The objective of this research and work is therefore to examine how Formula One can not only attract more viewers but also retain those viewers. As it seems Formula One has been losing fans over the last years for numerous reasons such as for example not being competitive enough and therefore not entertaining enough in my opinion to retain and attract viewers. In addition, the current trend of a world going green and being more concerned about sustainable energies, even though this will not be covered in depth by this research the question still arises: is there a future for Formula One and if so, which one? In order, to attract new fans and grow it is now more important than ever for the group to completely reinvent itself and maybe explore new paths which will be researched through means such as survey and interviews. Automobile racing has been around nearly as long as cars have been and the first accounted races date back to 1887 where only one competitor arrived for the competition, so the race never took place (Grand Prix History 2017). However, in 1894 in Paris in a race that started in Paris and went to Rouen and which covered 126 km there were 21 participants in the race with the winners driving a Panhar-Levassor and Peugeot (Grand Prix Racing 2017). The first race in Italy occurred in 1895 and was 93 kilometers in length and resulting in 1985 “being marked the formation of the Automobile Club de France while in the USA, the Times Herald sponsored a race or more accurately a challenge as there were only two competitors” (Grand Prix Racing 2017:1).
Thus, had begun automobile racing. The first of all racetracks was constructed in Surrey and opened in 1907 (Grand Prix Racing 2017). During the 1920s there were shorter circuits construction in Europe and the Italian Grand Prix was held in 1922 at the Autodromo Monza just north from Milano. (Grand Prix Racing,2017). Originally the racing had a formula that was quite strict in terms of weight and the size of the engine is reported to have been in 1928 abandoned and what were known as the Formula Libre racing rules were adopted (Grand Prix Racing 2017).
The Formula One group is owned exactly by between 30 and 40 companies according to a CNN interview with Christian Sylt (Knight and Torre 2013). These companies are reported to “invest in multiple jurisdictions- the UK, Jersey, Luxembourg, Switzerland, all over the place” (Knight and Torre 2013:1). However, Formula One’s parent company is reported to be that of Delta Topco who are jersey-based (Knight and Torre 2013). Delta Topco is reported to be owned 35.5% by CVC Capital Partners as a “private equity firm” (Knight and Torre 2013:1). The second largest of all shareholders is Waddell and Reed, reported to be a company in the United States (Knight and Torre 2013). The third largest of all shareholders is the Lehman Brothers estate owning about 12% with “Bernie Ecclestone’s family trust has circa 10% and Ecclestone himself has around 5% (Knight and Torre 2013:1) The structure is quite complicated (Knight and Torre 2013). It is reported that Formula One in the last five years and even during the couple of recessions has witnessed both its profits and revenues rise (Knight and Torre 2013). Specifically, stated are the following numbers:
2007/2008 $1.2 billion
2011 $1.5 billion
2012 $1.6 billion
Sources: Knight and Torre (2013)
When Sylt is asked how the money for Formula One is generated he is reported as having stated that “$500 million comes from the fees that promoters pay to host races and then another $500 million comes from the fees that broadcasters pay to screen the sport. Then you have circa $250 million coming from sponsorship – trackside advertisers and series sponsor. The remaining $250 million is coming from things like corporate hospitality” (Knight and Torre 2013:1). When asked as to the economic success of Formula One, Sylt answered by stating as follows: “The key driver of the growth is the fees that comes from circuits ($500 million). Most of these contracts include clauses that increase the rate by up to 10% annually” (Knight and Torre 2013:1). The strategy of Formula One is described as clever with an example stated being the move made to Asia which is reported to have been done not from desire but rather from necessity (Knight and Torre 2013). There is a restriction on Formula One for 20 races annually since the teams will not give their agreement for additional races and the result is that this “makes it difficult to exponentially increase revenues” (Knight and Torre 2013:1). Therefore, Ecclestone took the races to markets that are emerging and countries and countries hosting these races which include South Korea, China, Malaysia and India held that their host of a Formula One event would ensure that “their country was put on the global sporting map” (Knight and Torre 2013:1. This is because Formula One is viewed by 500 million individuals on an annual basis and would therefore drive their country’s tourism (Knight and Torre 2013). In addition, the different races are such that pay fees that are different with the example stated that the Italian Grand Prix takes in single digits however, in Singapore the take is around $60 million with Malaysia taking in approximately 70$ million annually (Knight and Torre 2013). The team that has been with Formula One the longest is the world-famous Scuderia Ferrari and in fact it is reported that this team is the only one that is owned by a manufacturer and that has signed direct contracts with Formula One (Knight and Torre 2013). However, Sylt notes in the interview that “There is a real risk of having teams leaving F1 at the minute… There are questions marks over, basically all the teams bar Ferrari, McLaren and Red Bull (Knight and Torre 2013:1). Because some of the teams can no longer afford to compete, Sylt states that there are “sponsorship deals with being with F1 owners” (Knight and Torre 2013:1). The benefits of sponsorship include trackside advertising packages throughout the circuit, 2013).
Chapter 2: Background and purpose of Thesis, Research Questions
Background of the Study
The work of Sylt (2017) reports that Formula One’s business model is different from the majority of other sports events that are major and specifically states “the commercial rights to the series are controlled by Liberty Media, which is listed on the Nasdaq with the ticket FWONNK” (1). The subsidiary is F1 Group and is reported to retain broadcaster revenue “which screen the races, guests who buy tickets to the official hospitality outfit and sponsors which buy trackside banners” (Sylt 2017:1). Left, are ticket sale which are utilized in covering the costs for running and the government footing the “face hosting fee which comes to an average of $31.5 million annually” (Sylt 2017:1). This is reported to place a high level of importance on the spectators at a steady stream and which, according to Sylt (2017) “would appear to be far from a racing certainty in light of widespread reports about F1’s reversing popularity” (1). Sylt (2017) reports however that a key data analysis demonstrates that this is just not the truth since findings show that the fans of Formula One “are spending more every year” (1).
However, in 2009, Formula One did perform poorly due to the economic decline that was global (Sylt 2017). Since that time, sale have risen but it is reported that the host city is critical in terms of the income generated by races (Sylt 2017). Races that are hosted in cities with a dense population are reported to be less successful than those held in outlying cities (Sylt 2017). Formula One has faced problems over the past few years and one of these are that Honda, a Japanese motor vehicle has had sluggish performance (Wybrew and Sylt 2015).
Honda is reported to have been involved in Formula One since 1964 and in 2015 returned once again and supplied engines for McLaren Team yet, even with the two champions that McLaren had driving and specifically Jenson Button and Fernando Alonso, it is reported to be “lagging at the back of the grid” (Wybrew and Sylt 2015:1) Engine regulations changed in 2017 and will change yet again in 2020 (Wybrew and Sylt 2015). Leng (2014 states that there is nothing new about the relationship that exists between tourism and sports since a major sports event has the power to “attract large numbers of International tourists and high level of media Interest on an International scale” (29). This suggests that tourism marketing of sport event is a highly successful venue of promotion of marketing events. In addition, sporting-event linked tourism offer brand exposure opportunities to audiences that are expanded, and this means a great deal to those corporate sponsors (Leng 2014). Leng (2014) reports that there has been the conduction of studies on spectators of Formula One racing events which have found that there are very few fans found to be willing to enter the financial commitment to view the event live and instead watch television broadcasts of those races (Leng 2014). There is reported to be an evolution across time for such events as Formula One which serves “to influence attendance decisions positively and create loyalty to the event” (Leng 2014:30). World Finance (2015) reports that it will be necessary to “rethink marketing as its audience figures drop” (Fronda 2015:1). In fact, it is reported that Formula One has undergone a gradual decline since “more and more people are apparently losing interest in the sport altogether” (Fronda 2015:1). For example, in 2008 there were in excess of 600 million individuals globally viewing the sport, but this has dropped drastically and in fact is reported by Formula One’s CEO to have dropped to the 2015 number of 425 million (Frond 2015). Fronda 2014 notes that at first sight the statement that Formula One is struggling could appear as being false but however, that “management’s readiness to sell rights to the highest bidder, regardless of how it will impact the sport’s presence worldwide, along with poor ticket sales and a difficulty for teams to secure long-term sponsorship deals are all strong indicators that all is not well in the world of Formula One” (1). That is not all since Formula One as a sport has struggles that are internal as the drivers want more competition in the races and investors are clearly worried as well (Fronda 2015). It is specifically stated that “There is a clear consensus within Formula One and among its supporters that reform is necessary in order to stop sport slipping further” yet making identification of and reaching an agreement to choose actions to take is a very difficult thing (Fronda 2015:1).
