1

Chung Lee Lee

GM03634

Hema Latha A/P Kumaresan

GM03610

Tung Wai Chee

GM03578

Siti Noraida Shaikh Abdullah

GM03538

Fairus Binti Radin Mohd Ali

GM03190

2

Table of Contents Page

1.0 EXECUTIVE SUMMARY 3

2.0 SITUATIONAL ANALYSIS 4

2.1 Background of Formula One 4

2.1.1 Grand Prix 4

2.1.2 Teams and Drivers 5

2.1.3 Competition 6

2.1.4 Popularity and Commercial 7

2.2 Inception of Formula One in Malaysia 8

2.3 Market Survey 9

2.3.1 Profile of F1 Malaysian Grand Prix Fan Base 9

2.3.1.1 Summary of Market Segmentation 13

2.3.2 Market Needs 13

2.3.3 Market Trend 15

2.4 PEST Analysis 17

2.4.1 Political 17

2.4.2 Economic 18

2.4.3 Social 19

2.4.4 Technology 20

2.5 Competition for F1 Malaysian GP 21

2.5.1 Competition between the GP Organizers 21

2.5.2 Competition in the Motorsport World 22

2.6 SWOT Analysis 23

2.6.1 Strengths 23

2.6.2 Weaknesses 26

2.6.3 Opportunities 28

2.6.4 Threats 29

2.6.5 Summary of SWOT Analysis 32

3.0 MARKETING STRATEGY 32

3.1 Marketing Mission 33

3.2 Marketing Objectives 34

3.3 Target Markets 34

3.4 Marketing Positioning 35

3.5 Marketing Plan 35

3.5.1 Marketing Plan – Shaping Market Offerings 35

3.5.2 Marketing Plan – Communicating Values 43

3.6 Action Plan 50

4.0 FINANCIAL 51

4.1 Revenue Forecast 51

4.2 Marketing Expenses 51

5.0 RECOMMENDATIONS FOR FUTURE 53

6.0 REFERENCES 54

3

1.0 EXECUTIVE SUMMARY

Formula One, also known as Formula 1 or F1, and currently officially referred to as the FIA F1

World Championship, is the highest class of auto racing sanctioned by the Fédération

Internationale de l’Automobile (FIA). It is also the highest TV rating sport in the World. F1 in

Malaysia was inaugurated at Sepang International Circuit (SIC) on March 9, 1999 by the country’s

4th Prime Minister, Tun Dr. Mahathir Mohammad.

In general, F1 fan base comprises of affluent, educated, upscale male and female youths from the

age of 20 to 49. These fans fall in the middle and high class social income who have strong passion

for motor sports and be associated with status and prestige. The fans are generally looking for

spectacular circuit experience, sense of prestige, distinction of value for money and good customer

hospitality.

The main competitors for F1 Malaysia are SUPER GT and Malaysian Rally Championship. PEST

and SWOT analyses identified the extent of favorability of the environment in respect of hosting F1

in Malaysia as well as the inner strength and weakness of the host. Among the main findings are F1

Malaysia has strong government support and sponsorship, one of world best circuit and cheapest

ticket price among all the GP organizers. The main weakness is there in no entertainment,

amusements and nightlife at the race location. As a result, the FI organizers are facing threats from

the competition among the grand prix organizers who are continuously creating point of difference

by turning the circuits to be more than race venue. They are creating a distinctive identity of their

own to attract the high end global fans.

Based on the result of the analyses, the best cost marketing strategy i.e. a low-cost with a

differentiated approach, is adopted by emphasizing the strength of cheap ticket price. F1 Malaysian

GP will give spectators value for money and make F1 accessible to all without reducing F1’s

exclusive and prestigious reputation. Hence the target markets are 4 groups of people: professionals,

foreign fans, high net worth individuals and corporate and lastly all those who have passion for F1.

Malaysian GP aims to position as the truly value-for-money F1 GP destination for all the

motorsport lovers.

The marketing plan adopts two steps in fulfilling the mission, shaping the market offerings and

communicating the value. Action plan has been drawn out to execute various activities under the

plan. In total, the whole marketing plan will cost approximately RM20 million to the organizers.

Lastly, it is highly recommended that the organizers should conduct market research to sustain in

the world of F1, the crown of motorsport.

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2.0 SITUATIONAL ANALYSIS

2.1 BACKGROUND OF FORMULA ONE

Formula One, also known as Formula 1 or F1, and currently officially

referred to as the FIA F1 World Championship, is the highest class of

auto racing sanctioned by the Fédération Internationale de l’Automobile

(FIA). It has a deserved reputation as one of the world’s most expensive

and glamorous sports.

2.1.1 Grand Prix (GP)

The F1 season consists of a series of car races, known as Grand Prix (GP), held on purpose-built

circuits, and to a lesser extent, former public roads and closed city streets. Although Europe remains

the historical center for F1, GP's are being held in many countries throughout the world. The 2010

GP will be held in 18 countries – Bahrain, Australia, Malaysia, Spain (2 locations), Monaco,

Canada, Korea, Singapore, Abu Dhabi, United Kingdom, Germany, Hungary, Turkey, Italy,

Belgium, Japan, China and Brazil as shown in the table below:-

ROUND OFFICIAL RACE TITLE CIRCUIT

DATE

(YEAR

2010)

1 2010 F1 GULF AIR BAHRAIN GP

Bahrain International

Circuit, Sakhir, Manama 12 - 14 Mar

2 2010 F1 AUSTRALIAN GP Melbourne GP Circuit 26 - 28 Mar

3 2010 F1 PETRONAS MALAYSIAN GP

Sepang International

Circuit, Kuala Lumpur 02 - 04 Apr

4 2010 F1 CHINESE GP

Shanghai International

Circuit 16 - 18 Apr

5 F1 GRAN PREMIO DE ESPANA

TELEFÓNICA 2010

Circuit de

Catalunya, Barcelona 07 - 09 May

6 F1 GP DE MONACO 2010

Circuit de Monaco, Monte

Carlo 13 - 16 May

7 2010 F1 TURKISH GP Istanbul Park 28 - 30 May

8 F1 GP DU CANADA 2010

Montreal's Circuit Gilles

Villeneuve 11 - 13 Jun

9 2010 F1 TELEFÓNICA GP OF EUROPE Valencia Street Circuit 25 - 27 Jun

10 2010 F1 SANTANDER BRITISH GP Silverstone Circuit 09 - 11 Jul

11 F1 GROSSER SANTANDER VON

DEUTSCHLAND 2010

Nürburgring 23 - 25 Jul

12 F1 MAGYAR NAGYDIJ 2010 Hungaroring, Budapest 30 Jul-01 Aug

Figure 1: Formula 1 logo

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ROUND OFFICIAL RACE TITLE CIRCUIT

DATE

(YEAR

2010)

13 2010 F1 BELGIAN GP

Circuit de Spa-

Francorchamps, Spa 27 - 29 Aug

14 F1 GRAN PREMIO SANTANDER

D'ITALIA 2010

Autodromo Nazionale

Monza 10 - 12 Sep

15 2010 F1 SINGTEL SINGAPORE GP Marina Bay Street Circuit 24 - 26 Sep

16 2010 F1 JAPANESE GP Suzuka Circuit, Suzuka 08 - 10 Oct

17 2010 F1 KOREAN GP Yeongsam Circuit, Korea 22 - 24 Oct

18 F1 GRANDE PREMIO DO BRASIL

2010

Autódromo José Carlos

Pace, São Paulo 05 - 07 Nov

19 2010 F1 ETIHAD AIRWAYS ABU

DHABI GP Yas Marina Circuit 12 - 14 Nov

(Source: The official F1 website: www.formula1.com)

The results of each race are combined to determine two annual World Championships, one for the

drivers and one for the constructors (the maker of car combination).

2.1.2 Teams and Drivers

The global popularity of F1 is also attributable to the speed and the sophisticated, high-technology

development of the vehicles. F1 serves as a global showcase for major car manufacturers: Renault,

Mercedes Benz, Ferrari and BMW. The sport provides a valuable research and development

laboratory for the leading motor manufacturers. Further, the individual drivers and their racing

teams are internationally recognized sports figures and each F1 race car built and maintained at a

cost of over millions of dollars. Competition between drivers and teams charges up the atmosphere

at every race meeting. The following table illustrates the 13 teams and drivers for 2010 FIA F1

World Championship:-

NO. TEAMS CONSTRUCTOR ENGINE RACE DRIVERS

1 Vodafone McLaren

Mercedes McLaren Mercedes

Jenson Button

Lewis Hamilton

2 Mercedes GP

Petronas Mercedes Mercedes

Michael Schumacher

Nico Rosberg

3 Red Bull Racing Red Bull Renault

Sebastian Vettel

Mark Webber

4 Scuderia Ferrari

Marlboro Ferrari Ferrari

Felipe Massa

Fernando Alonso

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NO. TEAMS CONSTRUCTOR ENGINE RACE DRIVERS

5 AT&T Williams Williams

Cosworth

CA2010

Rubens Barrichello

Nico Hülkenberg

6 Renault F1 Team Renault Renault Robert Kubica

7 Force India F1 Team Force India Mercedes

Adrian Sutil

Vitantonio Liuzzi

8 Scuderia Toro Rosso Toro Rosso Ferrari

Sébastien Buemi

Jaime Alguersuari

9 Lotus F1 Racing Lotus

Cosworth

CA2010

Jarno Trulli

Heikki Kovalainen

10 Campos Meta 1 Campos

Cosworth

CA2010 Bruno Senna

11 US F1 Team US F1

Cosworth

CA2010

José María López

12 Virgin Racing Virgin

Cosworth

CA2010

Timo Glock

Lucas di Grassi

13 BMW Sauber F1

Team BMW Sauber Ferrari

Pedro de la Rosa

(Source: http://en.wikipedia.org/wiki/2010_Formula_One_season)

2.1.3 Competition

The survey conducted by Synovate, a multinational research company, in six selected countries -

United States, Germany, Saudi Arabia, the United Arab Emirates (UAE), China and Malaysia

shows that in overall, F1 has established itself as the most popular motorsport worldwide except in

the United States where the NASCAR was rated as the most popular motorsport in the country. It is

probable that F1 is not popular in United States because the neither the sport is hosted in the country

nor the country has participated in the race prior to year 2010. The US F1 team was only selected to

join the grid for the 2010 season in June 2009.

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Nevertheless, NASCAR or in full, National Association for Stock Car Auto Racing, may serve as

a competitor for F1 based on its growing fan base. NASCAR racing is considered the number one

spectator sport in America, with an estimated 75 million fans and more than $2 billion in NASCAR

branded retail merchandise sales NASCAR races are broadcasted in over 150 countries in 21

languages(1)

. However, NASCAR and F1 complete on polar opposites. NASCAR uses carburettors

in its engines, which is now outdated in the road cars while F1 uses cutting edge technologies.

NASCAR sanctions a number of stock car racing in the United States such as the Sprint Cup,

Nationwide Series, Camping World Truck Series, NASCAR Local Racing, Whelen Modified Tour

and Whelen All-American Series.

