Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
FUNDAMENTALS OF MARKETING
A CASE STUDY ON
THE MARKETING ENVIRONMENT FORMULA 1 AND TOBACCO
BY
HAJI SAIF ULLAH
University of...
The main objective to achieve was not to do with consumers, but in developing business-to-
business relationships in areas...
d) Promotion of new product as e-cigarette
e) Giving price discounts for x packets of cigarettes
f) Advertising in their p...
Upcoming SlideShare
Loading in …5
×

Formula 1

131 views

Published on

Solution of case study Formula 1

Published in: Business
  • Be the first to comment

  • Be the first to like this

Formula 1

  1. 1. FUNDAMENTALS OF MARKETING A CASE STUDY ON THE MARKETING ENVIRONMENT FORMULA 1 AND TOBACCO BY HAJI SAIF ULLAH University of Gujrat Introduction Formula One was first defined in 1946 by the Commission Sportive International (CSI) of the FIA, forerunner of FISA, as the premier single seater racing category in worldwide motorsport. F1 teams can spend $US350 million a year, facing a constant challenge to rise funding. Sponsorship accounts for 80-85% of an F1 team’s income. In 1972 Philip Morris joined the fray with its Marlboro brand and that followed Rothmans, Benson & Hedges, West and Lucky Strike all became major players. Income from formula one and other sports His brother Ralf will only earn around $13 million - around £7 million, the same as David Coulthard, only a paltry £134,615 per week. At the lower end of the scale, drivers such as Nick Heidfeld at Jordan are reported to be earning around $1.5 million. Cost of maintaining a team The cost of maintaining the teams is also mind-boggling. Teams use around 900 tyros in a year's racing, each around £1,500 a time; a gearbox costs £65,000 and around 16 of these will be used - last year, they used one gearbox per race. Steering Wheels cost £30,000 each and engines £180,000 per race but with 170 used throughout the race calendar, the bulk of the money is spent on this technology. Why formula one for tobacco industry?
  2. 2. The main objective to achieve was not to do with consumers, but in developing business-to- business relationships in areas like the Middle East and the Far East, where there are number of brands. So once thinking about annual events that take place on a regular basis, we are limited in what sports you can be involved with. The World Cup is every four years, and so are the Olympics. And although we are involved with the Olympics, we rapidly became convinced that Formula One was the right place for us to be. There are a lot of races spread throughout the year and also spread throughout the world, so it seemed to be a perfect fit. Formula 1 is one area where the tobacco companies have been able to gain huge exposure as the average viewing figures for each grand prix is over 354 million worldwide. Formula One was seen as particularly valuable because “TV coverage is massive around the world and “there is a genuine association with the team, vital for image building.” Young people are traditionally early adopters of new media capabilities and consequently a very receptive audience. Ban on tobacco advertising in formula one In 1990 the European Union proposed an EU-wide ban on tobacco sponsorship. The British Medical Journal joined the battle by calling for a ban on tobacco sponsorship in sport, saying that studies by academics at Manchester University had revealed that it encourages teenagers to smoke. Tobacco companies fought back, arguing that they invest in motor racing not to start people smoking but rather to convince them to switch brands. Question 1: How has the marketing environment impacted on formula 1 racing? Answer:- F1 is one of the highest profit games which are popular and seen worldwide. A large sum of money has been invested by promoters like $38 m by Benson and hedges sponsoring Jordan team. By associating formula one game it increase brand loyalty, create awareness, change or reinforce their image, drive retail or dealer traffic and stimulate sales, trial and usage. It gives them global exposure on relatively cost-effective basis Brand leverage. In areas where we are growing, like Singapore, Malaysia and China, it has given the brand enhanced exposure. The association with Formula One, particularly in places like China where Formula One is hugely popular gives another opportunity to promote the brand. Question 2: How else could the cigarette producers promote their brands? Answer:- It can be done by making cigarette lighters as dummy and distributing it with a cigarette pack, making clothing line and household commodities and can be used in restaurants for menu holder purpose. b) By doing sales promotion for ex all smokers prefer to use freshener after cigarette so giving them freshener with x no of packets. c)promotional schemes--for ex giving 1 pack of cigarette for x empty pack of the cigarette and people buying more to get that extra benefit.
  3. 3. d) Promotion of new product as e-cigarette e) Giving price discounts for x packets of cigarettes f) Advertising in their popular local sport and in events

×