F1 customers needs and wants

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F1 customers needs and wants

  1. 1. Benedetta Piva MBA 8000 Spring semester 2012In order for F1 to be successful the company/industry had to satisfy the wants and need ofseveral groups of “customers”. Describe the wants and needs of each of these customergroups and discuss how F1 delivered value to each of them. In order to be successful Formula One has to consider various groups of customers witheach having different wants and needs. F1 basically offers to its customers two things. Thefirst one is the competition. F1 organizes a set of sporting races which take place in manydifferent locations around the world. The second one is a great platform where its customershave the opportunity to promote their image, brand, and products to a worldwide audience.Teams have to be considered crucial components of the phenomenon that is Formula One.Without teams, there would not be Formula One cars and, therefore, there would not be races.For this reason, teams are an essential component of F1: they contribute to create value forFormula One customers. One of the most important groups of customers are carmakers. This group of customersprovides teams with components, e.g. engines, that teams use to build Formula One cars.Carmakers use teams to test and improve their components. Through efforts that teams putinto races, they create technological innovations and knowledge that carmakers eventuallyapply to their products, cars for final customers. Thus, F1 satisfies the need of innovation thatcomes from this group of customers. From their perspective, this is a quicker and moreeffective way to create technological advancement for their final products. Indeed, F1 pleasescarmakers in their want to advertise their production cars and to promote their brand.Therefore, this group of customers use the Formula One as a way to do R&D and, at the sametime, to showcase their technological achievements for their market. Another important customers for Formula One Motor Racing are TV broadcasters. Thesecustomers are essential for F1 since they provide a substantial part of the F1 total revenue.That is why it wants to build a strong and lasting relationship with them. Formula One wantsto play the role of exclusive supplier for TV broadcasters and, in order to do that, it was evenwilling to give a 33.3% discounts to those who agreed not to show rival races such as theIndy 500 [Khanna et al., 2002]. Formula One Motor Racing offers to these customers a set ofwell-known sport competitions. Once TV broadcasters agree to buy the rights to show F1races, they automatically have access to a globally-spread catchment of spectators, who inturn are their customers. Therefore, F1 satisfies the need of TV broadcasters to reach a decentamount of audience share and, thus, improve their business activities. Indeed, Formula One 1
  2. 2. Benedetta Piva MBA 8000 Spring semester 2012pleases also the want for this group of customers to diversify their program offer and enrich itas well. In this group of customers we can include other kinds of media outlets as well:newspapers, magazines, and so forth. From their perspective, F1 represents a set of eventsthat not only feature races but also the latest appearances of celebrities. This attracts aconsiderable audience and, thus, increases their revenue. In order to be competitive, thisgroup of customers has to come up with always new and innovative ways to present F1 to theaudience. New telecommunication technologies, like interactive viewing experiences orparticular web-based applications, are new frontiers in this sense. Another group of customers is made up of sponsors. These kinds of customers are, forexample, tobacco companies, fuel companies, telecommunication and technology companies,financial services, delivery companies, and companies specialized in electronics, beverages,etc. (see Exhibit 7). They support F1 activity both financially and through the provision ofproducts or services. Sponsors can be considered customers because F1 satisfies their want tohave a great platform where they have the opportunity of promoting their brand to a hugeworldwide market. This group of customers, supporting either one or more F1 races or aparticular team, can disseminate their message to the center of the action, on the racetrack aswell as on the cars and drivers’ uniforms. Merchandisers are another group of F1 customers. These kinds of customers use the F1image and brand to promote and sustain their commercial activities. The exploitation of theimage and the brand of Formula One and of all the teams that compete in races is aconsiderable portion of F1 revenue. Merchandisers build and depend for their business uponthe Formula One’s offer and on its continued success. Therefore, through F1, merchandiserssatisfy their need to stay in business. The local environment where races are organized is another group of customers. FormulaOne creates the most wealth at the local level of any sport. On the one hand, localenvironment is constituted by the local government. They want to host F1 races becauseFormula One brings prestige and wealth to their municipalities and countries. Indeed, this isan excellent way to improve their international profile. On the other hand, there are all thelocal business activities that are positively affected when a race is hosted in each givenlocation. These business activities are, for example, hotels, restaurants, bars, museum, andany other form of entertainment that attract people to come to the local environment thanks toFormula One. For all these local business activities, F1 satisfies the need of doing businessand to create wealth. Of course, the level of attention for these local environments is at its 2
  3. 3. Benedetta Piva MBA 8000 Spring semester 2012peak during the days as well as immediately prior and after the race. However, the wealth forcities who host these races can be seeing throughout the year thanks to the internationalprofile that races give them. Indeed, the location where races are held can also be used bylocal environments as venues for other kinds of entertainment, such as the music festival“Rock am Ring” that takes place annually at the site of Nürburgring, Germany. These eventsfurther contribute to raising the wealth of local environments. In the F1 industry the spectators also have an important role. They cannot to be considereddirect customers for Formula One. Instead, they are customers of F1 customers. WatchingFormula One Motor Racing they receive all the messages that F1 customers addressed tothem. Therefore, Formula One gives all its immediate customers the opportunity to reachtheir customers on a worldwide scale.Work citedKhanna, Tarun, Kartik Varma and David Lane. "Formula One Motor Racing." HarvardBusiness School (2003): 3. 3

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