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Extreme Sports: Indy Racing League Report


Situational analysis

Open-wheel racing includes cars whose wheels are located outside the car’s body, have an open cockpit and the engine is at the rear of the car. The major open-wheel racing in the United States includes American Championship Car Racing, Midget Cars, Formula One and Sprint Cars (Pride & Ferrell 25). Indy Racing League was established in 1996 after splitting from the Champion Auto Racing Teams (CART) whose role was to authorize open-wheel racing in the United States.

CART was prominent in the open-wheel racing market for a period of 17 years. However, some individuals were not satisfied with the performance of CART. This arose from the fact that CART started losing interest in promoting open-wheel racing in the US, for example, the firm ventured into foreign markets (Pride & Ferrell 25). In addition, the body abandoned oval tracks and emphasized on road courses. It also concentrated on promoting foreign drivers.

In an effort to fill the market gap, IRL started competing with CART in 1996. Upon venturing into the market, IRL concentrated on promoting open-wheel racing in the US. However, IRL experienced a number of challenges. For example, a conflict between IRL and CART over the usage of the terms IndyCar and Indy car ensued (Pride & Ferrell 25). This arose from the fact that it was CART which had licensed these terms from Indianapolis Motor Speedway. The court ruled that neither of the two leagues was to use the terms until 31st December 2002.

The law suit affected the performance of the two leagues which is evidenced by a decline in their rating. Their publicity was also affected as a result of shift in preferences amongst the fans. During this period most racing fans preferred stock racing to open-wheel racing. For example, an ESPN Sports Poll conducted in 2001 indicated revealed that 56% of all American racing fans preferred stock racing to open-wheel racing. As a result of decline in the leagues public image, the enterprises’ relationship with their sponsors was negatively affected. For example, Honda and Toyota who were major CART sponsors pulled out their engine and technical support to the league.

Additionally, the decline in appeal of open-wheel racing coupled with a fragmented market and a weakened economy made it difficult for IRL to find corporate partners. In addition, IRL experienced a significant reduction in its audience during the RL during the period ranging from 2001 to 2004. Its television viewing in 2004 reduced with a margin of 25% compared to the 2002 viewing. The resultant effect is that IRL was not able to sell its naming rights. Naming rights are a potential source of finance for firms within the sports industry ((Pride & Ferrell 318).Despite these challenges, IRL has managed to be amongst the largest open-wheeled racing enterprises in the US.

Racing is considered to be amongst the fastest growing sports in the world. In the motorsports industry, IRL faces intense competition from 2 main racing series. These include the National Association for Stock Car Auto Racing (NASCAR) and Formula One (Pride & Ferrell 25). In its domestic market, IRL faces intense competition from NASCAR which fields 3 main racing circuits in US. These include the National wide Series, the Camping World Truck Series and the Sprint Cup Series. Since its establishment, NASCAR has managed to attain a substantial regional market. In an effort to establish its market in US, NASCAR has expanded to larger markets such as in Texas, California and Chicago.

On the other hand, Formula One has effectively positioned itself in the market by attaining a global reach. The firm has established a number of race venues across the world. Its main specialization is on road courses. In addition, Formula One is aggressive in penetrating emerging markets. For example, it was the first racing league to venture the Western hemisphere specifically the Chinese market.

SWOT analysis of IRL

The following is an analysis of IRL’s strengths, weaknesses, opportunities and threats.

Strengths

Development of a brand’s strength is a vital element in the success of a firm. This is due to the fact that brand awareness plays a significant role in creation of loyalty amongst the consumers. In its domestic market, IRL has attained a substantial level of brand recognition. Findings of a survey conducted by Motorsports Marketing revealed that 66% of fans would purchase a product of IRL’s sponsors.

IRL has laid more emphasis on technology and innovation. As a result, it has been able to improve its open-wheel racing cars thus making them to have a high speed of 230 mph, enhanced safety and performance compared to stock cars.IRL has attained environmental sustainability by ensuring that its cars operate on ethanol which is 100% renewable energy.

IRL has managed to attract a large number of fans. Its fans are distributed across different demographics. For example, the average age of its fans is 38 years.

