Harley-Davidson Case Report

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Harley-Davidson Case Report

Problems

The advent of the economic downtown of the late 2000s was accompanied by difficult financial times for NASCAR. For instance, not only did frugal funs forego the luxury three-day vacations offered by NASCAR but also corporations cut down on their marketing budgets resulting in the departure of some major sponsors of NASCAR such as Nicorette, Him Beam, Tylenol and Jack Daniels. In as much as attendance at races peaked in 2005 with a mean of 130,000 fans per race, the number declined by 22% between 2005 and 2010 with television viewership also declining by 30% between 2005 and 2010 (CBT, 2012). While other people within NASCAR believed that the trends were the outcomes of an economic downturn, Brian France, the current chairman and CEO of NASCAR is of the opinion that the sport requires crucial changes. As shown in Exhibit 1 and 2, some of the threats faced by NASCAR that have resulted in decline in revenue include lack of vivid fan engagement strategy to improve fans’ experience, aging population of fans, waning of “car culture” in American families and lagging behind in terms of digital and social media compared to other companies. In addition, as seen in Exhibit 4, NASCAR faced competition from the improved amenities of other sports such as Wi-Fi access, state-of-the-art jumbotrons and newly built venues. As such, the problem lies in how NASCAR should evolve so as to attract and retain customers and increase its revenue.

Potential Solutions-Harley-Davidson Case Report

Option 1

NASCAR to have better structures and amenities aimed at improving consumers’ event day experience such as cellphone and Wi-Fi access, state-of-the-art jumbotrons, acceptance of credit cards as a means of payment and updated technology by improving existing race tracks of building a new race track.

Pros

  • Improved comfort for fans when watching the race.
  • Supports various payment methods that fans can utilize to make payments and as such, increase revenue.

Cons-Harley-Davidson Case Report

  • Huge costs of renovating existing tracks and building new tracks.
  • High cost of including better structures and amenities such as new seats, state-of-the-art jumbotrons and screens in waiting areas for fans to watch the race.

Option 2Harley-Davidson Case Report

NASCAR to makes its digital and social media more relevant by regaining its digital rights from Turner Sports and invest in digital resources that foster online exploration of the sport, eliminates disjointed user experience and enables sponsors to push NASCAR out socially and digitally to their customers and the fan base so as to improve the company’s core equity with fans.

Pros

  • Increased revenue from maximization of promotions by sponsors.
  • Improved accessibility of races through online streaming of races.
  • Greater connectivity with customers through improved awareness and accessibility on various social media platforms, computer and smartphone applications and contemporary video games.
  • Improved user experience by having high quality and well-outlined profiles for races online, that is, on the company’s websites and on various social medical platforms.
  • Ability of customers to pay for tickets online, register as members and purchase NASCAR branded merchandise online.
  • Reach every demographic through targeted advertising for Hispanics, Kids and generation Y.

Cons-Harley-Davidson Case Report

  • High cost of investment in digital resources.
  • Loss of revenue from Turner Sports.

Option 3

NASCAR to foster its driver star power by creating stars with the aim of appealing to more fans and increasing its sports revenue through commercials done by

Pros

  • Improved awareness about the sport through the stars.
  • Increased revenue by maximizing the driver star power through promotions and advertisements.

Cons

  • High cost of investment in creating a star.
  • Lack of exclusive rights to the star since sponsors and track owners can also enlist their manpower for promotion purposes.

Decision-Harley-Davidson Case Report

NASCAR should go with option 2 and make its digital and social media more relevant by regaining its digital rights from Turner Sports and invest in digital resources that foster online exploration of the sport, eliminates disjointed user experience and enables sponsors to push NASCAR out socially and digitally to their customers and the fan base so as to improve the company’s core equity with fans as outlined in Exhibits 6, 7, 8 and the Service Blueprint (SB).

Appendix

Exhibit 1: SWOT Analysis

Strengths ·         Proven track record in governing races.

·         Always ensured vehicles adhered to specifications by thoroughly inspecting them.

·         Creates policies to foster driver safety.

·         Advances rules and scores conventions to ensure the sport remains inclusive, fair and exciting.