Thus, more races are held by NASCAR throughout the year in the Unites States in accordance to

their local time, as compared to F1 which is not held in the country. The F1 races are held

throughout the world and at times it might not be in viewing convenience for United States citizens

due to the different time factor.

2.1.4 Popularity and Commercial

According to F1's official Global Broadcast Report, F1 is not only the world’s most glamorous

sport, it the world’s largest annual sporting event. It has more than 200 broadcasters worldwide,

televised in more than 185 countries and has an annual cumulative audience of over 2.7 billion

viewers. An average of 600 million individual viewers watch each season during live broadcasts in

1 Source: http://www.hlglicensing.com/nascar.htm

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the world’s top 20 TV markets. The report also identified that over 200 global brands and

corporations are currently sponsoring F1(2). In short, F1 motorsport racing is the technologically

advanced and high-profile sport in the world, with a large worldwide sponsorship, audience and fan

base.

Furthermore, the commercial rights of F1 which includes promotion of the GP, the

media distribution and media content regarding F1, commercial rights to the team

names, broadcasting rights, F1 trademarks and logo, televised feed of the race

content is controlled by The F1 Group, spearheaded by Bernie Ecclestone, who is

also known as the F1 Supremo. Hence, the biggest slice of F1 revenue goes to the

Group and Bernie Ecclestone, F1’s septuagenarian ringmaster, has the most

powerful say in F1.

2.2 INCEPTION OF F1 IN MALAYSIA

F1 in Malaysia is the pet project of Malaysia’s 4th

Prime Minister, Tun Dr. Mahathir

Mohamad. When he visited the Portuguese GP in 1996, he recognised the publicity

to be gained worldwide from hosting a GP and began negotiations with F1 Supremo

Bernie Ecclestone who emphasised the need for a track. An area for a track was

identified near the airport, and the idea took off from there. The Cabinet requested

Malaysia Airports Sdn Bhd to obtain the rights to host a GP, and subsequently,

build the circuit. A taskforce was then formed to ensure that the circuit project would run smoothly.

Members of the taskforce went to F1 circuits around the world to learn about the layout and

organisation of a GP. They came back and constructed the Sepang International Circuit, with new,

dynamic ideas and concepts.

Sepang International Circuit Sdn Bhd (SIC) was later formed as a wholly owned subsidiary of

Malaysia Airports Holding Berhad to manage the operations of the SIC plus organizing and

promoting of motorsports and entertainment events. Malaysia was the first country in the South

East Asia to have a F1 track, second in Asia, with Japan being the first. Each track that wishes to

host the GP will have to pay US$8 million (RM30.56 million) a race (3).

Malaysia Airports Berhad

(MAB), the holding company of SIC, successfully signed a five-year contract with an additional

five-year option to renew to host the FIA F1 World Championship from 1999. To date, the F1

2 Source: http://formula-1-racing.hosting-of-webs.com/

3 Source: http://www1.american.edu/TED/formula1.htm

Figure 2: Bernie Ecclestone

Figure 3: Tun Dr. Mahathir

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Malaysian GP organisation has been extended its contract and thus secured to host F1 race at

Sepang until 2015.

Inaugurated in 1999, the F1 Malaysian GP has become the country's biggest racing event, attracting

thousands of local racing enthusiasts and international visitors from around the world. Further,

Malaysian GP which offers one of the most technical GP circuit in F1, had also won the Best GP

Award in the year 1999. The statistic published by SIC in its website clearly revealed that the

audiences for the F1 event in Sepang have increased steadily from 80,000 spectators in 1999 to

126,690 spectators in year 2008. However, F1 Malaysian GP 2009 has received a substantial

amount of bad press after being washed out by thunderstorm. A heavy downpour with thunderclaps

and lightning called for the suspension of the race and thus left both the fans and the teams in a

huge disappointment.

2.3 MARKET SURVEY

2.3.1 Profile of F1 Malaysian GP Fan Base

The profile of F1 Malaysian GP fan base is segmented and analysed based on geographic,

demographic, psychographic and behavioural factors:

(a) Geographic Segmentation

There is no set geographical target area for F1 Malaysian GP. This is because the F1 Malaysian GP

is the country's biggest racing event, attracting thousands of local racing enthusiasts and

international visitors from around the world. During this time, history has seen the biggest names in

F1 Racing such Felipe Massa, Michael Schumacher, Juan Manuel Fangio and many others coming

to Malaysia along with hordes of racing fans from across the world. According to SIC’s Chief

Executive Officer, Razlan Razali, about 70% or 92,484 spectators who turned up for the race in

year 2008 were domestic visitors while the balance 30% or 34,206 spectators were international

visitor (Source: The Star, 14 February 2009).

Further, the circuit is easily accessible via air, rail and road. The availability of 2 main airports in

Malaysia, Kuala Lumpur International Airport and Low Cost Carrier Terminal within a close

proximity enables SIC to cater both foreign and domestics fans of F1. The intense price war

between the 2 national airlines, Malaysia Airlines Systems (MAS) and Air Asia indirectly enable

more fans to fly to Sepang at low fares.

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Scrutinizing further into the domestic market, it is identified that both the national airlines stated

above also provide transportation services to all the 14 states and Federal Territories in Malaysia.

Therefore, distance is no longer a burden for the fans, whether they are at East Malaysia, Northern

region, Southern region or East Coast of Peninsular Malaysia. Leveraging on the expansive reach of

Internet and strategic location of the circuit, SIC is able to cater both foreign and domestic fan base

of F1 without geographical boundaries. In this respect, the targeted population for F1 Malaysian GP

is 2.5 billion people. These people were identified to be watching each of F1’s 17/18 races. (4)

(b) Demographic Segmentation

Demographic segmentation consists of dividing the market into groups and analyzing it based on

variables such as age, gender family size, income, occupation, education, religion, race and

nationality Due to unavailability of exact information regarding the demographic of F1 fans, the

survey conducted by caseynealracing.com in 2007 on Motorsports Demographic is used provide

some insight on the fan base distribution for motor racing sports in the world. The data can be

assimilated because F1 also falls under the category of motor racing sports. Using the information

from the survey, the target market in divided into 4 group factors i.e. Age group factor, Income

group factor, Education group factor and Marital Status group factor. The distribution of the

market in respect of the four factors are summarised by the following pie charts:-

4 Source: F1Scarlet: http://www.f1scarlet.com/about.html

11

The findings illustrated by the pie charts above indicate that: -

Majority or in other word, 81% of the motorsport fans are between the ages of 21 to 49;

56% of the fans earn more than $35,000 annually and more than half are in the $35,000 –

$74,000 plus bracket;

More than half or 53% of the fans are married; and

About 68% of the fans have attended college.

Furthermore, a survey conducted by The F1 Teams Association (FOTA) in 2009 provides and

insight on gender distribution of F1 fan base. The findings from 17 countries being surveyed has

been adjusted accordingly to the size of viewing market in each country to avoid small markets

skewing the results. It revealed that in general, total audience for F1 comprised of:-

Regular fans (25% by volume, predominantly male, cross section of ages)

Moderate fans (44% by volume, female and male, cross section of ages)

Infrequent fans (31% by volume, unlikely to watch GP, predominantly female, cross section of

ages)

In sum, based on the two surveys, it is identified that the largest attractive segment of F1 motor

racing fans generally comprised of affluent, educated, upscale male and female youths.

(c) Psychographic segmentation

Under psychographic segmentation, the F1 fan base is separated into groups of social class,

lifestyle or personality characteristics. Psychographic segmentation goes beyond demographic

where it examines attributes related to how a person, feel and behaves.

Source : http://www.caseynealracing.com/

12

i. Social Class:

F1 is officially an international sport that has reached mass appeal. F1 is organised for large middle

and upper social classes with disposable income - people who have good jobs, earn good money

and are able to spend it on an international standard. It is not appealable to the low income group as

it is perceived that they would look after their needs first before considering their wants. The low

income group might feel that F1 tickets of RM100 per person are costly and does not sees the need

in any way. Most importantly, the experience may benefit them much as compared to solving their

own needs. They will rather spend their money on their needs than to wants. Thus the possibility of

low income group being involved is low.

ii. Personality:

F1 is generally appealable to:-

Sporty and bold young males and females who love racing and high-octane actions.

People who are aggressive, adventurous, risk-takers and highly passionate for style, speed and

performance.

People who are fascinated and have strong interest in the cutting edge of automotive

technologies.

iii. Lifestyle:

Being sanctioned as the highest class of motor racing, F1 is a million-dollar sport with fast cars,

exotic locations and beautiful women. Thus, it has come to be associated with not only sporting

distinction but also with glamour and prestige. With the existence of big names in F1 such as Tony

Fernandez, CEO of Air Asia Airlines, Richard Branson, CEO of Virgin Group and F1

supremo Bernie Eccleston, plus the nature of the sport, F1 is attractive to those with the following

lifestyles categorized by the Cross Cultural Consumer Characterization model:-

Aspirers - Materialistic, status conscious, acquisitive, oriented to extrinsic image, glamour,

appearance, charisma, persona and fashion;

Explorers – Risk-takers, bold, daring, fun-lover and love to be different with own class and

style; and

Succeeders - Strong goal orientation, confidence, support status quo, stability and brand choice

based on reward and prestige i.e. the very best.

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(d) Behavioural segmentation

In behavioural segmentation, consumers are divided into groups on the basis of their user status,

loyalty status, knowledge of, attitude towards, use of, or response to a product. Racing fans fall

under the three categories i.e. regular, moderate and infrequent user as mentioned above, and are

extremely brand loyal- 71%-91% of racing fans go out of their way to buy products and services

that are involved in motorsports. (5)

2.3.1.1 Summary of Market Segmentation

Market Segmentation analysed under the four factors of Geographic, Demographic, Psychographic

and Behavioural above is summarized as follows:-

SEGMENTATION FACTORS DETAILS

Geographic Global

Demographic:

1. Age

2. Gender

3. Income

4. Education Background

21 ≥ 49

Male and Female

≥ RM24,000 – RM75,000 per annum

Tertiary Education.

Psychographic:

1. Social Class

2. Personality

3. Lifestyle

Middle and Upper Social Class with

Disposable Income

Sporty, Bold, Adventurous, Aggressive, Risk-

takers, Technology savvy.

Aspirers, Explorers, Succeeder

Behavioural:

1. Benefits

2. User Status

3. Loyalty Status

4. Attitude towards Product

Entertainment / Satisfaction

Regular, Moderate, Infrequent fans

Heavy.

Status Conscious, Informed, Interested,

Enthusiastic, Positive.

2.3.2 Market Needs

The market needs for F1 fans can be divided into 3 main elements: Spectacular Circuit Experience,

Sense of Prestige, Distinction (Value for Money) and Good Customer Hospitality and as explained

below.

5 (Source: “Get Sponsored” book by Charlie Hayes)

14

(a) Spectacular Circuit Experience

Source: FOTA

The above diagram shows FOTA global audience survey result conducted in February 2009. Based

on the survey, the top 4 turn on or factors that excite the F1 fans are: -

i. Driver skill - The capability of the drivers to maintain excellent control while driving fast

and demonstrating efficient skills like successful overtaking, breaking and

cornering with exclusive style.

ii. Winning - The satisfaction that expectations placed on brand image and excellent

performance are met.

iii. Overtaking - The breathtaking excitement in viewing exceptional skills of high speed

overtaking and pushing fellow competitors into backing off within just one

fast line around the track

iv. Technology - The exposure to the pinnacle of the automotive technologies and innovation,

racing at top speed of over 200 miles per hour.

