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DECLARATION
I, Miss Khan Maheen Fatima, student of Bhavans College of T.Y.BMS [Semester V] hereby declare that I have completed my project, titled Impact of Print Media in India in the Academic Year 2011-2012. The information submitted herein is true and original to the best of my knowledge.
Signature of Student
CERTIFICATE
I, Prof. Krupa Rai, hereby certify that Miss Khan Maheen Fatima, student of Bhavans College of T.Y.BMS [Semester V] has completed her project, titled Impact of Print Media in India in the Academic year 2011-2012. The information submitted herein is true and original to the best of my knowledge.
ACKNOWLEDGEMENT
No task however small can be completed on a hostile & uninspiring environment. Thus, I wish to thank every person who directly or indirectly helped to create a congenital atmosphere for us to work in & successfully complete our project. I express my highly indebted heartful gratitude to Prof. Krupa Rai for giving me the opportunity to do the project & providing me with greater learning experience.
Date:
EXECUTIVE SUMMARY
INDEX
1. Introduction 2. Product lines and consumer behavior 3. Growth of the industry 4. Technology of production and distribution 5. Marketing 6. Innovation 7. Strategies and competition in the industry 8. Business environment 9. Critical success factors
CHAPTER 1
Introduction
Print Media, as anyone can understand is one of the most important factors coming through in the way a nation works. Newspapers, magazines, books etc. are ready by a lot of people and are certainly one of the most trusted mediums of National and International News. India has a vast array of Print Media with Thousands of Magazines and Newspapers in circulation. Top Notch Journalism, great reporting, press unity and a very strong network is what makes Print Media so much of a success even today in the age of Television and the Internet. It is also said that Print Media also helped literacy and undoubtedly the General Knowledge of the average person in India. The good thing about Indian Print media is that any Bias of any sort is quickly subsided; therefore, impartial reporting is a major feature of the Indian Print Media. The news you get through these outlets cannot be any truer. The newspaper with the largest Circulation in India is Dainik Jagran, having near about Two million readers. Next comes Times of India, an English newspaper, followed by Dainik Bhaskar, another Hindi Newspaper. India has a lot of regional newspapers and magazines as well in a lot of languages. Therefore, there is something out there for everyone to read! This section is dedicated to the Indian Print media with articles on Newspapers, Magazines, Controversies, and opinions related to them etc.
regional papers aim at providing localised news for their readers. Even Advertisers saw the huge potential of the regional paper market, partly due to their own research and more due to the efforts of the regional papers to make the advertisers aware of the huge market. The Indian Newspaper industry is one of the largest in the world. It publishes the largest number of paid-for titles [2] in the world. In 1997, the total number of newspapers and periodicals published was 41705, which include 4720 dailies and 14743 weeklies. The highest numbers of newspapers was published in Hindi, 16864. Newspapers in India are measured on two parameters, circulation and readership. Circulation is certified by the Audit Bureau of Circulations which is an industry body. It audits the paid-for circulation of the member newspaper companies. Readership is estimated by two different surveys, The Indian Readership Survey (IRS) and the National Readership Survey (NRS).
PC Quest, Cyber India, Data Quest, Voice & Data, Computers Today, Express Computer, Silicon India The Onion, India Today Plus, Des Pardes, India Together, Teens Today, Andhra Jyothi in telugu, Wow Hyderabad, Zee Premiere, Showtime, Arcade, JAM, India Talkies
Chennai Times, The Times of South Mumbai, The Times of Doon, Meerut Plus, Haridwar Plus , Bhopal Plus . Other regular supplements include: Times Wellness (Saturdays) Times Wellness focuses on solutions to health issues and guidance to better living Education Times (Mondays) Education Times caters to the ever-expanding student community and learning experience, as a career guidance, counselor and adviser. Times Ascent (Wednesdays) Editorial of Times Ascent, Centers on human resource development and the impact and implications on business and society. ZIG WHEELS ZigWheels.com is an automotive website reviewing, discussing, features and interviews on Indian vehicles. Times Life (Sundays) Times Life is the supplement which is feature driven What's Hot (Fridays) Focus on latest happenings/events. Special pages created for channels and details of programmes Rouge (Saturdays) Concentrates on women's interest areas.
