NASCAR; Marketing Strategy; SWOT, 5C’s and 4 P’s of Marketing Management
The National Association for Stock Car Auto Racing (NASCAR) was created in 1948, and since then, it has garnered a lot of recognition on the global arena (Depken and Wilson, 2004a). In this industry, the main source of revenues is through sponsorship fees that are paid by corporate companies or organizations to be associated with the NASCAR brand. Furthermore, many NASCAR fans like shopping or buying products and services associated with NASCAR. However, it is not that clear if the cost associated with these sponsorships benefit the shareholders by increasing the value of the company through the sponsorship announcements.
This value can be calculated by analyzing the value of the companies in the stock market, and comparing it to the company’s values before the sponsorships. There is also the “value of victory” concept where the market value of NASCAR and the other brands associated with it were analyzed and compared to their values prior to the victories (Pfitzner, Barry and Rishel, 2005) Moreover, studies have also been conducted to analyze the changes in stock value of sponsor companies that have been associated with the victory lane, and the Indianapolis 500 victories were used as the reference point. There were no significant changes in the stock prices for the winning sponsors.
However, companies who were directly associated NASCAR experienced an average of 3% increase in their stock value around the time of these victories (Lazear and Rosen, 1981). This kind of association has really helped propel the popularity of NASCAR. Since there is no branch of NASCAR in Chattanooga, it is a great business opportunity for NASCAR since it has already built a name for itself and it has a ready fan base in America. NASCAR has increasingly become a household name in the USA and in Canada. However, there is still plenty of room to grow the business and expand it across international lines.
5 C’s of Marketing Management
Men are more dominant in the customer base for NASCAR where 62% of the customer base is male while 38% is female. A larger percentage of the fanbase for NASCAR is from middle-class and the average income of a NASCAR fan is around $50,000. About 45% of NASCAR fans make about $50,000 and above annually. It has been noted that most fans of NASCAR live in the Southern part of the country. Additionally, many NASCAR fans love spending on NASCAR merchandise and tickets. In fact, NASCAR fans have the highest probability of buying merchandise as compared to most other sports. NASCAR fans display high levels of customer loyalty, and this also includes the brands that are associated with sponsoring the races organized by NASCAR (Fizel, John, 2006). With this in mind, it is notable that being a sponsor for NASCAR can be quite rewarding, and many businesses tend to take advantage of this.
Some of the issues that and controversies surrounding the company include the issue of driver safety. Given the NASCAR is a company that deals with auto racing cars, there was previously a high risk of mortality for NASCAR drivers. However, recent years have seen the company incorporate more safety measures and make major advances in the safety regulations and significantly reduce the mortality risk. In fact, in the past 10 years, there have been a zero-mortality rate in NASCAR. The death of Dale Earnhardt at Daytona in 2001 was a major motivational factor for the aggressive approach to safety by NASCAR (Allender, 2007). Besides that, NASCAR has maintained a clean record in the world of sports and as continued to increase its value as a brand to the point where many corporate companies pay to be associated with NASCAR.
SWOT analyses of brands are important in determining both the direction and potential of the brand. In fact, each company and brand is advised to have provide an updated SWOT analysis on a regular basis especially to potential investors or sponsors to ensure honesty and promote credibility. A SWOT analysis of NASCAR is important in this context because it highlights the strengths, weaknesses, opportunities and Threats to NASCAR as a brand. This can have an effect on the brand’s stock market value. A SWOT analysis is not only important for the public, but it is also an opportunity for companies and brands to reevaluate themselves, work on their weaknesses, face their threats, and also capitalize on their strengths and opportunities. Here is a SWOT analysis of NASCAR.
Strengths of NASCAR
NASCAR has become a household brand name in the field of racing cars. As a result, it is associated with various top sponsors. In fact, many Fortune 500 companies are more inclined towards working with NASCAR as compared to other motor sports ( Allmen, 2001) NASCAR’s popularity works to its advantage because it increases the value of their merchandise in the market. In fact, NASCAR generates high revenue of more than $3 billion annually. NASCAR has been associated with many F1 stars, and this has helped increase the popularity of the brand. Additionally, more global giants are expected to participate in NASCAR and this only good news for NASCAR because it means more popularity and higher market value. Finally, NASCAR is among the professional sports franchises with the highest TV ratings in the USA.
Weaknesses of NASCAR
The first notable weakness for NASCAR is their lack of presence in the global arena. Other competitors such as F1 hold races in internationally and this is a strong competitive advantage over NASCAR. NASCAR only hold their races in USA and Canada. This is a point of weakness that could easily be exploited by their competitors to get ahead. The other weakness is how the company’s social responsibility of environmental sustainability has been brought to question due to harmful emissions, fuel consumption and pollution. Another weakness for NASCAR involves the various issues surrounding the safety of their drivers. Additionally, there has been a significant drop in TV ratings and in the ticket prices for NASCAR in the recent years.
