fish-out-of-water result from the Italian brand. While a valid consideration because we see so many brands end up having that outcome, Ducati has clearly taken notice of how other prominent companies have redefined themselves and entered new segment categories.

Ducatis Deal with the Devil: A Business Case for the Diavel Ducati Multistrada 1200 S Touring 635x422

The Porsche Analogy
In many ways Porsche is the Ducati of four wheels: a rich racing heritage, a masthead vehicle that embodies everything that the company stands for, and an insatiable tie to geographic region and culture. For auto-enthusiasts, the Porsche 911 Carrera is an achtung of German tuning and race engineering that has a cult like following with men of leisure. But like with motorcycles, the rising pressure of the automotive world made it infeasible for the Stuttgart company to sell only luxury sports cars.

In 1996, Porsche dipped its toe in the entry-model market with the Boxster, and in 2002 unveiled four-wheeled blasphemy with the Cayenne sport utility vehicle. The arguments made for both these launches was that the German company had strayed from its brand, rejected its core enthusiasts, and was bound for the special part of hell where they keep baby torturers, child rapists, and attorneys. The Cayenne has been Porsche’s best selling model since its release…that is of course until the four-door Panamera came out.

The thing with Porsche, which holds true for Ducati, is as long as the company holds onto its performance-oriented roots (one of its key brand elements) with all its model offerings, and continues to produce a no-compromises sports car the remains true to what the old guard holds dear, young boys will persist in hanging posters of Porsches on their bedroom walls, and the of effigy men going through a mid-life crisis will replicate the same with the actual cars in their garage. If the Multistrada 1200 is Ducati’s Cayenne, then the Diavel is the Italian company’s Panamera.

Ducatis Deal with the Devil: A Business Case for the Diavel Ducati Diavel Carbon 635x423

The Numbers
In 2007 Ducati’s sales were lead by the Superbike series (35%), followed by the Monster series (32%), with the Sport Classic (12%) and other model lines similarly much farther behind (note: that’s two model lines accounting for two thirds of the company’s sales). As we come into 2011 though, sales trends have clearly shifted. The Monster series (30%) has supplanted the Superbike series (28%), and the Multistrada comes in with a strong showing of 12% of total sales, despite only being available for half of the year. Ducati expects to see the MTS1200 take on similar numbers as the Monster and Superbike series for 2011, meaning the three mini-brands will account for nearly 3/4 of Ducati’s sales on their own.

The beauty of these numbers is that there is only light cannibalization between the models, which means that people who are buying Multistrada’s weren’t interested in buying a different kind of Ducati, say a Hypermotard or Monster. For Ducati, this means the Italian company is tapping into new buyers and new demographics, which it desperately needs if it wants to become a robust motorcycle company (the company currently has plans to grow to 60,000 motorcycles worldwide). In plan terms, for the Bolognese this means more bikes sold, more money made, and more people indoctrinated into the cult of Ducati. Charlie Sheen would simply call this “winning.”

For 2011 Ducati is expecting the Diavel to do similar numbers as the Multistrada did last year, again without tapping into current Ducati riders, which would make four sub-brands accounting for 80% of the company’s sales. In other words, with each new product-line extension, Ducati is finding new buyers for its bikes, and from that new ways to appeal to more motorcyclists, and this is where the real push-back is coming from, whether people realize it or not.

Ducatis Deal with the Devil: A Business Case for the Diavel Ducati Superbike 1198 SP 635x475

Why You Hate the Diavel
Good brand management boils down to whether or not you understand that you, the company, don’t own your brand…your customers do. And companies with strong brands will hear quite frequently when they’ve stepped outside of the box their consumers have put them in. However while modern theory would dictate that you should listen to your core following, the truth is that catering to the whims of your ultimate stakeholders can prove just as fatal as ignoring them. Like lemmings running off the cliff into the sea, die-hard Ducatisti would have long ago run Ducati into the ground pursuing the ultimate in Superbike-only brands…in fact they did…several times.