Thus, the main needs of the fans are the spectacular and immersive experience of watching

technologically advanced high-speed guzzling cars, sharp turns, screeching sound of tyres and loads

of high octane drama which gets the adrenaline to run through their vein. F1 fans want to have the

pleasure watching world famous drivers driving high performance cars skilfully at extreme speed

and track conditions.

15

(b) Sense of Prestige

The fans show their preferences for F1 because of the status, recognition and status of the FIA F1

World Championship as the highest class of auto racing in the world. They want to have a sense of

prestige and be associated with the top class of motorsport. Dr Vijay Mallya - Indian businessman,

and enthusiastic F1 fan clearly expressed this requirement for sense of prestige by saying “F1 is the

crown of motorsport and it is my style to look at the crown and not at the grass roots”.

(c) Distinction (Value for Money)

In addition to fabulous viewing experience, the fans want value for their money. Fans who bought

the cheapest tickets are generally satisfied with the on-circuit experience. However, fans who

bought more expensive tickets may not prefer to be equalized with those both the cheaper ticket.

They will expect for more special treatments and hospitality such as personal tours of the race pits,

air-conditioned suites, free Kangaroo TV which takes live events to a whole new dimension and

even meetings with the race legends. The higher the fans pay, the higher will their expectation be in

respect of getting value for their money.

(d) Good Customer Service

F1 Malaysian GP runs for three days. Thus, the fans will desire to spend an enjoyable race weekend

at Sepang. In addition to track viewing pleasures, the fans will expect good hospitality, professional

arrangement and international standard of service as stated below:-

Well organised and efficient transportation system – ease of access

Wide selection of quality accommodations

Effective ticketing system

Good facilities - clean toilet, well-maintained seats

Wide range of quality food in accordance to international taste

2.3.3 Market Trend

(a) Night Race

F1 night race was first held in Singapore in 2008. The race established itself as one of the most

dramatic and atmospheric races on F1 calendar. It was billed by all parties i.e. team principals,

driver and fans as the most exciting premiere in F1 history. Further, the night race was also

supported by the F1 boss, Bernie Ecclestone who commented that a night race in Asia should

increase the number of television viewers, especially in Europe. He also anticipates that the effect

16

of the night race is spectacular and able to draw a larger crowd of spectators who are looking for a

different experience.

More GP have thus adopted this trend to provide a new change in experience for their ardent fans.

In 2009, Abu Dhabi followed suit. In 2010, F1 night race is scheduled to be held at 5 GP i.e. Korea,

China, Australia, Abu Dhabi and Singapore.

Nevertheless, Malaysia has decided not to hold a F1 night race over the remaining years of its

contract because of the high costs and has elected to continue the twilight race model which was

started in 2009. According to SIC, installing a lighting system to illuminate the circuit will cost at

least USD 5.77 million. Thus, the Malaysian GP will be held at 5p.m. local time, making it easier

for European viewers to watch the race and cooler for spectators in Malaysia.

(b) Point of Difference

In 1999, F1 racing entered the brand new Sepang racetrack which changed the shape of F1 circuit

design. Those new concepts were developed further in Bahrain and China, and again in Istanbul

where the circuit's landscape also came into focus. Since then F1 has been to the first new age street

track in Valencia, another one at night in Singapore, and the latest is the spectacle of Abu Dhabi.

GP organisers are striving to come up with something special to give the event its own identity. The

moving trend shows that in addition to on the-track experience, the organizers are competing in

adding glitz, glamour and a sense of luxury occasion to the racing fans. Among the examples are as

follows:-

GP

ORGANIZER BEST IN CLASS OFFERINGS

Singapore

Treats high net worth fans to a series of luxury mega events such as

allowing instant entry into some of the best clubs, VIP tables at restaurants

and VIP tickets of the F1 Rocks concert at Ford Canning Park.

Monaco

Packages its F1 with luxury Caribbean yacht charters, cruises and free

flowing champagnes in addition to the road race through the tiny streets of

the wealthy paradise

Abu Dhabi

Offers sophisticatedly design circuit

Offers stunning luxury hotel intertwined with the raceway allowing high

rollers to arrive in style, in a luxury rental car, yacht charter, or private air

charter

Offers World’s first Ferrari Theme Park, marinas, golf courses and yacht

clubs.

Its grid-shell architecture also fuses the entire complex by producing

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captivating visual effects and spectral reflections of the desert, sea and sky.

It resembles a colossal jewel in the desert, instilling a powerful sense of

location and a fabulous backdrop for the F1.

On the whole, all the novelties and added flavours shows that F1 is moving from a motor racing

sport to leisure and lifestyle choice for the F1 fans. In order to distinguish itself, F1 Malaysian GP

also has to deliver best-in-class offerings to create the Malaysia Experience.

2.4 PEST ANALYSIS

PEST analysis identifies the external macro-environment that affects the conduct of F1 GP in

Malaysia. PEST is the acronym for Political, Economic, Social and Technological factors of the

external macro-environment.

2.4.1 Political

(a) Strong Government Support

From the inception of F1 in Malaysia, the Malaysian Government during the leadership of the forth

Prime Minister, Tun Dr. Mahathir Mohamad had made it clear that they are committed to the

hosting of the event. The event was put under the charge of SIC Sdn Bhd., a wholly owned

subsidiary of Malaysia Airports Holding Berhad, which is actually controlled by the government

through Khazanah Holdings. As such, SIC Sdn. Bhd. is a Malaysian Government’s entity in which

the government has interest in.

The support was further affirmed by the fifth Prime Minister i.e. Tun Abdullah Ahmad Badawi who

gave the mandate to the SIC Sdn. Bhd. to take all the necessary steps to ensure that Malaysia

remained on the F1 calendar beyond 2010 (The Star, 22 March 2007). In addition, the current prime

minister, Datuk Seri Najib Tun Razak also expressed the government’s support for F1 by launching

the 1Malaysia F1 Team, a joint venture between the Government and private sector, to participate

in the F1 race beginning year 2010. In sum, F1 in Malaysia has a very strong backing from the

Malaysian Government.

(b) Political Stability

Political stability has always been a major plus for Malaysia. It is undeniable that the country has its

minute share of internal problems caused by a handful of people who try to incite racial tensions.

Latest example of such incident is the church arsons. However, majority of Malaysian are peace-

loving and such incidents are condemned heavily by the leaders of the country. Actions by

18

individuals who try to incite racial tensions are strongly dealt with. Strong conflict is also largely

avoided through political power. Thus, it is normal to see the various races working together, joking

and helping each other or even eating together, although they do not necessary live in the same area.

In addition, the government also launched 1Malaysia concept in year 2008 which strongly

underscores the unity of the multiethnic, multicultural and multireligious society for the betterment

of the nation.

2.4.2 Economic

(a) Economic Slowdown (Recession)

Although it is generally acknowledged that Malaysia has strong economic fundamentals, the

country’s economy also fluctuates in tandem with the worldwide economic slowdown.

Nevertheless, the impact of the economic slowdown is not severe. Economic slowdown has

negative impact on F1. When economic activity slows, businesses begin to suffer. When businesses

suffer, they cut expenses in an attempt to remain profitable. One method of cutting expenses during

a recession is to reduce the overtime claims / salary, provide unpaid leaves or in extreme cases,

reduce the workforce. Unfortunately, when businesses lay off employees, consumers' ability to

spend money is curtailed. For example, Malaysia’s consumer expenditure in 2008 was

USD98.7billion. The amount dropped to USD94.0 billion in 2009 as a result of the recession which

hit the country during the year (6)

.

Consumers generally adopt prudent spending during recessions. The spending pattern would be

more towards fulfilling the necessities rather the wants. As such ticket sales for F1 will be affected.

This is further evidenced by the comparison SIC raceday attendance in year 2008 and 2009. In

2008, F1 event in Sepang drew 126,690 spectators(7)

. Although the official figure for 2009’s was

not release, newspaper reports that it was down by some 40 - 60 thousand people. Even worst,

www.fanatic.co.uk records it at slightly about 35,000 (refer the bar graph below).

6 Source: http://www.euromonitor.com/FactFile.aspx?country=MY

7 Source: The Star, 12 February 2009

19

2.4.3 Social

(a) Passion For Speed / Racing

Malaysians in general have high underlying

passion for speed and racing. This is evidenced

by the increments in the statistics of illegal street

racing by Malaysian youths. In 2006, Deputy

Inspector- General of Police at the time, Tan Sri

Musa Hassan reported that 2,970 of the 3,182

people arrested for illegal racing between

January and May during the year were aged between

16 and 25 years(8)

. Chief Traffic Officer of Bukit Aman Force reported that 35,353 summons were

issued for illegal street racing in 2007(9)

. Further, on 10 January 2010, 500 illegal racers were

arrested in Kuala Lumpur (10)

. On 16 January 2010, more that 200 illegal racers were arrested and

forced to push their motorcycles to the police station in Penang (The Star, 17 January 2010)

8 Source: http://www.bernama.com/bernama/v3/news_lite.php?id=218555

9 Source: http://informasi.phpbb3now.com/viewtopic.php?f=9&t=548&start=16

10 Source: http://btsera.blogspot.com/2009/05/500-mat-rempit-pelumba-kereta-haram.htm

Source: http://www.f1fanatic.co.uk/

Figure 4: Illegal Street Racing Arrest in Penang

20

(b) Malaysian Spending Power

Malaysia is classified as an upper-middle income country, and considered as one of the most

developed of the developing countries. The proportion of middle income households, defined as

those earning between MYR1,000 and MYR4,000 per month, has increased from 47.7% in 1999 to

62.1% in 2007. Mean monthly gross income per household increased from MYR2,472 in 1999 to

MYR3,686 in 2002, denoting an increase in their spending capacity. (11)

Malaysia’s consumer lifestyle has been evolving and changing due in part to rising affluence and

education levels. High profile international retailers and the global mass media have also played a

hand in shaping consumer-buying behaviour. Malaysians are becoming more westernized,

sophisticated and cosmopolitan(12)

. Thus, their lifestyles and buying behaviour is also moving

towards brand and status conscious.

2.4.4 Technology

(a) Regional Auto Hub

Under the National Automotive Policy Framework, Malaysia aims to become the regional hub for

the manufacturing, assembly and distribution of automotive vehicles and to promote a competitive

and viable automotive sector in the country. The Government underlined that it will continue to

provide incentives and infrastructure as well as implement favourable policies to attract

manufacturers or assemblers to remain or to set up in Malaysia. Priority will be given to

manufacturers and assemblers which plan to use Malaysia as a launch pad to tap the regional and

international markets. Further, Research and Development grants are given for automotive

manufacturers, and components and parts manufacturers which undertake research and

development activities, including designing, prototyping, product development and improvement.

