Competing in the F1 with a high R&D budget is the most powerful strategy

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Research-intense car manufacturers have more to gain from competing in the F1 championship than advertising-intense car manufacturers, says new research conducted by a joint research team from Rotterdam School of Management, Erasmus University (RSM), and Erasmus School of Economics (ESE).

According to Associate Professor Yvonne Van Everdingen “Some car manufacturers choose to compete in F1 with their own teams and gear instead of just sponsoring, as we see in sports such as motorbike racing, cycling, and skiing.

“Brands that compete in F1, such as Daimler and Honda, and invest at least €3.8 billion annually in research and development do better in terms of innovation performance than other manufacturers such as Fiat and Renault that invest less. The research also found that the brand benefits in terms of sales from competing in F1 were highest for those that spent the least on advertisement, such as Ferrari, Lotus, and Jaguar.

“These findings can guide sports gear manufacturers to assess the potential outcomes of competing and guide them when allocating budgets between competing in sports competitions, R&D, and advertising.”

The study analysed the effect of participation, spending and performing in F1 on manufacturers’ innovation and sales performance. In addition, the study examined how participation, spending and performance in F1 interacts with R&D and advertising spending.

This research was published in The Journal of Marketing.