Dainik Jagran
Dainik Jagran is the Worlds Largest Read Newspaper and the Number One Hindi Newspaper in India. It is the worlds largest read news paper and is one the largest newspapers in the world. It was the brainchild of the aggressive freedom fighter Mr. Puranchandra Gupta. The first edition was launched in Jhansi in 1942 and in 1947 Dainik Jagran shifted its headquarters to Kanpur and thus launched its second edition. In this new, dynamic world of Indian media Dainik Jagran is an iconic brand. More than 55.7 million people reach out for Dainik Jagran making it the largest read daily of India. Dainik Jagrans 37 editions carve a huge swathe across eleven states Madhya Pradesh (Bhopal, Indore, Gwalior, Jabalpur, Ratlam, Satna & Saugor) along with the states of Uttar Pradesh, Uttarakhand, Punjab, Haryana, Bihar, Jharkhand, Himachal Pradesh, Delhi, West Bengal and Jammu & Kashmir .
Some supplements offered by the Dainik Jagaran are: Jhankaar, Yatra, Sangini, Josh, Nai Rahein, E - PAPER Jagran.com has various channels on its website focusing on different information needs of its users. On the website the latest news in Hindi more than 30 times a day. In addition to news, they also have more than 30 other channels on their website including:
Junior Jagran - A colored, bilingual, weekly tabloid catering to the taste of the youngsters and teenagers of 1319 years age group. Khana Khazana - A cookery channel targeted at household women who cherish cooking. Jagran Yahoo! Khana Khazana is a complete resource of multi cuisine recipes and quick cooking tips.
Channel Sakhi - The Sakhi is a premium womens channel targeted at upwardly mobile and outgoing women in the upper socio-economic class. The channel highlights the role of women in modern times and helps them in coping with the outside world.
Josh - A monthly supplement of jagran.com which is concentrating on educational content, career related queries, personality development, and updates on science and technology.
Cine Maza- A popular Bollywood news and reviews channel of Jagran.com giving information on Bollywood, top 5 releases, Box office hits, fact files of actors and actresses with biographies and latest releases.
The Hindu
The Hindu is a leading English-language Indian daily newspaper with a circulation of 1.45 million and is the second-largest circulated daily English newspaper in India after Times of India, and slightly ahead of The Economic Times. According to the Indian Readership Survey (IRS) 2008, The Hindu is the third most-widely read English newspaper in India (after Times of India and Hindustan Times) with a readership of 5.2 million. It has its largest base of circulation in South India, especially Tamil Nadu headquartered at Chennai (formerly called Madras). The Hindu was published weekly when it was launched in 1878, and started publishing daily in 1889.
The Hindu became, in 1995, the first Indian newspaper to offer an online edition. The Hindu is published from 13 locations - Bangalore, Chennai, Coimbatore, Delhi, Hyderabad, Kochi, Kolkata, Madurai, Mangalore, Thiruvananthapuram, Tiruchirapalli. Achievements The Hindu has many firsts in India to its credit, which include the following 1940 - First to introduce colour 1963 - First to own fleet of aircraft for distribution 1969 - First to adopt facsimile system of page transmission 1980 - First to use computer aided photo composing 1986 - First to use satellite for facsimile transmission 1994 - First to adopt wholly computerized integration of text and graphics in page makeup and remote imaging 1995 - First newspaper to go on Internet 1999 - Becomes India national news paper Supplements and features Mondays - Metro Plus, Business Review, Tuesday - Young World, Education, Book Review, Improve Your English, Wednesdays - Job Opportunities, Thursdays - Metro Plus, Science, Engineering, Technology & Agriculture, Friday - Friday Features, Saturday - Metro Plus Weekend, Sunday - Weekly Magazine, Open Page, Literary Review
Daily features - This day that age, Religion, The Hindu Crossword, Sudoku Online presence. The Hindu was the first newspaper in India to have a website, launched in 1995.
Deccan Chronicle
Type Format Owner Editor Founded Language Headquarters Circulation Website :Daily newspaper :Broadsheet :Deccan Chronicle Holdings Ltd. :A T Jayanti :1938 :English :Hyderabad, India :1,349,959 Daily :www.deccanchronicle.com
The Deccan Chronicle is a daily newspaper published through the Andhra Pradesh, Karnataka and Tamil Nadu states of India. It is published in English. The newspaper's name derives from the originating place Deccan regions of India. Other supplements by it are TV Guide, Sunday Chronicle, Chennai and Bengaluru Chronicle. It also supplies other weekly features like School chronicle, Teen Chronicle, Sunday chronicle, etc.