The Technology Acquisition Fund (TAF) is extended to the automotive sector. Malaysian-owned

companies, which acquire new and emerging technologies to enhance their technological

capabilities can apply for partial grants from TAF.

In addition, Mailsport dated 26 August 2009 reported that Meritus, a multi-dimensional motorsport

services company with a winning culture of race-engineering success in Europe, Asia Pacific and

the Middle East, has its base in Malaysia. Its founder Peter Thompson, who has been in the industry

11

Source: http://voyager8.blogspot.com/2008/09/malaysian-household-monthly-income.html 12

Source: http://www.pwc.com/en_GX/gx/retail-consumer/pdf/malaysia.pdf

21

for 25 years affirmed that Malaysia has great facilities and technology where Sepang is right smack

in the racing crossroads of Asia and Europe.

(b) 1Malaysia F1 Team – Transfer Of Technology

BERNAMA on 29 December 2009 reported that the country’s participation in F1 with the national

team had far reaching objectives, mainly the advancement of the country’s automotive industry

development from the technological aspect. The establishment of racing centre within the country

aims to attract more foreign investments and the best technical minds which, in turn, will spur the

research and development plus growth of automotive industry. In short, 1Malaysia F1 team

facilitate the collaboration between many players in the automotive technology and it will be a

further boost for ongoing technical development and technology transfer to Malaysia."

(c) Tertiary Education in Automotive Industry

Malaysia is producing more and more automotive technology savvy graduates via public

universities and private colleges. For example, The Otomotif College offers Diploma in Motorsport

Technology, Diploma in Automotive Technology and Diploma in Automotive Engineering. Public

universities such as Universiti Teknologi Malaysia and Universiti Putra Malaysia offer post

graduate studies in Automotive Engineering. In addition, The Automotive Development Centre

(ADC) was established at Universiti Teknologi Malaysia to channel expertise specifically in the

field of automotive engineering. All these clearly Malaysia’s endeavour a position in the fore-front

of automotive technology in line with other automotive producing countries. In short, technological

environment factor reacts favourably for F1 in Malaysia.

2.5 COMPETITION FOR F1 MALAYSIAN GP

Competition for F1 in Malaysia can be categorized into 2 main groups i.e. competition between the

GP organizers and competition in motorsports world.

2.5.1 Competition between the GP Organizers

Today, all the GP organizers are competing to attract more and more F1 fans to their respective

country, especially the international fans. Prior to year 2004, Malaysia was the second GP organizer

in Asia and had a renowned circuit design to meet the fans passion. In 2004, China and Bahrain

inaugurated their first GP and this was followed by Singapore in 2009. Korea will be holding their

first GP in 2010. Hence, to date, there are 6 hosts in Asia per se: Malaysia, South Korea, Japan,

Bahrain, China and Singapore.

22

It should be noted that the circuits in Bahrain and China were developed further based on the

Sepang International Circuit’s concept by the same designer, German architect Hermann Tilke who

designed SIC. On the other hand, Singapore has distinguished itself with its night race which

naturally provides cooling effect to drivers, team members and fans while giving extra thrill due to

the difficultly to speed and navigate in the dark. These persistent changes and improvement by other

GP organizers serve as a challenge to Malaysia as the foreign fans are now given more options on

which country they want to catch the race and spend their weekend.

2.5.2 Competition in the Motorsport World

The survey conducted by Synovate as shown under the Background of F1 above illustrates that F1

most favoured motorsport in Malaysia. SIC has also confirmed that most of its revenue is earned by

hosting F1 in Malaysia. However, SIC also host other motorsports such as Super GT, Formula

BMW Asia, A1GP, Petronas Sprinta Asia Road Racing Championship and. These other

motorsports are emerging and gaining more popularity in Malaysia. Two prominent emerging

competitors for F1 Malaysian GP are:

(a) Super GT – First introduced in year 2000 in

Malaysia, the Super GT or formally known as All

Japan GT Championship, is a prominent international

series. In year 2009, it grabbed almost half the seats

from F1’s domestic spectators count in 2008, where

the 2009 Super GT blast with a total of 39,486 in

SIC(13)

. Audience claimed that GT is much more

interesting as superb street cars are used (therefore,

more down to earth) and coupled by Japanese fascinating race queens. Moreover, it draws top

international former F1 drivers such as Ralph Firman, Michael Krumm, Erik Comas and

many others.

(b) Malaysian Rally Championship - Relatively a young sport, rally has become a major

spectator-sport event coming second to the F1 race in Malaysia. Household names like

Karamjit Singh, Kan Chee Hong, Saladin Mazlan and also others have inspired many young

and new talents to take up rallying. The Malaysian Rally Championship is sanctioned by the

Fédération Internationale de l'Automobile (FIA), supported by the Ministry of Youth and

13

Source: http://www.malaysiangp.com.my/news/super-gt-39486-spectators-came-super-gt

Figure 5: Super GT Race Queens

23

Sports Malaysia. The Malaysian Rally 2009 was broadcasted to a potential television

audience of 60 million with over 176 broadcasters beaming pictures into 196 countries (14)

2.6 SWOT ANALYSIS

The following SWOT analysis captures the key strength and weakness within Malaysian GP and

describes the opportunities and threats facing it.

2.6.1 Strengths

(a) SIC – One of World Best Circuit

Specifically built for speed and exciting racing, the SIC

in Malaysia is one of the world's best. Is was designed

by the world leading circuit engineer, Hermann Tilke

and consulted by F1 living legend, Michael

Schumacher, both from Germany. SIC is widely

regarded as a benchmark for other GP venues. From

aerial view, SIC signifies a hibiscus, the national flower

of Malaysia.

SIC also possesses superb pit garage and extraordinary media facilities as well as remarkable

grandstands and patron amenities. The track is stretched at a length of 5.542km with 16m width (up

to 25m width at turn 15). There are 15 turns in total, and the longest straight is 927.543m at the

start-finish line. SIC has the perfect mélange of uphill and downhill turns built to provide an

amazing spectacular view. SIC has the only double frontage grandstand in the world which can

accommodate up to 30,000 spectators; a further 100,000 spectators will be able to experience the

excitement from the uncovered stands. Furthermore, Sepang Circuit has been designed to be

environmentally friendly with the planting of a total of 5,000 palm oil trees and 4,000 coconut

trees.(15)

From the driver’s view, the combination of long high-speed straights and tight twisting complexes

make the track very complicated, but perfect for overtaking as the track itself is very wide. The

drivers love it and along with Malaysia's distinct tropic atmosphere (hot or most humid with series

of shower), it is a unique experience in F1. It was voted the world's 'most challenging' track by F1

14

Source: www.virtualmalaysia.com 15

Source: http://ndtv.f1pulse.com/circuits/Sepang_International_Circuit/3F42/circuits_profile.aspx

Figure 6: Sepang International Circuit

24

drivers and has been rated as one of the world's best. Also, in recognition of its modern facilities, it

is the only circuit in the world allowed to incorporate the F1 logo on its official name.(16)

(b) World Wide Fan Base - Large Followers

F1 is a sport that needs no introduction. It is the second most

watched after the Olympics in terms of fanbase (17)

. The table

on the right tabulate the race day attendance of Malaysian GP

from 1999-2008, which saw a steady rise since 1999 with

sudden drop in 2001 (fatal tragedy in preceding Australian GP)

and 2004 (due to post 2003 international SARS scare and the

first day clashes with Malaysia’s national poll day) but manage

to lift up again in the respective following years.

At the same time, annual worldwide home viewers are

estimated to be approximately 330 million with 64% (211.2

million) is in Asia. Apart from live coverage, about 2.5 billion people watch each race every

season(18)

.These die-hard fans grow by day through membership in respective fan clubs set by team

owner. Officially, they also gather at Facebook’s F1 Fan Associations (FOFA).

(c) 11 Years of Experience in Hosting F1

Malaysia has a long involved experience in hosting Malaysian GP since 1999. Past exposure and

success had garner strategic corporate partnership for coverage and sponsorship (e.g. banks, media)

that even Singapore GP turn to SIC for advice on organising F1 (The Star, September 29 2008).

(d) Strong Malaysian Government Support and Sponsorship Backing

Moreover, F1 has full Malaysian government support as it helps to boost the country’s economy

through sports tourism. After the 1999 race, University Malaya did a study that says that the

economy benefited by about RM1.5billion during the F1 week(19)

. In addition, F1 in Malaysia has

the strong financial backing from Petronas, which has been sponsoring Malaysian GP from year

1999 to present. Petronas is the main title backer for F1 GP in Malaysia.

16

Source: http://www.malaysiangp.com.my/story/sepang-circuits-sepang-circuit-history 17

Source: http://www1.american.edu/TED/formula1.htm 18

Source: http://www.f1scarlet.com/f1_racingwhatitmeanfoeindia.html 19

Source: http://biz.thestar.com.my/news/story.asp?file=/2009/2/14/business/3249781&sec=business

Source: SIC

25

(e) Cheap Ticket Price

Malaysian GP has an advantage in the price war. The ticket prices are not only among the cheapest

tickets in the 2010 calendar but also have some premium ones making it affordable for all (refer the

following table for comparison). As such, Malaysia remains as a value-for-money destination,

especially to the Europeans

F1 GP

ORGANIZERS

RANGE OF

TICKET PRICES (RM)

Bahrain 405 – 1,615

Australia 189 – 1,727

. Malaysia 100 – 2,600

China 191 – 1,977

Spain 762 – 2,400

Monaco 326 – 2,400

Turkey 303 – 1,089

Canada 127 – 1,977

Valencia 260 – 2,500

Great Britain 740 – 1,251

Germany 468 – 2,363

Hungary 265 – 2,287

Belgium 1,017 – 2,240

Italy 572 – 937

Singapore 616 – 3,698

Japan 473 – 3,575

Brazil 785 – 4,712

Abu Dhabi not yet on sale

(modified from: http://www.gpticketshop.com/en/f1.html)

(f) Spatial Convenient

SIC have a great market decentralization of distribution of e-ticketing plus locally and

internationally based tickets agents. It helps local and global fans to save on transportation and

search cost in buying tickets while further increasing switching cost.

26

(g) Location

Situated 85km from Kuala Lumpur city centre, SIC is accessible via modern North-South

Expressway, Railway Links and a network of Highways. It is also situated in close proximity to the

Kuala Lumpur International Airport and Low Cost Carrier Terminal makes it an ideal place for

world-class international events. The KLIA Pan Pacific Hotel (five star hotel) and The Tune Hotel

(budget hotel) are just 10 minutes away from the circuit.

(h) Medical Team Has ISO Certification

SIC is also the only circuit in the world where the F1 medical team received the ISO

certification(20)

. This is a salute to the Armed Forces Medical Corp that provides the bulk of the

medical personnel. SIC provides the very core of F1 race requirement - high standard of safety and

marshalling requirements.

