The Strategy that The Chronicle Gazette Must Implement to Further Penetrate and Maintain Its Market - Essay Example

The Strategy that The Chronicle Gazette Must Implement to Further Penetrate and Maintain Its Market Outline 1. Introduction 2. The State of the Newspaper Publishing Industry in the United States Today 3. The Reasons of the Decline in Circulation and Revenues among Newspaper Industries 4. The Strategies Adopted By Newspaper Companies to Cope with the Challenges 5. The Steps Being Proposed for The Chronicle Gazette’s Revival 6. Conclusion 1. Introduction One among the leading newspaper in a major metropolitan area in the United States, The Chronicle Gazette, has a paid circulation of 225 customers. It is one among the highest rated newspaper in America. In fact, its writers have been recognized and awarded for their excellent works. Despite this fact, the Chronicle Gazette is challenged by a steady decline in its customer base subscription as well as its advertising revenues. It has been observed in the past 8 years that there has been a drop of a total of 35 per cent among the customer base subscription to Chronicle Gazette. As a result, its advertising revenues have also deteriorated by a total of 28 per cent. This is not only true for the case of Chronicle Gazette but also valid for the cases of other huge newspapers like New York Times and Wall Street Journal. Meanwhile, this continuous decline in subscription and advertising revenues to Chronicle Gazette and the whole newspaper publishing industry in the United States are largely caused by the increasing dominance of the Internet. This is because the Internet has largely become today’s means of news and information dissemination. Unlike newspapers, access of news to Internet is for free. Aside from the free subscription, news accounts are indeed up – to – the – minute. The Internet is certainly more advantageous than newspaper for having also video recordings on hot topics that can be played and watched. Internet is very fast, up – to – the – minute, and has different features unlike newspapers. Moreover, videos can be watched and more topics can be further explored by just a click on the Internet. Given this, the main aim of this paper is to highlight the strategic measures that Chronicle Gazette should apply to improve its circulation and increase profits in the Internet age. In order to achieve this main objective, this paper will also analyze the current position of the Chronicle Gazette in the newspaper publishing industry today and where it is possibly positioned in the future. Moreover, this paper will also evaluate the factors that are affecting the decline in its circulation and revenues. It will also shed light on the strategic measures adopted by the leading newspaper industries in this new business environment to prevail over the losses. 2. The State of the Newspaper Publishing Industry in the United States Today According to Hoover’s Inc., there are approximately 2,000 companies that comprise the newspaper publishing industry in America today. The total annual revenues of the newspaper industry in America amount to approximately $30 billion in which majority of this earning come from the advertising revenues followed by customer base subscriptions. On the one hand, the circulation of newspaper industry in America sums to an almost $50 million daily. Nonetheless, a constant decline in the circulation as well as advertising in newspapers has been observed over the past few years. This is because of the technological advancement of Internet. People can readily access news and information any time they want for free. Internet news are up – to – the – minute and can be accompanied by videos and other details with just a click on the internet. 2.1 Data on the Declining Circulation and Revenue According to the Newspaper Association of America, there is an observed decline in the circulation of newspaper copies in United States over a ten – year period. From the total number of 115,194,000circulated newspaper copies in 2000, it has significantly reduced to 97,712,000 in 2008 (Newspaper Association of America). According to the New York Times Company, the rate of decline in newspaper circulation in 2005 was noted at 2 per cent and this has grown to 3 per cent in 2007. After a year, the rate of decline in newspaper circulation was recorded at 4 per cent (The New York Times Company). The New York Times also suggested that the newspaper sales dropped by 7.5 per cent for Sunday newspapers and by a total of 10.6 per cent for daily newspapers for the six months in 2009 in comparison to the same period 2008. As follows, advertising revenues have also dropped. 2.2. Status of Newspaper Leaders In the United States, the top three leading newspaper companies are News Corporation, Gannet Company and The New York Times Company. News Corporation owns the largest selling daily newspaper in United States named The Wall Street Journal. The Garnett Company runs USA Today while The New York Times Company manages the New York Times. The Wall Street Journal is a United States based newspaper. Apart from providing daily week day and weekend news information among American readers, it also has its Asian and European editions. In fact, The Wall Street Journal is the largest of them all in the US. According to the Audit Bureau of Circulations, in a span of six months in 2010, The Wall Street Journal daily weekday edition caters a total of 2,092,532 subscribers while there are a total of 1,913,284 readers for its weekend edition. Aside from the print newspaper editions, this journal has also an online newspaper edition with a total subscriber base of 414,025 readers in April 2010 (Audit Bureau of Circulations). On the one hand, the USA Today is also one among the leading newspaper in the United States. Aside from its United States based newspaper, USA Today also runs an international edition. However, this newspaper company also experiences a decline in its subscribers. According to the Audit Bureau of Circulation, in a period of six months in 2010, the circulation base of USA Today