Introduction
Formula One or F1 is the highest category of single-seater auto racing authorized by the Federation Internationale de l’Automobile (FIA). Formula One is officially referred to as FIA Formula One World Championship.
A Formula Season is composed of a series of cars referred to as Grand Prix racing on special built circuits and public roads. The mission of this marketing plan is to enhance China’s image, economy and tourism through promotion of Formula One.
Background
Grand Prix racing was initiated in 1906 and it become popular during the 20th Century. Negotiations over a Chinese Grand Prix started in early 1990s. The first circuit known as Zhuhai International Circuit was built in the city of Zhuhai but it was rejected by FIA due to non-compliance with some FIA standards. The first Grand Prix was finally hosted at Macau Grand Prix in 2004.
Even though it was hosted for the first time in 2004, Formula 1 has not yet picked up a material following from China with fans being estimated at 79.9 million people. China has the potential of becoming one of the best hosts of this game if certain measures are put in place. Most of the fans in the country are upscale male and female youths (Erjavec, et al. 2012, p. 19).
Market Analysis
China has a population of about 1.344 billion people and is a strong emerging economy implying that the country could be a big market for the F1 sporting activity if marketed well (Stuthbury 2011, p. 26). Despite huge investments by the government that led to the hosting of the first Grand Prix in 2004, the game has not yet picked up when compared to other hosts like Spain.
The game only attracts high hosting charges but less is gained in other areas. Most of these youths come from middle class and upper class homes where owning a car comes at an early age. The fans are driven by the desire for speed in addition to status and prestige associated with the game.
They also seek exemplary circuit experience, value for money and a feeling of high status. This market segment is however still not fully tapped by the organizers of the Chinese Grand Prix (Pricelist Formula 1 Chinese F1 Grand Prix 2013, 2013, p. 5).
The event organizers have so far been unable to attract enough corporate sponsors from China to be involved in the sport. Attendance in stadiums is also low despite efforts by the organizers to attract more crowds.
At one instance in 2011, the cheapest ticket was being sold at a meager US $12 but the 260,000 required capacity was hard to achieve. Attendance has been declining over the years and hurting revenues in the process. This therefore means that it is not the price that was an issue. Many factors have to be considered especially the preferences of the people.
Main competition arises from other established Asian countries such as Singapore, Japan and Malaysia in addition to European countries such as Spain. Unlike in China, these other countries have enough fans who enjoy the sport and also corporations in these respective countries are heavily involved.
The organizers however managed to extend China’s contract to host Formula One events until 2017 despite competition from other nations (Sylt & Reid 2013, p. 3).
It is rather unfortunate that Japan and China are neighbors since Japan has a circuit at Suzuka that is full of history and is considered as the favorite for drivers. The circuit is well built and easily accessible via Nagoya or Osaka. This poses a challenge to China to catch up with this development in the same region (Spurgeon 2013, p. 23).
SWOT Analysis
Strengths
Formula One sponsors and other automakers cannot ignore China due to its resurgence as the largest car market. Furthermore, Chinese cities especially Shanghai have recorded the fastest growth in the world.
This means that if the sport starts to grow, it will grow with the economy leading to higher yields. The amount of local wealth around Shanghai has also been increasing over the years, since mostly middle and high-class fans watch the sport (Dozsa & Kaczan 2012, p. 7).
Opportunities
The increase in wealthy people would mean more fans that can afford the charges. Chinese population is estimated to be around 1.344 billion people. If enough marketing is done for the sport, this would translate to a great fan base that could double the returns from the sport (Li, MacIntosh & Bravo 2012, p. 63).
Weaknesses
Compared to the circuit in Japan, which has additional facilities such as an amusement park with a roller-coaster feeling and look, the Chinese circuit is still lagging behind in terms of additional facilities, thereby forming one of the major weaknesses of the country.
However, it is imperative to note that it is one of the longest circuits in the world and the organizers should capitalize on it. In order to attract more people, some additional features will have to be added to the circuit to make it more enticing.
Threats
Even though a subway was constructed to connect the venue with Central Shanghai, it has not been fully utilized and the way via road is characterized with heavy traffic jams (Handy, Lim & Milsom 2003, par. 3).
Furthermore, it has been alleged that the circuit tracks in Shanghai are sinking owing to the fact that they were built on reclaimed marshland.
This is however not considered as a barrier and it is believed that the tracks will continue holding events as seen by an agreement between the organizers and the concerned parties, which has seen the contract extended until 2017.
List of References
Dozsa, A. & Kaczan, I. 2012, The effects of formula 1 championships: The environment. Web.
Erjavec, V. et al. 2012, The case of China and India. Web.
Handy, B., Lim, C. & Milsom, M. 2003, A country analysis of China. Web.
Li, M., MacIntosh, E. & Bravo, G. 2012, International Sport management, Sheridan Books, New York.
Pricelist Formula 1 Chinese F1 Grand Prix 2013. Web.
Spurgeon, B. 2013, The Chinese Grand Prix in Shanghai is an Oriental F1 travel Destination. Web.
Stuthbury, G. 2011, Shanghai to host F1 for seven more years: city officials. Web.
Sylt, C. & Reid, C. 2013, The Business of Formula One. Web.