Monday, March 21, 2011

The business of motor racing, our story – Part 1

Mohammad Medan Abdullah
Senior General Manager
Corporate Services Division, 
People often wonder why PETRONAS, an oil and gas company, is involved in motorsports, and believe me, we get asked that a lot!

I can’t say that I’m a natural motorsports fan – I’m more into fishing, the outdoors and nature – but over the years, I have come to appreciate the sport as an excellent branding and business platform when I was heavily involved in PETRONAS’ globalisation strategy beginning in the late 1980's and early 1990's.

Compared to the more established oil majors, we were then still considered a new kid on the block, but we did have the aspiration to be a key player very early on, you know?

I think it’s fair to say that the progress that we had made up to that point whetted our appetite to strive for even greater success. I mean, it wasn’t as if we had any inferiority complex and we’ve always thought that we had every chance to stand head and shoulders with the big boys.

When we first embarked on our globalisation effort, it was really tough getting through to the peoples and authorities of the countries we wanted to go into. But our involvement in motorsports and in Formula One racing in particular, helped open a lot of doors.

I can remember one business trip to somewhere in North Africa in the early days. We were exchanging business cards with our counterparts there and they instantaneously recognised the PETRONAS logo and its association with F1. “Oh, PETRONAS! Formula 1?" was invariably the remark they made, and some of us might remember than we once ran a TV commercial based on this experience.

It certainly served as a terrific icebreaker. Once they know you are representing PETRONAS, the tone and feel of the discussions became somewhat different and less laboured. Suddenly it was as if there was a common denominator between obvious strangers.

Today we are in more than 30 countries worldwide, and I can tell you that some of the countries and places we operate in are really remote. But thanks in part to the global exposure that we got out of Formula One, there’s always instant recognition wherever we go.

So how did we first get ourselves into motorsports? Having built our experience PETRONAS spent much of the 1980s growing our business beyond its exploration and production and into downstream retail. This was a period when you started to see an explosion in the number of PETRONAS retail stations being built across the nation.

Around this time, we started to think about ways to market our brand, image and products to the masses.  We were keenly aware that we were up against the giants of the industry, so we had to think of alternative means to get our name out there and put a more prominent ‘public face’.

At that time, it became obvious that there could be opportunities for such exercise in motor racing and product placement and association.

Malaysia actually has a very interesting motor racing history in the late 60s and early 70s. Not a lot of people know that Malaysia was one of the venues for the Formula Pacific races, which was part of the now-defunct Formula Atlantic.

Apparently, we used to host races at Selangor’s Batu Tiga and Shah Alam circuits, as well as the Penang street circuit. These circuits also hosted other categories like endurance and touring car races, so our nation actually had a pretty impressive racing pedigree and a vibrant local motorsports scene.

Motor racing in Malaysia underwent a transformation in the 1980s with the popularity of rallying, especially when the country’s national carmaker became heavily involved in the sports. This was when we saw motor racing as a brilliant marketing platform, and it was simply too good an opportunity to miss.

Having our name and products associated with the most successful rally outfit of that era not only helped to gain people’s association to our products, but it also provided us with an avenue to differentiate ourselves from our competitors.

Crucially, we also found out that branding exercise through motorsports sponsorship was far more cost-efficient as opposed to forking out a fortune on traditional advertising mediums.

From there, it was a natural progress over the years for us to be involved in other formula and forms of racing.

By the 1990s, PETRONAS’ business ambitions grew to the point where we started to look beyond Malaysian shores, and the aspiration to grow globally provided the impetus for us to look for ways to position our name onto the global stage.

This ushered in our involvement in Formula One racing, starting with us entering into a partnership with Sauber at Monaco GP in 1995.

If you really look at it, there is probably no better platform that can capture millions of eyeballs than Formula One racing and give you an instant recognition across a wide global audience. The decision to enter into Formula One seemed the most natural and logical one, and in many ways, we were just really taking our experience at home and to a global stage.

Again, relative to other branding and promotion media, Formula One proved to be far more efficient in terms of cost and audience reach, and offered a superior value for money compared to other forms of advertising.

And I’m happy to note that we never looked back since.

It’s been 23 years since our first foray into motorsports and we have progressed in leaps and bounds since then. Over the years, what started out as purely a branding and promotion exercise has grown into full-fledged technological partnerships and collaborations to penetrate the international lubricant markets for our Syntium range of products.

There are those who continue to ask if it’s our involvement is still relevant and necessary, and our answer is, very simply, still a resounding yes.

No comments:

Post a Comment