had reduced by 13.6 per cent accumulating a total circulation base of 1,826,622 subscribers. Nonetheless, it has also embraced today an electronic form of news dissemination. Meanwhile, the case of New York Times also experiences a decline among its readers. The Audit Bureau of Circulations stated that the weekday edition of New York Times had reduced by 8.5 per cent while its Sunday edition had sdropped by 5.2 per cent. As of 2010, it accumulated a total of 951,063 daily newspaper subscribers while a total of 1,376,230 readers on its weekend edition (Audit Bureau of Circulations). This only evidences the fact that even the frontrunners of newspaper industries are confronted by the continuous decline in circulation. Given this decline, advertising on newspaper also drops. Thus, it is the case that it is not only The Chronicle Gazette but even the leaders of newspaper industry suffer decline in profits in this market. 3. The Reasons of the Decline in Circulation and Revenues among Newspaper Industries There are various factors that affect the decline in circulation and revenues among the newspaper industries. There are external as well as internal aspects that influence the current state of The Chronicle Gazette and other newspaper industries. This part of the review will examine the factors through the different analyses. 3.1. PEST Analysis The PEST or political, economic, social and technological factor analysis is a useful analysis tool used to comprehend the factors of market decline or even growth of a business. The external influences affect the performance that is why it is important to consider such external environment in which the business operates within (Narayanan and Fahey, 189 – 214). Businesses should know these factors because these are beyond their control. 3.1.1. Political factors Publication of newspapers takes place in the different cities and towns at the local levels. Nonetheless, distribution of newspaper is highly concentrated only in the major cities. Hoover’s, Inc. stated that 80 per cent of the market is controlled by the top 50 companies. Moreover, competition of newspaper industry in America is not that intense, especially the case of smaller towns in America. The publication and circulation of newspapers are not strongly supported by the political parties just like they did before. In fact, these parties are allotting their money on online campaigns and promotions instead of spending it on print ads like newspaper advertisement because of the cost. The advertisement is done only in newspapers with large circulations while smaller newspapers have to shut down their managements because they could not catch up with the trend (Potter 53). 3.1.2. Economic factors Economic factors play also an impact on the current situation of newspaper industries. The effect of the economic recession impacts the decline of revenues among the newspaper industries given that businesses which place advertisements on newspaper are also experiencing financial decline. As a consequence, they will choose to not place advertisements on this platform during this time. This will have an effect on the profits of newspaper industry since their major source of income is from advertising. Aside from this aspect, people choose to access news for free instead of paying for the print newspapers. 3.1.3. Social factors There are also social factors that influence the current state of newspaper industry today. Pulizzi and Barrett suggested that the average age of newspaper readers is 60 years old (13). This only suggests that the population that is subscribing to the newspapers are the older segment. The younger people have abandoned reading the newspapers because of the availability of online sources of news. Meanwhile, Rayport expressed that there is also a drop in the percentage of adults who daily read newspapers (98). In 1990, six out of 10 adults read newspaper on daily basis. In 2000, only 55.6 per cent among the adults were reading newspaper daily in America (Rayport, 98). The print media is not able to attract the younger population. That is to say, there is another form that attracts them. That is the news and information available in the Internet. This has been the increasing trend of today. 3.1.4. Technological factors Today has been an age of the Internet. The Internet has widely emerged and is commonly used by the people at present. All the news and information needs are very accessible with just a click on the Internet. Such technological advancement has dramatically altered the way news is received and stated to its audience. The impact of Internet on newspaper is huge for the reason that the internet is slowly killing the business of newspaper. The advantage of Internet is that it presents news very instantly. It delivers the news information up – to – the – minute. Aside from providing news very timely, access to it is free unlike the access of news from print media like newspapers. This has caused a decline in the number of people who are subscribing to newspapers. On the one hand, the advantage of Internet is that it can also be accompanied by video that can be played and watched. Moreover, if the reader wishes to further explore on a certain topic, he or she may do so with just a click on the Internet. Because of the great number of people who are resorting to Internet for information, the circulation base of newspaper readers has declined. This also has reduced the number of advertisements placed on the newspapers. In fact, more and more businesses have resorted to advertisements through Internet. Moreover, there are lots of media platform in which Internet can be accessed such as computer, mobile devices, tablets, iPads and a lot more others. This technological innovation has taken away the readers of print media to the virtual space. This has been the major factor that influences the decline in circulation and revenues of newspaper industries. 