Introduction

Formula One was first defined in 1946 by the Commission Sportive

Internationale (CSI) of the FIA, forerunner of FISA, as the premier single
seater racing category in worldwide motorsport. F1 teams can spend $US350
million a year, facing a constant challenge to raise funding.

Sponsorship accounts for 80-85% of an F1 team’s income.In 1972 Philip

Morris joined the fray with its Marlboro brand and that followed Rothmans,
Benson & Hedges, West and Lucky Strike all became major players.

Income from formula one and other sports

His brother Ralf will only earn around $13 million - around £7 million, the
same as David Coulthard, only a paltry £134,615 per week. At the lower end
of the scale, drivers such as Nick Heidfeld at Jordan are reported to be
earning around $1.5 million.

Cost of maintaining a team

The cost of maintaining the teams is also mind-boggling. Teams use around
900 tyres in a year's racing, each around £1,500 a time; a gearbox costs
£65,000 and around 16 of these will be used - last year, they used one
gearbox per race. Steering Wheels cost £30,000 each and engines £180,000
per race but with 170 used throughout the race calendar, the bulk of the
money is spent on this technology.

Why formula one for tobacco industry?

The main objective to achieve was not to do with consumers, but in
developing business-to-business relationships in areas like the Middle East
and the Far East, where there are number of brands. So once thinking about
annual events that take place on a regular basis, we are limited in what
sports you can be involved with. The World Cup is every four years, and so
are the Olympics. And although we are involved with the Olympics, we
rapidly became convinced that Formula One was the right place for us to be.
There are a lot of races spread throughout the year and also spread
throughout the world, so it seemed to be a perfect fit.
Formula 1 is one area where the tobacco companies have been able to gain
huge exposure as the average viewing figures for each grand prix is over
354 million worldwide.Formula One was seen as particularly valuable
because “TV coverage is massive around the world and “there is a genuine
association with the team, vital for image building.” Young people are
traditionally early adopters of new media capabilities and consequently a
very receptive audience.

Ban on tobacco advertising in formula one

In 1990 the European Union proposed an EU-wide ban on tobacco

sponsorship. The British Medical Journal joined the battle by calling for a ban
on tobacco sponsorship in sport, saying that studies by academics at
Manchester University had revealed that it encourages teenagers to smoke.
Tobacco companies fought back, arguing that they invest in motor racing not
to start people smoking but rather to convince them to switch brands.
Question 1 : How has the marketing environment impacted on formula 1
racing?

Answer :-

F1 is one of the highest profit games which is popular and seen worldwide. A
large sum of money has been invested by promoters like $38 m by Benson
and hedges sponsoring Jordan team.

By associating formula one game it increase brand loyalty, create

awareness, change or reinforce their image, drive retail or dealer traffic and
stimulate sales, trial and usage. It gives them global exposure on relatively
cost-effective basis Brand leverage.

In areas where we are growing, like Singapore, Malaysia and China, it has
given the brand enhanced exposure. The association with Formula One,
particularly in places like China where Formula One is hugely popular gives
another opportunity to promote the brand. 

Question 2: How else could the cigarette producers promote their brands?

Answer :-

it can be done by making cigarette lighters as dummy and distributing it

with a cigarette pack, making clothing line and household commodities and
can be used in restaurants for menu holder purpose.

b) By doing sales promotion for ex all smokers prefer to use freshener after
cigarette so giving them freshener with x no of packets.

c)promotional schemes--for ex giving 1 pack of cigarette for x empty pack of

the cigarette and people buying more to get that extra benefit.

d) Promotion of new product as e-cigarette

e) Giving price discounts for x packets of cigarettes

f) Advertising in their popular local sport and in events

 Case Study

on

The Marketing Environment Formula 1 and Tobacco

1. Introduction

2. Question and Answers

Submitted By
Rohit Arora
10BSP0477