During the decade of the 1970’s the following of Formula One is reported to have been cultivated through what was “free-to-air broadcasting” and that this enabled those who love races on a global basis to have access to the races (Fronda 2015:1). However, due to the drop in followers who are watching programming regularly and having turned to watching streaming content instead this strategy will no longer be effective (Fronda 2015). Ecclestone is reported to have completely ignored Internet but is stated to have be having the realization that it is going to be necessary in order to gain young users who do not watch television (Fronda 2015). It is also reported that some rights are being sold to pay TV exclusively which is a completely new move on the part of Formula One (Fronda 2015). However, subscription prices are reported to be high enough to contribute to the poor viewing figures of the sport (Fronda 2015). This may well additionally harm Formula One’s capacity in attracting new fans as well as resulting in already existing fans “to grow despondent to the sport” (Fronda 2015). Thus far, Ecclestone is reported to have entered into deals with Fox Sports, the UK-based Sky and Spain’s Telefonica with coverage being divided between the free-to-air broadcasters and the pay for TV companies. (Fronda 2015). While there is a variation in the subscription costs Sky in the UK charges $865 for the full F1 season (Fronda 2015). The cost in Australia is reported at $600 per year (Fronda 2015). There are also problems with sponsorship and although the TV strategy has assisted in the generation of additional income for the company’s shareholder at the same time should there continue to be a decline in the audience it will become increasingly difficult for the teams of Formula One to “secure mass-market sponsorship deals in the future. Some teams are already feeling the impact. McLaren’s boss Ron Dennis has been unable to secure a title sponsor since its deal with Vodafone ended back in 2013” (Fronda 2015). In fact, Dennis is reported as having stated that “Title sponsorship doesn’t exist anymore as a concept” (Fronda 2015:1). The general sponsorship in the past was between 40 and 50% of a team’s budget but sponsors will just not make provision of those amounts of sponsorship anymore (Fronda 2015.) The obsession that Ecclestone is reported to have with generating revenue even “at the expense of the sport’s popularity is the result of increased pressure from shareholders who are eager to see a return on their investment” (Fronda 2015:1). This type of thinking is short-term and is probably going to become worse with a prediction that CVC is seeking a way out (Fronda 2015). Fronda (2015) states specifically:
“I think CVC is not going to be around for much longer in Formula One”, he said. “They bought the business almost 10 years ago now they’re looking for an exit strategy, so they’re not so concerned about what happens in five or 10 years. Their main interest is the revenue, as with the other shareholders, which include a lot of asset management companies and their main concern is that the revenue keeps coming in” (1).
Yet, CVC is reported to have stated that this Is not true but that they would certainly like to “see it launched on the stock market, but so far it has been unsuccessful” (Fronda 2015:1).
Ecclestone is reported to have stated in his interview with Campaign Asia-Pacific that he had no interest whatsoever in the area of social media or even in the younger people generally stating specifically “I’m not interested in tweeting, Facebook and whatever this nonsense is. I tried to find out but in any case, I’m too old-fashioned. I couldn’t see any value in it. And I don’t know what the so-called ‘young generation’ of today really wants” (Fronda 2015:1). The stakeholders of Formula One are all too well aware that television viewing is down along with ticket sales and that this is linked to the poor management of sports marketing of Formula One however, there is also the view that the races themselves have become very bland” (Fronda 2015:1.
Purpose of the Research
The primary objective of this thesis is that I have personally be following Formula One for a very long time and have been a racing fan since a very young age. This has led to witnessing a great decline in interest for Formula One amongst friends and family members. It is a personal opinion that Formula One has become less attractive than it once was and through this research can potentially arise new interesting solutions in order to make the sport rise to the popularity levels it once had and maybe even beyond who knows. The aim is to demonstrate through the studies in marketing that have been followed at UIBS coordinated with opinions from fans and experts through research methods such as survey and interviews, how marketing tools can help the Sport reinvent itself and become appealing to a larger number of customers and understand how to choose the right strategy to do so. For information; Formula E (Electric) is heavily using marketing and is succeeding in engaging the fans and making the sport appealing even though it is not as technologically advanced as Formula One. Methods can be utilized in promoting Formula One in the future will be examined as well as past case studies consulted along with any other means of promotion that can potentially be implemented.
The previous mentioned factors and feelings have led to the development of research questions which are stated as follows:
(RQ 1) How can Formula One attract more fans and become more attractive through effective marketing while growing in the future?
(RQ 2) Why do the lead sponsors use F1 for marketing purpose?
(RQ 3) Is there a relationship between Safety measures in the sports and its popularity?
(RQ 4) In what way can a business development plan become more efficient based on professionally prepared marketing strategies?
Chapter 3: Methodology and research procedures
The methodology in this study is a compilation of mixed-methods studies. The first aspect and the most used aspect of the study will be qualitative research which is used in understand the phenomena (Simon and Goes 2011). Qualitative research seeks to understand phenomena that cannot be studied and reported in numerical data. This research study will be a studying the phenomenon within the world of Formula One. It will is conducted in the form of a literature review in this area of inquiry and specifically material relating to professional marketing strategies that Formula One successfully use in its self-promotion to customer and then engaging and finally, ultimately retaining customer loyalty. The literature reviewed in this research is including business and professional reports and studies as well as academic journal publications. The study will include more than 50 sources at least in this area of study. The findings in this study will be presented in a table with headings for each column so that the information gathered can easily be viewed and compared with one another.
The second aspect of this study will by for a small part quantitative in nature and will involve my involvement in conducting surveys and interviews which will contain close as well as open-ended questions with some having multiple choice and only open-ended for the interviews. The response of the participants will be analyzed using both qualitative methods and quantitative especially regarding the survey.
Chapter 4: Business Development
4.1 Brand Building
The work of Agrawal (2016) says that Formula One and its sponsorship branding is one of its very hallmarks. The colors are described as racy and the graphics described as bright and coming in all sizes but with “all hoping for a piece of the Formula 1 advertising generated profit” (Agrawal 2016:1). The goal reported “is to be noticed by all those watching the races who will buy the products because of the in-track signage” (Agrawal 2016:1). Those reported to be attempting to grab the advertising spots that are reported as those most wanted for 2016 included Pepsi, Mobil 1, Anheuser-Busch, AT&T, Frito-Lay, Prince Lubricants, Pirelli, Mistimoto, Nankang, Recaro as well as others (Agrawal 2016). Agrawal (2016) reports an interview with Josh Cart who has a career in racing. The question which is asked to John Cartu is to know how that sponsorship branding actually works. He answers by stating “The more often consumers see the brand, the more common it will be to them. Good advertising is not always the ‘in your face kind’ but the more subliminal kind. Viewers and spectators expect to see advertising at a race, but they still don’t want to feel like they’re being pressured to buy something. Getting your logo seen by as possible can do this in the minds of hundreds of thousands of people” (Agrawal 2016:1).
Sponsorship branding is reported to be effective since the graphics are remembered by people and processed much quicker than written text is processed for example (Agrawal 2016). When asked as to the reach of advertising during an event for Formula One, Cartu states that just one event in the Formula One has the power to “expose a company’s brand to hundreds of thousands of fans, hundreds of trade partners and media outlets. This include not only the race day itself on racetrack signage, but consumer and trade events related to the promotion of a single race day” and this is additional to other materials used for promotions such as flags, towels, t-shirts and the like (Agrawal 2016:1). Agrawal (2016) reports that marketing that is excellent is such that connects” with the community. That connection establishes trust and potential buyers believe that this company isn’t only concerned about making money, but also helping the community” (1). The question however, is how it is that Formula One is marketing its brand and as reported by Agrawal (2016), there has been a campaign launched recently by Bernie Ecclestone “about driving responsibly and ‘keeping it on the track’ I think this is a good thing as many people hold Mr. Ecclestone in high esteem. It’s about establishing a feeling about that particular company in the hearts and minds of viewers and spectators. Once you plant that seed of trust, you’ll be able to win them over and you will have a loyal customer for years to come” (1). Loyalty is of utmost importance and reported to be one of those primary drivers in marketing campaigns that are successful (Agrawal 2016). Loyal customers are reported to promote the company to others they know such as colleagues and friends and additionally “have been shown to purchase more, on average” (Agrawal 2016:1)
Formula One is reported to have a new logo which is shown in the following illustration.
Figure 1: Formula One Newly Created Trademark/Logo
Formula One’s new logo is reported to be such that has the objective of embodying “the cores forces of Formula 1 racing: speed, attack and control, while its sleek, sharp interlocking components celebrate technical prowess of Formula 1 engineering teams” (Hitti, 2017:1).
4.2 Product Relevance through the” Paddock Club”
Formula One’s Paddock Club is reported as a “premium global sporting events company” which is reported as making the provision of a race weekend that is both unforgettable and tailored (Edge 2017:1). In addition, the Paddock Club of Formula One provides the very best of seats during the races along with other options including a positioning of viewing that is above the garages of all the teams, although this is not available in tracks such as Monaco (Edge 2017). In addition, those in the Paddock Club have access to the pit lane during the entire event and have an open bar featuring vintage renowned wines and premium Champagne (Edge 2017). Dinning is gourmet with excellent hospitality and Paddock Club members have the access privileges to the “‘Support Race Paddock’ (Edge 2017). The members of the Paddock Club additionally are provided with the official programs as well as ear plugs and are able to access the club lounge in the Paddock (Edge 2017). Parking for Paddock Club members is VIP and there are also private suites that are available branding (Edge 2017).
