1. Benedetta Piva
MBA 8000
Spring semester 2012
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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2. Benedetta Piva
MBA 8000
Spring semester 2012
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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3. Benedetta Piva
MBA 8000
Spring semester 2012
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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