Eenadu
Eenadu, headquartered in Hyderabad, India, is the largest circulated Telugu news daily in the state of Andhra Pradesh. According to NRS (National Readership Studies) 2005 it has got a readership of 1,134,000 and is the third most circulated regional language daily and 10th most circulated daily in India. Eenadu (meaning "Today" in Telugu) was founded by the Indian media baron Ramoji Rao in 1974. It has played a role in either crowning or dethroning governments in Andhra Pradesh. It has also successfully adapted the latest publishing and communication technologies into the Telugu language. Eenadu's rapid expansion enabled diversification of its portfolio by venturing into numerous other markets such as finance and chitfund (Margadarsi chits), foods (Priya Foods), film production (Usha Kiran Films), film distribution (Mayuri Films), and a group of television channels (ETV). All the businesses are organized under Ramoji Group. History As with any other publication, Eenadu too had its share of struggles. When launched in Vishakapatnam, it wasn't able to sell more than 3,000 copies a week. Eenadu found itself struggling to become a daily publication ranked amongst other popular rival publications. By 1975, Eenadu managed to achieve its target of becoming a daily publication. However, it was popular in regions and rivalry was still an issue. In a period where the company needed vision to drive and expand it any further. Eenadu hired a new set of directors to be part of its key decision and management group which drove it towards what it is today being the top read, highly circulated newspaper. Mr. Ramoji rao's growth from no where to every where, is amazing. His name became a household name. Every one in Andhra Pradesh knows Ramoji Rao. He is an inspiration for many young business people.
Though Eenadu is a highly circulating news paper, they have a healthy competition with other circulating news papers Vaartha,Sakshi (magazine), and Andhra Jyoti.
Dainik Bhaskar
Dainik Bhaskar is a Hindi-language daily newspaper of India. It was started in year 1958 from Bhopal, the capital city of Madhya Pradesh. Its current editor is Ramesh Chandra Agrawal. Dainik Bhaskar is published from many cities of North and Central India: Bhopal, Indore, New Delhi, Lucknow, Nagpur, Akola, Raipur, Gwalior, Jabalpur, Jaipur, Ajmer, Jabalpur, Satna, Varanasi, Ahemedabad. In Gujarat, and Western Madhya Pradesh the Gujarati Version of the newspaper is also published as Divya Bhaskar. Dainik Bhaskar Group publishes a varied range of magazine helpful in many ways, like 'Aha zindgi' a magazine based on highlighting the positive features of life. The company also runs English newspaper DNA in partnership with Zee Group. History Dainik Bhaskar was first published in Bhopal and Gwalior of the central province. The newspaper was launched in year 1956 to fulfill the need for a Hindi language daily, by the name Subah Savere in Bhopal and Good Morning India in Gwalior. Later in year 1957, it was renamed as Samachar Kranti, and then again in year 1958 as Bhaskar Samachar. Finally in year 1960, it was published as Dainik Bhaskar. There were only 100 prints of the news paper on the first day of its publication, a figure which increased by 69566 within a week and rose to over 2.5 million prints daily in 2008.
CHAPTER 2 Product Lines and Consumer Behavior Complimentary and substitutes products
Complimentary good for print media is advertisements as it gives high revenues. Substitutes for print media are radio, television, e-papers, online newspaper, door to door campaigns, exhibition, and pamphlet distribution.
CHAPTER 3 Growth of the Industry Rate of growth, pattern of growth, growth determinants
The Indian Media and entertainment industry stood at Rs584 bn in 2008, a growth of 12.4% over the previous year. Over the next five years, the industry is projected to grow at a CAGR (compound annual growth rate) of 12.5% to reach the size of Rs1052 bn by 2013, says a FICCI & KPMG report on the sector release. The report however, highlights that the market environment has become increasingly challenging for the sector, on the back of economic slowdown and the consequent slowdown in advertising revenues, especially in the last quarter of 2008. Sectors like TV, Print, Radio and Outdoor which depend on advertising revenues were largely affected and this is estimated to continue into the current year too. Advertising spends grew at CAGR of 17.1% in the past three years. Going forward, it is expected to exhibit a robust growth rate at CAGR of 12.4% over the next five years. Potential upsides could take this higher. Growing acceptance of the digital TV distribution technology, entry of DTH players the success of many small budget movies, and the rising competition in the regional market were some of the key highlights of the previous year. Rajesh Jain, Head Information, Communication & Entertainment, KPMG India said, Media companies are under pressure to change, innovate and re-examine their existing business models. Players need to draw upon new capabilities to survive in this environment. In the immediate future, media corporate is likely to focus more on operating margins, and assess opportunities for consolidation, while building on core strengths. The projected 12.5% growth for the sector will
be driven on the back of factors like favorable demographics, strong long term fundamentals of the Indian economy, expected rise in advertising to GDP ratio compared to developed economies and increasing media penetration. The focus of industry players too is changing; with a strong emphasis on profitable growth in the current scenario. Hence, media companies are increasingly concentrating on strengthening existing operations and assessing options for growth through consolidation, while continuing to innovate. Factors like Narrowcasting, Regionalization, Internationalization, Organized Funding, Digitization and Deregulation have become the buzzwords in the industry. The Indian Print Media industry is estimated to have grown by
7.6% in 2008 and reaching around INR 172.6 billion in size. The industry is projected to grow at a CAGR of 9% over the next five years and reach around INR 266 billion in size by 2013. Growth in the Print media industry is achievable through sustained growth in advertisement revenues due to increased advertising spends from emerging sectors such as Education, Organized Retail and Telecom, improving literacy levels in the country, optimization of cover prices leading to improved penetration and growth in sales volume, more launches in the niche segment, like newspaper supplements and specialty magazines, by players. The industry needs to invest in quality improvements, especially in regional media to attract advertisers; collective negotiations and bulk purchase of newsprint, constitute forums to encourage and promote regular reading habits among youth, adopting innovative practices like trading media space in publication platforms in return for equity and improve organizational ability to attract and retain talent. The structure of the Indian print media industry is highly fragmented with importance to regional dominance. The Indian print media segment primarily comprises newspaper and magazine publishing.