2.6.2 Weaknesses

(a) Lack of Entertainment/Amusements within the close proximity of SIC

The Star, 14 February 2009 reported that with the high-end audience the F1 attracts, Malaysia has

been projected as an international destination that offers high quality services and facilities, five-star

hotels, fine dining, luxury pampering, high-tech telecommunications services, cosmopolitan city

entertainment and shopping. However, these novelties are generally located at Kuala Lumpur, the

nation’s city center, which is located 85km from SIC. Further, only limited accommodations are

available within close proximity of SIC. Most of the five-star and even four star hotels are located

in Kuala Lumpur. Thus, the affluent audiences who require excitements and adventures as well as

nightlife entertainments have to base their destination in Kuala Lumpur and travel approximately

160km (to and fro) to SIC. The travelling time will take approximately 45 minutes subject to traffic

condition as well.

(b) SIC is not Disable-Friendly

Undeniably, SIC has an ultramodern facility – except for disabled fans. SIC should a leaf from

counterparts such Spanish GP who provides special Grandstand and disable-friendly facilities such

as car park and washrooms.

(c) SIC has Poor Lighting Technology

The 2009 Malaysian GP was forced to abandoned halfway due to bad weather and poor light. The

drivers commented that the visibility was almost zero during the heavy rain pour. After the rain 20

Source: http://www.asiaone.com/Motoring/Motorworld/Story/A1Story20090412-134812.html

27

subsided, the race could not resume because the sky became darker with the onset of evening and

the organisers had run out of daylight (21)

. Thus, the circuit is highly dependent on daylight and has

poor lighting technology. The race could have been extended after the rain stopped if SIC had good

lighting technology to illuminate the circuit brightly at night as the rain eased.

(d) No Local F1 Drivers

Malaysia has many champions and leaders involved in motorsports such as:-

Jazeman Jaafar

Formula BMW Asia Champion year 2001

He was also the youngest champion in Formula BMW Asia history

at just 14 years old

Alex Yoong Malaysia First F1 racer in year 2001

Fairuz Fauzy

Malaysia A1GP racer

He had beaten F1 legend track record in Britain in year 2008 just by

using A1GP race car.

He also set the fastest lap record in Nurburgring, the legendary

Germany track which have regarded as “Green Hell” – the track

where almost all the best supercars manufacturers in the world test

their supercar prototype

Tengku Djan Ley No.5 best drifter in this world, he already beaten USA drift

champion

Karamjit Singh Malaysia Asia Pacific Rally Champion in year 2001

Fariqe Hairuman Asian Touring Car Champion in year 2007

He also win so many races in Japan Super Taikyu Championship

Despite having so many expert drivers involved motorsport, Malaysian does not have any local

heroes featured in F1. Alex Yoong was the first Malaysian in F1 with Team Minardi, racing in 2002

but failed to make an impact as well as struggled to remain competitive. His F1 career ended at the

close of season. After that, to date, there have been no other Malaysian drivers who have taken part

in F1. Even the 1Malaysia F1 Team has picked veteran F1 driver Jarno Trulli and Finland’s Heikki

Kovalainen as drivers for its debut season in 2010.

This is sad because despite offering tertiary education in motorsport technology such as the

Otomotif College, Malaysian have yet to achieve the standard required for F1. Further, Malaysia

21

Source: http://www.asiaone.com/Motoring/Motorworld/Story/A1Story20090412-134813.html

28

also have won the Best Team Identity Award for F1 in School 2009 (an international competition

for school goers aged 11–18, in which groups of 3 - 6 students have to design and manufacture a

miniature "car" out of balsa wood using CAD/CAM design tools). Students that had good exposures

to the best aerodynamics area world class engineer just have no local race figure to look up to.

2.6.3 Opportunities

(a) The First Appearance of Lotus F1 Racing Team

Now Malaysian has its own team to cheer for in Malaysian GP. The 1Malaysia Racing Team a.k.a

Lotus F1 Racing – a team backed by the Malaysian Government and leading corporate and run by

Malaysians (except the drivers), will participate in F1 GP for the 2010 season. The participation

also marks the comeback of Lotus to the F1 motor race. Therefore, it is expected that more

Malaysian as well as Lotus fans will turn up to show their support. At the same time, it is expected

that the critics will also show up to watch and evaluate the performance of the team. Hence, with a

Malaysian team on the grid, SIC would be hoping for substantial increase effect on spectator

attendance.

(b) The Bet between Tony Fernandez and Sir Richard Branson

There are two new team joining this season F1, Lotus F1 Racing Team (Tony Fernandes is Team

Principal) and Virgin Racing (owned by Sir Richard Branson). Both had openly bet that the loser in

the F1 will have to dress up as an airline stewardess on the winner's airline. Since both of them are

popular and well respected personalities in the aviation industry, it is expected that this particular

stake will spark interest of more fans (including the infrequent fans) to follow the races closely to

see who will lose.

(c) The Return of Michael Schumacher (Schumi)

Many people look forward to 2010 with renewed gusto because Michael Schumacher, the most

successful F1 driver of all time will make his much-anticipated return to F1. As seven-time World

Champion, Schumi’s outstanding record in F1 speaks for itself. Needless to say, international and

regional media will be more than interested to focus on him while loyal fans will return to their TV

set or follow him to SIC. Past record had shown that whenever Schumi’s race, attendance rose by

35%. Therefore, for 2010, Malaysian GP can confidently expect a rise of 15-20% in turnout.

The popularity of Schumi has a great influence among the F1 fans and the relationship is shown in

the diagram below:-

29

(Source: http://lifeizlikethat.wordpress.com)

(d) The Intense Price War between MAS and Air Asia

The intense price war between the 2 national airlines of Malaysia, MAS and Air Asia indirectly

enable more domestic and global fans to fly in to Sepang at low fares.

2.6.4 Threats

(a) Second Wave of H1N1

World Health Organisation chief Margaret Chan says the H1N1 flu pandemic may not be conquered

until 2011. Therefore, if H1N1 goes out of control, the F1 event will have to be a casualty.

(b) Weather

All parties inside SIC have to be able to withstand two types of heat: one from the weather and

another from the track, which can get up to 60°C on a hot day. Temperature can reach a high of

32°C and as low as 24°C. Besides that, heavy rain will wet the track making it trickier for F1 teams

to race. The 2009 Malaysian GP staged the drama where heavy downpours and thunderbolts

resulted the race to be red flagged as visibility dropped to near zero and the track become totally

drenched with water. Subsequently, only half points were awarded to winners in the race. This

caused disappointment to all parties i.e. the drivers, teams, organizer and fans.

Even if the rain does not pour, darkened thunderstorm clouds will also cast a shadow in the

surroundings and affect the visibility of the drivers. Thus, the unpredictable weather of Malaysian

GP might distance off F1 fans who are not will to take the risk of spending on a half way race or

30

covering themselves per se as they have more options in Asia per se where the weathers are more

predictable.

(c) Competition among GP Organizers

Competitions among the GP organizers pose as a threat to Malaysian GP. The organizers are trying

to fish more high-end fans to their country simply to boost the economy. It is undeniable that the

fans’ availability of resources is also limited at a certain extent. Thus, the fans’ spending in one

organizer’s country serves as an opportunity cost to another organizer where its number of fans will

reduce.

The glimpses of the threats can also be evidenced by the number of raceday attendance for the 2009

Malaysian GP (bar chart shown under (b) World Wide Fan Base – Large Followers in SWOT

Analysis). The amount dropped from 126,000 spectators to slightly more than 35,000 spectators

only. Although the authorities attributed the downfall to economic slowdown, the drop could have

also been caused by fans being pulled to Singapore GP or Japan GP, Malaysia’s neighbouring

countries in Asia.

Singapore GP offers night race, which represent a change to the fans that have been following

consistent twilight races for the past 10 years. The Suzuka circuit, the venue for the Japanese F1

race, has its own amusement park, Motopia, which offers a diverse range of driving entertainment

for young children. This caters to fans that travel together with their children.

Another scenario might be the fans have saved their resource by not attending Malaysia GP in order

to attend the new, most sophisticated, classy and exclusive day-light race in Abu Dhabi GP which

made its inauguration in 2009. The Yas Marina Circuit (venue for the Abu Dhabi GP) was also

designed by Hermann Tilke. However, it have 21 corners twists through the manmade island off the

Abu Dhabi coast, passing by the marina and through the Yas Marina Hotel and wind its way

through sand dunes, with several long straights and tight corners.(22)

The marina-based development

also includes a theme park, a water park, as well as residential areas, hotels and beaches.

(d) Competition among the Motorsports

The emerging players in the motorsport world such as the Super GT or Malaysian Rally are also

threats to F1 in Malaysia. They are also trying to pull more and more fans under the “switchers”

category to watch the sports. As the fans recourses are limited, the more the fans spend for other

sports, the lesser the fans will have for F1. The threat was vivid in 2009 where both F1 and Super

22

Source: http://en.wikipedia.org/wiki/Yas_Marina_Circuit

31

GT had same number of spectators which was around 35,000. Some Super GT fans commented that

the tickets for the sport are also cheap and the sports offer more drama such as more overtaking.

The types of cards being used also provides better information on the performance of the actual cars

in the street (not tailor made cars). Thus, competition is a threat to F1 as it has to protect its fan base

in Malaysia from being pulled away by other motorsport players.

(e) Negative News on the Internet

Critics and news posted on the Internet can reach everyone who is connected to Net regardless of

geographical boundaries. These critics and negative news can give negative impression to the fans

about Malaysia in general.

For example, the news about the church arsons, cow head demonstrations, politic controversies

between Barisan Nasional and Pakatan Rakyat, Internal Security Act (ISA) and the Ethnic Indian

protesters (Hindraf) protest marches will disturb the foreign fans view about the peacefulness of

Malaysia. Further, unsupportive Malaysians who are sceptical with the 1 Malaysia F1 team are

noted to be continuously condemning online that the project is an unnecessary waste of public

resources. Things can go pretty ugly if they decide to stage roadside demonstration during raceday.

2.6.5 Summary of SWOT Analysis

The strength, weaknesses, opportunities and threats discussed above are summarized below:-

STRENGTH

SIC – One of World Best Circuit

World Wide Fan Base - Large Followers

11 Years of Experience in Hosting F1

Strong Government Support and Sponsorship Backing

Cheap Ticket Price

Spatial Convenient

Location

Medical Team Has ISO Certification

WEAKNESSES

Lack of Entertainment/Amusements within the close proximity of SIC

SIC has Poor Lighting Technology

SIC is not Disable-Friendly

No Local F1 Drivers

32

OPPOTUNITIES

The First Appearance of Lotus F1 Racing Team

The Bet between Tony Fernandez and Sir Richard Burson

The Return of Michael Schumacher (Schumi)

THREATS

Second Wave of H1N1

Weather

Competition among GP Organizers

Competition among Motorsports

Negative News on the Internet

3.0 MARKETING STRATEGY

Marketing strategy for F1 in Malaysia is determined based on the findings from scanning the

environment, identifying the potential market and their needs, identifying competitors, recognizing

internal strength and weaknesses and distinguishing external potential opportunities and threats.

When F1 was inaugurated in 1999, the SIC served as a point of difference for Malaysia or its core

competency.The circuit was regarded as the best circuit in the world. However, as mentioned

earlier, the concepts were developed further by Bahrain, China and Abu Dhabi. Most of the F1

circuits are designed by the same architect, Hermann Tilke who continuously strives to provide

improvements in his designs.