·         Longest season of any major sport, lasting 10 months.

·         Loyal to the sport and brands that support the company.

Weaknesses ·         Poor collaboration brought about by the non-interventionalist approach of NASCAR, such as in the case of the Car of Tomorrow.

·

Opportunities ·         A novel forty-person communications team that brought additional talent to NASCAR’s communications group.
Threats ·         Lingering high fuel prices that affect the availability of fans to go to NASCAR’s events since they often drive far distances to get to the events.

·         Production and technical problems experienced by car companies that accelerate NASCAR’s problems.

·         Lack of vivid fan engagement strategy.

·         Behind in terms of digital and social media compared to other companies.

·         Competing configurations of brands.

·         Aging population of fans.

·         Waning “car culture” in American families.

 

Exhibit 2: 7 P’s of Marketing

Products/Services ·         Corporate Sponsorship.

·         Media Rights (digital and television broadcast prerogatives).

·         Sanctioning fees.

·         Licensing the NASCAR brand to companies seeking to sell the NASCAR-branded merchandise.

Prices/Fees ·         NASCAR distributed 65% of the television revenues to the race tracks all over the United States for hosting NASCAR races.

·         25% of the television revenues distributed to competing teams.

·         10% of the television revenues retained by NASCAR.

Place/Access ·         Customers can get tickets to watch the races at the tracks.
Promotion ·         Traditionally relied on media outlets such as local newspapers to cover the sport.

·         Currently, NASCAR has digital and social media outlets for promotion though are hindered by huge fees from Turner Sports, the company that NASCAR sold its entire digital rights to and as such, controls its online exposure.

Physical Evidence ·         Communication audit revealed that prior to the audit stakeholders throughout the ecosystem did not know the direction in which NASCAR was taking the sport, who it was targeting, as well as, its objectives.

·         Audit also evinced lack of proper way of assessing success such as ratings in terms of viewership other than blogs.

·         NASCAR also had a defensive approach to crisis management, as well as, lack of integration internally.

People ·         Altered the way the media centers at the tracks were placed together and educated media personnel on how to cover the sport.
Partners ·         Turner Sports
Process ·         NASCAR has teams of individual and group drivers who compete in the three races in trackers owned by Speedway Motorsports Inc. (SMI) and International Speedway Corporations (ISC) who dominate NASCAR-sanctioned events.

·         NASCAR earns revenue from corporate sponsorship, media rights (digital and television broadcast prerogatives), sanctioning fees and licensing the NASCAR brand to companies seeking to sell the NASCAR-branded merchandise.

·         The revenue is shared between NASCAR, track owners and the race teams and individual drivers.

 

Exhibit 3: Boston Consulting Group Matrix

Stars (high growth, high market share) ·         NASCAR’s broadcast of races on television.
Cash Cows (low growth, high market share) ·         NASCAR’s drivers
Dogs (low growth, low market share) ·         NASCAR’s customer engagement
Question Marks (high growth, low market share) ·         NASCAR’s sponsorships.

 

Exhibit 4: Porters Five Forces-Harley-Davidson Case Report

Competition in the Industry ·         Improved amenities of other sports such as Wi-Fi access, state-of-the-art jumbotrons and newly built venues.
Potential of New Entrants into an Industry
·         No potential new entries, only innovations in existing companies.
Power of Suppliers
·         Speedway Motorsports Inc. (SMI) and International Speedway Corporations (ISC) dominate NASCAR-sanctioned events.

·         50% of NASCAR’s 36 Sprint Cup Series races held at ISC tracks, 36% held at SMI tracks and 14% held at independent tracks.

·         Track owners enjoyed revenue from their portion the tracks’ 65% of NASCAR’s television right deals and 100% of the proceeds from sponsorships of the tracks.

Power of Customers
·         Race teams enjoyed 25% of NASCAR’s television right deals and corporate sponsorship.

·         Drivers are significant influencers and have a huge impact on the direction the fans believe the sport will take.

Threat of Substitutes
·         Other sports with better sporting facilities in terms of infrastructure and amenities.