Further reported is that the Paddock Club is the official distributors of the Formula One team suite and area also reported to be ticket agents that are authorized “for the Red Bull Racing Formula One Team in addition can also gain access to a number of the other top F1 Team Suites” (Edge 2017:1). It is reported that added to the general benefits of the Formula One Paddock Club that its guests also benefit from all of the following:
(1) Tour of the team garage which provides a view at the scenes behind the garage of the teams and an exclusive viewing of the cars (Edge 2017)
(2) Paddock tours: This involves mixing with the VIPs as well as the starts and celebrities in the Paddock and drinking coffee in the motor-home of the team (Edge 2017)
(3) Question and Answer sessions with Drivers: On Saturday as well as Sunday prior to and following the racing those in the Paddock are able to ask questions and get the autographs of drivers (Edge 2017).
(4) Team merchandise: those in the Paddock Club receive Formula One merchandise commemorating the racing weekend (Edge 2017).
(5) Exclusivity: The Paddock Club offers this exclusivity because of their experience in their work for nearly two decades with Formula One (Edge 2017).
(6) The Paddock Club’s great knowledge along with relationships that are quite close with Formula One teams and their drivers puts them in a unique position to make offerings of special access along with experiences that include exclusive access to teams and their drivers and other personalities in motorsports (Edge 2017).
Beers (2015) reports that the average cost for the Formula One Paddock Club membership is approximately $10,000.00. The food is prepared by renowned chefs and guests are offered all the trimmings on can imagine (Beers 2015). In Singapore, Formula One acquired all available boats and limousines for the event (Beers 2015). This is high-level branding on the part of Formula One and which caters to those who are wealthy (Beers 2015).
4.3 Differentiated Product Showcase
The work of Neewoor (2016) report on Formula One brand differentiation and states that this plays a critical role in regard to social media’s use in motorsport. According to Neewoor (2016) Ferrari and Mercedes-Benz” are two of the most famous rival teams in Formula One” (1). Neewoor (2016) states that it would be reasonable to believe that the primary objective of any strategy that uses social media would that of bringing about an increase in the sales of product through brand awareness creating and brand loyalty being increased since “social media is all about reaching and engaging with your customers to increase business” (Neewoor 2016:1). And while this is true this is also reported to be the place “where differentiation becomes a key factor” (Neewoor 2016:1). Formula One involves the racing teams promoting their products through various means and advertising the differences between the various automobiles used in the races and drive by the teams. However, Formula One is promoting the racing through many products which can be viewed on the F1 product website available at: http://f1store.formula1.com/stores/f1/en/c/accessories-&-gifts. This website offers products such as jackets, sweatshirts, t-shirts, collections, video games and collectibles (F1 Store, 2018). In addition, customers can choose from the team branded products as well (F1 Store 2018).
The work of Rosenberg and Donahay (2008) entitled “Brand Personality Differentiation in Formula One Motor Racing: An Australian View” reports that brand personality is defined as the “set of human characteristics associated with a brand. BP is a strategically important construct that can help firms achieve differentiation and sustainable competitive advantage (Rosenberg and Donahay 2008:2). Fan identification is defined as “the personal commitment, perceived connectedness and emotional involvement spectators have with the sports organization, where the team’s failing and achievements are experienced as one’s own” (Rosenberg and Donahay 2008:2). When the brand personality is very strong it makes the provision of fulfillment emotionally to consumers as well as enhancing the brands image and bringing about an increase in the willingness of a fan to stay loyal to that brand (Rosenberg and Donahay 2008). This differentiation of brands within Formula One creates a multiple fan-base for Formula One. It is reported that the personality that is of an ‘ideal’ nature is on that is dependent on the market of the brands as well as the brand’s “positioning within that market” (Rosenberg and Donahay 2008:4). While wins did influence the brand performance within the teams of Formula One the identification of fans was also a strong influence on the brand personality perception (Rosenberg and Donahay 2008). In fact, the identification of fans and its influence on brand loyalty highlights the importance of campaigns of communication that target fans in order to improve outcomes of loyalty (Rosenberg and Donahay 2008).
The work of Dickson and Ginter (1987) reports that while the term ‘product differentiation’ is used quite frequently, that “there has been and continue to be considerable misunderstanding about…meaning and use” (1). Product differentiation is reported to be where the offering of a product is “perceived by the consumer to differ from its competition on any physical or nonphysical product characteristics including price” (Dickson and Ginter 1987:2). This means that there is the creation of differences perceptually speaking according to experience of use, word-to-mouth as well as promotions with differences that are actually being created by the characteristic of the product (Dickson and Ginter 1987). A strategy for product differentiation is reported to be an alternation of “perception so as to result in a state of product differentiation” and as such might be directed toward the market as a whole or just toward segments and may make use of nonphysical product characteristic (Dickson and Ginter 1987:5). Formula One is reported to have had many less viewers than the Super Bowl in 2012 with more than 1 billion globally viewing the Super Bowl and just 500 million viewing Formula One races in the same season (Camber 2012). This means that Formula One must necessarily differentiate its product from such as the National Football League in order to gain and then retain viewers (Camber 2012). Formula One is reported to have understood its lack of a track in the United States meaning that while it was the most popular world auto racing that it was lacking a real presence in the United States. This resulted in in the construction of the new Austin track in Texas (pollard 2011). However, the problem is that Formula One racing taking place on Sunday afternoon presents a challenge since that is the same day of the week that the very popular American football is played and televised and according to Pollard (2011) “Trying to get Americans to watch a race with odd-looking cars, being piloted by foreign guys with funny-sounding names, when their football team is playing will be a monumental task” (1). In addition, there is the problem for available television channels for the races and while Fox is reported to be the station that would be perfect for Formula One, the problem is that Fox is reported also to be “one of the NFL’s partners” (Pollard 2011:1).
Chapter 5: Marketing
5.1 Marketing Methods: Promotion ; Research Tools
The work of Cuellar-Healey 2013) reports that every business requires a strategy for marketing
If they are to realize success. First, it is necessary to understand promotion which is reflecting specifically “to the mix of promotional elements a firm uses to communicate with its current or potential customers about its products or services” (Cuellar-Healy 2013:4). It is reported that a critical decision is that of choosing a focus on either a pull or push type strategy. The push strategy is one in which the product is promoted to wholesalers with those retailers promoting the product to the consumer however, in a pull strategy, the efforts at promotion are such “are directed to the end consumers in such a way that they demand the service or product from those intermediaries and the result is that the service or product is therefore pulled through the system of distribution (Cuellar-Healy 2013). Reported as the five primary elements of promotion are: (1) advertising; (2) personal selling; (3) public relations (4) sales promotions; and (5) direct marketing (Cuellar-Healey 2013). The elements of communication that are not really personal include those of sales promotion, advertising and personal selling (Cuellar-Healey 2013). Advertising can be utilized for the purpose of the creation of awareness on services or products as well as to provide a description of features and indicate the usage as well as to “differentiate it from competitor’s offers, include consumers to buy it, create or enhance its brand image” (Cuellar-Healey 2013:4). Because of the impersonal nature of advertising which is also very costly acquiring feedback is quite difficult (Cuellar-Healey 2013). Another critical aspect of advertising is the public relations with the primary benefit of publicity being that it is an “unpaid way of communication… one of the most credible communication information sources (Cuellar-Healey 2013:6). As Evans (2015) notes data analytics are driving the development of advertising and marketing for Formula One.
5.2 Traditional vs Online marketing
Traditional marketing is generally accomplished through the use of: (1) television; (2) radio; (3) magazines; (4) newspapers; (5) direct mail; and (6) signage (Cuellar-Healey 2013). However, the internet offers a medium for advertising and is reported to be the one which is growing the fastest, and to be the one “which most consumers turn for initial or additional information” (Cuellar-Healey 2013:6). The reach of television has been historically effective however since more and more people are watching streaming television (online) and many of these such as Netflix which do not have advertising, and which is a preferred type of television because there are no commercials this is no longer the best advertising medium (Cuellar-Healey 2013). In fact, none of the historical advertising mediums are very effective for today’s younger generation. Online marketing is reaching a larger audience and many age groups and through various marketing channels including social media websites such as Facebook and Twitter. Push advertising via Facebook realizes millions in revenues each year for companies using this channel of advertising media (Kissmetrics 2017). In addition, Facebook enables a company to “zero in and specify the type of people you are looking for. You can target by location, demographics and interest” which is a highly useful tool for marketing (Kissmetrics 2017:1).