The inconvenient truth in Italy is that the Ducati Diavel wasn’t made for the current Ducatisti — it was made for future ones. It shouldn’t be surprising that the Diavel is unappealing to many of the already indoctrinated, and that’s likely well and fine by Ducati. It’s not looking to up-sell its current rider base to this $17,000-$20,000 motorcycle, instead the Italian company is looking for fresh meat for the brand.

The issue of brand dilution won’t be seen in the Diavel, but instead will be reflected in the 2012 Ducati Superbike. If the nay-sayers are truly right, then the forth coming Ducati Superbike will be a flop. The legion of Ducati fans around the world will see the new Superbike, and scoff at how much Ducati has sold them out, and is now a brand for people who dress up like pirates on the weekends. However I suspect the opposite will happen.

Ducati’s new Superbike is already shaping up to be a monster of a machine, and it wouldn’t surprise me if the Bologna-based company planned its debut to come just after the Diavel’s on purpose. In November of this year, motorcycle fans around the world will see Ducati’s new Superbike, and instead of thinking the brand has been diluted, they’ll think about what a progressive leap forward the company has made with its iconic design. Will kids stop dreaming of Ducatis? Will Red shirts, hats, and jackets, all emblazoned with the Corse logo stop selling?

If anything I think 2012 will be a break-out year for Ducati in those regards, and it’ll be interesting to see who is still saying that Ducati betrayed its core constituents at that point in time when all the evidence points to the opposite. As for the Diavel, if the bike truly embodies the aesthetic, performance, and prestige of its predecessors, it should be a strong success in the marketplace. Afterall, the sales will speak for themselves.

Comment:

  1. Spytech says:

    Good read!

    those who like/love ducati, should not hate the fact the company is growing. without all the new products, they would not survive in this economy. they are just trying to appeal to more people, more name brand recognition, more markets, etc.

    to be honest, i am just a superbike guy, but i kinda like the Diavel – lets see how it rides.

  2. This is why I like this site. Great article.

  3. Mike L. says:

    Great analysis. It’s all about the product, and -like it or hate it- if the new release draws buyers who wouldn’t have bought any other Ducati…well, what you said.

  4. RobG says:

    Ducati purists can be upset all they want. I’m a new rider as of the last 18 mos, and while I despise cruisers (especially Harleys), I LOVE the Diavel. I want one.

  5. Congratulations.
    It’s so rare nowadays to find this high quality journalism that I was surprised to read such an article with so many interesting insights on both market, industry and the Ducati company itself (although I have to admit no agreeing with 100%).

  6. hoyt says:

    Ducati & BMW have been the most intriguing motorcycle companies to watch the last 10 or so years for many of the reasons mentioned above.

    While BMW has extensively added to their portfolio with numerous engine variations (and suspension), Ducati has diversified their models with just 2 engine platforms. Each approach should be applauded in different ways..

    BMW’s ability to engineer, manufacture, & sell 1, 2, 3 (older), 4, & now 6 cylinder motorcycles is impressive.
    Ducati’s model diversity with just an air-cooled and liquid-cooled version of their L-twin is also impressive. (desmosedici not included on purpose)

  7. Andrew says:

    Great article, but I was sad to hear that the Hypermoto isn’t a big seller. If I was in the market for a Duke that would be the one I’d get, I think it’s just stunning. It looks perfect for our twisty canyon roads here in SoCal.

  8. AC says:

    Great piece.

    I’m as much a Ducatista as anyone and lust only for the SBK and Monster-like bikes, but I can at least respect Ducati trying to broaden their customer base. Like you mentioned, Ducati (or Porsche’s) expansion hasn’t affected their core product, if anything, they’ve taken the strengths of their core product and brought it to the new machines.

    Aesthetically, the Diavel is far from perfect but I hear that it’s an amazing machine to ride. And that’s as true as a Ducati should be.