Opportunities available for NASCAR
As already pointed out, one of the main weaknesses for NASCAR company is the fact that it does not have a global presence. Given its worldwide popularity, this is a major opportunity for them to expand their business by holding races in multiple countries all over the world. It could also breed healthy competition between NASCAR and F1. This will also give foreign sponsors and interested investors a chance to get involved in the business. The other weakness pointed out is the questionable social responsibility of NASCAR with regards to environmental sustainability. Therefore, if NASCAR switches to green fuel, it will be a great opportunity for them to be environment-friendly and receive further acceptance.
Threats to NASCAR
At the moment, the biggest threat to NASCAR is their number one competitor – F1. F1 has an aggressive marketing strategy, and the fact that F1 has invested in the expansion of their business to more countries as compared to NASCAR should be viewed as a major threat. Additionally, the high spending by F1 and their large investments in manufacturing is a major threat to NASCAR since the high salaries at F1 could easily attract the best drivers from NASCAR (Maloney and McCormick, 2000). The top 2 competitors for NASCAR are Formula 1 and Moto GP.
Marketing Plan Strengths & Weaknesses
The current marketing plan for NASCAR has notable strengths and weaknesses. Some of the strengths include good marketing strategies through advertisements. Even though NASCAR has not yet exploited its full potential in the global arena, the fact that it has become so popular in the USA and Canada is a reflection of good marketing strategy plans. For them to get this far and maintain high stock value in the market over all those decades and years, they must be doing something right. However, a main weakness of the marketing plan is the fact that they do not invest in marketing globally and they have not yet expanded their businesses globally. We feel like there are many sponsors and corporates who would be willing to invest in NASCAR but availability is an issue due to the limit on NASCAR location.
We still believe that NASCAR is not exploring their full potential and that they are limiting the growth of their business as a brand by sticking with Canada and the USA. There is still a larger market on the international arena that is yet to be explored by companies and brands such as NASCAR. NASCAR’s biggest competitors, Formula 1, are already taking advantage of this weakness and they could easily outshine NASCAR. Also, NASCAR should out into consideration the issue of environmental pollution and sustainability and consider the option of switching to the use of green gases. Additionally, the fact that NASCAR has a zero-mortality rate for the past few events means that their driver safety is prioritized. Therefore, they should keep revisiting and updating their safety measures and regulations especially in these times of the Corona pandemic. There is also room for growth in the world of video games and simulations, and this is something that NASCAR should consider exploring.
As stated above, a larger percentage of NASCAR’s customer base is of middle-class. Therefore, most of the merchandise sold by NASCAR are at affordable prices. The best price range when targeting the middle class is to ensure that the merchandise is not too expensive for them to afford, but it is not too cheap either. Therefore, a good pricing strategy is one which puts these factors into consideration by generating prices that will ensure the products are affordable without downplaying the value of the brand. For example, some of the shirts go for $26.99, and most merchandise fall within the price range of $20-$50 depending with the item on sale (Gene, 2006).
Targeting always goes hand in hand with segmentation. As discussed above, segmentation is the analysis of a company’s customer base or fanbase according to various characteristics. Collection of raw information is good starting point for segmentation because some patterns usually stand out when observing the results. NASCAR targets the younger generation since they make a larger percentage of the fanbase. Additionally, NASCAR targets men when manufacturing its merchandise since they make up a larger percentage of its fanbase. However, 38% for the females is not such a low value either keeping in mind that NASCAR has massive following. Therefore, they can take advantage of this and sell merchandise that specifically targets their female fans. NASCAR is also targeting the international arena since they is enough room for growth and expansion of business. This also includes a large number of sponsors willing to work with NASCAR on the international scale. Going global also means rapidly increasing their fanbase and customer base.
With regard to context, NASCAR has been criticized concerning its environmental sustainability. Given that NASCAR deals with racings cars, there is very high consumption of fuel on a regular basis. This fuel consumption and the emission of harmful gases to the environment have led many people to question the environmental sustainability aspect of it. However, as stated earlier, this issue can be resolved by the replacement of the poisonous fuels with green gases. With regard to the stability of our sponsors, NASCAR has had stable sponsors and other big brands pay to be associated with the NASCAR brand. Therefore, that is something that we can be confident about for now. There have been no major political scandals associated with NASCAR so far. However, this is not to mean that the political climate has no effect on NASCAR. Politics has a direct correlation with the state of the economy of a country. This also means that when the economy is strained, it will have a direct impact on the spending patterns of customers. Therefore, that is something we always keep in mind.