The work of Thurman (2013) reports that marketing communication can be described as “the ideas and actions, which companies use to inform, persuade and or remind the customers about their company or products” (10). Included among these communications are those of “social responsibility initiatives” (Thurman 2013:10). However, it is important to note that across time marketing communication has become conceptualized quit differently and can presently be viewed as “any action meant to persuade the customer that a specific brand has a certain’ image (Thurman 2013:10). Internet technology enables companies to provide instant information to customer and potential customers (Thurman 2013). This has both negative and positive aspects including that the availability of information that is instantly may be either true or false information resulting in positive or in the other case negative advertising (Thurman 2013). Thurman (2013) notes that in the decade of the 1960’s that just three channels used to exist for television viewing and it was possible for a company to reach women through this advertising median and specifically noted is that Tide’s advertised its laundry detergent. However, with the changes of marketing communication company websites are of very high value for a company (Thurman 2013). Websites do require updating more frequently than other types of advertising and must be excellent web pages since this is often “one of the first impressions people get about a company” (Thurman 2013:26). Social media advertising is big however, the company must ensure that they assign a particular department to the social media advertising initiative (Thurman 2013). Facebook is one of the most used social media websites having 1.11 billion users as of 2013 (Thurman 2013).
5.3 Marketing Tendencies
Marketing trends according to Winans (2017) include insights which are cognitive in nature and will work in the revolution of the way that marketers deepen their connections with customers and drive strategic growth Cognitive technologies offer insights into the customer’s attitudes and emotions and it is reported that this is potentially powerful in drawing those who are marketing closer to those who are buying (Winans 2017). Winans (2017) also states to just imagine the use of “analytics to identify the customer journey that led to the most sales for your important buyers. Then with that information in hand, tapping cognitive technology to select the images and offers that would resonate with those buyers”. (4). Cognitive marketing is described as a revolution that is going to happen very quickly (Winans 2017). McDonald 2017 additionally reported on cognitive marketing or what he terms to be “center-brain marketing described as process that integrates creativity and technology to drive the success in a market that machine learning is driving. Specifically stated by McDonald (2017) is that marketing teams who realize success will make sure that data and creativity work collaboratively rather than in an abrasive manner Another trend in marketing is reported by Faupel (2017) who states that companies are presently making a shift from what has been a more mobile strategy to the strategy that works in engaging mobile customers with their product. The marketing trend is going to include the integration of technologies as well as teams and processes to ensure that “the actions customers take on mobile are tied to your internal systems (CRM, marketing and automation)” (Faupel 2017:5). Date is reported to result in the creation of relevance and the higher levels of data that the marketer can “make sense of, the more you can use to create valuable engagement with your customers” (Faupel 2017:5).
Armstrong (2017) reports that marketers are able to become more creative in the influencers they use in reaching the customer base and confirms that the emergent cognitive technologies and their use with social media can be utilized in key characteristic identification and then used in resonating with the audience that is actually targeted. (Henderson (2017) reports that today’s marketers are making use of website and email contact and specifically personalization and the outcomes include the benefits of more efficient marketing budget spending, improvement in the chances the customers will change their loyalty to their company, increases in the loyalty toward the company and acquisitions that are more effective. Valentine (2017) states that “customer-focused marketing teams” are making use of call centers that are enhancing the experience of customers, marketing automation to increase the value of products, and experience improvements in the customer’s in-store and mobile interaction with the company. (Walters 2017) states that email is the number one channel that is best for “ecommerce conversion based on delivering maximum relevance and timely content to your most engaged audience” (10) HTML is reported to be valuable for delivering content that is dynamic (Walters 2017).
Chapter 6 Communication
6.1 Channels of communication ; tools
There are various channels of communication for marketing available as well as there being many tools. This study has reviewed the various marketing channels including radio, television, newspapers, billboards, and other print media along with Internet marketing, email marketing and cognitive marketing tools. There are other considerations with the delivery of content via Internet marketing and email marketing in that it is important according to Waite (2017) to consider the velocity of the rate of data travel to ensure it is quick. Waite (2017) says that veracity is a consideration because data needs to be adequate. Finally, the value of data captured must be such that they result in the creation of additional value for the customers (Waite 2017).
6.2 How the Media are Making F1 Relevant to Digital Audiences
Formula One reported in January 2018 that during the year of 2017 the company had registered “an increase in audience figures across both TV and digital platforms compared to the previous year, with F1 the fastest growing sport brand on social media platforms” (1). Formula One’s market that are stated to be the four at tope are those of Italy, Germany, the UK and Brazil (Formula One 2018). It is reported that those users via social media websites experienced significant growth for 2017 and a total stated of 11.9 million who are following Formula One on YouTube, Facebook, Instagram and Twitter (Formula One 2018). The improvements between 2017 when compared with 2016 is stated as being “up to 54.9% (Formula One 2018:1). The following chart shows the growth in social media for Formula One and its competitor.
Figure 2: Growth of Social Media in 2017 According to Formula One Report
Source of the figure 2: Formula One (2018)
6.3 Traditional ways of Distributing Content Versus New Entrants
As already discussed very in depth in this research paper in writing, the traditional methods of the distribution of content are no longer viable in order to target the consumer audience in general. This is because so many of customer in today’s day and age are more likely to be influenced by Internet marketing and specifically by word-of-mouth marketing via social media websites.
Chapter 7 Case Study on Formula One
Williamson (ND) reports on the history of Formula One in an ESPN publication and states that the name ‘Formula One’ is a reference to “a set of rules to which all participants and cars must comply” (1). Formula One was originally “known as Formula A” and has roots that trace all the way back to the earliest of all racing motor days having emerged from the racing scene of Europe and during the years in between the two World Wars (Williamson ND:1).
7.2 Organizational structure
The work of Ciolfi and Stuart (2013) entitled “Organizational Succession in F1: An analysis of Bernie Ecclestone’s Role as CEO of Formula One Management” reports that the organizational structure of Formula One is such that has a structure of management that is of a very complex nature. The organization is reported to be comprised of what is “a large, intertwined network of many stakeholders. These stakeholders range from the world governing body of motorsport ((Fédération Internationale d’Automobile-FIA) and their national representatives, the teams (Formula One Teams Association-FOTA) and drivers (Grand Prix Drivers Association – GDPA), sponsors, merchandisers, suppliers, the media, and fans” (Ciolfi and Stuart 2013:2). It is reported that the individual stakeholders are generally independent, and their goals are unique in terms of “their organizational mandate” (Ciolfi and Stuart 2013:2). For example, it is reported that the mission of Ferrari in terms of its Formula one participation is to bring about visibility increases and well as sales increases for its cars (Ciolfi and Stuart 2013). However, Red Bull’s participation in Formula One is reported to be “mandated by F1’s inclusion in the Red Bull’s overall marketing portfolio of extreme sports” (Ciolfi and Stuart 2013:2). Along with the many stakeholders of Formula One are the governance which is formed by three primary protagonists including those of; (1) The FIA; (2) Management of Formula One; and (3) the competition reported to be primarily “represented by FOTA” (Ciolfi and Stuart 2013:2). Reported to be at the head of the global and “multi-billion-dollar organization” over most recent years is Bernie Ecclestone who is attributed for developing Formula One into what is now a sport that is global in its nature (Ciolfi and Stuart 2013:2). CVC Capital partners is reported to have for some years now and who is a “leading private equity and investment company to have owned F1’s commercial rights” (Ciolfi and Stuart 2013:2). In the 1980’s, Bernie Ecclestone is reported to have been the Brabham F1 Team owner and to have realized the marketing and financial potential of the sport being televised and overtook the contractual negotiations that were the commercial aspect of the sport and ultimately is reported to have “negotiated a deal to purchase F1’s commercial rights from the FIA” (Ciolfi and Stuart 2013:2) Bernie Ecclestone is reported to be the Formula One Group’s current CEO “a cluster of subsidiary companies (e.g., Formula One Management, Formula One Administration, and Formula One Licensing BV) responsible for the commercial exploitation of F1 (Formula One, 2012a). As CEO of Formula One Group, Bernie Ecclestone acts as CEO of all subsidiary companies” (Ciolfi and Stuart 2013:2).
Since Bernie Ecclestone was 80 years old in 2013 it was reported that a great deal of speculation was going on about the succession of Ecclestone however, since the time of the 2013 report Bernie Ecclestone sold his commercial right in Formula One and is reported that he sold them to Liberty Media with the FIA’s approval (Birchall 2017). The CEO of Formula One is now Chase Carey who is also reported to be the 21st Century Fox’s vice chairman (Birchall 2017).