  9. kevin says:

    “Like you mentioned, Ducati (or Porsche’s) expansion hasn’t affected their core product, if anything, they’ve taken the strengths of their core product and brought it to the new machines.”

    Additionally, the revenues/profits generated mean a healthier company overall and more money for R&D across the product line.

    Anybody care to guess where Porsche would be right now with out the Cayenne or the Boxster.

    At times its easy for enthusiasts to moan and lament the product moves of their favorite marques but we’re not entrusted with the responsibility of running these companies. We don’t see the ledger sheets. All we know is our favorite brand isn’t being true to their heritage.

    All great companies need to adapt to changing circumstances if they want to remain in business.

  10. andrey says:

    Excellent and incredibly well written article that makes a very good series of points. Top marks Jensen. Bloody good job.
    Drawing an analogy between the Diavel and the Panamera has pushed me a step back away from the Diavel.
    Your points are very well made but I would extend the comments a little further when you discuss the reasons for branching out into new products… One of the problems with the Cayenne is not that it is an SUV, it is that it is so damn ugly for what it is. Similarly with the Panamera, what awkward proportions.; there was a UK show recently (top speed?? not sure) that compared the Panamera to the Maserati GT and an Aston Martin (if I remember correctly). The Panamera was slagged for being the ugliest of the bunch and they were dead on correct. See one and you would have to agree it is an ungainly design compared to these other two cars. It wouldn’t be so bad if these vehicles for “new market segments” weren’t so damn ugly. Ducatisti want beautiful design, just as a Porsche owner does, not some ungainly and ugly piece of crap. Owners of both marques want beauty AND performance. Of course NEW owners are none the wiser and unfortunately may even have accountants amongst their fold. Which leads me to another point:
    The other thing we need to remember is that damn accountants have way too much say in the running of a business these days…. most of them need to be locked in a room and allowed out when their numbers are required, then put back in promptly. Left at large too long and they will screw up a company completely. These guys, in conjunction with the glories or “corporate” decision making (i.e. trying to please all the people all the time and never pleasing anyone) makes for the Diavel, Cayenne and Panamera…. Taken to the logical extreme, before you know it Maserati will be building an SUV on a Jeep chassis (ooops… too late sorry!)
    Now that said, I do like the Diavel somewhat…… but I am mostly interested because it is the only Ducati my wife would be comfortable on.

  11. If people are getting upset about thE Diavel wait till they see what Ducati is looking at next. anybody for a Ducati scooter?

  12. RD46 says:

    Brilliant Read. A&R Does it again !

  13. @maatmann says:

    Thumbs up! If it is OK with you Jensen, I would like to copy this quality item and discuss this with my automotive marketing students. Really a perfect business case! Thanks a lot.

  14. Filip Vandenbulcke says:

    Wow. About time somebody analyzed this stuff adequately, coz most journo’s really do not have a clue.

    By the way, an insider at Ducati told me their next thing would blow us all away. Dunno why people tend to think it will be a scooter. Unless… maybe it’ll have wings? :)

  15. Scooter says:

    Get serious – a Ducati cruiser? If I could find a dealer then maybe I would be interested in a Ducati. The only motorcycle that has less dealers is Moto Guzzi. Over priced – yes……

  16. dmclone says:

    No mention of the Streetfighter. This is the model I’m most interested in buying.

  17. RGR says:

    dmclone, depending on how Ducati categorizes the Streetfighter maybe it’s included in the Monster series numbers or Superbike series numbers already?

  18. dmclone/RGR: Monster numbers are for the Monster only. The Streetfighter accounted for 7% of Ducati’s sales in 2010. I didn’t mention it, because it wasn’t relevant to the discussion.

    maatmann: fine by me, just cite the source.

  19. dmclone says:

    No problem. I was just wondering how the streetfighter was doing.