As a result, Bahrain’s circuit was established as the best circuit in the world in year 2004 while Abu

Dhabi grabbed the award in 2009. Furthermore, circuit rankings published at websites such as

http://www.rankopedia.com and http://www.team-bhp.com/forum/intl-motorsport/870-best-f1-

track.html shows that Malaysia is no longer one of the top popular locations for the global F1 fans.

Among the circuits which received high ranking are Monaco, Japan, Singapore and Abu Dhabi.

This shows that F1 is not only internationally embraced sports but had also scaled the heights of

entertainment. F1 fans, especially the high-end fans are looking for entertainment and amusements

in addition to challenging racing experiences. SIC’s differentiated offerings are considered

insufficient as compared to the brand equity offered by the following GP organizers:-

33

F1 GP ORGANIZERS DIFFERENTIATED OFFERINGS

Singapore

Night race which weave its way alongside the marina and

through the streets under the beam of floodlights and the

electric glow of an eastern metropolis.

Monaco

The race is set in the French Riviera where glitz and glamour is

a part of everyday life. Exceptional glamour and prestige

offerings such as luxury Caribbean yacht charters and cruises.

Japan

The Suzuka circuit has its own amusement park, Motopia,

which offers a diverse range of driving entertainment for young

children.

Abu Dhabi

The F1's first race that starts in daylight and ends after nightfall

in an island race-track. The circuit also includes Ferrari World

theme park which features world fastest roller coaster, mega

mall, golf courses, marinas and yatch club. The race track goes

through the 5- star hotel built in the middle of the track

In this respect, F1 Malaysian GP cannot adopt a full differentiation strategy at premium as it does

not have distinctive offering in addition to the circuit which is losing its strength as a core

competency/ point of difference. As identified under the weaknesses, the F1 circuit is located far

from entertainment, amusement and nightlife activities. F1 Malaysian GP cannot adopt a niche

strategy due to its circuits’ capacity as the organizers will not achieve economies of scale.

Another core competency of F1 is the cheap ticket price. As described under the SWOT analysis,

F1 Malaysian GP provides the world best at an affordable price for all. This is a low cost strategy.

Nevertheless, given its stature and prestige plus its global recognition as glamorous and expensive

sport, F1 Malaysian GP should also offer additional attractive features to the affluent spectators to

give them a sense of distinction from the layman.

Thus, the best marketing strategy for F1 in Malaysia is the best cost provider strategy i.e. a low-

cost with a differentiated approach. F1 Malaysian GP will give spectators value for money.

3.1 MARKETING MISSION

The marketing mission is to make “F1 for All”. F1 Malaysian GP aims to make the crown of

motorsports accessible and affordable to virtually everybody without reducing its exclusive and

prestigious reputation. F1 Malaysian GP will offer the world’s ultimate racing experience packaged

with various best-in-class offerings at various affordable prices.

34

3.2 MARKETING OBJECTIVES

The marketing objectives are:

a. To have full house circuit on the F1 race day by attracting more people to watch F1 directly at

the circuit

b. To create a uniquely unforgettable experience to the spectators through excellent hospitality

c. To increase F1 fans in Malaysia by converting available and ambient nonusers to users (nonfans

to fans) through awareness of Malaysian GP and bridging the gap between the F1 fraternity and

the mass market

d. To maximize the boosts from gate proceeds and tourism spin-offs.

e. To gain strategic partnership with more companies to co-sponsor the race.

3.3 TARGET MARKETS

F1 is meant for everyone. Based on the segmentation, the target markets for F1 in Malaysia are the

following group of people:-

a. The primary spectator target group is the local middle to upper class of income white

collar corporate professionals especially within the age group of 20-50 years old. The

weightage will be more on male professionals as the male were identified to have more passion

towards motorsports and automotive technology as compared to the females. Nevertheless, both

constitute as the primary target. These people generally have high disposable income, strong goal

orientation, conscious of social status and prestige, always searching for the best, plus are keen of

competitions, high performances and winnings.

b. The secondary spectators target group is the foreign F1 fans who love travelling and

want to get good viewing experience and the adrenaline drive at a value for money. These people

are not materialistic and do not have high favouritism for the glitz and sense of luxury. They not

only seek for the race, but also are fun-lovers and explorers who seek place to relax and chill out.

They want a vacation trip coupled with the F1 race at a reasonable price.

c. The third spectator target group is the high net worth individuals and corporate. While

the race is the personification of money and glamour, the sports provides a unique opportunity for

corporate and high net worth individuals to rub shoulders and network. The sport provides high net

worth entertainment for corporate who want to entertain their clients. For the affluent individuals,

the sports provide a sense of high class, style and glamour. This target group has high spending

power.

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d. Last but not least, in accordance to mission to give F1 to all, the final target group are all the

others who have an extent of disposable income or financial backing thus the passion for

motorsports. This target market includes blue collar workers, under-graduates, high-school

students and retirees.

3.4 MARKET POSITIONING

With the best-cost provider approach, Malaysian GP aims to position as the truly value-for-money

F1 GP destination for all the motorsport lovers. For each and everyone, Malaysian GP creates One

Identity, fulfils One Desire and provides One Opportunity to experience the one and only one, The

Malaysia Racing Experience. Malaysian GP welcomes every individual to become One with the

prestigious motorsport in the world - F1.

3.5 MARKETING PLAN

An event of entertainment and thrill; glamour and excitement for motorsport fans, the F1 Petronas

Malaysian GP (GP) that enters its twelve editions in 2010 will be held in Sepang International

Circuit (SIC) from April 2 - 4. In order to fulfil the main marketing mission of “F1 for All” and to

have full house circuit on the F1 race day, the marketing plan consists of two main steps: Shaping

the market offerings and communicating the value.

3.5.1 Marketing Plan – Shaping Market Offerings

(a) Pricing

As practice and qualifying sessions take place on Saturday, with the Grand Prix following on

Sunday, all tickets (daily passes) are valid for Saturday and Sunday. Friday is a free entry day but

only the Mall Area will be accessible, all other locations are closed.

Differentiated pricing method is adopted where tickets are priced based on the sitting arrangement

in the circuit; whether it is covered, numbered and with a nearby LED Screen (refer Table

3.5.1.(a)(2) F1 2010 Official Tickets Prices). Admission for children 2 years and below is free. For

children above 2 years, student tickets via walk in at the ticket counters are available only for Topaz

and Citrine (refer Figure 8: Layout of Mall Area).

As parking space is limited, spectators are required to purchase parking sticker. There are lots for

car, bus and bike. The prices are tabulated in Table 3.5.1(a)(2) Parking Tickets Prices.

36

Figure 7: Sitting Arrangement

Figure 8: Layout of Mall Area

37

F1 2010 Official Tickets Prices : 2 Days (3 - 4 April 2010)

TYPE OF TICKET UNIQUE CHARACTERISTIC PRICE (RM)

MALL AREA - MAIN GRANDSTAND NORTH - UPPER TIER

DIAMOND 2,600.00

SAPPHIRE

Situated at the end of the Mall Area

opposite pits 19-30. Offers a good

view on the Pit Exit and the Chicane.

1,700.00

EMERALD Start-finish straight and directly

opposite the pits 7-18. 1,700.00

MALL AREA - MAIN GRANDSTAND NORTH - LOWER TIER

CRYSTAL

Facing pit 1–7, granting a clear view to

see the top teams doing their pit

activities. Able to watch the start-

finish of the race from the green light

to the checked flag and the podium

ceremony.

1,200.00

TURQUOISE 1,200.00

JADE Opposite the garages 7-18. 1,200.00

MALL AREA - MAIN GRANDSTAND SOUTH - UPPER TIER

TOPAZ

A fantastic view to the entire southern

section of SIC. Will see the cars from

turn 8 to 13. Two big screens.

700.00

MALL AREA - MAIN GRANDSTAND SOUTH - LOWER TIER

CITRINE

Similar view to the Topaz grandstand,

but the general overview is not as

extensive, due to the lower positioning

on the stand.

500.00

Figure 9: 15 Turns Of SIC

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MALL AREA – TOWER

TOWER NORTH

Provides a good view on the last

corner before the start-finish straight,

on the pit entry and on the start-finish

straight itself. Tower South.

500.00

TOWER SOUTH

Provides a good view on the long

straight at the backside of the

grandstand and at the last corner.

500.00

TOWER 1 (LOWER) 500.00

TOWER 2 (UPPER) 2,000.00

Other GRANDSTANDS

K1 First corner views of the entire start-

finish straight, as well as turns 1-3. 800.00

F

Offers a good view to the short straight

coming to the grandstand and the

corner in front. A view of about 50%

of SIC is guaranteed.

600.00

F1 2010 Official Tickets Prices : 2 Days (3 - 4 April 2010)

TYPE OF TICKET UNIQUE CHARACTERISTIC PRICE (RM)

HILLSTAND COVERED

C2

Facing South Mall Area with a clear

view on the Support Paddock. The area

faces turn 9 and the Tower, and offers

an excellent view on almost 70% of

the track.

200.00

HILLSTAND NON-COVERED

K2

Located directly in the third corner. It

consists of natural stands without

cover and offers a good view of the

exit of the Chicane.

100.00

C1

Offers good view of cars coming from

section C3, the corner in front of C1

and the straight going to section B.

100.00

C3 General Admission area located

outside the circuit on a short straight. 100.00

Table 3.5.1(a)(1) : F1 2010 Official Tickets Prices

LEGEND

Covered Seats

Numbered Seats

LED Screen

39

Parking Tickets Prices : 2 Days (3 - 4 April 2010)

TYPE OF PARKING PRICE

(RM)

A. CAR PARKING

PA1 Recommended for Diamond, Emerald, Sapphire, Ruby, Corporate Platform & Corporate

Suite seating area. 100.00

PA2, PA3, PA4, PB1, PB2, PB3 Recommended for Crystal, Jade, Turquoise, Garnet, Tower, Citrine & Topaz seating area.

50.00

PK, PC, PF, PO Recommended PK & PO for K1 Grandstand & K2 hillstand.

Recommended PC & PD for C1, C2 & C3 hillstands seating area.

Recommended PF for F Grandstand seating area.

50.00

B. BUS PARKING

PA3 Recommended for Diamond, Emerald, Sapphire, Ruby, Corporate Platform & Corporate

Suite, Crystal, Jade, Turquoise, Garnet, Tower, Citrine, Topaz & K1 Grandstand seating

area.

300.00

PC1, PE1 Recommended PC1 for C1, C2 & C3 hillstands seating area.

Recommended PE1 for F Grandstand seating area. 250.00

C. BIKE PARKING

SELECTED AREA Available for all area of seating.

10.00

Table 3.5.1(a)(2): Parking Ticket Prices

(b) Packaging – Distinctive Offerings

For high end spectators or corporate who desire a distinction and recognition, F1 Malaysia offers F1

Corporate Hospitality with 18 types of offerings packaged under the 3 main categories as

discussed below:

i. F1 Paddock Club

The Paddock Club complex is situated on the upper terrace of the pit building and

it offers guests a spectacular view of the F1 race. These private lounges are fully

air-conditioned and grandly furnished allowing enjoyment of all-day dining of fine cuisine, best

wines and cigars, along with a host of other unique benefits and privileges.

ii. Corporate Suite

Located along the start/finish straight, Corporate Premier Suite is meant as gift to

business associates that provides the kind of entertainment that only F1 can give.