The organizational structure of Formula One is a complex hierarchy of management due to the many teams that are in the Formula One sporting environment. It is reported that the Delta Topco company is the means by which shareholders control the Formula One Group (Sylt 2007). There is also registration of other holding companies located in Luxembourg, Jersey and the UK that are in control of SLCE Holding group comprised by a few subsidiary companies and which are companies that are in control of management, right and operations licensing for the world championship of Formula One (Grand Prix 1997). A company that is Dutch-registered and specifically, Formula One Licensing BV is the company with ownership of Formula One’s logo and trademark (Grand Prix 1997). FOM or Formula One Management is reported to be the primary company operating for the group and to be in control of its organization, right of promotion and broadcasting for Formula One (The Economist 2011). The Concorde Agreement is that which determines the amounts that the teams are paid (Grand Prix 2011). Trackside advertising is handled by a company registered in Switzerland known as Allsport Management SA as well as being in charge of the Paddock Club for Formula One (Saward 2000).
However, in a 2016 report published by Liberty Media Corporation entitled “Introducing Formula One Group” it is reported that Greg Maffei is the actual President and the CEO of Liberty Media Corporation and that Chase Carey is a Formula One Chairman. Bernie Ecclestone will remain Formula One’s CEO under this agreement (Liberty Media Corporation 2016). Liberty Media reports that it will work cooperatively and collaboratively with the management of Formula One in order to drive the next growth phase for Formula One (Liberty Media Corporation 2016). The Formula One Group Ownership is shown in the following figures:
Figure 3: Formula One Ownership Groups
Source: Liberty Media Corporation (2016)
There are going to be two transactions governing the purchase by Liberty Media Corporation with the organizational structure to be as the following figure shows after the first and second transactions.
Source: Liberty Media Corporation (2016)
The Formula One teams are shown in the following figure.
Figure 5: Formula One Teams
Source: Liberty Media (2016)
7.3 Management and Economics
The work or research of Nichols and Savage (2017) which is entitled “A Social Analysis of an Elite Constellation: The Case of Formula 1” reports that over the past decade that there has been so much done on elite studies with a shift in focus “toward the more dynamic world of financial elites” (1). The theoretical framework of the elite studies is “that older forms of elite analysis might overstate the coherence and consistency of elite power network” (Nichols and Savage 2017). It is what Nichols and Savage (2017 are saying and their claim that a study of Formula One is such that make offerings of “an unusual but strategically essential – vantage points for thinking about elites more generally” (2) Formula One is reported to be such that “forms a distinctive technical, engineering and meritocratic elite” (Nichols and Savage 2017:2). Formula One, as an industry in its whole has realized a total of 11.1 billion in revenue over the past decade and one half with spending stated at 1.9 billion and its average budget to be $194 million (Nichols and Savage 2017). Formula One presented and directly is reported to employee approximately 6,000 individuals and who are working “with a large network of motorsports suppliers – the Williams team used 3’000 UK companies alone in a six-year period (Nichols and Savage 2017:3). These suppliers were mostly comprised of approximately 4’500 different companies and who are actually reported to have employed “a minimum of 41’000” individuals and to have had a turnover annually of approximately $9 billion (Nichols and Savage 2017:3). The elite formation that is reported to be inherent for Formula One include “the roots of motor racing in upper class culture epitomized by the gallant drive, it directly exemplifies the decline of the old fashioned, languid, gentlemanly elite associated with the power” (Nichols and Savage 2017:4). Finance is significant for Formula One and Ecclestone was playing what was a primary role in placing the company as globally present and was reported by Forbes to be the world’s 435th globally richest person (Nichols and Savage 2017:4). Formula One is also reported to be “massively vested in the proliferation of desire and fantasy, ranging from the presentation of the cars to the display of glamorous female models on the Grand Prix circuits” (Nichols and Savage 2017:4). In addition, this glamour is something that can be traced all the way back to the factories due to the “suspended glass walkways and clean lines of the McLaren Technology Centre in Working Surrey” which cost approximately $300 million (Nichols and Savage 2017:4).
According to Bob Fernely, reported to be the FOTA Deputy Team Principle:
“The job of F1 is to help develop the technologies, as with the V6 programs, so that we can benefit the whole economy through the manufacturers…. I think F1-and maybe I’m a bit of a dinosaur- is a celebration of excess. We have the most powerful engines, we have the best show in motor racing, we have the best parties and the prettiest girls, and we should not lose that. We are a show at the end of the day and the show must be maintained” (Nichols and Savage 2017:5).
Therefore, Formula One is about putting on a massive scale show complete with glamour and richness all of which appeals to the viewers (Nichols and Savage 2017). Nichols and Savage (2017) state Formula One “is renowned as an environment of turbulence, immediacy and extreme innovation. Media reports portray a world of short-termism and instability. The car itself symbolizes this-it passes from being an idea in a designer’s head, through competition, to a museum piece within just 24 months (5). However, the industry’s competitiveness and its pace are within the fact that in the last half century of competition in Formula One that there is not a team that has four times in a row won the competition (Nichols and Savage 2017). It is the process that are long-term and accumulative that are reported to be that which “not only underlie the industry, but are indeed the very bedrock of its constitution and continue success”. (Nichols and Savage 2017:5).
7.4 Current marketing plan and approach in F1
Formula One’s current marketing plan involves several aspects of marketing including those of (1) promotion of races; (2) broadcasting; (3) Sponsorship and advertising; and (4) others including hospitality (Liberty Media Corporation 2016). Race promotion is reported to account for less than 30% of Formula One’s revenues with contracts being typically between five and ten years in length (Liberty Media Corporation 2016). Promotion of races include the hosting fees, the stage events and promotion of events (Liberty Media Corporation 2016). Broadcasting is reported to include contracts with less than 100 broadcasters which comprises less than 30% of Formula One’s revenues with contracts generally set at between three and six years in length (Liberty Media Corporation 2016). Formula One is reported to be “historically produced live feed for all races” with the exception being Monaco (Liberty Media Corporation 2016:11). Sponsorship and advertising is reported to represent less than 15% of Formula One’s revenue and to have contracts that are typically for three years or more (Liberty Media Corporation (2016). Sponsorship and advertising is reported to be inclusive of official suppliers and global partners along with title sponsorshiips that are specific to individual races (Liberty Media Corporation 2016). In addition, advertising on the side of the track is included in this category (Liberty Media Corporation 2016). In the category of ‘other’ which represents less than 20% of Formula One’s revenue are those of hospitality which is inclusive of the Paddock club, already described in this study (Liberty Media Corporation 2016). Also, included in the ‘other’ category is that of television productions as well as post production, freight, feeder racing for the services along with GP2 and three as well as licensing and other unnamed sources (Liberty Media Corporation 2016). As of 2016, Formula One had less than $9.3 billion revenues that we under contracts that were of a long-term nature (Liberty Media Corporation 2016).
7.5 The role of effective marketing strategies in F1’s development
Formula One is reported to have a business model that is very low in risk with contracts that are for the long term as well as including many of the following components:
1) Revenues streams that are multiple (Liberty Media Corporation 2016)
2) Government counterparties that are of high quality (Liberty Media Corporation 2016)
3) Revenue renewals that are staggered and contracts that are long term (Liberty Media Corporation 2016)
4)An approximate $ 93 billion in revenue that is long term and contract through the year 2026 (Liberty Media Corporation 2016)
5) Stated to be representative of “5.1x LTM 7/31/2016 revenue” (Liberty Media Corporation)
6) F1 contracts with obligations that are limited in nature (Liberty Media Corporation 2016)
7) The largest items of cost is payment to the teams stated to be primarily variable (Libery Media Corporation 2016) and (leading to number 8)
8) A business that is not ‘hit-driven’ (Liberty Media Corporation 2016)
This information is show in the following figure entitled “Low Risk Business Model with Long-Term Contracts”
Source: Liberty Media Corporation (2016)
7.6 Business Development Plan Effectiveness
Formula One’s business plan is highly effective since its racing business is so inherently linked to the development of automobiles. The engines in the cars racing in the Formula One races are those developed by the teams and the companies who sponsor those teams which connects in with the mass consumer base and automobile purchases. For example, Evans (2015) notes that Formula One “in addition to the blistering excitement of race day… is well known for its technology innovation and advancement that later find their way into the consumer auto industry. Examples include a multitude of innovations related to engines, transmission, braking and safety” (1). Formula one is making great use of analytics according to Evans (2015) who states that the Formula One team “collects more data now within a single race weekend than they did across every race weekend from 1998 to 2006 combined” through the use of data analytics (1) Formula One’s business plan is rock solid as it has long-term contracts, a large audience base, a complex sponsorship and advertising strategy along with its elite Paddock Club. The business plan has layer upon layer of intricately connected business development and integration ensuring the success of Formula One. Formula One is taking in more revenue than it is paying our which can only be a good thing and is very favorable for them which result in success being realized at its bottom line.
