F1 Merchandise- Market Report
Discussion
Half way between "General Motortsport" and "Business" but let's start here!
Had cause recently to digest the content of the report published by Grand Prix Legends into the state of the F1 merchandise market.
I work with market research and reports a great deal and I have to say that this one misses the mark on so many points and written so badly as to be questionable as to its intent and use – apart from getting the company a few headlines which in that respect, has proved successful!
For example:
The report says, “Motorsport fans are not style gurus. They do not frequent trendy clubs or sophisticated bars. They do not turn left when boarding a plane. They don't drive new Ferraris, Jags, BMWs or Mercs."
Utter tosh!
Those who put the report together have clearly never walked round the public car park at Silverstone or any other race meet. Sure, not many may turn left on a plane (not many do full stop!) but they will still spend the best part of month’s money to go watch F1 in Malaysia, Australia, etc.
Mintel – the world’s leading market information company show that of those that follow F1, 35% are ABs and 34%; C1s. In English – affluent professionals or those on their way to becoming so!!
The report is highly dismissive of Jordan, saying that there is "a glut of merchandise from previous disastrous licensing agreements as a result of which there is enough yellow and black team wear in the market to last until the end of the decade".
Rubbish!
EJ is if nothing else – a superb marketer. They have one of the most active “clubs” in the business and the stuff they buy or commission is in large numbers to get the unit prices down. They will have covered their costs and made a profit very early on so anything they sell thereafter is a bonus.
I suspect that GPL may have over-ordered on the yellow gear!!!
The report attacks the drivers for their attitudes towards the fans saying that "with a few exceptions they are totally disrespectful of the fans who support the edifice which pays then so handsomely" and concludes that "many of them behave like spoilt brattish adolescents".
What??!!
The phrase “pot calling the kettle black” springs to mind!!!
No way should such a phrase even be inferred in such a report. And in any case, the drivers and teams have so little say in what and how stuff is sold; there approach is pretty much irrelevant.
The basic conclusion is that F1 gear is overpriced.
Really?
So all those crowds at Silverstone wearing hats, shirts and jackets got given them then?
Bottom line being suggested is that F1 is greedy. In point of fact, the amount of money the teams make from merchandising is, in the scheme of things, quite small. The licensing companies who buy the rights to use the name and images are the ones that control the end cost. Not Williams, BAR, et al.
I think that Grand Prix Legends have missed a good opportunity here. It’s right that such matters should be aired but to do so in such a vengeful tone without providing any real marketing insight or “constructive” conclusion is a waste.
Surprising, from what I know to be a good company.
>>> Edited by steviebee on Monday 7th June 19:45
Had cause recently to digest the content of the report published by Grand Prix Legends into the state of the F1 merchandise market.
I work with market research and reports a great deal and I have to say that this one misses the mark on so many points and written so badly as to be questionable as to its intent and use – apart from getting the company a few headlines which in that respect, has proved successful!
For example:
The report says, “Motorsport fans are not style gurus. They do not frequent trendy clubs or sophisticated bars. They do not turn left when boarding a plane. They don't drive new Ferraris, Jags, BMWs or Mercs."
Utter tosh!
Those who put the report together have clearly never walked round the public car park at Silverstone or any other race meet. Sure, not many may turn left on a plane (not many do full stop!) but they will still spend the best part of month’s money to go watch F1 in Malaysia, Australia, etc.
Mintel – the world’s leading market information company show that of those that follow F1, 35% are ABs and 34%; C1s. In English – affluent professionals or those on their way to becoming so!!
The report is highly dismissive of Jordan, saying that there is "a glut of merchandise from previous disastrous licensing agreements as a result of which there is enough yellow and black team wear in the market to last until the end of the decade".
Rubbish!
EJ is if nothing else – a superb marketer. They have one of the most active “clubs” in the business and the stuff they buy or commission is in large numbers to get the unit prices down. They will have covered their costs and made a profit very early on so anything they sell thereafter is a bonus.
I suspect that GPL may have over-ordered on the yellow gear!!!
The report attacks the drivers for their attitudes towards the fans saying that "with a few exceptions they are totally disrespectful of the fans who support the edifice which pays then so handsomely" and concludes that "many of them behave like spoilt brattish adolescents".
What??!!
The phrase “pot calling the kettle black” springs to mind!!!
No way should such a phrase even be inferred in such a report. And in any case, the drivers and teams have so little say in what and how stuff is sold; there approach is pretty much irrelevant.
The basic conclusion is that F1 gear is overpriced.
Really?
So all those crowds at Silverstone wearing hats, shirts and jackets got given them then?
Bottom line being suggested is that F1 is greedy. In point of fact, the amount of money the teams make from merchandising is, in the scheme of things, quite small. The licensing companies who buy the rights to use the name and images are the ones that control the end cost. Not Williams, BAR, et al.
I think that Grand Prix Legends have missed a good opportunity here. It’s right that such matters should be aired but to do so in such a vengeful tone without providing any real marketing insight or “constructive” conclusion is a waste.
Surprising, from what I know to be a good company.
>>> Edited by steviebee on Monday 7th June 19:45
Well I saw the headlines about the report and I must say I agreed with every word I saw reported.
F1 merchandise is overpriced, I would buy some but not at the prices they are asking.
Fans at the circuits may wear the gear but they are wealthy after all getting to most races is not cheap! lso much of the gear may well be fake, especially in the Far East. I have one each of Ferrari and McLaren Team Shirt bought for £15 the pair in KL.
With TV figures in the billions one shoul see people wearing the gear all the time however we don't.
F1 merchandise is overpriced, I would buy some but not at the prices they are asking.