The league has established a strong relationship with institutional customers. As a result, it has been able to derive a substantial amount of revenue by selling tickets to these institutions.

Weaknesses

IRL has not been committed towards developing an international recognition. This has been hindered by its lack of thrift to venture into the international market. Currently, the only foreign market where the league operates is Japan.

The league has also not effectively incorporated the concept of product differentiation. For example, the league’s current emphasis is on oval racing while its competitors such as NASCAR have integrated non-oval racing which include road course and street racing (Pride & Ferrell 25).

IRL has not developed a strong connection between its drivers and the fans. As a result, it is not able to attract a strong attendance and television audience.

According to Pride and Ferrell (25), broadcasting of open-wheel racing leagues can play a vital role in attracting a large following. However, since its establishment, IRL has not been successful in attracting a substantial television audience compared to its competitors. For example, in 2008, NASCAR’s average television audience was approximately 5% of the total United States households which IRL audience was less than 2%. As a result, IRL has not been effective in negotiating contracts with major publicity companies such as Fox and ESPN.

Opportunities

There is a high probability of IRL improving its competitiveness by entering into strategic partnership with other leagues such as Champ Car, and Mittell. In addition, the IRL can improve its brand awareness by partnering with broadcasting stations such as VERSUS which will give the league a greater publicity.

By capitalizing on college attendees, there is a high probability of the firm increasing its attendance. IRL can improve its fan to driver connection by hiring emerging high profile drivers in the market. As a result, there is a high probability of the league improving its television rating and attendance.

The firm can also improve its public image by incorporating celebrity owners and drivers such as David Letterman, Michael Andrettin, Sarah Fisher, Eddie Cheever and Arie Luyendyk. This will significantly improve its television audience and attendance.

Threats

IRL faces intense competition from NASCAR which competes in the same market segment (the oval track racing). Over the years, NASCAR has been dominating in the motor racing. Its popularity has enabled it develop a strong television rating. In addition, NASCAR has been able to attract and maintain a strong attendance over the years. Other leagues which pose a threat to the firm include CART and Formula One. This is due to the fact that they have adopted the same format.

IRL’s failure to attract fans may lead to some of its high profile drivers such as Marco Andretti, Helio Castroneves and Danica Patrick leaving the league and joining more appealing leagues such as Formula One or NASCAR. This may adversely affect IRL’s competitiveness.

Target market and segmentation

Target marketing and segmentation refers to the process through which a firm divides its market into small parts and concentrated its marketing efforts on the few segments. The effectiveness with which a firm has targeted its market can contribute to its success. In an effort to improve its performance, IRL has incorporated the concept of target marketing and segmentation. The league has integrated different forms of market segmentation which include demographic segmentation, benefit sought, and psychographic segmentation. The objective of incorporating these forms of segmentation was to differentiate the event from other leagues.

With regard to demographic segmentation, IRL has considered different demographic variables which include age, individual’s disposable income, gender, and the size of a household, education, race and social class. Incorporation of these demographic variables has enabled the league meet the needs of the various categories of fans. As a result, the league has been effective in attracting a large number of fans.

Considering the intense competition from other leagues such as Formula One and NASCAR, IRL targets both the youth and the elderly. For example, the league has approximately 30 million adult fans in the United States of America. With regard to differences in age structure, the league has taken into account the age distribution in market and established its average fans age at 38 years. This is due to the fact that the youth form a large proportion of the world’s population. The table below gives a summary of IRL’s fans with regard to their age.

Table showing distribution of IRL’s fans on the basis of age

Age group (years) Distribution (%)
18-24 12%
25-34 16%
35-44 20%
45-54 21%
Above 54 31%
Distribution of IRL's fans on the basic of age

With regard to education, IRL mainly targets the educated. Currently 62% of its fans are college students, while 37% are high school students. IRL also appreciates the fact that motor racing is undergoing a rampant growth. This arises from increased consumption of motorsports racing by the two genders in their consumption patterns. As a result, IRL has targeted both males and females. Decision to target female fans arose from realization of the fact that most leagues had not capitalized on female fans. In an effort to appeal to female fans, IRL has considered incorporating female drivers. The resultant effect is that the league has been able to increase its spectatorship tremendously. However, 70% of its fans are male while 30% are female. The low proportion of female fans indicates that there is a viable market potential for IRL by increasing the number of female fans.