Chapter 8: Sponsors and Their Impacts in F1
There are really many trademarks and logo that actually belong to Formula One included those stated on the Formula1.com website under “Legal Notices” which are as follow:
1) “F1 Logo (Script)”
2) “FI Formula (Script also)”
3) “F1 Formula (Logo)”
4) “F1 Logo”
5) “FAI Formula One World Championship Logo”
6) “Formula One Paddock Club logo”
8) “Formula One”
9) “Formula 1”
10) “FIA Formula One World Championship”
11) “Formula One Paddock Club
12) and finally, “Grand Prix (Formula1.com 2018)
Formula One reports that it makes offerings to its promotors including “F1 Event Title Partners, global partners, suppliers and licensee exclusive rights” to both make use of all the trademarks of Formula One as well as be associated directly with the Formula One brand that that the Formula One company takes a very great deal of car in order to have full protection over their brand’s image, reputation and ensuring that the company’ trademarks are utilized properly and correctly (Formula1.com 2018:1). Formula One’s trademarks should never be used by any third parties unless they have a special approval or permission or even a license from Formula One to actually do so (Formula1.com 2018). The following are reported to be word marks that are permitted for use:
¢ “Formula 1™”
¢ “Formula One™”
¢ “FIA Formula One World Championship™”
¢ “Grand Prix™”
¢ “F1 Grand Prix™”
¢ “Formula 1 Grand Prix™”
¢ “Paddock Club™”
¢ “Formula One Paddock Club™”
¢ “F1 Paddock Club™” (Formula1.com 2018:1)
The event titles reported to be permitted for use include all the one stated as follows:
¢ “FORMULA 1 HEINEKEN CHINESE GRAND PRIX”
¢ “2018 FORMULA 1 AZERBAIJAN GRAND PRIX”
¢ ” FORMULA 1 GRAND PREMIO DE ESPAÑA 2018 ”
¢ ” FORMULA GRAND PRIX DE MONACO 2018 ”
¢ ” FORMULA 1 GRAND PRIX DU Canada 2018 ”
¢ ” FORMULA 1 GRAND PRIX DE France 2018 ”
¢ ” FORMULA 1 GROSSER PREIS VON ÖSTERREICH 2018 ”
¢ “2018 FORMULA 1 ROLEX BRITISH GRAND PRIX ”
¢ ” FORMULA 1 GROSSER PREIS VON DEUTSCHLAND 2018 ”
¢ ” FORMULA 1 MAGYAR NAGYDÍJ 2018 ”
¢ ” 2018 FORMULA 1 BELGIAN GRAND PRIX ”
¢ “FORMULA 1 GRAND PREMIO HENEIKEN D’ITALIA 2018”
¢ “2018 FORMULA 1 SINGAPORE GRAND PRIX”
¢ “2018 FORMULA 1 VTB RUSSIAN GRAND PRIX”
¢ “2018 JAPANESE GRAND PRIX”
¢ “2018 FORMULA 1 UNITED STATES GRAND PRIX”
¢ ” FORMULA 1 GRAND PREMIO DE MEXICO 2018 ”
¢ “FORMULA 1 GRAND PREMIO DO BRASIL 2018”
¢ “2018 FORMULA 1 ETIHAD AIRWAYS ABU DHABI GRAND PRIX” (Formula1.com 2018:1)
As it is very strict, whenever someone want to use any of Formula One’s logos or script marks in any for example printed or online materials they will have to use the following disclaimer “This website is unofficial and is not associated in any way with the Formula 1 companies. F1, FORMULA 1, FIA FORMULA ONE WORLD CHAMPIONSHIP, GRAND PRIX and related marks are trademarks of Formula One Licensing B.V.” (Formula1.com 2018:1). In relation, to sponsorship and endorsements the following is stated by Formula One “Our Permitted Word Marks cannot be used in any manner, in any medium, that implies the Formula 1 companies’ affiliation with or endorsement, sponsorship, support of any third party or their product or services. They cannot be used in conjunction with an unauthorized third party’s brand or logo” (Formula1.com 2018.1).
Sponsors are not even allowed to make use of Formula One’s ‘Word Marks’ on any type of services or goods related to promotion or sales unless they have “an express license from the Formula 1 companies. This include but is not limited to the manufacturing, distributing and promotion of good or services” (Formula 1.com 2018:1). In other words, all the sponsors of Formula One could not say for example, please make caps or t-shirts which will have the Formula One logo or Word Marks even though they are a sponsor without receiving beforehand the express permission for Formula One to do so. In addition, sponsors are not allowed to use Formula One race tickets as prizes or in any type of giveaway or competition unless Formula One also expressly authorized them to do so (Formula1.com 2018). Adding to all of that, Formula One prohibits all the date on timing of the races or results to be utilized since they are protected by the database and copyrights laws although it is reported that “individual pieces of the data can be used incidentally within editorial material to genuinely inform but substances pieces of the data may not be reproduced or used commercially” (Formula1.com 2018:1). There are also many restrictions on how the event titles are written as they area also required to be written either in title case with the trademark symbol following the event or they must be written in capital letters which does not make a requirement of the trademark symbol of TM (Formula1.com 2018). However, it is reported that one exception exists and that “in editorial copy e.g. Body of text, news and race reports, Word Marks should still be written in Title Case or BLOCK CAPITALS, to identify use of trade mark” although the trademark symbol is reported in this case to not be mandatory (Formula1.com 2018.1).
There are also some other added restrictions and regulations for sponsorship which are specific to the racing teams. For example, there is strict regulations on the paint on car cars since they are only just developed for Formula One and have to be very light as well as be incredibly light in terms of weight. (Formula1.com 2018). It is also to be said that very good money is paid by the sponsors for their logos to be placed on the racing cars meaning that both the position of and size of the logo of the sponsor is completely dependent upon the amount of money that is paid (Formula1.com 2018). In addition, all of the cars that a team owns are required to be in the exact same color (Formula1.com 2018). The liveries (stickers) on the cars are those placed by sponsors and those change quite frequently (Formula1.com 2018). It is reported that “the advantage of doing business the NASCAR way is that major sponsors can change from one race to the next. There is no consistency, except the car number” Formula1.com 2018). There are even more regulations such as the car having the driver’s number displayed visibly from both the front and the side and “on a 25 cm TV screen” (Formula1.com 2018).
8.2 Formula One Safety Measures
The work of Golson (2014) reports on Formula One safety measures stating that there are many of these in today’s version of Formula One racing. First thing noted is that the campaign to ensure safety in Formula One is relentless in nature since there are “pages and pages of safety regulations, and the cars undergo stringent dynamic, static and loads tests to ensure the safety of drivers” (Golson 2014:1). It is reported to begin with the primary part of the chassis of the car known as the monocoque (French word) stated to include the survival cell of the driver along with the cockpit all of which “is surrounded by deformable crash protection structures that absorb energy during a crash, plus a 6mm layer of carbon and Zylon (which is also used in armored vests for example), so things like carbon fiber splinters don’t injure the driver in the event of a crash (Golson 2014:1). In addition, each car is reported to be equipped with a “fire suppression system” that is driver activated or for example by a race Marshall activated which spreads foam that is fire retardant, and which surrounds the enginge and the chassis (Golson 2014:1). In addition, there is the capability or possibility of removing the driver from the racing car through the whole seat being removed working to reduce spinal damage risks (Golson 2014. Prior to racing, the pilots and drivers are required to perform a demonstration that they are actually able to exit the car in a time of only five seconds only having to remove their seat harness which has six points although just one hand movement can open the seatbelt (Golson 2014). It is reported that there is also a requirement that the car’s steering wheel can be installed in five seconds after the drive exit and every car must be equipped with a data recorder for accidents keeping information on deceleration forces and speed so that the doctors are able to accurately understand about how bad or severe the impact actually is when an accident occurs (Golson 2014). Next thing required are “Nomex fire-resistant suits” that are and should be able to withstand between 600 and 800-degree temperatures for in excess of 11 seconds and the suit’s inside not being warmer higher than 41 degrees (Golson 2014). The next required thing for Formula One drivers are the helmets that are constructed from “carbon fiber, polyethylene and fire-resistant Kevlar” (Golson 2014:1). The visor on the helmet is equipped with a special chemical that prevents fog so that the driver’s vision is not impaired during the race which used to be the case in the early days of Formula One and the helmet also have special intakes for air to flow and to ensure that the head of the driver is kept cool during the whole race (Golson 2014). The drivers in Formula One are also required to wear a device called HANS which actually standi for ‘Head and Neck Support’ that is connected to the helmet of the driver and positioned beneath the seat and which works in preventing the vertebrae of the driver being stretched as well as providing head stabilization when an accident occurs (Golson 2014). The collar works through absorbing any forces on the driver’s head and then redistributing these (Golson 2014). In the past the entire body of the racecar driver could be seen but today nothing is seen but their head (Racecar Engineering 2017). Noble (2017) reports that fans of Formula One are not happy with the new changes due to the limited visibility of drivers. Despite the mixed reviews this system will be implement by Formula One n 2018 (Groves 2017). It is reported however, that the Formula One safety car of the future might well become one without a driver toward promotion AI (Artificial Intelligence) (Nugnes and Noble 2017). However, there are no plans to replace all Formula drivers with artificial intelligence in the future (Nugnes and Noble 2017) and hopefully in my opinion it will not happen.