As per PwC report, the print industry is expected to grow from Rs 128 bn in 2006 to Rs 232 bn by 2011, at 12.6% CAGR. While the newspaper industry is estimated at Rs 112 bn, the magazine segment is valued at Rs 16 bn.
Growth drivers
Higher literacy levels: In 2006, the literacy levels increased to 71.1% as compared to 69.9% in 2005. While rural literacy is at 64.8%, urban literacy touched 85.3%. Currently Indian print media is estimated to reach over 220 m people, and has immense growth potential since close to 370 m literate Indians are believed to not be served by any publication. Also, the reach of newspapers is only 27%, as compared to the global average of 50%. Lower cover prices: Earlier, due to strong hold over a region, the newspaper had higher cover charges. However, with increasing competition and venture into newer regions the companies have reduced the cover prices to augment more sales. Many English dailies are sold for as low as Re 1 or Rs 2. The initial subscription offers of DNA and Hindustan Times (HT) in Mumbai, during their launch period, further reduced the cost of the newspaper to around 50 paise for an average issue Higher ad spends: Print media accounts for 48% of the total Rs 137.5 bn advertising spend in the country. However, the ad spend in India is just 0.4% of GDP as against 0.5% in China, 1.3% in the US and a world average of nearly 1.0%. With rising consumerism and growing interest from domestic and global brands in Indian market, the growth in ad segment is expected to be strong. As per the registrar of newspapers, there were approximately 6,529 daily newspapers as of March 2005. No single newspaper had a national circulation. In 2006, India had the second largest circulation of newspapers with 88.9 m copies per day; second only to China with 98.7 m copies a day.
Urban & Rural Urban Base Population (m) Any Publication Any Daily Any Hindi Daily 184 170 62.9 % 23.6 21.9 8.1 2.2 7.6 (m) %
Rural (m) %
99.9 42.2 84.3 15.6 93.8 39.6 76.6 14.2 35.6 15 27.3 5.1
Newspaper
Jagran Prakashan Uttar Pradesh and Uttaranchal Times of India HT Media Mumbai Delhi, Bihar, Jharkhand
Fragmented industry
The regionalism aspect is clearly visible in the newspaper sector. The print media is further divided on the basis of the languages. Of the daily newspapers, about 46% are vernacular, 44% are in Hindi and 10% are English. Hindi and vernacular language newspapers offer a local and regional flavor to their readers. The content and circulation of English-language newspapers, on the other hand, are largely focused on the primary urban centers. Approximately 7% of the population in urban areas read English-language newspapers, compared to a readership of only 0.3% of the population in the rural areas. (Source: IRS 2005) In contrast to this, Hindi-language newspapers have a proportionately larger readership in rural areas, in addition to their strong presence in urban areas, with a readership of approximately 15% and 5% of persons in urban and rural areas, respectively. The newspaper industry is regionally divided, with existing players enjoying strong brand loyalty. For e.g. Times of India follows strong brand loyalty in Mumbai and it was difficult for Hindustan Times to enter Mumbai. The newspaper industry has relatively high entry barriers due to the strong brand equity of existing players. Also, existing players have strong control over the distribution network, making it difficult for new players to enter.
