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

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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

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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. Figure 1: Formula 1 logo

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:-

DATE
ROUND OFFICIAL RACE TITLE CIRCUIT (YEAR
2010)
Bahrain International
1 2010 F1 GULF AIR BAHRAIN GP 12 - 14 Mar
Circuit, Sakhir, Manama
2 2010 F1 AUSTRALIAN GP Melbourne GP Circuit 26 - 28 Mar
Sepang International
3 2010 F1 PETRONAS MALAYSIAN GP 02 - 04 Apr
Circuit, Kuala Lumpur
Shanghai International
4 2010 F1 CHINESE GP 16 - 18 Apr
Circuit
F1 GRAN PREMIO DE ESPANA Circuit de
5 07 - 09 May
TELEFÓNICA 2010 Catalunya, Barcelona

6 F1 GP DE MONACO 2010 Circuit de Monaco, Monte 13 - 16 May

Carlo
7 2010 F1 TURKISH GP Istanbul Park 28 - 30 May
Montreal's Circuit Gilles
8 F1 GP DU CANADA 2010 11 - 13 Jun
Villeneuve
9 2010 F1 TELEFÓNICA GP OF EUROPE Valencia Street Circuit 25 - 27 Jun
10 2010 F1 SANTANDER BRITISH GP Silverstone Circuit 09 - 11 Jul
F1 GROSSER SANTANDER VON
11 Nürburgring 23 - 25 Jul
DEUTSCHLAND 2010
12 F1 MAGYAR NAGYDIJ 2010 Hungaroring, Budapest 30 Jul-01 Aug

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 DATE
ROUND OFFICIAL RACE TITLE CIRCUIT (YEAR
2010)
Circuit de Spa-
13 2010 F1 BELGIAN GP 27 - 29 Aug
Francorchamps, Spa
F1 GRAN PREMIO SANTANDER Autodromo Nazionale
14 10 - 12 Sep
D'ITALIA 2010 Monza
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
F1 GRANDE PREMIO DO BRASIL Autódromo José Carlos
18 05 - 07 Nov
2010 Pace, São Paulo
2010 F1 ETIHAD AIRWAYS ABU
19 Yas Marina Circuit 12 - 14 Nov
DHABI GP
(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

Vodafone McLaren Jenson Button
1 McLaren Mercedes
Mercedes Lewis Hamilton
Mercedes GP Michael Schumacher
2 Mercedes Mercedes
Petronas Nico Rosberg
Sebastian Vettel
3 Red Bull Racing Red Bull Renault
Mark Webber
Scuderia Ferrari Felipe Massa
4 Ferrari Ferrari
Marlboro Fernando Alonso

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 NO. TEAMS CONSTRUCTOR ENGINE RACE DRIVERS
Cosworth Rubens Barrichello
5 AT&T Williams Williams
CA2010 Nico Hülkenberg
6 Renault F1 Team Renault Renault Robert Kubica
Adrian Sutil
7 Force India F1 Team Force India Mercedes
Vitantonio Liuzzi
Sébastien Buemi
8 Scuderia Toro Rosso Toro Rosso Ferrari
Jaime Alguersuari
Cosworth Jarno Trulli
9 Lotus F1 Racing Lotus
CA2010 Heikki Kovalainen
Cosworth
10 Campos Meta 1 Campos Bruno Senna
CA2010
Cosworth José María López
11 US F1 Team US F1
CA2010
Cosworth Timo Glock
12 Virgin Racing Virgin
CA2010 Lucas di Grassi
BMW Sauber F1 Pedro de la Rosa
13 BMW Sauber Ferrari
Team
(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 Figure 2: Bernie Ecclestone

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
Figure 3: Tun Dr. Mahathir
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
8
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
10
Source : http://www.caseynealracing.com/

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.