8.3 Analysis and correlation between Safety Measures and Popularity
According to the work of Walthert (2013) the largest problem that Formula One has in the present days is that it is lacking in danger (not spectacular enough) and specifically in professional words that “the specter of death no longer hangs over every Grand Prix, and while this is certainly a positive development, it has robber the Grand Prix racing of some of its essence (1). A former driver pilot in Formula One, Anthony Davidson once said in an interview “I feel a driver should be challenged and should be punished for mistakes. It’s what makes people follow sport in a quite gruesome way-it’s the danger, racing drivers should be heroes” (Walthert 2013:1). The first F1 World Championship race is reported to have been held in 1950 and it is related that in these earlier days of racing that death occurred quite commonly (Walthert 2013). In fact, it is reported that nine drivers were killed in 1955 through till 1961 (Walther 2013). The improvements brought about with safety standards has greatly decreased fatalities in Formula One races with the last driver who died racing being in the San Marino Grand Prix in 1994 (Walthert 2013) adding the death of Jules Bianchi in 2015 sometime after his accident in Japan. Since that dangerous time safety regulations have ensured that circuits that were held to be too dangerous were taken off the racing calendar (Walthert 2013). While the new standards on safety in Formula One races have resulted in death reductions among drivers at the same time it Is reported that these standards of safety “have also presented F1 with a double-edged sword: No one… wants to see drivers die, but by eliminating the potential for death (as nearly, as possible), the danger which led to the popularity of the sport is lost” (Walthert 2013:1). It is reported that the glamour that remains absent the danger is both superficial as well as empty (Walthert 2013). There are circuits that are modern and in which the cars can be pushed to the limit by drivers who have no fears and at the same time sponsors do not have to cope with their logo winding up stuck against gravel or crashed into the barriers (Walthert 2013). The new Halo is a protective system that extends above the cockpit of the Formula One race cars (ABC News 2017). Knight (2017) reports that the fans response to the use of the Halo is quite mixed: However, Formula One is adding a race that should create excitement in the United States. It is reported in an article in USA today that a street race in the United States in being planned by Formula one and specifically Liberty Media. Liberty Media is reported to be focused on “driving growth in the United States” (USA Today 2017:1). Liberty Media has realized that investment is needed in the United States by Formula One who has long neglected to do so (USA Today 2017).
Chapter 9 Surveys
The survey used for this study consisted of twenty obligatory closed ended questions as well as one bonus question which was not obligatory and close ended as well. The questions have been designed to try and answer the research questions of this study and they were also designed to be as unbiased as possible and make for a clear preference and choice for the survey takers. The survey as for example been posted on social medias such as Facebook where an animation (Gif) of a Formula Car passing by very quickly as well as a short text was written to encourage potential survey takers to actually take the survey.
Here under are three figures to give a quick insight into the survey that was developed:
9.2 Targeted segments
Due to the worldwide scale of Formula One’s potential fan base and on the basis of answering the research questions such as how to attract more fans meaning to bring totally new fans to the sport, the survey has targeted most of the potential market without including demographic segmentation, psychographic segmentation nor geographic segmentation but included those factors in the questions resulting in an overview of different markets segment being beneficial for the sake of this study.
The full responses overall responses including graphs with percentages are to be found in the appendix of the study. The questionnaire itself revealed that approximately 48% of individuals responded that they had never watched a Formula One race live or on television which is meaning that there is a large base of potential fans that Formula One has not managed to tap into. Finding in this study also shows that more than 62% are not willing to pay to watch Formula One with slightly over 20% willing to pay between $22 and $50 to watch Formula One and as the price for Formula One race day tickets rises the percentages of individuals willing to pay for the race ticket declines. When asked what would make Formula One more interesting the responses to the surveys demonstrated that the top answers were those of more competition and improved interactions although it is important to note that more risk and faster cars would serve to make Formula One more interesting although higher safety standards were also mentioned by respondent which reflects this real dilemma between safety and risk for Formula One. When asked whether the respondents knew that Red Bull, UBS and Rolex are sponsoring F1, 65% of respondent were not aware of this fact. It is also important to note that nearly 68% of respondents stated that they had not recently seen any Formula One advertising which means that Formula One needs to increase advertising to reach those who presently have no interest in Formula One. The image that respondents held of Formula One racing include the top response at 33.16% who consider Formula One to be boring although it was also held to be danger and exciting, dangerous and unappealing and glamorous and passionate. In regard to the new halo device the majority of respondents had not even heard of it with a small percentage stating they did not like the idea of the halo device and more than 20% of respondents stating they like the idea of the halo device showing that Formula One should do more to inform fans and potential fans.
CHAPTER 10: INTERVIEWS
Interviews were chosen as a form of questioning participants as part of qualitative research they were completed by the interviewer based on what the participants were answering. This method is efficient in receiving a productive feedback constructed of different opinions from different people linked in some way to the Formula One world in this present study. The selection was based on their professional background.
10.2 Style and Questions
The interviews in this study took place in the form of one-on-one setting (for Expert Number One, Four and Five), Facebook messages (For Expert Number Two) and skype interview (For Expert Number Three, Six and Seven) and the following questions were asked to all participants:
Q1: What image do you think Formula One has established in the eyes of the fans?
Q2: Do you think viral and more aggressive marketing approaches might help F1 to win new international markets?
Q3: Should Formula One marketers strategically bet on social media networking and the contemporary channels of mass communication?
Q4: Would you say that internal competition between teams and pilots is decisive in making Formula One more popular?
Q5: Why do you think that big sponsors use F1 for marketing purpose? In other words, what are the benefits for them?
Q6: How can Formula 1 become more attractive for sponsors?
Q7: What are the feasible growth strategies for Formula One in the foreseeable future?
Q8: What do you think about the current racing safety measures such as the new “Halo” feature? Can there be such a thing as too much safety?
Q9: Should we attribute F1’s popularity solely to the factor of risk and if it was less risky would it be less popular?
Q10: Is Formula One’s legacy enough to withstand marketing challenges in the 21st century?
The style of the questions is open-ended and have been specifically chosen to potentially help in answering the research questions of this study. The questions are also more specific, sharp and detailed than for example the surveys questions since the people interviewed are more familiar with the world of Formula One.
10.3 Answers, Conclusion and Recommendations
It has to be said that the full Interview responses is joined in the appendix of this study.
Regarding the first questions asking what the experts in the study believed that that Formula One has established in the eyes of fans, Expert 1 (Paul Stewart) stated that he believed that Formula One has effectively “established a stronger brand and is more accessible to the fan”. Expert 2 (Ralph Firman) responded to this question stating that Formula One is “pure racing and unpredictable” in terms of the fan’s image of Formula One. Expert 3 (Matt Turner) however radically disagreed stating that Formula One is “predictable, unfortunately”. However, when Expert 4 (Anker Thomsen) was asked the same questions he stated that Formula One “is all about speeding and pushing the limits”. Expert 5 (Karina Rudakova) noted that Formula One has an image for being “dangerous, fast, elite” while Expert 6 (Arnaud Barbezat) stated it had an “Valiant and Brave image like heroes for kids” while expert 7 funnily defined Formula One has having an image of being “a bit of a crazy sport”.
When the interviewee in this study were asked in the interview the question of whether they think viral and more aggressive approaches might assist Formula One to win new international markets, Expert 1 (Paul Stewart) noted that in today’s world that it is “vital that they work harder to win new markets as competition is a lot tougher than it used to be”. Expert 2 (Ralph Firman) stated in the interview in response to this question that “Yes, especially in order to win a younger audience and it seems rebranding is currently taking place. Expert 3 (Matt Turner) responded to this questions by stating that Formula One should use viral and more aggressive marketing since “it has to be run as a big show like American sport league such as the NFL and the NHL, there should be more merchandise and broader coverage of F1 worldwide”. However, Expert 4 (Anker Thomsen) differed in his response to this question stating that viral and aggressive marketing should not be used by F1 to win new international markets and stated a belief that this will not secure the loyalty of fans. Expert 5 (Karina Rudakova) was more in favor of viral and aggressive marketing of F1 to win new international markets but notes that it is a risky strategy as Expert 6 (Arnaud Barbezat) also pointed out the factor of risk while Expert 7 (Ana Pavuna) was in favour of making it more “engaging to the fans”.