2002. Currently, up to 26% foreign direct investment (FDI) is permitted in newspapers and periodicals dealing with news and current affairs. In non-news publications, 100% foreign investment is permitted. Since the changes in the regulation many foreign investors have taken strategic stakes in the domestic print media companies.
Going forward
A booming Indian economy, literate population on the rise, increasing consumerism, entry of global brands in the country and opening of the sector to foreign investors would drive the growth in print media. Also, with newspaper companies entering into newer regions and segments would lead to stronger growth.
have raised their cover price in many markets, though Delhi seems to be unaffected as of now but for The Hindu which raised the price from Rs 2.50 to Rs 3. The economic downturn appears to have taken a severe toll on the Indian print media industry. It's bleeding, given the conditions across all platforms. With dipping Ad revenues due to the slowdown and high cost structure, the print media industry will continue to face pressure for the next two to three quarters. Layoffs and salary cuts may become a necessity for many businesses to survive as they have added substantially to their capacities.
Newsprint prices, which constitute more than 70% of the cost of producing a newspaper, shot up last year by around 60-65%. The concessions announced by the Finance Ministry include: Full exemption in customs duty on newsprint and glazed newsprint used for printing newspapers Full exemption in customs duty on lightweight-coated paper used for printing magazines. These exemptions will reduce the price burden to some extent and so too the reduction in imported newsprint prices from its peak. Information and Broadcasting ministry came to the rescue of small and medium newspapers by announcing a revised policy of releasing Government advertisements. It increased the advertisement quota of the Directorate of Audio Visual Publicity (DAVP) for small papers from 10% to 15% and for medium newspapers from 30% to 35%. Under the new policy, 35 per cent of DAVP advertisements in rupee terms will be given to regional and other language newspapers against the existing limit of 30%. Under the new policy, all ministries, departments, and subordinate offices of the Government of India can issue tender notices directly to empanelled newspapers at DAVP rates.
increase in the number of firms. While the shift in the size distribution of firms is not significant, the log odds ratio of increased national and local market share is greatest for this size class. Except for the very largest class, these results are consistent with the conjecture that the new technology of daily newspapers has reduced first copy costs and lowered the minimum efficient scale. This conclusion is buttressed by the performance of firms in the 10,000- 100,000circulation size range in both national and local markets, and taking intercity shifts in demographic factors into account. Moreover, the second smallest size category, 5,001 - 10,000, while not experiencing a statistically significant increase in the number of firms, did demonstrate a high log odds ratio of increased market share when demographic variables are included in the analysis. The performance of the 500,000 plus circulation size class is difficult to interpret. The economies of scope increases with increase in number of advertisers where they get high return and in turn help in reduction in cost of the newspaper as the processes utilize the same resources.
Sell waste/defect paper: Identify opportunities and track metrics related to selling waste paper (e.g. for recycling). Production Performance: Track printers production activity by facility, shift, printer and type of paper. Identify faulty paper, human errors, production quality and efficiency.
Today the distribution in print media industry is viewed as a value added or ancillary service. Ancillary services have been identified a challenge in printing industry for growth opportunity. Distribution is a customer service offering that starts when the job is scheduled. Efficient distribution involves the use of market expertise to negotiate freight rate and logistics services, routing, and overall compilation or management and organization of products and distribution. Other aspects of distribution include warehousing, shipping, inventory management, fulfillment and kit packing. Newspapers require unique definition of their product, information, and financial flows to be adapted to supply chain and other quantifiable management programs. The primary supply chain flow for newspapers is the outbound product flow and its associated information flow. Newspapers have successfully separated subscriber and advertiser cash flow timing from product delivery. As such, all financial flows within the newspaper supply chain are either discretionary (how much newsprint and ink inventory is carried), or direct costs resulting from the supply chain in place. The primary components affecting the total supply chain cost for a newspaper are: Inbound Information: advertising, news, editorial, pagination Press Operations: plate making through pressing Packaging Operations: handling, insertion, storage, package design & flow Distribution Operations: transport mode, timing, locations, and handling.
Balancing time and workflow across the supply chain will yield the largest results. A dynamic cost and process flow model of the newspaper supply chain will be essential in keeping pace with changing needs and demands within the newspaper industry. In print media industry the labor market is highly skilled. Number of employees is the sole basis of the industry. Skilled labors required are press operator, information system analyst, HR, reporter, journalist, editor, librarian, sales supervisor, promotion manager, publisher, general manager, web manager.
