This report will demonstrate how new communication technologies can assist Formula 1 (F1) commercial rights owners Formula One Group and F1 teams, to improve communication with F1 stakeholders, and helps to enhance F1 brand image (ec.europa, 2016). This is exhibited in its present performance, understanding F1's history and their earlier interaction with stakeholders it is essential to how it has gotten to where it is today with core values driven by a need to satisfy the expectations and needs of the F1 stakeholders.
F1 is known as the most prestigious type of auto racing in the world and is the most technologically advanced sport in the world. In May 1950, the first individual driver's world championship race was held at Silverstone (Silverstone, 2016). F1 has expanded rapidly since 1950. Nowadays, it is a global phenomenon. Bernie Ecclestone, F1 shareholder rearranged the management of F1's TV commercial rights in the early 1980s, and managed to turn the organisation into a billion dollar business.
The number of races has increased from seven races held in 1950, to twenty-one races across twenty-one countries and five continents in the current season 2016 (fansite, 2016). In this year's current season, there are eleven teams (twenty-two drivers) on the grid competing for the individual drivers' championship and constructor world championship. F1 created sports legends such as: Ayrton Senna, Michael Schumacher, or Sir Frank Williams etc.
Cars manufacturers such as Ferrari, McLaren, Mercedes or Renault and others use F1 racing as a marketing platform to enhance theirs brand image, the way they communicate with their stakeholders, promote their products, or build consumer loyalty. According to Luca di Montezemolo (previous long term Ferrari chairman), “Ferrari does not invest in advertising, because racing is the best advertising for Ferrari” (Sylvers, 2014).
Marketing drives successful organizations. Peter Drucker (1999) believes, that the basic function of marketing is to attract and retain customers at a profit (Drucker, 1999). An effective marketing strategy combines 4Ps of the marketing mix. The marketing mixes consist of everything the organization can do to influence the demand for its product. According to Kotler (2005) the marketing mix is set of the following controllable tactical marketing tools:
• Product: product, brand names, quality, design, services etc.
• Price: price, allowances, discount, credit terms and payment period
• Place: distribution channels, locations, transport, inventory levels etc.
• Promotion: advertising, sales promotion, social media, direct marketing and PR
As promotion is part of the marketing mix, there are various tools that a company uses to understand its customers (Jobber and Ellis-Chadwick, 2013). The promotion of an organization can also been seen as being entirely responsible for communicating the marketing proposition and includes the online, and digital marketing communications, which become widely used by many organizations.
F1 and Ways of Communication with Stakeholders
Analogue TV and F1
The main objective of sports industry is to satisfy the needs of three different groups of consumers: spectators, participants, and sponsors (Shank, 2009, p.11). For many years F1 satisfied it's stakeholders needs and their expectations via TV broadcasting, radio transmission and F1 dedicated print magazines. These channels were used by F1 as the main communication tool with the stakeholders-fans. The TV right payments that broadcasters pay to screen the sport, and race hosting fees are the main sources of revenue for Formula One Group (Knight and Tore, 2013). F1 has been broadcast on TV since the first F1 season in 1950 (f1broadcasting). Now, 66 years after their first TV broadcast, F1 is the world's most watched annual sport series with hundreds of millions loyal TV viewers (Mavsteruk, 2016).
During an analogue TV broadcast, or radio transmission customers are watching/listening F1, without any possible closer interaction with the sport. Customers are not able to provide any feedback, share ideas in real time, have chat with F1 teams, analysts, or others stakeholders etc. A better service for its customers was provided when Digital TV arrived into market with brand new interactive functions.
Digital TV and F1
Television, radio or telephones have changed to digital format. These new technologies enabled TV broadcast transmission in high definition (HD), or ultra HD quality. SKY broadcaster will broadcast all F1 races exclusively from 2019 to 2024 in deal to be worth £1 billion (Nelson, 2016). Sky sport F1 HD broadcaster offers interactive service, which enable viewers to pick and choose on board cameras, or pit wall cameras (Skysport, 2014). SKY F1 has employed retired F1 drivers such as Johnny Herbert, or Damon Hill to provide detailed F1 race analysis, analysis of the teams' strategies etc. Digital TV-SKY sport F1 HD is new and perhaps has a better way of promoting F1 to their stakeholders. This can been seen with the engagement with the fans as they are receiving more tactical information and are more involved with their interaction of viewing the racing with the different on board cameras views. However, even with new interactive service and detailed race analysis, customer's closer interaction with the sport and theirs favorite teams is still very limited.