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 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 21 ≥ 49
2. Gender Male and Female
3. Income ≥ RM24,000 – RM75,000 per annum
4. Education Background Tertiary Education.
Psychographic:
1. Social Class Middle and Upper Social Class with
Disposable Income
2. Personality Sporty, Bold, Adventurous, Aggressive, Risk-
takers, Technology savvy.
3. Lifestyle Aspirers, Explorers, Succeeder
Behavioural:
1. Benefits Entertainment / Satisfaction
2. User Status Regular, Moderate, Infrequent fans
3. Loyalty Status Heavy.
4. Attitude towards Product 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)
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(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.

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(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

15
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
BEST IN CLASS OFFERINGS
ORGANIZER
 Treats high net worth fans to a series of luxury mega events such as
Singapore 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.
 Packages its F1 with luxury Caribbean yacht charters, cruises and free
Monaco flowing champagnes in addition to the road race through the tiny streets of
the wealthy paradise
 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
Abu Dhabi 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

16
 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

17
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
18
 Source: http://www.f1fanatic.co.uk/

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
Figure 4: Illegal Street Racing Arrest in Penang
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
(10)
arrested in Kuala Lumpur . 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
19
(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
20
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.

21
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, Figure 5: Super GT Race Queens
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
22
 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.
Figure 6: Sepang International Circuit
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
23
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
Source: SIC
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
24
(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 RANGE OF
ORGANIZERS 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.

25
(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
26
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:-
 Formula BMW Asia Champion year 2001
Jazeman Jaafar  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
 Malaysia A1GP racer
 He had beaten F1 legend track record in Britain in year 2008 just by
using A1GP race car.
Fairuz Fauzy  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
27
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:-

28
 (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

29
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
30
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:-

 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
STRENGTH
 Cheap Ticket Price
 Spatial Convenient
 Location
 Medical Team Has ISO Certification
 Lack of Entertainment/Amusements within the close proximity of SIC
 SIC has Poor Lighting Technology
WEAKNESSES
 SIC is not Disable-Friendly
 No Local F1 Drivers

31
  The First Appearance of Lotus F1 Racing Team
OPPOTUNITIES  The Bet between Tony Fernandez and Sir Richard Burson
 The Return of Michael Schumacher (Schumi)
 Second Wave of H1N1
 Weather
THREATS  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:-

32
 F1 GP ORGANIZERS DIFFERENTIATED OFFERINGS
Night race which weave its way alongside the marina and
Singapore through the streets under the beam of floodlights and the
electric glow of an eastern metropolis.
The race is set in the French Riviera where glitz and glamour is
Monaco a part of everyday life. Exceptional glamour and prestige
offerings such as luxury Caribbean yacht charters and cruises.
The Suzuka circuit has its own amusement park, Motopia,
Japan which offers a diverse range of driving entertainment for young
children.
The F1's first race that starts in daylight and ends after nightfall
in an island race-track. The circuit also includes Ferrari World
Abu Dhabi 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.

33
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.

34
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.

35
 Figure 7: Sitting Arrangement

Figure 8: Layout of Mall Area

36
 Figure 9: 15 Turns Of SIC

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
Situated at the end of the Mall Area
SAPPHIRE opposite pits 19-30. Offers a good    1,700.00
view on the Pit Exit and the Chicane.
Start-finish straight and directly
EMERALD    1,700.00
opposite the pits 7-18.
MALL AREA - MAIN GRANDSTAND NORTH - LOWER TIER
Facing pit 1–7, granting a clear view to
see the top teams doing their pit
activities. Able to watch the start-
CRYSTAL    1,200.00
finish of the race from the green light
to the checked flag and the podium
ceremony.
TURQUOISE    1,200.00
JADE Opposite the garages 7-18.    1,200.00
MALL AREA - MAIN GRANDSTAND SOUTH - UPPER TIER
A fantastic view to the entire southern
TOPAZ section of SIC. Will see the cars from    700.00
turn 8 to 13. Two big screens.
MALL AREA - MAIN GRANDSTAND SOUTH - LOWER TIER
Similar view to the Topaz grandstand,
but the general overview is not as
CITRINE    500.00
extensive, due to the lower positioning
on the stand.
37
MALL AREA – TOWER
Provides a good view on the last
corner before the start-finish straight,
TOWER NORTH   500.00
on the pit entry and on the start-finish
straight itself. Tower South.
Provides a good view on the long
straight at the backside of the
TOWER SOUTH grandstand and at the last corner.   500.00