CHAPTER 5 Marketing
Market segmentation, marketing strategies, marketing practices, and marketing concepts specific to the industry. The print media industry has low entry and exit barriers. However, there is intense competition for market share in the industry. Many players are well established in their respective regions and it is difficult for new players to penetrate the market. The market for print media can be segmented based on geography, demographics and psychographics. Many players used technology and marketing strategies to emerge as global giants. In India, the print media industry is in the growth phase. There are a few well-established players in the industry, with each player constantly trying to increase its market dominance. The decision of the Indian government to allow 26% FDI in Indian print media has received mixed response from media houses. Some players strongly opposed the move while others welcomed it. Promoting, advertising, and marketing products or services are the most basic ways to drum up new business. But it should come as no surprise that the vast proliferation of media seen since circa. 2000 has been wreaking havoc with traditional approaches to marketing and promotion. A partial list of the media available to marketers includes, but is not limited to:
print direct mail print catalogs print advertising (magazines, newspapers) Web sites Web advertising (banners and other ads) e-mail direct mail/e-letters search engine marketing (sponsored links on Google, e.g.) broadcast/satellite radio broadcast/cable/satellite TV billboards/posters/outdoor advertising point of sale/point of purchase displays
word of mouth/so-called viral marketing computer desktop wallpaper advertising on mobile phones/other portable devices ring tones for mobile phones blogs social networking sites (like MySpace) online video (like You Tube) in-game advertising (for videogames) And on and on and on
Part of the marketing problem is that, thanks to inexpensive electronics and display technologies, almost any surface can be a marketing vehicle. After all, consumers are awash in advertising and marketing messages, which all intermingles to create a dense wall of background noise. The Industry Measure has conducted extensive research into media channels and the ways in which those channels are changing. In a recent survey of ad agencies, for example, it was found that:
70% of ad agencies currently use print direct mail (not variable) to market and promote their and their clients services or products;
52% currently use Web advertising (banners, rich media, etc.); 45% currently use outdoor/display advertising (signs, posters, fleet graphics); and 45% also currently use broadcast radio.
Less important shouldnt be construed as meaning unimportant. In todays media mix, its all good. At the same time, some advertisers and marketers are jumping onto whatever new medium comes down the pike, fearful perhaps of missing out on the next big thing. While new media are important to the overall media mix, older established media are often still the most effective. This is why a judicious combination of media is the best approach. There are certain guidelines marketers can take to ensure that their media rupees are not spent in vain. First, identify the target audience and think carefully about the best medium/media to reach them. Different demographic groups (age, gender, income, even geographical location) have
different media habits. Print may not be the best way to reach certain groups, while the Internet may not be the best way to reach certain other groups. Second, combine media. Relying on just a print direct mail campaign may garner some new business, but combining that with a direct e-mail blast, an outdoor advertising campaign, radio spots, or some other combination of media will help build brand awareness. Third, to keep the advertising message and design elements consistent across media. Using the same logo and logo colors, the same fonts, the same tagline phrasing, the same or similar text, etc., in all your media permutations. This helps with branding and reinforcing the message. At the same time, the adoption of design-once-reuse-many strategy helps save costs on design and lets you get more bang for your buck. In print media industry, newspapers and magazines are difficult to use for direct marketing because the ads have to compete with the clutter of other ads and because the space is relatively expensive, response rates and profits may be lower than in other media
CHAPTER 6 Innovation
Types of innovation, concepts of innovation relevant to the industry, source of innovation, rate of innovation and economies of scale.