The F1 and F1 teams have realised that closer interaction, and communication with their stakeholders through this new contemporary connecting technologies might help them to promote their product to wider population, create loyal customers, build bigger fan base, and enhance theirs brand image. Customers' feedback in real time might also help them to understand the markets and their customers' needs and expectations. Communications technologies evolve, so do the ways how we communicate, reach our customers, and other stakeholders. F1 and F1 teams, like many others organizations discovered the power of digital social media.
Online Social Media and F1
Over the past few years, social media has established itself as a powerful marketing tool. New connecting technologies are completely transforming marketing, as we know it. Organizations can nowadays expand beyond their local market, and connect or create a wider customer base simply by maintaining an active online presence. Foster et al. (2006) put it: “fans are the foundation of the business of sports world” therefore, building and sustaining a base of “committed fans” should be a primary goal of sport organizations and teams (Foster, Greyser & Walsh, 2006, p.23). F1 and F1 teams managed to build social media accounts with millions of followers, loyal customers and committed fans within several years. Please see Table 1.
Customers and other stakeholders of F1 have access to information any time, and in any place they want it thanks to social media, and other digital platforms such as F1 dedicated mobile applications, or F1 websites. F1 teams, and F1 are nowadays very closely interacting with their stakeholders-fans through their digital media accounts. Social media enable sharing ideas, building relationship, publish and distribute editorial content, photos or videos. F1 has several F1 dedicated accounts, for example #askcrofty (212K followers) on Twitter, where F1 specialists answer public questions related to race strategy, or comment news from F1 world etc.
The three most prominent social media platforms used by Formula One Group and F1 teams are: Facebook, Twitter and Instagram (Galloway and Esler, 2015).
Table 1 above illustrates, that in the last two years all analyzed teams have managed to increase the numbers of theirs followers-likes on each social media platforms. The highest increase of the followers is on the social platform-Instagram. Facebook is the most successful social platform with the highest numbers of followers. The most successful team in the term of followers is Mercedes AMG F1 with combined 13,73M followers. Formula One Group activated social media accounts last year (2015) and official F1 Facebook account was activated in 2016. (Nelson, 2016)
The biggest F1 survey (215,000 fans took part) in 2015 showed, that 90 per cent of the F1 fans watch F1 on TV, 45 per cent watch also online and more than 50 per cent don't watch races live since broadcast moved to pay television. (gdpa.motorsport, 2015).
F1 viewership has declined from 600 million viewers in 2008 to 425 million TV viewers in 2014 resulting in a lost of 175 million TV viewers worldwide since 2008 (Sylt, 2015). SKY's live coverage and Channel 4's highlights of the last F1 race in USA (23Oct 2016) attracted just over 1.8million viewers. This is the lowest rating for any F1 race in over ten years (Stephen, 2016).
How does F1 compare to other sports?
Table 1 above shows that the most successful social media platform Facebook has 2.75millions likes. In comparison to other sports; National Basketball League (NBA) official Facebook account have 31,518millions likes, National Hockey League (NHL) 4,237millions, NASCAR (American car racing sport) 4,637millions.
YouTube (video sharing platform) F1 official channel has 246,236 subscribers (November 2016) and NBA 7,277,400 subscribers.
According to the survey mentioned above, F1 undertook, over half of F1 fans are between 25 and 44 years old, with an average age of 37 years. The survey shows us that younger population between 10 and 24 years old are perhaps not interested in F1. The question is how will F1 marketers attract young people and others to follow F1 sport? Especially if the only the way to watch the races is through pay TV and for a duration of two hours which requires them to sit in front of the TV on a Sunday afternoon, late evening, or early morning? New communication technologies are perhaps the answer for previous question.