 

Exhibit 5: Product Life Cycle Assessment

  • NASCAR was founded in 1947.
  • Conceived as a racing series for stock cars in the United States, that is, a group of individuals or teams competed in a specific number of events and followed rules established by NASCAR as the sanctioning body.
  • Grew to become a multi-billion dollar industry in the United States and the second largest spectator sport with broadcasts in more than 150 nations.
  • NASCAR was estimated to have generated more than $56 million in revenues from television rights, as well as, hundreds of millions of dollars from licensing, sponsorship and sanctioning fees.
  • NASCAR owns three national racing series, the Nationwide Series (minor league), the Sprint Cup Series (premier series for stock car racing) and the Camping World Truck Series (series for modified pickup trucks).

 

Exhibit 6: Promotional Item-Harley-Davidson Case Report

Based on the case report on NASCAR, there is no clear fan engagement strategy. This mostly due to the fact that NASCAR’s technological systems and applications are lagging behind in terms of digital services and social media compared to other industries. As a result, most individuals, be they Hispanics, kids or generation Y find it difficult to become fans of NASCAR’s sanctioned races due to the company’s lack of a centralized e-payment option, as well as, social engagement and digital interaction with fans and brands. Notwithstanding, increased service consumer experience can be achieved by socially and digitally reaching out to consumers through a centralized online payment or e-payment strategy that is devoid of third parties for tickets and online video streaming that is synched or linked to social media. Currently, most of NASCAR’s racing tickets are sold online through third party websites that must first pay Turner Sports for digital rights. However, after regaining its digital rights from Turner Sports, NASCAR can invest in digital resources that support online payment for tickets and online video streaming of the races and also foster the company’s customer engagement through social media.

Exhibit 7: Marketing Plan

Products/Services ·         Centralized Online Payment on NASCAR’s website or NASCAR-controlled website for purchasing:

§  Racing Tickets

§  Online Video Streaming of races

·         Social Media Pages including Facebook, Twitter, Instagram.

Prices/Fees ·         NASCAR will employ both luxury and budget pricing strategies depending on the customer’s preferred avenue for watching the race.

·         For track tickets, NASCAR will price luxury and budget tickets discordantly with the former being higher than the latter based on the premium or regular tickets.

·         Discounts on both track tickets and online video streaming will be offered by NASCAR.

Place/Access ·         Customers can get tickets or rights to watch the races at the tracks or through online video streaming respectively by purchasing online using their credit cards.
Promotion ·         Content Marketing.

·         Advertising.

·         Social Media.

·         Online Marketing.

Physical Evidence ·         Audit also evinced lack of proper way of assessing success such as ratings in terms of viewership other than blogs.

·         With this new centralized online system, NASCAR can easily monitor its success through the number of tickets sold and number of online viewers.

People ·         NASCAR can change the way the media centers at the tracks are placed together to accommodate online streaming and educated media personnel on how to cover the sport.

·         NASCAR can also hire communication personnel to monitor and improve their engagement with customers through its social media platforms.

Process ·         The process for the strategy to improve customer experience through centralized online payment option and increased communication via social media is outlined in the service blue print.

 

Exhibit 8: Marketing Budget-Harley-Davidson Case Report

Campaign Type Quantity Projected Cost Per Unit ($) Projected Subbtotal ($) Implementation Timeline
Content Marketing/Public Relations       1 year
Sponsored Content 5 2,000 10,000
Driver Promotion 10 1,000 10,000
Social Media      
Facebook 30 100 3,000
Twitter 30 100 3,000
Instagram 300 100 3,000
Advertising      
Print 2 900 1,800
Online 5 2,000 10,000
Radio 5 2,000 10,000
Television 5 2,000 10,000
Outdoor 5 2,000 10,000
Online Marketing      
Blogs 5 800 4,000
Websites 5 900 4,500
Mobile Applications 10 250 2,500
Email Newsletters 1 5,000 5,000
Advertising      
Print 2 900 1,800
Online 5 3,000 15,000
Radio 5 3,000 15,000
Television 5 3,000 15,000
Outdoor 5 3,000 15,000
       
Total   32,050 148,600