Types of innovation
The Concepts in innovation relevant to the industry are disruptive innovation, process innovation, business model innovation. The newspaper industry is going through a "disruptive" change, a phenomenon that has transformed industries such as retailing, computing, airlines and automobiles. The bad news is that when the dust of disruptive change settles, historically even the best-run companies typically end up in the loser's column. Disruptive innovations typically offer lower performance along dimensions that firms consider critical. In exchange, new benefits are introduced along dimensions such as simplicity, convenience, ease of use, or low price. In the media industry,
blogs, Google, eBay, Monster.com, and freely distributed commuter papers each fit the pattern of disruptive innovation. Each emerging competitor lacks something that is core to most newspaper companies' value proposition. Some can't match a newspaper's broad distribution network. Others can't compete with the newspaper's detailed reporting capability or local reach. All, however, compete along dimensions of performance that are different than the traditional metrics emphasized in the print newspaper business. Three barriers typically make it difficult for marketleading incumbents to get disruption right: 1. Fail to spot the disruptive change early enough: Disruptive change tends to start innocently at a market's fringes. Market leaders tend to dismiss early disruptive developments because they just don't affect their core business. 2. Fail to allocate sufficient resources towards disruptive offerings: Disruptive innovations often have lower performance and lower prices than established offerings. Companies find it hard to prioritize spending time and money on disruption when they have seemingly attractive opportunities in their core business. 3. Force the disruptive initiative into the existing business model and product concept: Most newspaper companies still focus a disproportionate share of time and attention on their print product. While not ignoring that product, allocating more resources towards new disruptive products makes sense. It seems clear that newspaper companies must reimagine their content and business models if they hope to succeed. Despite the sense of doom and gloom that pervades the industry today, there are signs of hope. While newspaper readership is declining, information consumption is increasing. Almost every newspaper company has made the transition to the Web, with their properties attracting new audiences and new advertisers. In fact, the interactive nature of the Web allows forward-thinking companies to completely change the way they interact with readers and advertisers. Readers can become content creators and community builders. Web sites can serve advertisers that would eschew the static nature of print. Additionally, companies are experimenting with new approaches. Dozens of companies have launched free papers targeted at young readers or recent immigrants. Newspaper companies should look at their local market to identify jobs that people can't get done well today. They should think of the great assets they have at their disposal top-flight journalists, strong brands,
in-depth local knowledge, healthy balance sheets and think how they could reconstitute those assets to address important, unsatisfied jobs. The Cost dimension in media product innovation requires a media organization to obtain a cost advantage through product innovation, thus enhancing the probability a media product is chosen. The Value Analysis Model sees cost as the fee incurred in a products life circle. The cost advantage the media product innovation want to realize include low media consumer cost and low media product cost. However, under the usual circumstances, the above-mentioned two costs are in a zero-sum relation -- A decrease of one of them will inevitably cause an increase in the other. Given that, before media cost innovation can be realized, two questions need to be tackled: How to cut media consumer cost, and how to cut media product cost thus caused. Media Product Cost is closely related to the learning curve, experience curve; scale economy, economy of scope and innovation method. This is because: Firstly, as a media organization gains experience in its targeted market, its pinpointing skills will increase and thus can better satisfy the media users needs. Increased targeting skills will consequently reduce the redundancy in the content it produces and increase the efficiency as a media user fulfills its needs while using the content in a given time span. As the content redundancy is cut, the media can offer more space for advertisements, and the medias attraction to ads increases accordingly. Meanwhile, increased accuracy in information collection and processing will greatly cut resources consumed by the reporting and editing team. This deduces the total operation cost of the media organization. As we can see, a media product innovation based on collective intellect (core competence) can cut the cost it pays in learning and experience. Secondly, as the scale expands, the media product will see a cost cut, according to the scale economy theory. But essentially an influence economy, the media economy generally operates at a loss at the early stage. Expanding the scale in a free rein will very likely impoverish the media organization; therefore, what it needs is a relative scale advantage rather than an absolute one. So in the media product innovation process, the media organization should try to obtain a relatively efficient scale at a time spell shortest possible while decreasing the possibility of an inefficient scale, exerting a cost control in both aspects. Beijing Times, for example, launched at a very low newsstand price, but latter increased it three times within one year of the launch in order to cut cost in the most. Thirdly, according to the economy of scope, a media product innovation should be conducted within a business scope
where a coordination, mutual support, and resources sharing are possible and efficient. Only when this condition is met can a cost cut be realized, otherwise the so-called diseconomies of scope will appear. Therefore, a media product innovation should be carried out on the basis of a media organizations core resources and center on competence strengthening. The overall goal of the innovation is to realize media expansion at a low cost. Fourthly, the media product innovation encompasses independent innovation, emulation innovation and cooperative innovation, with each of them having a different cost-saving ability. Among the three, independent innovation is most expensive, while the latter two are more cost-efficient, imitative innovation in particular. So, cost-centered media product innovation tends to adopt the imitative innovation approach or even a complete imitation in order to reform the media product line. In this approach, to be cost saving, the core product a media organization offers should be uniform with that of its competitors, but can be very innovative in its outer appearance and other benefits it offers. Using this approach, the consumer cost is transferred, and as whole, the product life cycle cost is reduced, and its value increased. In summary, efforts in the four aspects discussed above can, through reorganizing its production elements, help a media organization obtain higher production efficiency and cut media product unit cost, thus obtaining a sustainable competition advantage. An examination of the newspaper competition in Nanjing in 1999 shows the cost innovation by some of the competing newspapers in the city was still on the first aspect, and few were on the second aspect. Therefore, thinking about media competition as merely a competition of burning money, to cut the media users cost while ignoring media product innovation is too naive and detrimental both to a medias growth and the nurture of its all-around ability.