Across the globe, we are seeing a transformation of the world thanks to new communications technologies. eMarketer predicted that by 2018 the number of tablet users in the world will reach 1,43billion up from 1billion in 2015 and 2billion consumers worldwide will get smart phones by 2016. (eMarketer, 2014) Increasing number of mobile devices might be a big opportunity for F1 to promote the sport to a wider population and assist them with enhancing their brand image. Videos can be watched at any time, and anywhere on mobile devices, laptops, personal computers or smart TVs. According to the You Tube statistics from September 2016, there is 1,325,000,000 billions of people who use You Tube, and 4,950,000,000 videos viewed on You Tube every day. (Statisticbrain, 2016)
Hence, video-sharing platform You Tube has a huge potential. The Formula One Group should use this much more as this popular video-sharing platform is another important communication channel with F1 stakeholders. F1 should upload on the You Tube channel live coverage of the races, short cut from the races, or at least the most critical, and important moments of the each race. Videos (if no possible, at least in their short form) should be at the same time shared on the social media platforms to create networks between group members, which can lead to wider immediate communication with teams and others stakeholders. According to Tuten and Solomon (2013) the social element (social, media, and network) are all about a culture of participations. Jobber and Ellis-Chadwick (2013) described network as, “the interconnections between the members of the community” (Jobber and Ellis-Chadwick, 2012, p. 672). Not only for the Formula One Group, but also F1 teams and F1 drivers should also upload videos on the official You Tube F1 channel. Videos from the pit lane, boxes, or backstage might attract new and retain customers.
All materials, such as (video, photo etc.) might be strictly forbidden to share on any social platform by SKY broadcast right holder. However, SKY broadcaster can increase revenue if they allow videos to be uploaded on the social media platforms, especially on the You Tube channel because more views equals more money. Advertisers pay when someone clicks on ad or watch video for 30seconds (videopower, 2016). F1 official You Tube channel can be created as well through the pay option, which can be seen as opportunity to be cheaper option than SKY paid broadcast. As F1 lost 175 million TV viewers worldwide since 2008 and there is the risk that many of them might stop watch F1 due to moved free TV broadcast to pay TV broadcast. If F1 were likely to take this approach they could entice these supporters back to the sport through the free F1 You Tube channel or small subscribe payments, which will allow them to watch live or past races and others F1 related videos etc. Young F1 supporters will also be allowed to watch the F1 races through the mobile device at any place and any time. This availability might help F1 sport, and F1 teams to build bigger network of loyal customers and customer satisfaction. According to Jobber and Ellis-Chadwick (2013) “Customer satisfaction occurs when perceived performance matches or exceeds expectations” (Jobber and Ellis-Chadwick, 2013, p.15). D'Aveni, (1994) beliefs, that stakeholder satisfaction is critical for successful companies in a very competitive environment. F1 is a highly competitive sport that thrives on technological developments (D'Aveni, 1994). New technology such as virtual reality or 3D can be used to attract and retain customers. Formula One Group can upload tracks on the You Tube and enable customers to feel in real time what is like to be a driver or be a part of favored team in virtual or 3D reality.
Winning F1 race or whole championship has an impact on marketing outcomes for the sports team (e.g. increased race and TV attendance, team-related merchandise sales, fan identification) (Rosenberger and Donahay, 2008, p.2). This has been seen by extra social platforms, and You Tube viewers as the F1 race winner, perform some extraordinary action overtake, driving excellence skills or been seen on top of technological excellence car design, top engines, aerodynamic etc, which can help the company to enhance their brand image.
Promotional marketing involves raising awareness of the brand in order to generate more sales and gain a loyal customer base. According to Rosenberger and Donahay (2008), motor sport fans can be up to three times more brand loyal than fans of other sports. They are also known to switch product loyalties to a sponsor's brand (Rosenberger and Donahay, 2008, p2). Jobber and Ellis-Chadwick (2013), describes loyalty as “a response, which a customer shows over time” (Jobber and Ellis-Chadwick, 2013, p.18). Customers and other stakeholders develop various associations with the brand. Based on these associations, all stakeholders form brand image. Levy (1978) defined brand image as, consumers' overall impression about a brand or product, which includes recognition, feeling and attitude toward it (Levy, 1978).
Formula 1 poses a strong exemplar of how an organization has evolved its communication with stakeholders from analogue TV to new age communication technology. Contemporary communication technologies have the potential to change the way of watching F1. Such a change can perhaps enhance brand image of the entire F1, F1 teams and help the organizations with communication with F1 supporters and other stakeholders. Stakeholders can interact much closer with their favorite teams, F1 drivers, and be “part” of the sport, and not only passive watchers.
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