In segmenting its market, IRL has mainly targeted mid income consumers. The average income of its fans is approximately $ 68,000. These are consumers who have a relatively high social class. The table below gives a summary of distribution of IRL’s fans on the basis of income.

Income Percentage
Above $ 100,000 23%
$ 75, 999- $ 99,999 17%
$50,000- $74,999 19%
Less than $50,000 41%

With regard to household size, IRL targets both the married and the single. Seventy six percent of its fans are married while 30% are single. Of the married, 36% have children. The table below gives a summary of IRL’s demographic perspective.

IRL’s Fan profile
Male 70%
Female 30%
Average age 38 years
Married 70%
Have children 36%
Average income $68,000
Attend college 62%

Positioning strategy

Positioning refers how customers rank a particular product relative to competing products. This means that customers use competing products as the criteria through which they determine their preference towards a certain product or service. According to Pride and Ferrell (206), a firm can attain a high competitive advantage through implementation of an effective positioning strategy. Positioning strategy contributes towards a firm’s competitive advantage by enhancing the products or service’s image amongst the customers. A firm can either adopt a repositioning strategy or concentrate at strengthening its existing market position.

Over the years it has been in existence, IRL has consistently strengthened its market position despite the existing similarities between IRL and other open wheel leagues. IRL has effectively positioned itself on the basis of the racecourses employed. In sports, a positioning can also be evaluated in terms of where the sport/event is held. The facility/ arena used can give a sport a competitive advantage. For example, a league can differentiate itself by holding the event in a unique arena/ facility. In its operation, IRL has differentiated itself by conducting its races in oval tracks. On the other hand, some of its competitors, such as NASCAR, conduct its races on road courses.

The oval tracks are different from road courses which makes IRL to be unique. The success of an oval track driver is determined by the race car’s aerodynamics and horsepower. As a result, oval track drivers lay more emphasis on technical expertise and engineering in order to compete effectively. On the other hand, it is challenging for a road course track driver to pass his or her competitor which means that road course races lay more emphasis on the ability of a driver to navigate through the tracks.

Attaining an effective market position can contribute towards a firm’s long term success. According to Pride and Ferrell (206), positioning strategy is mainly concerned at improving the customer’s expectations and improving their perception towards a firm’s products as the only products from which they can derive value. Indy Racing League has adopted an effective strategy to position itself in the market. This has been achieved through by ensuring that its racing events are not only an opportunity for fans to watch the racing but also gives the fans an opportunity to be entertained. This means that IRL considers racing as only one product.

IRL considered integrating other forms of entertainment with racing so as to give the fans a unique experience. After merging with Champ Car, IRL adopted its differentiation strategy in order to position itself in the market. To achieve this, IRL has integrated the positioning strategy ‘Festival of Speed’. By positioning itself as a ‘festival’, IRL has been able to integrate diverse products to the race. Examples of these products include activities such wine tasting, beach volleyball, and live concerts. Incorporation of product diversity enables IRL to deliver unique experiences to the fans culminating into a high level of satisfaction.

The league also positions itself through verbal and non-verbal communication to its fans. This is achieved through use of logos, symbols and advertisements which aid in capturing the attention of the fans. For example, the cars are well branded by including the name of the sponsors and include that of the driver. The league’s effectiveness in positioning itself in the market has contributed towards improvement in its competitiveness.

Integrated Marketing Communication

Marketing communication is aimed at influencing the consumer’s decision making process. When marketing its products or services, it is the objective of the firm to attract customers to purchase its products. This is achieved by ensuring that the products being offered appeal the customer. Additionally, marketing communication should be effective by communicating the value or experience which the consumer will achieve upon purchasing the particular product or service.

In an effort to create more public awareness, IRL has incorporated the concept of Integrated Marketing Communication (IMC). The firm achieves this by utilizing both traditional and emerging market communication techniques. For example, in an effort to promote fans’ interest to IRL, the league’s management team has integrated endorsement of IRL by celebrities in different fields through team ownership. Some of the celebrities which the firm has incorporated include David Letterman who is a famous talk show host, Carmelo Anthony (a famous NBA star), Patrick Dempsey (an actor) and Jim Harbaugh (former NFL quarterbacks).