SWOT Analysis
STRENGHT: Supply creates its own demand. High degree of market coverage. Service and flexibility. Revenue increases with increase in number of advertisements. Products can easily be recycled.
OPPORTUNITY Digital space technology. Innovation Growing mass media Value adding Online newspapers
THREAT Economic downturn. Consumer migration to TV media. Radio Porters generic strategies model
Generic strategies were used initially in the early 1980s, and seem to be even more popular today. They outline the three main strategic options open to organization that wish to achieve a sustainable competitive advantage.
The generic strategies are: 1. Cost leadership, 2. Differentiation, and 3. Focus 1. Cost leadership In the case of media products, means they should be offered at a price lower than their competitors but with as good benefits, or, the unique benefits the media products offer can overoffset the premium.
2. Differentiation Differentiation in media refers to when a media organization provides unique benefits to the media users through product innovation. This is to increase the probability of the media users to choose the product. A media organization with a target user loyalty can concentrate more on how to fully meet the target users needs rather than on product cost saving. 3. Focus Focus strategy is also known as a 'niche' strategy. The clutter of ads has now spilled out on the number of channel availability due to which people are spoilt for choice. Thus Niche channels are the only way to maintain viewer loyalty. Some premium-branded newspapers, a bit like The Sunday Times is more niche-orientated.
Let's consider rivalry within the industry first. It is common sense to assume that if the rivalry is intense, average profitability will reduce. In other words, to increase profitability, firms within an industry may have to coordinate for collective good. For example, if the firms want to avoid costly price wars, which will ultimately reduce profits for all firms, firms need to coordinate. However, this is easier said than done. Frequently, in an industry, comprising of firms large and small, smaller firms tend to lower prices to increase market share, and ultimately larger firms follow. Bargaining power of suppliers and customers always needs to be considered, while analyzing any industry. The threat of substitutes is important while analyzing an industry. Currently, with the onslaught of the Internet, traditional media like print and TV are under attack. Online advertisers like Google and Yahoo!, two well-known Internet companies, are ensuring that more and more advertising move to the World Wide Web, at the cost of print and TV advertising. In short, the Internet and the mobile Internet have emerged as real substitutes to reading newspapers and magazines and watching TV.
A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order and at each activity, the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities. It is important not to mix the concept of the value chain with the costs occurring throughout the activities. The value chain categorizes the generic value -adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), outbound logistics, marketing and sales (demand), and services (maintenance). The "support activities" include: administrative infrastructure management, human resource management, technology (R&D), and procurement. The costs and value drivers are identified for each value activity. The value chain framework quickly made its way to the forefront of management thought as a powerful analysis tool for strategic planning.
CHAPTER 8
Social factor: Social factors influence people's choices and include the beliefs, values and attitudes of society. So understanding changes in this area can be crucial. Such changes can impact purchasing behavior. Consumer attitude is very important social factor. Technological factor: Technology is increasingly competing with print media by opening access to endless sources of news. It may now seem that the need of the reader to buy a newspaper for news and the need of the advertiser to advertise in it is slowly receding. Thus it is for the newspapers to look at emerging options and to rework their traditional sources of revenue. Environmental factor: Newspapers face significant challenges on the back of economic slowdown and the consequent slowdown in advertising revenues, especially in the last quarter of 2008. Print media industry has to adapt to a fast-moving environment and players need to draw upon new capabilities to survive in this environment. Legal factor: As a measure of policy liberalization, Government has allowed Indian edition of foreign news magazines for facilitating wider readership at affordable prices. Also, Government has recently announced facsimile edition of international news papers to be brought to be India. Government has reviewed the print advertisement policy and brought about changes to support small and medium newspapers. As per that policy, advertisement support has been increased from 10% to 15% for Small newspapers and from 30 to 35% for Medium newspapers, in money terms. Minimum publication period requirement drastically reduced from 36 months to 6 months for regional languages newspapers.
for the newspapers to look at emerging options and to rework their traditional sources of revenue.
Appendices
SHARE OF ADVERTISEMENT IN DIFFERENT MEDIUM: MEDIUM 2008 TV PRESS RADIO 40.7 46.9 3.2
Figure
READERSHIP (MILLIONS)
VERNACULAR DAINIK JAGRAN DAINIK BHASKAR EENADU LOKMAT AMAR UJJALA HINDUSTAN 21.2 21 13.8 10.9 10.8 10.4
9.6 9.4
7.4 4.1