Fans have two options to choose from: (a) Corporate Premier & Executive Suite or (b) Corporate

Silver & Bronze Suite

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iii. Corporate Platform

The Corporate Platform is situated at the Upper-tier Grandstand in the Mall Area.

This section of seats allows enjoyment of special food and beverage counters while

feeling the excitement of F1 with other spectators. Fans can opt for: (a) Corporate Premier &

Executive Platform, (b) Corporate Silver & Bronze Platform or (c) Food & Beverages Option for

Corporate Platforms.

Also, pricing with be different for those under the F1 Hospitality packages. Refer the following

table for the pricing:-

F1 Hospitality PACKAGE PRICE (RM)

F1 Paddock Club

3 Days (Friday, Saturday, Sunday) 16,340.00

2 Days (Saturday, Sunday) 15,580.00

1 Day (Sunday) 14,400.00

Paddock Club Parking

(1 Complementary Parking for every 4 guests)

380.00

Corporate Suite Exclusive (40 person amenities)

Premier 350.00

Executive 300.00

Silver 250.00

Bronze 200.00

Corporate Suite Individual (per person)

Premier 9,625.00

Executive 8,250.00

Silver 6,875.00

Bronze 5,500.00

Corporate Platform (30 person amenities)

Premier 57,000.00

Executive 54,000.00

Silver 51,000.00

Bronze 48,000.00

F&B Option for Corporate Platform (30 person amenities)

Sunday Only 15,000.00

Saturday & Sunday 18,000.00

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(c) Ticketing Channels

As global F1 fans are expected, apart from direct selling e-ticketing through SIC official website

(http://malaysiangp.com.my) they will also be locally and internationally based tickets agents.

Besides, ticket reservations also allowed for those who are interested.

In Malaysia, most of the ticketing agents are travel agents covering the areas from Klang Valley and

Penang. To ease Malaysians further, other ticket outlets (aka Preferred Agent and Authorize Agent)

selling are nationwide’s AAM, petrol station, shopping complexes (e.g. Parkson), highways’

offices, KLIA and ERL.

Internationally tickets agents exist in neighbouring countries (Thailand, Singapore, Brunei,

Indonesia, Philippines, Australia) as well as Austria, China, France, Hungary, India, Netherland,

New Zealand, South Africa and United Kingdom.

(d) Logo and Tagline

Creation of logo and tagline is vital as part of brand awareness and brand image. Figure 3.7 (4)

show the F1 logo known worldwide with details of Malaysian GP. The tagline is “Alive with

Adrenalin”.

Figure 10: Malaysian GP Logo

(e) Customer Service

Customer care involves providing good and high quality services in respect of pre and post

Malaysia GP 2010 to ticket holders. It must be exciting, fun yet convenient which hindering

unanticipated situational factors. For instance, race week is a carnival like party. There are fast cars,

beautiful women and loud music. It provides non-stop adrenalin rush. F1 fans that goes back not

just have had witnessed a race, but also carry with him or her, an experience to remember for a long

time to come. They will be transported into a different world for three whole days. Below are some

elements that pampered fans before, during and after the event.

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i. Hotline and Email

603-8778 2222 is the contact number that SIC established to verbally answer queries from fans on

matters pertaining to tickets, track, packing, amenities etc. International fans can contact SIC via

email i.e. enquiries@sic.com.my .

ii. Transportation

For spectators comfort and convenience, SIC will be working closely with its partners in offering

various service packages including transportation through the ERL network and Skybus to the

venue along with a complimentary KLCC Tourist card.

iii. Food and Beverages

All spectator areas will have food and beverage outlets. There will also be mobile van bearing Pizza

Hut, KFC, Milo, ice cream etc. However, except Milo, payment must be made using food coupon at

RM10 each. Specials arrangements are made for the grand stand and distinctive corporate

hospitality packages.

iv. Safety and Health

For overall security, mobile police are stationed around SIC. Ambulances are also standby in case

of any emergencies. To help spectators to cool off and prevent sunburn, misty fan (refer picture

below) will be place randomly within SIC. It will prevent unwanted fainting in crowded area.

Figure 11: Misty Fans

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(f) Host Broadcaster (TV and Radio)

Due to a successful collaboration last year, ntv7 will once again be the Host Broadcaster of the 2010

F1 Malaysian GP. Malaysian fans that are unable to watch the event directly at SIC or other

countries can still experiencing the F1 fever from the comfort of their own homes with live and

delayed race. For Malaysian GP, it will be broadcast live both on qualifying (Saturday) and race day

(Sunday). To enhance the viewing experience for F1 enthusiasts, a nationwide-exclusive BBC

commentary will be aired throughout each race. For international viewers, they can utilize ntv7’s

catch up tv from their computer screen.

Since ntv7 is one of the television broadcasting under Media Prima Berhad, their three sister radio

station (FlyFM, HotFM and OneFM) will also double as Host Broadcaster to the multilingual

Malaysians.

(g) Grid Girls

It would seem no motoring event is complete without a parade of girls. At the race everybody talks

about the drivers and the cars, but their eyes are wandering towards the grid girls who these days

have become compulsory accessories at such events. Whether they be long-legged and in a skimpy

outfit or demure and in kebaya, the grid girls never go unnoticed.

Malaysian grid girls are “ladies with a mission” with brand names are emblazoned on their

uniforms. They participate fully in the Promotional Programme period for Malaysian GP (e.g.

media conferences, launches, fashion shows to preview costumes, photos sessions and/or

interviews).

On Saturday and Sunday, they continue with Promotion Programme (e.g. Paddock Club Pit and

Grandstand Walkabout, carry umbrellas for drivers in case of rain, carry flags of FIA, Malaysia and

driver grid signage and national flags for the Starting Grid). In high heels, they will walk from one

end of the circuit to the other, handing out flyers and post for photographs with spectators.

3.5.2 Marketing Plan – Communicating Values

(a) Interactive Marketing - Official Website

SIC official website (http://malaysiangp.com.my) does not only sell Malaysian GP tickets but are

self-service in nature. It provides answers to FAQs. On the home page, it highlights latest and

archive top headlines of F1, results, drivers and teams information. Image seekers can scoop

44

exclusive shots in photo gallery. Outstation and local travellers can plan are guided with road map

to SIC, public transportation and nearby accommodations.

(b) Direct and Interactive Marketing - Facebook

Figure 12 :Facebook

Unlike other corporate user who create fan page on Facebook, SIC register as an “individual” that

add “friends” as one channel to be in touch with fans, racers, press, track photographers and anyone

who like to know what is happening inside SIC. That way, wall posting of new announcement are

much more personal and real time.

Fans also receive interactive invitation to attend Malaysian GP using the event function of

Facebook. They can reply, voice suggestions and chat with organizers of GP Malaysia. Among

themselves, they can upload photos, videos, socialize and bond through the love of F1, motorsport

and the country, Malaysia.

(c) Sales Promotion - Roadshow

Roadshow is an opportunity to engage visitors in a relaxed, engaging environment and to hype up

the Malaysian GP. 2010 F1 Roadshow will tour nationwide shopping complexes and hot spot in

major cities such as Penang (Autocity), Selangor, Kuala Lumpur (Pavillion), Johor Bharu and

Singapore. It will be a three day event fill with pop quizzes, fun and games. Kids and adults are

welcome to play for fun in GP Playground and F1 Simulator Contest (refer photo below). If they are

good, they might win tickets to SIC! For education, touch screen info kiosk is there for use.

45

Figure 13: GP Playground

(d) Sales Promotion - Permanent Placement of Coin Slot F1 Simulator

Since not everybody can attend 2010 F1 Roadshow, F1 Simulator with coin slot will be place

permanently in offices that provide staff with rest rooms for rejuvenation and combat stress. It can

also be seen inside shopping complexes, video game centres and ticket agents of Malaysian GP.

That way, Malaysian GP will be able to advertise F1 indirectly all year round and earn some passive

income. Simultaneously, there is a potential to generate stimulator-to-ticket traffic.

(e) Sales Promotion - Rebates

To attract more fans for the upcoming event, SIC offers the F1

early birds a special deal (refer figure on the right). If the tickets

are bought before 31st January 2010, consumers will get 50% off

for second ticket purchase. However, the promotion is not

applicable for tickets of certain areas covering from Diamond,

Sapphire, Emerald, Ruby, Tower 2, Garnet and Hillstands.

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(f) Events and Experience - Welcome Cocktail Party and Gala Dinner

On Thursday, 1st April 2010, a welcome cocktail party would be held for the F1 fraternity and fans

followed by the grand Gala Dinner on next day. Gala Dinner is the ultimate in F1 hospitality,

marking the beginning of the race weekend. It is the most glamorous social event in Kuala Lumpur

as among the guest are personalities of F1, stars of the Malaysian film and music industry as well

local and regional socialites. They will enjoy sumptuous dining and world class entertainment. The

event is sponsored by Board of Tourism Malaysia and Petronas.

(g) Events and Experience - Pit and Garage Tour

On Friday, about 40 lucky fans will be treated for a breathtaking, priceless and unforgettable

experience: to walk among F1 drivers, team principles and world known celebrities in the legendary

F1 Paddock. They will also have exclusive insights into F1 team garages by being personally

guided through the “the hearts of racing” in small personal groups of 4. On that occasion, they can

go behind the scene to look at race cars and their favourite teams, ask questions they always wanted

to ask to mechanics and engineers, plus feeling the exact tense of F1 race from the pit stop.

(h) Events and Experience - Malaysian GP Tour Package

By offering F1 GP Tours package, it will certainly attract a large crowd of F1 fans from within the

country as well as throughout the world. The package will provide visitors a great opportunity to

experience the 2010 Petronas F1 Malaysian GP as well as the sights, sounds and people of Kuala

Lumpur. It also includes accommodation in a superior 5 star hotel in Kuala Lumpur, located within

easy walking distance of the city's finest restaurants, nightclubs and shopping centers, combined

with a choice of general admission or grandstand race tickets, to form the basis of an unforgettable

2010 Malaysian F1 travel package.

(i) Public Relations and Publicity - Strategic Alliance with Board of Tourism Malaysia

The Board of Tourism Malaysia make F1 as one of the attraction in Malaysia through advertising in

their official website in order to attract tourists from around the world. This will be one of the

advantages to F1 Malaysia when the tourists browse through the website with no intention to watch

the events. As the tickets are selling cheap and easy to get, this will directly make SIC as one of the

tourists’ destination when they are visiting Malaysia.

47

Apart from that, Malaysian GP Grid Girls will join whenever the Board of Tourism Malaysia

normally organize cultural dance and local delicacy promotion overseas. Every now and then,

Fairuz Fauzy and Alex Yong will grace the event with a replica of the team Lotus F1 “rainbow” car.

It might garner interest of non-Malaysians and Malaysians abroad.