Over the years, NASCAR has worked in collaboration with many companies and brands including VISA, the Race Team Alliance, and 704 Games among others. However, it is worth mentioning other franchises and companies bought by NASCAR. These include NASCAR Digital Media, International Speedway Corporation, ARCA, Grand American Road Racing Association (Grasnd-Am), International Motor Sports Association (IMSA), NASCAR Kinetics, and NASCAR Technical Institute.
The two major competitors for NASCAR are Formula 1 and Moto GP. Formula 1 has proven itself as the main competitor for NASCAR. However, there are some elements that are unique to each company. For example, Formula 1 can be described as a sprint, while NASCAR can be described as a marathon. This is explained by the fact that Formula 1 deals with very short races or around 190 miles while NASCAR deals with longer races of around 500 miles. Formula 1 races often last for about an hour while NASCAR races last for about 3 hours including bathroom pit stops, lunch break and even channel surfing. That said, this element among others separates the two on the competitive arena. Even though moto GP has also proven its capacity to be a major competitor for NASCAR, there is one defining factor between the two. NASCAR deals with four-wheelers while Moto GP deals with bikes.
STP of Marketing Management
Segmentation is a process where businesses divide their market of potential customers according to various characteristics. These could include age, gender, geographical location, psychographic or other demographics. Segmentation is important to a business because it helps them gain insight on its customer base and they can use this information to determine a marketing strategy for their business. For example, a larger percent of NASCAR’s fanbase lives in the Southern region. This means that if NASCAR organizes an event in the South, they are more likely to make more sales and generate more revenues as compared to other parts of the country. They might need to invest more in marketing when hosting events in other places. Additionally, about 62% of the overall fan base is male. This also means that NASCAR should make more merchandise for men than for women since they are more likely to get sold out. Also, the fact that most of NASCAR’s fanbase is of middle-class is also an indication that can be used when creating a successful pricing strategy.
Our positioning at NASCAR is to work towards reaching out to a larger fanbase and build our community of NASCAR fans and customers. Therefore, this means that more events should be hosted that focus on the global arena. Such could include going live during some events for a given time. It could also include giving out free tickets once in while after giving the fans a challenge and whoever wins gets the tickets. This could also include social media challenges where fans use a given hashtag maybe for an upcoming event and they could win free tickets. NASCAR could also invest in more media coverage to increase their popularity and promote their brand name. Positioning is vital for every business with regard to accessibility and familiarity. When a business positions itself in a strategic position where the public can easily access them or contact them or even interact with them, it improves their credibility.
For customers who are into racing cars or people who love extreme sports such as fast car racing, NASCAR is here to ensure that you get the thrilling experience that you have been looking for. For those interested to be racers, NASCAR always ensures driver safety by regularly reviewing and our safety measures and updating our safety standards. We are proactive in our aggressive safety measures and we always prioritize our driver’s safety. We always work round the clock to ensure that all measures have been taken to protect and withhold the safety of our drivers.
4 P’s of Marketing Management
NASCAR has a wide range of merchandise including accessories, sweatshirts, golf&sporting goods, hats, jackets, jewelry, pants and shorts, pet gears, rompers, shoes and socks, sleepwear, pants and shorts, face coverings, flags and banners, diecast, car accessories, polos, swim collection, t-shirts, tank tops, toys, tailgating, audio, video & books, collectibles & memorabilia, and gift cards among others.
At NASCAR we have various strategies for promotion of both our products and services. First is through advertisement. Marketing and advertisement is carried out through various channels. All our products and merchandise are branded with the NASCAR logo. This helps in promoting our brand recognition and familiarity. Our promotion strategy also involves advertisements during our events. Most of our fanbase is usually tuned in whenever we are hosting an event. Therefore, it is the best opportunity for us to market and sell out our merchandise. It is also the best time to launch new products or new sponsors under our brand name. This is when it has the highest potential to sell out or reach a bigger audience. Victories also work to our advantage because they always increase the value of the brand. Additionally, it is possible for us to deliver custom-made merchandise to some of our customers. Our wide range of products and apparel also ensure that we cater for our fans with diverse taste in fashion and preference.
NASCAR is always open to partner with various networking channels. Therefore, it has established good rapport with the networks. Some networks usually work with brands under incentive – driven relationships (Becker & Harold, 1992.). This is something we can consider. However, it depends with the reach of the network and the audience of the network in question. If NASCAR is a bigger brand than the network, and they stand to gain much more from the partnership, then we can reconsider the use of incentives to lure in the audience (Nalebuff & Stiglitz, 1983). However, we prefer to be selective with the network channels that we work with to avoid any political association or similar engagements. We aim at meeting our customer needs with regard to whether their products will e exclusive or available to the public. Such patterns and decisions are usually determined by our customer base and their preferences. The role of our distribution network is to ensure that all our products are made available to our customers and potential customers at their convenience.