Monday, October 16, 2006

When Customers Collide

Here's a thorny marketing problem: you have a dedicated base of customers. They've been your bread and butter. But to grow, you need new customers, and that will require you to expand into market segments with different demographics and preferences.

But those new customers are not only different from your current customers, they actually may be turned off by them. That's the problem that NASCAR is facing.

Over the rolling Alabama hills, the soft autumn breeze still whistles through Dixie, finding a legendary track on race week and a sea of flags to push and pull – American flags, driver flags and the flag that remains the third rail of NASCAR, the Confederate.

In America, a NASCAR race is the last major sporting event where the Stars and Bars is still so prevalent, still so prominent, and while the debate over whether the flag's presence is appropriate isn't new, the stakes for NASCAR continue to get higher.

After a decade of massive growth, NASCAR's popularity has slowed and television ratings have slumped. To restart its progress, NASCAR must continue to attract new fans in fresh, more diverse markets, many of whom view the Confederate flag as a symbol of racism and oppression. Yet NASCAR doesn't want to alienate its loyal base, many of whom view the waving flags in the infield as a symbol of honor, history and traditional Southern pride.

Which is why the flag issue – symbolic of many others including prerace prayer and moving races out of the South to fresh markets in the North, Midwest and West – remains an issue NASCAR can't easily solve.

A year ago NASCAR CEO Brian France condemned the flag on "60 Minutes" and reiterated his company's "commitment to diversity."

But that has done little to pull the flags down here at Talladega; they were out in force all weekend, hung from homes and trees on the drive to the track, placed in the back windows of trucks and cars and run up makeshift flag poles on motor homes throughout the party-packed infield.

The image of NASCAR is southern, conservative, and working class, but NASCAR has been one of the fastest-growing sports businesses in the United States. A decade ago, when I left Boston and moved south of the Mason-Dixon line, I wasn't even sure what it is. Today I doubt there's a soul in America who's not familiar with it.

Battles over the Confederate flag have cost politicians their offices; no business wants to step into that political minefield. NASCAR's current approach seems to be to try to just not talk about it.

I doubt that's going to work for them, though.

The flag isn't the only thing that's caused some tension for NASCAR; there have been complaints from long-time fans that the sport is losing its manliness because drivers have been spokesmen for hair care and grooming products instead of the NASCAR staples (beer and cigarettes). But those kinds of complaints go away pretty quickly; the flag issue stirs up some intense emotions for people on all sides, and they're going to have trouble dodging it.

If you were NASCAR's marketing chief, what would you do?

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