Those patriotic Malaysians might be moved to return home to catch the race live in SIC. Even if

they cannot return, they can fly Jalur Gemilang in other F1 circuits near them or be glue in front of

the television or computer screen. Hopefully, after their abroad stay is over, they will continue to

frequent SIC for F1 in years to come.

(j) Public Relations & Publicity - Strategic Alliance with Famemas (Malaysia Supporters)

Over the years, behind the scene, Famemas had been cheering

for the Malaysia contingent without fail be it a local or

overseas sport event. They sing, shout and shed happy tears in

midst of the beat of kompang in Olympic, Asian and the SEA games. Famemas had gather hundreds

of patriotic sport lovers and they are sensitively aware of sports news and events.

A strategic alliance can be form with Famemas by tailor making Malaysian GP T-Shirt for them and

sponsoring them early bird tickets. They will help in promoting Malaysian GP through their official

website, http://famemas.blogspot.com, word of mouth, “walking advertisement” when wearing the

tailor made T-Shirt and antics while cheering inside SIC or around the world for team Lotus F1.

(k) Public Relations & Publicity - Charity Work

SIC’s social responsibility goes far beyond borders. As SIC is representing the centre of

international motorsport in this region including Thailand, Singapore, Indonesia and even all the

way to the Philippines, they reach out to put a helping hand to lighten the load on the victims of

natural disaster. For example, putting RM10 from every ticket sold to an aid fund intended to help

the unfortunate people. It is also a way to increase their popularity and attract more audiences from

the region.

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This is especially important now when the attention of the world is on the suffering of Haiti’s

earthquake survivors. Any charity or spreading of goodwill (take a look next page for what Arsenal

is doing) simply boast the brand equity of SIC – Malaysian GP as an organization that do their part

in corporate social responsibility.

(l) Advertising - Commercials

Rerun of past official commercials of F1 Malaysia will be broadcasted through national television,

Astro and YouTube and cinemas in January and February 2010 to remind viewers of the upcoming

GP. Only in March 2010, the much awaited new official commercials will hit electronic screens.

This time around, the new commercials will be in three versions. The first features snippets from F1

related celebrities and corporate leaders such as Prime Minister, Dato Sri Mohd Najib Bin Tun Hj

Abd Razak, Datuk Seri Jean Todt, Datuk Michelle Yeoh, Tony Fernandez, Richard Branson, Alex

Yoong, Adrianna Teoh, Hannah Tan and Ning Baizura reflecting on F1 Malaysia and their hope for

F1 2010 Championship. Second version focuses on all F1 drivers especially team Lotus F1 while

the third zoom on SIC, recognize as one of best track in the world with it toughest wide symmetry

design and unique 15 Turns.

(m) Advertising – Press

Advertisement on F1 GP race also can be found in some magazines in order to reach the target

customers effectively. These magazines including in-flight magazines, hotel magazines in which

most of the readers are foreigners and local professionals. However, press advertising in some local

major newspaper is also important to attract the attention of local fans.

Figure 14: Charity Work

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(n) Sales Promotion - Autograph Signing Session and Show Car

While global race events and TV broadcasts bring F1 to the masses, there are millions of consumers

who have never met a F1 driver or seen a real race car in person. For them, F1 can be effectively

transported to their locales through show car displays and driver appearances.

Show car displays containing an authentic race vehicle and supporting content are proven tools for

building consumer engagement. By added in live personal drivers appearance, it is akin to bringing

to life a race outside the track. On Friday, all drivers will appear at the Mall Area for autograph

signing session.

(o) Events and Experience - Carnival

F1 can be family-oriented. To occupy ticket holders in the morning, small children can play

bouncing castles, get their face paint and watch mimes or people walking on stilts. Ladies that love

to shop can opt for bazaar stores with Karyaneka’s batik and handcraft, souvenir and other clothes

and shoes. Die-hard fan of F1 will awe at merchandizes (e.g. T-Shirt, poster, mug, cap, banner etc)

of their favourite driver or team.

(p) Event and Experience - Concert

A post-race open-air concert will be held after the race in the open field at the helipad area as it is a

massive area that could hold at least 50,000 people. The concert would be open for free for all ticket

holders.

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3.6 ACTION PLANS

Activities 2009 2010

Dec Jan Feb Mac April

Selling entrance tickets via internet and ticketing agents.

Parking stickers made available for those who will drive there.

Building strategic alliances with Tourism Board of Malaysia and Famemas.

Offering F1 GP tour package that will expose tourists with luxury hotels, good food and nightlife in

the city centre other than the F1 race.

Commercial through television, radio, newspaper, banner, advertisement board.

Organizing F1 roadshow in major shopping complexes and hot spots. Lucky winners will be entitled

free entrance tickets by participating in the games. Warming up the public with F1 simulator while

children will be entertained by lots of fun games and playground.

Early bird promotion in which fans can purchase the second tickets at 50% off.

Introduction of F1 logo and tagline.

Establishment of website carrying information on latest highlights, archives, results, drivers, teams,

FAQs and time schedule.

Involving in charity work by giving out RM10 for every ticket sold to Haiti’s earthquake survivors.

Organizing a welcome cocktail party for F1 fraternity and fans and grand Gala Dinner for the rich

and famous.

Organizing Pit and Garage tour where lucky fans can go behind the scene to look at race cars and

their favourite teams.

Having a session on autograph signing and F1 car show.

Organizing a carnival to occupy ticket holders’ time in the morning and where food stalls are made

available all around.

Collaboration with police and authorities for safety and security purposes. Misty fans installed to

ensure the comfort of the crowd under the heat.

Holding a post-race open-air concert to entertain the crowd.

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4.0 FINANCIAL

4.1 REVENUE FORECAST

Malaysia Airport Holding Berhad’s annual reports states that most of Sepang International Circuits

Sdn Bhd’s revenue (i.e. its subsidiary’s revenue) is derived from hosting F1 Malaysian GP. It is

assumed that the revenue contributed by F1 Malaysian GP is 80% of the company’s total revenue

for the year.

Based on the assumption, F1 revenue for 2008 was 80% from RM78,116,000 which is RM62.5

million. The revenue was generally obtained from 126,690 spectators who patronized the circuit

during the year.

The current target is to get a full house circuit which should actually generate revenue more than

RM62.5 million. Nevertheless, to be conservative and in accordance to the prudence concept, the

total revenue to be derived from hosting the 2010 F1 GP is forecasted to be at least RM62.5 million.

4.2 MARKETING EXPENSES

It is estimated that the whole marketing strategies of shaping the offerings and communicating

value will cost the organizer an estimate of RM20 million which is 32% of total forecasted revenue.

The estimate is high because more intensified hype are required for the current year GP due to the

disappointing experience and bad press reports in year 2009. The budget is divided appropriately

between the following categories as explained in the table below:-

CATEGORIES TYPES OF ACTIVITIES % OF

BUDGET

MARKETING

COST

SHAPING THE

OFFERINGS

a. Pricing

b. Packaging

c. Ticketing Channels

d. Logo and Tag Line

e. Customer Service

f. Host Broadcaster

g. Grid Girls

4% RM800,000

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CATEGORIES TYPES OF ACTIVITIES % OF

BUDGET

MARKETING

COST

COMMUNICATING VALUES:

ADVERTISING a. Press Advertisement

b. Commercials 35% RM7,000,000

SALES PROMOTION

a. Roadshow

b. Permanent Placement of Coin Slot

c. Rebates

d. Autograph Signing Session and

Show Car

20% RM4,000,000

EVENTS AND

EXPERIENCE

a. Cocktail Party and Gala Dinner

b. Concert

c. Carnival

d. Malaysian GP Tour Package

e. Pit and Garage Tour

35% RM7,000,000

PUBLIC RELATION

AND PUBLICITY

a. Charity Works

b. Strategic Alliance with Board of

Tourism

c. Strategic Alliance with Famemas

(Malaysia Supporters)

5% RM1,000,000

DIRECT AND

INTERACTIVE

MARKETING

a. Official Website

b. FACEBOOK 1% RM200,000

TOTAL 100% RM20,000,000

After deducting the marketing expenses, the organizers still have RM40.25 disposable income for

other administrative and operating expenses.

RM(million)

Forecasted Revenue 62.5

Less: Budgeted Marketing Costs -20

Available disposable revenue 42.5

% of Available disposable income

from total revenue after deducting

marketing expenses

68%

53

On whole, with the strong financial sponsorship from Petronas plus the contribution to the country’s

economy, hosting F1 is Malaysia is indeed a profitable business.

5.0 RECOMMENDATIONS FOR FUTURE

Given the evolving market trend and spectators needs, SIC should rebrand itself to be more than

just race revenue. It should offer more than just a venue on the F1 race calendar. It is high time for

SIC to conduct marketing research to study the market requirements and gain deeper insight of the

changing needs and wants. Among the suggested changes that should be undertaken are:

Consider the installation of a lighting system to facilitate the night races in the long run.

Set up a more amenities at Sepang such as hotels, an amusement park, an indoor entertainment

arena, a duty-free zone and even a bigger and grander motorsports museum.

54

6.0 References

Publishing:

Kotler, P., Keller, K. L. (2009). Marketing Management, 13th ed. Pearson Prentice Hall.

Charlie Hayes, (2008). “Get Sponsored”

The Star, 12 February 2009

Websites:

1. www.formula1.com

2. http://en.wikipedia.org/wiki/2010_Formula_One_season

3. http://www.hlglicensing.com/nascar.htm

4. http://formula-1-racing.hosting-of-webs.com

5. http://www1.american.edu/TED/formula1.htm

6. http://www.f1scarlet.com/about.html

7. http://www.caseynealracing.com/

8. www.teamsassociation.org/FOTA

9. http://www.euromonitor.com/FactFile.aspx?country=MY

10. http://www.f1fanatic.co.uk

11. http://www.bernama.com/bernama/v3/news_lite.php?id=218555

12. http://informasi.phpbb3now.com/viewtopic.php?f=9&t=548&start=16

13. http://btsera.blogspot.com/2009/05/500-mat-rempit-pelumba-kereta-haram.htm

14. http://voyager8.blogspot.com/2008/09/malaysian-household-monthly-income.html

15. http://www.pwc.com/en_GX/gx/retail-consumer/pdf/malaysia.pdf

16. http://www.malaysiangp.com.my/news/super-gt-39486-spectators-came-super-gt

17. www.virtualmalaysia.com

18. http://ndtv.f1pulse.com/circuits/Sepang_International_Circuit/3F42/circuits_profile.aspx

19. http://www.malaysiangp.com.my/story/sepang-circuits-sepang-circuit-history

20. http://www1.american.edu/TED/formula1.htm

21. http://www.f1scarlet.com/f1_racingwhatitmeanfoeindia.html

22. http://biz.thestar.com.my/news/story.asp?file=/2009/2/14/business/3249781&sec=business

23. http://www.gpticketshop.com/en/f1.html

24. http://www.asiaone.com/Motoring/Motorworld/Story/A1Story

25. http://lifeizlikethat.wordpress.com

26. http://en.wikipedia.org/wiki/Yas_Marina_Circuit

27. http://www.rankopedia.com

28. http://www.team-bhp.com/forum/intl-motorsport/870-best-f1-track.html

29. http://famemas.blogspot.com