  20. Great Marketing Case: Ducati's Deal with the Devil, A Business Case for the Diavel http://bit.ly/hnDGNE

  21. Nobody says:

    Great article offering a perspective most don’t consider. What’s really wrong with a performance-oriented vehicle manufacturing company to produce performance oriented versions of different segments? If the Panamera keeps Porsche producing the GT3, or if the Diavel (or a Ducati scooter!) drops the price of the 2012 Superquadrata by a few hudred bones what’s the harm?

    With that said, I still hate the Panamera. ;)

  22. Damo says:

    If anything Aprilia is also following this same path, although they have had a healthy off road segment for years now. I wouldn’t be surprised if they put out their own power cruiser.

  23. Davin Black says:

    Beeler is proving once again that he’s easily one of the best op-ed writers in the game. All of the analysis and analogies were spot-on; I’d be hard-pressed to find anyone who walks away from this article not understanding the business of motorcycling (instead of getting hung up on the enthusiast POV) a little better. In fact, I think this article was just what I needed to read to get over my initial Diavel rage.

    (My favorite model is, rather tellingly, the Sport 1000 biposto :-p)

    That said, I still believe that the Diavel will face a bit of a battle. The SportClassic series were admittedly a niche/enthusiast-only products, and the low sales reflected the very dangers of catering to the customer base that you wrote about. The Hypermotard and Multistrada, however, were strong directional changes in a time when dual-sports were rising in popularity – and dominated by BMW.

    The Diavel is coming in at a time when cruisers aren’t *quite* as popular as they once were, yet it would STILL have to fight Yamaha, and a floundering Harley . As much as the Ducati is growing on me, I’d still leave the dealership with an XR1200 or a V-Max (or an MT-01, were I not a law-abiding citizen).

    I can only speak for the American market though, so I’ll be very interested to see how it does abroad – especially in Europe.

  24. dmclone says:

    I also think the Diavel is being mislabeled as a cruiser. It is not a cruiser. It’s a lightened up version of the Yamaha VMax.

    The truth is that everyone loves the image/idea of the 1198 but in the real world they are worthless. How many 1198, 1098, 999′s, etc do you see with more than 10K miles? Most are garage queens that barely get ridden because they are so uncomfortable for the average human.

  25. Other Sean says:

    My 848 has over 9,000 miles dmclone, I’m getting there! And yes, this editorial was well done and spot on. I hated the Hypertard when it came out, didn’t like the new Multi too much either, but now forgive them both in light of the Diavel.
    Do I want Ducati to survive? Of course But it doesn’t mean I have to like everything they do! And just like you wouldn’t expect a guy in a 911 Turbo to salute a passing Panamera, don’t expect me to wave to you Diavel riders, bwwahahaha! That’s right, I’m crotchety and entrenched. Deal with it.

  26. Westward says:

    Excellent article my friend…

    You are right, I would debate that it all began in ’93 when Ducati introduced the Monster 600 along with the 750 & 900, rather than the Hypermotard 1100 in ’07. The difference in the models relative success has more to do with the availability of the brand, rather than the appeal to another market demographic.

    The 796 Hypermotard was a step in the right direction, but I would go so far as to say they need a 696 version as well, or even a 596 for asian and european markets a’la the 400M and watch the market share increase. Form and function drives desire, but the wallet determines action…

    The Monster saved Ducati, in much the same way the Boxter did with Porsche, which probably got their cue from Ducati.

    To really dent the market they should offer a 796 Diavel as well. Now, I have not ridden one, but my girl and I got to sit on one at the Motorcycle Show last year. What amazed us was how light it felt (low centre of gravity I know) even though it was heavier than our Monster. The real key was that a 5’1” female felt comfortable enough to want to ride the thing off the platform.

    Women’s interest in motorcycles are growing evermore, seat height is often the determining factor for them and the Pedrosa-esque enthusiast.