When asked the question of whether Formula One marketers should strategically bet on social media networking and the cotemporary channels of mass communication, Expert 1 (Paul Stewart) stated that they do no not have much in the way of experience with social media but however, would “love to see a stronger presence on television”. Expert 2 (Ralph Firman) responded to this question by stating that they do use Facbook and would “like to see the interaction from fans on F1 related pages” noting he is using an internet box in order to watch television races because there is little in the way of television coverage on French Television in Monaco. Expert 3 (Matt Turner) answered this question by stating that certainly Formula One should use social media with live coverage of races online being a priority for Formula. While Expert 4 (Anker Brask Thomsen) answered by saying that he “don’t use social medias… but it would be a good idea to use this channel… to target the younger generations”. Expert 5 (Karina Rudakova) stated that “everyone should be on social media” as if it was an evidence and logical to bet on social media in today’s world. Expert 6 (Arnaud Barbezat) was agreeing with the previous expert as he answered that “Social Media should always be used in 2017” while expert 7 (Ana Pavuna) was also agreeing with those views as she stated that “all channels possible should be used…if the budget is there”.
Questions four in this study asked the experts in the interviews whether internal competition between teams and pilots is decisive in making Formula One popular.
Chapter 11 Research Questions Responses
The objective of this work and first research question has been to examine how Formula One can attract more viewers and then retain those viewers through effective marketing. Formula has been losing fans over the last years for numerous reasons such as for example not being competitive enough and therefore not entertaining enough to retain and attract viewers effectively. In addition, the current trend of a world going green and being more and more concerned with sustainable energies, the question arises: is there a future for Formula One and if so, which one? Which is a sign of the palpable uncertainty felt in the sport actually one thing is very clear though is that in order to attract new fans and grow it is now more important than ever for the group to completely reinvent itself. This study first asked the research questions of how it is possible for Formula One to attract more fans and become more attractive through effective marketing while growing in the future? The second research question in this present study was one that asked why is it that sponsors use Formula One for marketing purposes.
This study has found that Formula One’s business model is very different from the vast majority of other sport events that are major with Liberty Media controlling Formula One’s commercial rights. F1. F1 is the subsidiary group and get to keep broadcaster revenue. However, this study found that Formula One’s popularity has been on the decline, but this is not a supported fact since this study has also found that Formula One’s fans are spending additional money with each passing year. This study did find that races that are hosted in cities with a dense population are reported to be less successful than those held in outlying cities. This study also found that there is an inherent link between tourism and sports and that this is something that Formula One can expound upon to increase its sale and popularity as well as attendance at its racing events since tourism marketing of sport events is a highly successful venue of promotion of marketing events for the sponsors. In addition, sporting-event linked tourism offer brand exposure opportunities to audiences that are then expanded, and this means a great deal to those corporate sponsors of Formula One. However, the costs associated with the financial commitment required of fans to view the event live are high with many choosing to watch television broadcast of those races. However, due to the decline of those viewing the races, Formula One needs to develop a marketing plan that is more attractive to its fan base. This study found that a consensus is existent in Formula One and specifically among those supporters of Formula One that reform is needed while drivers are desiring more in the way of competitiveness within the sport. Free-to-air broadcasting is no longer viable as most individuals are watch streaming televisions it seems and the subscriptions prices for a season of Formula One races is very high and is likely a contributor to the poor figures for fan viewing of the sporting events of Formula One. Title sponsorship has been found in this study to no longer be secure. One of the most important thing in Formula One is the branding of sponsors on the Formula one race cars. Track advertising promotes the purchase of those products advertised and certainly sponsorship of Formula One race cars certainly supports advertising and marketing for those who are sponsors. Top advertisers at Formula One races in 2016 were those of Pepsi, Mobil 1, Anheuser-Bush, AT&T, Frito-Lay, Prince, Pirelli as well as many others. This study found that the more that consumer view or see the brand then the more common that brand will become for the consumer and this results in them being subliminally affected to choose that brand in the future. Advertisers at Formula One races enable their brand to be viewed by individuals by the 100s of thousand. Findings in this study include that sponsorship branding is effective since the graphics are remembered by people and processed much quicker than written text is for example processed. Just one Formula One event enables a company and its brands to reach not just fans by the thousands but also that many number of potential partners in trade as well as media outlets. This is not just signage at the event but also include items used in promotions like t-shirts and caps and so forth.
This study found that marketing that is connected to the community is a great way to market a brand since this connection is such that it enables trust and will in potential customers that the company is not focused only on making money but that the brand is also community-focused, in other words it feels closer to the customers. This result in meaning that Formula One can use community-focused marketing through becoming involved in communities which will result in trust being constructed between the larger community of consumers and Formula One. Community involvement results in Formula One consumers and fans becoming more highly engaged with Formula One and feeling that they have an ownership in the success of Formula One. Any community-focused initiative should be of the type that ties in the community events with Formula One racing events. This could include for example VIP seating for various communities at the races which would in the short term reduce Formula One’s profits but as the fans become more and more integrated into involvement in Formula One events they will be more interested to be present at races, and feel like they are missing something when they are not present. Small communities of racers will bond with one another after attending races together and this will draw the fans back to the races since they have become very engaged in the racing events. In addition, through community-focused initiatives Formula One can have drawings for seasons passes for winners in each of the community initiatives. This will be very likely to mean that other individuals in that community will attend races with their friends who won the season passes and across the foreseeable future will develop communities within the Formula One events community that are eager to stay engaged with Formula One events. As this is a great way to market a brand, and for all the reasons listed throughout this study, sponsors choose to use Formula One for marketing purposes and it is indeed such a great showcase for any sponsors that want to attract more fans and that’s why so many lead sponsors decide each year to sponsors many things in the world of Formula One.
The third research question that was asked in this present study was the one asking if there is a direct relationship between the Safety measures in the sport and its popularity. This study found that the dangers of the Formula One races had a very special kind of attraction for fans and that some of the sport’s drop in its popularity is due to the lacking excitement so to say which is surrounding the dangers of the sport. It is also a very complex question in its nature because as written earlier in this study no one wants to see any more fatalities so it is like a double-edged sword because Formula One is losing popularity due do the lack of action per say but at the same time has a moral duty to make the sport safer.
The fourth question asked in this study was in what way can a business development plan become more efficient based on professionally prepared marketing strategies. Findings in this study include that linking for example tourism and racing events would be a very highly effective way to increase fans attending Formula One races. Therefore, from this point of view a professionally prepared marketing strategy would be very effective. In addition, professional planning of the community-based marketing strategy would realize a high level of success since this type of professional planning would target communities situated strategically on a global scale to ensure a wide coverage of communities throughout the world of Formula One’s community-focused marketing strategy.
Chapter 12 Findings and Recommendations
The findings in this study include that Formula One needs to make its races more accessible to viewers and while presently the majority of viewers, according to the responses in this study, are not willing to pay large amounts to view Formula One races that through community initiatives and engaging fans and potential fans that Formula One can create a higher level of interest in the sport and ultimately create new fans as well as highly engaging existing fans and therefore hopefully retain them. In other words, Formula One needs to reach out and create excitement about Formula One among the population globally. This study is pointing in the direction of recommending that the community initiatives be such that provide a seasonal membership fee to a couple of individuals in strategically selected communities globally because this will result in friends of those with the seasonal memberships races attend with them. This turn will create communities of racing fans who can get to know one another and develop bonds and make race-going and event for these groups just as has occurred for fans in the NFL and other major sporting events. Formula One needs to construct their fan base in this pyramid type fashion which ultimately when integrated into groups in the communities globally will grow as more and more potential fans hear about personal experiences at Formula One races and become interested in the sport. To better explain this idea, this stud would seek to propose that for example were John Q. Smith to win a free season pass then he would also invite his best friend to attend. John and his friend would then return to their hometown and proceed to talk with their other friends and contacts about the great time they had at the Formula One event, week-end and race. Some of those friends would become interesting in going to the races so ideally two more friends would potentially be attending the following races. This would mean that four men returned to their community talking about the excitement of the races meaning that even more men in the community would be drawn to go to the next Formula One race. If this type of initiative were undertaken in 1000 communities globally it is much easier to see how Formula One could quickly exponentially grow its fan base throughout the world and by doing so reach their objectives. To do even better in such an initiative, Formula One could offer season passes to one winner of the drawing in each community and could provide free race passes to two races for a friend of the winner however, each of the passes must be used by a different individual. This means that through the season passes that three people are attending Formula One races. As more interest develops in the community there more people in the group who can share expenses such as stays in hotels making it much more likely that the group of individuals who attend Formula One races sporting events grows globally. This means that it’s 1000 free season passes that are given to individuals in communities globally along with a free event ticket for two friends of those winning the drawing that Formula One will be able to reach 3000 potential fans in just one season. As there 3000 individuals attend Formula One races and post their pictures on social media sites such as Facebook, Instagram and Twitter the excitement about Formula One will only increase and Formula One will receive on top of everything free advertising through the marketing technique called word to mouth advertising. The literature reviewed in this study found that social media website advertising is the fastest way to reach the largest audience with the least costs in the shortest amount of time and which company wouldn’t want that. Therefore, this idea would be great for Formula One and make it increasingly more popular in the future.