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In order for F1 to be successful the company/industry had to satisfy the wants and need of

several groups of “customers”. Describe the wants and needs of each of these customer

groups and discuss how F1 delivered value to each of them.

In order to be successful Formula One has to consider various groups of customers with

each having different wants and needs. F1 basically offers to its customers two things. The

first one is the competition. F1 organizes a set of sporting races which take place in many

different locations around the world. The second one is a great platform where its customers

have 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 for

Formula One customers.

One of the most important groups of customers are carmakers. This group of customers

provides 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 put

into races, they create technological innovations and knowledge that carmakers eventually

apply to their products, cars for final customers. Thus, F1 satisfies the need of innovation that

comes from this group of customers. From their perspective, this is a quicker and more

effective way to create technological advancement for their final products. Indeed, F1 pleases

carmakers 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 same

time, to showcase their technological achievements for their market.

Another important customers for Formula One Motor Racing are TV broadcasters. These

customers 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 wants

to play the role of exclusive supplier for TV broadcasters and, in order to do that, it was even

willing to give a 33.3% discounts to those who agreed not to show rival races such as the

Indy 500 [Khanna et al., 2002]. Formula One Motor Racing offers to these customers a set of

well-known sport competitions. Once TV broadcasters agree to buy the rights to show F1

races, they automatically have access to a globally-spread catchment of spectators, who in

turn are their customers. Therefore, F1 satisfies the need of TV broadcasters to reach a decent

amount of audience share and, thus, improve their business activities. Indeed, Formula One

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pleases also the want for this group of customers to diversify their program offer and enrich it

as 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 events

that not only feature races but also the latest appearances of celebrities. This attracts a

considerable audience and, thus, increases their revenue. In order to be competitive, this

group of customers has to come up with always new and innovative ways to present F1 to the

audience. New telecommunication technologies, like interactive viewing experiences or

particular web-based applications, are new frontiers in this sense.

Another group of customers is made up of sponsors. These kinds of customers are, for

example, 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 of

products or services. Sponsors can be considered customers because F1 satisfies their want to

have a great platform where they have the opportunity of promoting their brand to a huge

worldwide market. This group of customers, supporting either one or more F1 races or a

particular team, can disseminate their message to the center of the action, on the racetrack as

well as on the cars and drivers’ uniforms.

Merchandisers are another group of F1 customers. These kinds of customers use the F1

image and brand to promote and sustain their commercial activities. The exploitation of the

image and the brand of Formula One and of all the teams that compete in races is a

considerable portion of F1 revenue. Merchandisers build and depend for their business upon

the Formula One’s offer and on its continued success. Therefore, through F1, merchandisers

satisfy their need to stay in business.

The local environment where races are organized is another group of customers. Formula

One creates the most wealth at the local level of any sport. On the one hand, local

environment is constituted by the local government. They want to host F1 races because

Formula One brings prestige and wealth to their municipalities and countries. Indeed, this is

an excellent way to improve their international profile. On the other hand, there are all the

local business activities that are positively affected when a race is hosted in each given

location. These business activities are, for example, hotels, restaurants, bars, museum, and

any other form of entertainment that attract people to come to the local environment thanks to

Formula One. For all these local business activities, F1 satisfies the need of doing business

and to create wealth. Of course, the level of attention for these local environments is at its

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peak during the days as well as immediately prior and after the race. However, the wealth for

cities who host these races can be seeing throughout the year thanks to the international

profile that races give them. Indeed, the location where races are held can also be used by

local 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 events

further contribute to raising the wealth of local environments.

In the F1 industry the spectators also have an important role. They cannot to be considered

direct customers for Formula One. Instead, they are customers of F1 customers. Watching

Formula One Motor Racing they receive all the messages that F1 customers addressed to

them. Therefore, Formula One gives all its immediate customers the opportunity to reach

their customers on a worldwide scale.

Work cited

Khanna, Tarun, Kartik Varma and David Lane. "Formula One Motor Racing." Harvard

Business School (2003): 3.

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