Fans at the circuits may wear the gear but they are wealthy after all getting to most races is not cheap! lso much of the gear may well be fake, especially in the Far East. I have one each of Ferrari and McLaren Team Shirt bought for £15 the pair in KL.
With TV figures in the billions one shoul see people wearing the gear all the time however we don't.
chrisgr31 said:
Well I saw the headlines about the report and I must say I agreed with every word I saw reported.
F1 merchandise is overpriced, I would buy some but not at the prices they are asking.
Fans at the circuits may wear the gear but they are wealthy after all getting to most races is not cheap! lso much of the gear may well be fake, especially in the Far East. I have one each of Ferrari and McLaren Team Shirt bought for £15 the pair in KL.
With TV figures in the billions one shoul see people wearing the gear all the time however we don't.
Chris; You're right!
I should have probably clarified the purpose of the post better.
The findings I don't dispute (well, mostly) but the way in which the report was produced, its "ad-hoc" comments and the accuracy of the statements made - I don't. Hence me posting it in "Business" rather than "General Motorsport".
Call me a marketing tart (many do
!) but it purports to be a genuine market report about a sector of commerce from which people earn a living but it comes across as a rather long winded "letter to the editor of Autosport". Steve,
May I pick you up on a few points. The terms used in the report are sometimes 'inappropriate', but they do make some very valid arguments.
You say:
"The basic conclusion is that F1 gear is overpriced. Really? So all those crowds at Silverstone wearing hats, shirts and jackets got given them then?
Bottom line being suggested is that F1 is greedy. In point of fact, the amount of money the teams make from merchandising is, in the scheme of things, quite small. The licensing companies who buy the rights to use the name and images are the ones that control the end cost. Not Williams, BAR, et al. "
Not true:
If you think F1 sells a lot of merchandise, have a look at NASCAR. The highest paid driver in 2000 was not Michael Schumacher but Dale Earnhardt. Over 50% of his income came from merchandise. They sell it off the back of a lorry, and a dozen navvies couldn't shovel shit as quickly.
NASCAR clears an incredible amount of money through merchandise. The deals are simpler (driver, team and sponsor each pay a third of the costs and receive a third of the profits), the management far better (with a chain of NASCAR stores across the country - amongst the most profitable sales per square metre real estate in the country). Most significantly, the prices are much lower.
You know the margins on merchandise material, and they are crazy. NASCAR demonstrates that if you halve the costs, you more than double the sales.
There is a market for the expensive stuff (like Prodrive puffa jackets), and that is being serviced. GPL are saying that there is also a market for cheap, accessible stuff, and it is no longer serviced.
Also, the teams do make a lot of money from merchandise, they do have control over both designs and costs. The licensing companies do not just buy the licence for "20% of gross", they also have to provide minimum guarantees running to many millions. Most are relatively small businesses, and this is a tremendous liability.
This is the gist of the GPL report. I agree that some of the language is a bit dodgy, but in essence they are right:
- There's a lot of money out there.
- You're all screwing the market
- Take it seriously, and you could make a lot more money.
- The business model is out there. Take a trip to Daytona to see it.
- (and rather unnecessarily) it's rather typical of the way people in F1 seem to work - try and get the most money for the least amount of effort - whether that's hosting a race, driver PR activities & appearance fees, etc.
I've seen all this from the inside, and was arguing the same things five years ago.
May I pick you up on a few points. The terms used in the report are sometimes 'inappropriate', but they do make some very valid arguments.
You say:
"The basic conclusion is that F1 gear is overpriced. Really? So all those crowds at Silverstone wearing hats, shirts and jackets got given them then?
Bottom line being suggested is that F1 is greedy. In point of fact, the amount of money the teams make from merchandising is, in the scheme of things, quite small. The licensing companies who buy the rights to use the name and images are the ones that control the end cost. Not Williams, BAR, et al. "
Not true:
If you think F1 sells a lot of merchandise, have a look at NASCAR. The highest paid driver in 2000 was not Michael Schumacher but Dale Earnhardt. Over 50% of his income came from merchandise. They sell it off the back of a lorry, and a dozen navvies couldn't shovel shit as quickly.
NASCAR clears an incredible amount of money through merchandise. The deals are simpler (driver, team and sponsor each pay a third of the costs and receive a third of the profits), the management far better (with a chain of NASCAR stores across the country - amongst the most profitable sales per square metre real estate in the country). Most significantly, the prices are much lower.
You know the margins on merchandise material, and they are crazy. NASCAR demonstrates that if you halve the costs, you more than double the sales.
There is a market for the expensive stuff (like Prodrive puffa jackets), and that is being serviced. GPL are saying that there is also a market for cheap, accessible stuff, and it is no longer serviced.
Also, the teams do make a lot of money from merchandise, they do have control over both designs and costs. The licensing companies do not just buy the licence for "20% of gross", they also have to provide minimum guarantees running to many millions. Most are relatively small businesses, and this is a tremendous liability.
This is the gist of the GPL report. I agree that some of the language is a bit dodgy, but in essence they are right:
- There's a lot of money out there.
- You're all screwing the market
- Take it seriously, and you could make a lot more money.
- The business model is out there. Take a trip to Daytona to see it.
- (and rather unnecessarily) it's rather typical of the way people in F1 seem to work - try and get the most money for the least amount of effort - whether that's hosting a race, driver PR activities & appearance fees, etc.
I've seen all this from the inside, and was arguing the same things five years ago.
RichB said:Oops was that prophetic or what...? If the other news is true
I've enjoyed wathcing F1 over the years but what's all this with wearing replica kit all about then? I support british drivers not certain teams... I don't have a McClaren or a Ferarri so I'll be kitted out in Purple this weekend as I DO own a TVR! Rich...
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