    A Diavel 796 at $8999 is easier on the wallet than $16999 to a new rider. It will also make the explanation of the cost difference between it and a 1200cc HD Sporster easier to swallow too…

  27. Westward says:

    @ Devin Black

    I myself would be on a Sport Classic too if they had produced a 750 version, I suspect they would have sold more if they had, plus it would be truer of a classic as well. But alas, I make do with my Monster quite well instead…

    In fact, 796 and 696 should be across the entire Ducati spectrum outside of the Superbikes and Street Fighter.

  28. DuxBros says:

    It’s already been said but this is a superb article and part of the reason I look at A&R every day. The Diavel isn’t my cup of tea but from what I’ve read of the reviews it is not a paunchy poser muscle bike so it seems that it’s more of a broadening of what a Ducati is rather than a sell-out. I was one of the people that thought the Monster was a travesty when I first saw it, and now it’s one of my favorite Ducs. However I think Ducati needs to take a page from the playbook of iconic Italian bicycle manufacturer Colnago and make sure that it still has offerings for traditional Ducati diehards, especially if the rumors are true that the new SBK will not have a frame. A few years ago Colnago dropped its lugged-steel frameset from its line-up and there was such an outcry that they had to relent and continue to offer it. A new interpretation of the Supersport with an air-cooled engine, trellis frame, and dry clutch should do it. It’s not just older riders that would be the buyers because there’s a lot of gen Y people that are into retro/traditional stuff.

    Aesthetics have also taken a different direction for Ducati. They have always had a reputation for beautiful bikes and the bird of prey look that the Hyper and MTS have is aggressive and purposeful-looking but I wouldn’t call it beautiful and a new SS could address that.

    My last quibble with Ducati is that Gabriele del Torchio seems to be almost invisible while former CEO Federico Minoli really knew how to attract people to the brand by doing things like bringing them into the process of creating the Hypermotard, creating World Ducati Week, the museum, and communicating regularly through the company blog and writing in both Italian and English. I personally had a couple of surprise contacts from him and I think it creates brand loyalty when the CEO is willing to make customers feel that when they buy a Ducati, they are part of the family.

  29. hoyt says:

    @ Kevin 3/7 8:34

    “All we know is our favorite brand isn’t being true to their heritage.”

    How is Ducati or Porsche not being true to their heritage? They are not making the Superbike range slower, heavier, and reducing its handling by introducing other models. In addition, the Apollo is a great looking ride to this day. That is also part of the Ducati heritage, regardless if it was ahead of tire technology or did not make it to production. (had the police orders come in, Ducati was prepared to produce it).

    @ DuxBros….
    I’ll take a 2012 version of the 900 SS FE, revisited with the new dual spark engine and current components.

  30. BikePilot says:

    Excellent writing and analysis – you just don’t get this anywhere else in the moto industry. I’d join some others in quibbling over the characterization of certain historic factors, but its just that – quibbling and over arguable points. One of the halmarks of great writing is that it provokes thought and generates these sorts of discussions. Well done.

  31. kevin says:

    *Hoyt–Bad choice of words. I meant how the brands are perceived. If a company needs to extend its product line (or reintroduce models in long forgotten spaces) to survive/thrive I’m fine with that.

    I don’t think Ducati or Porsche is not being true to their heritage. Quite the contrary. And the outliers are outstanding machines in their own right.

    In fact, some might say that the “true believers” are holding certain companies back. Why won’t Porsche drop a more powerful motor in the mid-engined Cayman. Are they afraid the “true believers” 911 would get thoroughly trounced?

    I know some BMW guys who say the M3 should go back to its roots. Take out the V-8 and put a high revving 6. Thing is the first M3 the E30 was a 4.

  32. Nice work Jensen. Funny I am working on something with similar sentiments

  33. Josh says:

    So when might we get a ride report/review of this controversial beast?

  34. Josh, probably today, but I’m sick as a dog.

  35. Josh says:

    DOH! Hope ya get better soon (to be honest its the only ducati I haven’t pondered buying at some point in time so no rush on my account).