Loyal citizens know that we admire NASCAR for its competitive business strategy. Assessing IndyCar's busines strategy is difficult because IndyCar has no apparent business strategy. Let's use an example and assess the difference. We begin with the dominant market leader.
NASCAR's various products all contain the following attributes:
- Domestic Drivers
- Low-Cost, Low-Tech Cars
- Racing circuits that appeal to local tastes
Harvard Business School Professor Michael Porter says that strategy is about what you choose not to do. If NASCAR has a list of what not to do - and we bet that it does - it might look like this.
- Do not attempt to sell racing drivers to consumers across international borders.
- Do not use racing circuit types for which demand has not been demonstrated.
- Do not allow total enterprise costs to exceed the value of consumer demand
Empirical evidence supports our hypothesis. The example of NASCAR Cup and NASCAR Grand National are well known. They race almost exclusively on oval tracks. Combined, they venture outside the United States only once per year. The drivers are almost all from the U.S. The series are the nation's clear #1 and #2 motorsports enterprises.
The NASCAR Canadian Tire Series follows the same model. Drivers are almost all Canadians. The series runs road courses, temporary circuits and short ovals, with circuit type largely owing to local tradition.
In Mexico, the NASCAR Corona Series is growing. Its 14 events in 2009 include 12 ovals and two road courses. Every driver is Mexican. The low-cost formula has enabled the 5-year old series to attract more than 30 entrants this season.
Stock Car Brazil is not a NASCAR enterprise, but it is gaining popularity and its competitive strategy is similar. Competitors are almost all Brazilian. The series sticks to road courses.
Fans of oval racing will not like Stock Car Brazil. Road racing enthusiasts in the United States tend to be dismissive of NASCAR. Those who enjoy international competition would be disappointed by NASCAR's racing products in Canada and Mexico. As we like to say here, serving one market - and serving it well - necessarily means not serving another at all.
Fans of the old CART series argue - persuasively, in our view - that it successfully combined circuit types in the United States. However, we would counter that that was then and this is now.
The U.S. oval and road racing market segments were redefined when the Indy Racing League entered the marketplace in 1996. Regardless of whether one agreed or disagreed with Tony George back then, we think it's clear that the IRL did, as the economists say, cause a significant market disruption.
With that, the Committee for Public Safety shall turn its attention to the present course of the IndyCar Series.
Roggespierre
You're doing a great job with this, Roggespierre. Your analysis is well articulated and referenced with thought leadership in marketing, such as Michael Porter - who I was compelled to read way back in my MBA days in the 80's. I would love for the IRL to provide a strategic overview of their vision, objectives and goals complete with an analysis of their brand attributes as they see them. I would like to see how they define their "whole product," that would provide tremendous insight. Keep up the good work, you are amazingly prolific!
ReplyDeleteMuch appreciation to you, sir! Unfortunately, the Incorruptible has escaped to Eastern Long Island to consider the problems of IndyCar Racing and those pesky Girondists. With Danton notably unreliable and Marat constantly in the bath, we fear that the next week might be a bit light. Nevertheless, Roggespierre is shall use this sabbatical to further develop and refine the analysis from the Committee of Public Safety. Your Brother in Revolution - Roggespierre
ReplyDeleteThe thing I don't get is why we use NASCAR as example of where open wheel racing can go. If we try that they will win (which they have) and we become a feeder series (which we have.)
ReplyDeleteThe league needs to find a new market to grow and trying to milk off some of theirs is just plain lame.
Classical radio has few listeners but commercials for high end companies (like bose or Mercedes), pop music has tons of listeners but commercials for low end companies (but still big like McDonalds.) I don't see why IndyCar can't be classical music and Nascar can't be pop.