In a cover story on NASCAR last September, Fortune magazine referred to the new world of NASCAR as "the fastest-growing, best-run sports business in America - - with the emphasis on business." Last week, I had the opportunity to spend some time with Steve Phelps, the new Chief Marketing Officer for NASCAR, during his visit with Georgia State University's Robinson College of Business Marketing RoundTable. It became clear that not only is marketing a key reason for the phenomenal success that NASCAR has experienced in the past decade, but that there are many lessons to be learned from this case study.
First some key facts. One in 3 U.S. adults, 75 million people, are NASCAR fans. The sport has become the number 1 spectator sport, and 17 of the top 20 most attended sporting events in the U.S. are NASCAR events. The sport is broadcast in 150 countries, and it is the second most watched sport on TV (after the NFL). Contrary to what one might think, NASCAR appeals to a very wide target market. Fans are over-represented vs. average among those 18 to 54 and with incomes $30,000 to $100,000. Forty percent are female (up 17 percent in the past 3 years) and 21 percent are minorities (also up dramatically). Over half of young people age 7 to 17 say they are NASCAR fans.
NASCAR fans are loyal - - they are three times as likely to try and buy NASCAR-related sponsors' products and services. Simmons Market Research reports that 40 percent of fans are willing to switch brands to buy NASCAR-linked products.
So what has NASCAR done to be so successful? First and foremost, they understand and manage the brand. NASCAR is more than a sport; it is a lifestyle. They have worked hard to build both functional and emotional equities into their brand. The functional attributes include non-stop thrilling and exciting entertainment, action, teamwork, and intense competition among the drivers. Emotional attributes include being genuine, open to all, like a big family, and athletes that are role models and down-to-earth regular people. This combination creates a powerful connection to the fans and attracts sponsors. As Kurt Kuehn, CMO for UPS has said, NASCAR's emphasis on "speed and execution matches UPS's brand personality."
The governing body is constantly fine tuning the core product. Many rules have been implemented to encourage parity and competition. As a result, there are lots of lead changes throughout the season. The recently-initiated Nextel Chase for the Cup creates an exciting type of playoff system for the final 10 races of the season. In addition, much effort has been expended to improve the customer experience. Detection loops have been installed every 100 yards on the track to generate running order and speed statistics for the fans. Track Pass, a web-based service on NASCAR.com enables fans at home to follow cars in real time using GPS technology. FanScan enables fans to listen to communications between drivers and their pit crews during races and NASCAR's Nextel FanView gives fans in the stands live access to video, audio, race stats and driver data during the race.
NASCAR has utilized partnerships to enhance the sport. They have educated fans about the sports economics (e.g., a team can spend up to $1 million a year just on tires). As a result, 76 percent of fans agree with the statement that without sponsors the sport would not exist. Almost two-thirds say they don't mind paying more for a sponsor's products. For other sports, sponsorships are an intrusion and a necessary evil; that is not the case for NASCAR. Fully one-half of NASCAR fans say they consider buying sponsors' products as their contribution to the sport's well-being. A study by the Center for Sports Sponsorship at James Madison University reported that greater than one-third of fans can list the chief corporate sponsors of the top 30 drivers unaided, that is with no prompting. As NASCAR says in its promotional materials, it was built on partnerships, has grown by its partnerships, and is thriving because of its partnerships. It upholds its part of the partnership by holding educational seminars for sponsors to help them make the most of their investment. They also host sessions to help sponsors develop relationships with each other, enhancing their sales to other sponsors. NASCAR is in the process of reducing the number of sponsors to reduce clutter and provide greater value to sponsors.
NASCAR has introduced a formal loyalty program for fans with its Official NASCAR Membership Club. For $59.95 a fan receives free merchandise and discounts from sponsors, has opportunities to meet drivers, and can hang out in the pits at the races. NASCAR has also used charitable initiatives to increase fan loyalty. Last Friday was the second annual NASCAR Day. In cooperation with corporations (over 2500 last year) fans could buy a NASCAR pin for $5 and wear the colors of their favorite car to work. The money goes to a trio of children's charities. Over 60,000 pins were sold on the NASCAR website.
Finally, NASCAR has taken a number of steps to broaden their fan base. They studied the barriers to entry and took actions to remove them. Over half the NASCAR races now take place outside their traditional Southeast base. New markets include Kansas City, Dallas, Phoenix, Los Angeles, Chicago, and Mexico, and sites have been selected for Seattle and Long Island, NY. NASCAR's "Drive for Diversity" program has included minority internships and scholarships, an Urban Youth Racing School, and a tour of Historically Black colleges and universities to build awareness about the industry and careers.
Atlanta companies such as UPS, Cingular, SunTrust, Delta, Georgia Pacific, Coca Cola, Home Depot, NAPA Auto Parts, and Aaron Rents have all experienced first hand the power of NASCAR. Other smaller companies can also benefit from the NASCAR experience by emulating what they have done via marketing - - working to continually enhance the core product, using technology to improve customer experience, utilizing partnerships for mutual benefit, developing loyalty programs and strategic philanthropy to strengthen relationships with customers, and taking actions to broaden the customer base. There are reasons for NASCAR's success and the actions NASCAR has taken can be used by any business to achieve similar results. So, start your engines and race for success.