TOWER 1 (LOWER)   500.00

TOWER 2 (UPPER)   2,000.00
Other GRANDSTANDS
First corner views of the entire start-
K1    800.00
finish straight, as well as turns 1-3.
Offers a good view to the short straight
coming to the grandstand and the
F    600.00
corner in front. A view of about 50%
of SIC is guaranteed.
F1 2010 Official Tickets Prices : 2 Days (3 - 4 April 2010)
TYPE OF TICKET UNIQUE CHARACTERISTIC PRICE (RM)
HILLSTAND COVERED
Facing South Mall Area with a clear
view on the Support Paddock. The area
C2 faces turn 9 and the Tower, and offers   200.00
an excellent view on almost 70% of
the track.
HILLSTAND NON-COVERED
Located directly in the third corner. It
consists of natural stands without
K2 100.00
cover and offers a good view of the
exit of the Chicane.
Offers good view of cars coming from
C1 section C3, the corner in front of C1 100.00
and the straight going to section B.
General Admission area located
C3 100.00
outside the circuit on a short straight.

LEGEND
Table 3.5.1(a)(1) : F1 2010 Official Tickets Prices
Covered Seats
Numbered Seats
LED Screen

38
 Parking Tickets Prices : 2 Days (3 - 4 April 2010)
PRICE
TYPE OF PARKING
(RM)
A. CAR PARKING
PA1
Recommended for Diamond, Emerald, Sapphire, Ruby, Corporate Platform & Corporate 100.00
Suite seating area.
PA2, PA3, PA4, PB1, PB2, PB3
50.00
Recommended for Crystal, Jade, Turquoise, Garnet, Tower, Citrine & Topaz seating area.
PK, PC, PF, PO
Recommended PK & PO for K1 Grandstand & K2 hillstand.
50.00
Recommended PC & PD for C1, C2 & C3 hillstands seating area.
Recommended PF for F Grandstand seating area.
B. BUS PARKING
PA3
Recommended for Diamond, Emerald, Sapphire, Ruby, Corporate Platform & Corporate
300.00
Suite, Crystal, Jade, Turquoise, Garnet, Tower, Citrine, Topaz & K1 Grandstand seating
area.
PC1, PE1
Recommended PC1 for C1, C2 & C3 hillstands seating area. 250.00
Recommended PE1 for F Grandstand seating area.
C. BIKE PARKING
SELECTED AREA
10.00
Available for all area of seating.
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

39
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

40
(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.

41
 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
43
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.

44
 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.

45
(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.
46
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.

47
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.

Figure 14: Charity Work

(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.

48
(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

2009 2010
Activities
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.

50
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:-

% OF MARKETING
CATEGORIES TYPES OF ACTIVITIES
BUDGET COST

a. Pricing
b. Packaging
c. Ticketing Channels
SHAPING THE
d. Logo and Tag Line 4% RM800,000
OFFERINGS
e. Customer Service
f. Host Broadcaster
g. Grid Girls

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 % OF MARKETING
CATEGORIES TYPES OF ACTIVITIES
BUDGET COST

COMMUNICATING VALUES:

a. Press Advertisement
ADVERTISING 35% RM7,000,000
b. Commercials
a. Roadshow
b. Permanent Placement of Coin Slot
SALES PROMOTION c. Rebates 20% RM4,000,000
d. Autograph Signing Session and
Show Car
a. Cocktail Party and Gala Dinner
b. Concert
EVENTS AND
c. Carnival 35% RM7,000,000
EXPERIENCE
d. Malaysian GP Tour Package
e. Pit and Garage Tour
a. Charity Works
b. Strategic Alliance with Board of
PUBLIC RELATION
Tourism 5% RM1,000,000
AND PUBLICITY
c. Strategic Alliance with Famemas
(Malaysia Supporters)
DIRECT AND a. Official Website
INTERACTIVE b. FACEBOOK 1% RM200,000
MARKETING
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 68%
marketing expenses

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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.

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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

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