3.2. Porter’s Model Porter developed a strategic tool to analyze the competitive forces in the market. For him, he stated that businesses must take into consideration the opportunities and threats in the industry through looking at the five forces namely power of suppliers, rivalry of existing competitors, threat of new market entrants, bargaining power of buyers, and threat of substitute products (Chapman 132). First is the rivalry of suppliers. Newspaper industries are in competition on which cheaper supplier of materials like papers, ink, machines and others they can get. This will of course impact the maximizing of profits among the newspaper industries. The existing rivalry of competitors also affects the current standing of Chronicle Gazette. This is for the reason that the readers of Chronicle Gazette is still encouraged by other newspapers for them to try and read not only Chronicle Gazette. Another is the threat of new market entrants. Of course, the presence of new publishing industries can also cannibalize the current market share of Chronicle Gazette. In terms of bargaining power of buyers, newspaper industries should also strategize to have more youth buying and reading the newspaper. The presence of free online news articles is the major point of competition in this case. Aside from these factors, the Chronicle Gazette is also threatened by substitute products like news in the form of television, radio and most especially, news from the Internet. The wide availability and accessibility of news and information for free make it more difficult for the newspaper industries to tap the young market. Given this, the newspaper industries must strategize on how they can be able to tap the youth. 3.3. Internal Factors Internally, The Chronicle Gazette has flaws in its organizational processes and structures. First, The Chronicle Gazette does not have enough distribution channels. The other major have resorted to the technological advantages of Internet while Susan Feinman, the publisher of The Chronicle Gazette does not take advantage of the Internet yet. On the one hand, because of the numerous awards received by the writers of The Chronicle Gazette, it is undeniably the case that the company has great and talented writers. There are no problems with their skills and abilities of their writers. The exceptional skills of the writers must also be used in exploring the advantages of the Internet. In terms of the financial position, it is the case that The Chronicle Gazette is experiencing decline in subscription and advertisings, thus, revenues as well. This is because of the many readers are resorting to the electronic news available in the Internet. The Chronicle Gazette should be to consider online as another format of news. In this way, the young readers could now be the viewers of The Chronicle Gazette. In case The Chronicle Gazette explores the new technology of Internet, the company has its writers as its strength. However, given that Feinman is hesitant to adapt the technological advancement, this is the main weakness. Having the hesitation of Feinman, efficacy on adapting new technology is also questionable. The Chronicle Gazette must also strategize enough on how to explore the electronic news business of today. Thus, digitization is the biggest problem of today’s newspaper industry. 4. The Strategies Adopted By Newspaper Companies to Cope with the Challenges The dominance of the Internet is the biggest challenge faced by the newspaper industries. This has caused the decline of subscription, advertisements and revenues in different companies. However, in order for survival of the newspaper companies, there are different strategic measures that have been adopted. First, newspaper companies like The Wall Street Journal have considered diversity. The Wall Street Journal did not just stick to the traditional print newspaper but had set up its own website which is the www.wsj.com. Through accepting diversity, The Wall Street Journal has provided free online news access among its readers. The strategy employed by The Wall Street Journal is that not all news articles can be accessed for free. There are free and paid content that can be accessed from their website. Through the website, advertising profits will still be kept through the use of this platform. Meanwhile, another tactic used by The Wall Street Journal is its encompassing the digital revolution. According to the Business Insider, Inc., The Wall Street Journal had generated a total of $2.4 million profits from the more than 10,000 subscriptions to the said journal. Digitization can make newspaper industries grow its business as well as its readers. On the one hand, Tuncalp stated that another strategy that newspaper companies can adopt is translating into local languages their news articles in case readers from other regions or other countries would want to read such (35 – 44). This could grow their viewers bigger. 5. The Steps Being Proposed for The Chronicle Gazette’s Revival In order to revive its business, further penetrate and retain its market, The Chronicle Gazette must strategize and embrace changes to improve its current business state. Through the analysis of the external and internal factors that influence the business standing of The Chronicle Gazette, it is indeed the case that there are changes that must be adopted. The steps that must be considered by The Chronicle Gazette are highlighted below: 5.1. Short – term steps The Chronicle Gazette must take into consideration the pricing strategy that should be applied on the newspaper as well as advertisements. In order to increase circulation, publishers can lower the prices of newspaper. This is advantageous for The Chronicle Gazette in a sense that advertisers choose to place an advertisement on newspapers with large scope of readers. On the one hand, this newspaper company should also be open to assess their advertising packages so that there will be more advertisers to place ads on the said newspaper. Moreover, The Chronicle Gazette should also set up its own website. However, the lay out should be friendly and attractive to its prospective readers. Setting up the website can also make way for new readers. Aside from that, The Chronicle Gazette can have free and paid online news articles and items. In this regard, this company can still accumulate profits. Aside from such, the website can also be rooms for advertisers to place their ads. This will serve as additional revenue for The Chronicle Gazette. Apart from these steps, The Chronicle Gazette should be open to outsource labor force too but still maintaining its pool of professional writers. Having employment on a commission basis as well as the engagement of freelance writers could increase the profits of company. 