The league has also sought endorsement by rock celebrities such as Gene Simmons. By incorporating Simmons, IRL has been able to formulate its marketing strategies considering that he is a marketing savvy working with Simmons Abramson Marketing. As a result, IRL has enhanced its probability of establishing an emotional connection with the fans.

Additionally, IRL promotes its league by seeking endorsement from renowned driver personalities. This has contributed towards the league gaining a significant amount of visibility in the market. One of the driver personalities which the league has sought is Danica Patrick. She has been sought by other successful companies such as Go Daddy, XM Radio, Boost Mobile and Motorola to endorse their products. For example, incorporation of Danica Patrick as one of its stars during IRL racing event has significantly appealed young male fans. As a result, the league has been able to broaden its market.

Her contribution to IRL during the 2005 IRL racing event was very noticeable. For example, IRL’s event attendance increased significantly in addition to the league experiencing a rise in its television rating. The league also experienced an increment in its website traffic and merchandise sales.

IRL also creates market awareness by advertising through various mediums such as the television and radio whereby famous celebrity drivers such as Helio Castroneves feature. In an effort to promote its IndyCar Series, IRL has established and maintained a strong relationship various television broadcasting stations such as ABC and VERSUS through establishment partnerships. For example, IRL has entered into a $67 million contract with VERSUS so as to undertake the coverage. These television stations are experiencing an increment in their market coverage. The league has also established a partnership with other broadcasting stations such as ESPN and ESPN2. These television stations undertake a comprehensive coverage of IndyCar Series thus creating a substantial level of awareness.

In order to create a strong customer relationship, IRL organizes contests where the fans contend to win VIP treatment during the Indianapolis 500 and other IRL’s racing events. For example, the winners are given a chance to ride IndyCar 2-seater, taken a tour to IRL’s race shop and an on track access prior to the race. In addition, the winners are given an opportunity to take a ride with an experienced driver in the pace car during the event’s introductions. This enhances the fan’s experience.

IRL also undertakes market communication through emerging information communication technologies. For example, the firm posts advertisements on IndyCar.com where fans can view IRL’s cars and drivers. In addition, the league also advertises its IndyCar Series through print media such as newspapers and magazines. After the completion of Indianapolis 500 in 2006, IndyCar Series was covered by 42 of the 50 top most newspapers.

Distribution strategy

The success of a firm’s products is affected by the effectiveness with which it is easily accessible in the market. Product or service accessibility can be enhanced by formulating an effective distribution strategy. One of the ways through which a firm can achieve this is by formulating an extensive distribution strategy. This entails utilizing a wide range of distribution channels so as to penetrate the entire market. Integrating an extensive distribution strategy minimizes the consumers’ efforts to access the product or service. This means that there is a high probability of the increased consumption of the particular product. Alternatively, a firm may incorporate an exclusive distribution strategy. However, this is mainly used if the management team intends to control the distribution channel so as to retain the image of the product (Pride & Ferrell 23).

In its operation, IRL has incorporated an effective distribution strategy so as to be efficient in serving its domestic and foreign market. IRL has achieved this through effective scheduling. IRL develops a racing schedule for a whole year. This enables the customers to plan in advance their attendance to its racing events.

Over the years, IRL has mainly concentrated on its domestic market. In order to achieve this, IRL holds its leagues in different cities in the United States. The leagues are organized at different dates in the various cities. In addition, IRL ensures that its races are broadcasted on various television stations across the United States. This enables a large number of fans to experience the event. The chart below illustrates IRL’s 2011 racing schedule for the period ranging from March 2011 to July 2011.

Date Race Place and Venue Broadcasting station
15thMarch Barber Open Test Barber Motorsports Park-(Birmingham) VERSUS
27thMarch Honda Grandprix of St. Petersburg Street of St. Petersburg (St. Petersburg) VERSUS
10th April Honda Indy Grand Prix of Alabama Barber Motorsports Park (Birmingham). VERSUS
17thApril Toyota Grand Prix of Long Beach Long Beach streets. VERSUS
1stMay Itaipava Sao Paulo Indy 300
Sao Paulo, Brazil
Streets of Sao Paulo (Long Beach, California) VERSUS
29th May Indianapolis 500 Mile Race Indianapolis Motor Speedway -Speedway, Indiana ABC
11thJune Firestone Twin 275s Texas Motor Speedway Fort Worth, Texas VERSUS
19thJune The Milwaukee 225 The Milwaukee Mile – West Allis, WI VERSUS
25thJune Iowa Corn Indy 250 Iowa Speedway VERSUS
10thJuly Honda Indy Toronto Street of Toronto –Toronto, Ontario VERSUS
24thJuly Edmonton Indy Edmonton City Center Airport VERSUS
7thAugust Honda Indy 200 Mid-Ohio Sports Car Course VERSUS
14th August New Hampshire Motor Speedway New Hampshire Motor Speedway VERSUS
28thAugust Indy Grand Prix of Sonoma Infineon Raceway VERSUS
4th September Baltimore Grand Prix Streets of Baltimore VERSUS
18thSeptember Indy Japan 300 Twin Ring Motegi VERSUS
2ndOctober Kentucky Indy 300 Kentucky Speedway VERSUS
16thOctober Izod IndyCar World Championships Las Vegas Motor Speedway ABC

In an effort to attain a large market share, IRL has ventured into the international market. Currently, IRL only holds racing events in Japan. In Japan, IRL holds the Indy Japan 300 racing event annually. This event has significantly improved IRL’S publicity in Japan. This indicates that IRL has not effectively established a large distribution network across the globe. In order to ensure that fans access the events tickets more easily, IRL has improved its ticket distribution by selling them through various agencies. In addition, the league has also integrated online marketing so as to access a large number of fans.

Through incorporation of electronic media such as the television, the league is able to increase its market coverage.

Pricing strategy

In order to penetrate the market, a firm must formulate an effective pricing strategy. This arises from the fact that the pricing strategy adopted has a direct influence on the firm’s product positioning. In their decision making process, consumers evaluate the price of a product or service in order to determine whether to purchase or not. Additionally, the pricing strategy also affects the distribution and promotion strategy adopted.

IRL has adopted the premium pricing strategy. This is a strategy used to price goods and services in a particular niche market targeted by a firm. Premium pricing is mainly used if a firm has identified a market which has a relatively high discretionary income. This enables a firm to set the price of its products or services at a relatively high point compared to its competitors. For a firm to effectively implement premium pricing effectively, it is paramount for the marketing department to conduct a comprehensive consumer market research. This will aid in determining the size of the consumer’s discretionary income. One of the issues which the marketing department can evaluate is the consumer’s spending habits.

Upon implementing premium pricing, a firm should ensure consistency in its pricing so as to maintain its value image it has created in the consumers. In order to achieve this, the firm should avoid discount pricing since it has a potential of destroying the image. In its operation, IRL core target market is composed of individuals who have an average income of $68,000 which is relatively high. In addition, premium pricing is mainly used if a firm expects the consumers to derive a high value upon consumption of its products and services. The value provided is considered to be a premium. This is evident in IRL which enables the fans to experience other products/ services such as live concerts and wine tasting in addition to the car races during its annual racing events. As a result, the customers (fans) receive a high value for their money.

In pricing its tickets, IRL takes into consideration various seat positions. As a result, the league has differentiated its seats into ordinary seats and preferred seats or VIP seats. Pricing for the VIP seats are relatively high compared to that of the ordinary seats. In addition, other tickets are also priced differently with regard to the various groups of fans. IRL has categorized its fans into a number of groups which include; Family ticket purchasers

  1. Mini-season ticket purchasers
  2. Single-ticket purchasers
  3. Corporate season ticket holders
  4. Charitable organizations
  5. Group ticket purchasers
  6. Charitable organizations

The price of ticket for these groups is differentiated on the basis of the fan’s interest, and ability to pay for the ticket so as to experience the event.

In addition to premium pricing, IRL has also integrated psychological pricing strategy. Firms result to psychological pricing if they intend to appeal the emotions of the customers. This is achieved by setting a unique price point. As a result, the consumer responds to the emotions generated by the pricing and purchases the particular product or service. In setting the price of its races, IRL integrates psychological pricing. For example, the price of its 2011 race held at Indiana Tower has been set at $96 dollars. This is a unique price point and has a potential of attracting a large number of fans to purchase the ticket.

Conclusion

The report has given a comprehensive analysis of IRL with regard to various marketing aspects. Situational analysis indicates that the industry is characterized by intense competition. This has arisen from an increment industry’s profitability potential which has been stimulated by a rise in consumer demand. Over the past few years, the US has experienced a significant economic growth which has led to an increment in consumers’ disposable income. In order to position themselves in the market, the various US leagues are considering the most effective way to develop their competitive advantage.

Over the years it has been in operation, IRL has managed to develop its competitiveness despite the intense competition from other leagues such as NASCAR and Formula One. This has arisen from the various strengths possessed by IRL. For example, IRL has managed to develop strong brand recognition in its domestic market which has culminated into creation of brand loyalty. This is evidenced by the large number of fans who attend IRL racing events. In addition, the firm has also been accepted by the society as a result of operating in an environmental sustainable manner through utilization of renewable energy.

IRL has also capitalized on technological innovation so as to differentiate itself in the market. As a result, the league has managed to attain a strong performance which is evidenced by event attendance and television rating. By segmenting its market on the basis of various demographic variables, there is a high probability of IRL succeeding in the future and becoming the leader in motorsports racing. This is due to the fact that a large number of fans will be attracted to IRL league.

Considering the degree of rivalry in the racing industry, IRL has effectively positioned itself in the oval track racecourse. As a result, the league has continuously emphasized on improving its strength with regard to its car’s aerodynamics and horsepower. In addition, IRL’s positioning is enhanced by the management team’s commitment towards ensuring that the customers (fans) derive a high value. To achieve this, IRL has positioned itself as a ‘festival’ which has been achieved by offering other products and services such as wine tasting and concerts.

IRL has appreciated the fact that the success of a product or service in the market is affected by the level of its awareness amongst the consumers. In creating market awareness, IRL has incorporated the concept of integrated marketing communication. This has been achieved through integration of traditional and emerging technologies. For example, IRL advertises its leagues through various mediums such as the print media, television and the radio. In addition, IRL has also integrated online advertising by posting information about its racing events on its website. However, it is paramount of IRL to improve its marketing communication by integrating emerging social communication networks such as You Tube and Facebook.

By integrating celebrities from various fields to endorse its races, IRL has managed to develop an emotional link with its customers. This arises from the fact that the consumption patterns of fans are influenced by the celebrities. To ensure a substantial coverage in its domestic and international markets, IRL holds it’s racing events in different venues in the US and Japan. As a result of efficient race scheduling, IRL is able to undertake a substantial number of racing events in the United States annually. As a result, a large number of customers are able to attend. However, the league is not well established in the international market. Therefore, the management team should consider expanding into the foreign market so as to enhance its competitiveness.

IRL has also appreciated the role of price in the consumer’s decision making process. Considering the fact that IRL targets mid level income consumers, the league has integrated premium pricing which signifies the value derived by the customers.

Works Cited

Pride, William and Ferrell, Charles. Marketing. Boston: Houghton Mifflin Co., 2008. Print.

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IvyPanda. (2020, June 5). Extreme Sports: Indy Racing League. Retrieved from https://ivypanda.com/essays/extreme-sports-indy-racing-league/

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"Extreme Sports: Indy Racing League." IvyPanda, 5 June 2020, ivypanda.com/essays/extreme-sports-indy-racing-league/.

1. IvyPanda. "Extreme Sports: Indy Racing League." June 5, 2020. https://ivypanda.com/essays/extreme-sports-indy-racing-league/.


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IvyPanda. "Extreme Sports: Indy Racing League." June 5, 2020. https://ivypanda.com/essays/extreme-sports-indy-racing-league/.

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IvyPanda. 2020. "Extreme Sports: Indy Racing League." June 5, 2020. https://ivypanda.com/essays/extreme-sports-indy-racing-league/.

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IvyPanda. (2020) 'Extreme Sports: Indy Racing League'. 5 June.

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