5.2. Long – term steps It is mentioned in the short – term steps to set up a website of its own. After setting its own website, The Chronicle Gazette should go online with its news content. This could accumulate more and more readers who wish to read the latest news update. It is the case that the young readers prefer to read news through the internet. In this regard, The Chronicle Gazette must also have its online version of its news. However, like The Wall Street Journal’s strategy, it must have free and paid news and information as well. The long – term step is on how maintain the website. First, the target market must be defined which is definitely the younger market. In order to have more and more subscribers, the free news articles will be the tool to be used to attract them. Once they are in, The Chronicle Gazette can now offer them the paid access to other articles if they wish to. This can ensure the increased profit of The Chronicle Gazette. On the one hand, the freelance writers will be the assist the maintenance of the websites. Apart from that, The Chronicle Gazette can also make partnerships with the local news agencies and other websites. Aside from minimizing the cost, The Chronicle Gazette can increase its profit. Meanwhile, The Chronicle Gazette should embrace the changes that the other companies are implementing like the embrace of digital platforms. Digitalization will serve as another channel for distribution of their news and other articles. With the advent of technology, The Chronicle Gazette should not be threatened with the technological advancement but must exploit this technology to attract newer and younger readers. Moreover, the company should not just deal with the external factors that influence the condition of The Chronicle Gazette. The internal aspects should also be open for modification to ensure an effective organization structure. The great skills of its writers are making the effectiveness of The Chronicle Gazette. However, it is stated earlier that the company should also be open to outsource freelance writers. Nonetheless, the quality of these writers must be ensured. This is to ensure that the organizational goals of the companies must be met. This step will increase the productivity, efficacy and profits of The Chronicle Gazette. Furthermore, while setting up and maintaining the website, the newspaper industry must also be carefully maintained. The production and distribution should be reorganized in order to reduce the cost. 6. Conclusion The decline in the circulation and revenue of The Chronicle Gazette as well as other newspaper industries is observed over the years. This is due to a wide array of factors, but most especially, the advent and rise of Internet. Because of Internet, more and more readers are no longer subscribing to the news available in print formats. Meanwhile, in this analysis, the situation faced by The Chronicle Gazette is not just an isolated case. In fact, even the leaders of newspaper industries have experienced the same dilemma. If the situation is not properly addressed, The Chronicle Gazette could just be part of the history. Its operation can die if not strategically attended. Going back to the main goal of the paper, there are different strategic measures that Chronicle Gazette can implement. There are short – term steps as well as the long – term ones in order to improve its circulation and increase profits. The short – term goals that the company must implement includes considering the right pricing strategy to lower the cost of newspaper and advertisement. Indeed, the costs must be revisited in order to gain more customers. Lowering the cost of newspaper does not reduce the revenues of The Chronicle Gazette. In fact, this can result to gaining more newspaper readers, thus, wider circulation. With wider scope of circulation, more and more advertisers will place advertisement on the said newspaper. This will increase the revenues of the newspaper given that the main source of profit of newspaper is from advertisement. On the one hand, the main strategy that can be applied for long – term results is through accepting diversity. This means, The Chronicle Gazette must be open to embrace the benefits of the technological advancement and not just fear the threats it poses. There should be a website to be set up and maintained which will offer its readers free and paid news and other articles. Their website can also be a source of income through being sites on where to place ads. Aside from the website, the company must also embrace digitalization. Apart from that, the company should also be open for outsourced freelance writers. These strategic measures can sustain not only the revival of the company but can also ensure a more profitable and more effective business once implemented successfully. Works Cited: Audit Bureau of Circulations. “FAS-FAX Report - 3/31/2010.” Audit Bureau of Circulations, 2010. Web 26 April 2012. Chapman, A. Porter's Five Forces Model. 2010. Web 26 April 2012 Hoover’s, Inc. “Newspapers and News Organizations Industry Profile.” Hoover’s, Inc., 2010. Web 26 April 2012 Narayanan, V. K. and Fahey, L. “Macroenvironmental Analysis: Understanding the Environment Outside the Industry.” In L. Fahey and R. M. Randall (eds.), The Portable MBA in Strategy, 2nd edn (New York: Wiley, 2001): 189–214. Print. Newspaper Association of America. “Advertising Expenditures.” Newspaper Association of America, 2010. Web 26 April 2012 http://www.naa.org/TrendsandNumbers/Advertising-Expenditures.aspx Newspaper Association of America. (2010). Total Paid Circulation. Newspaper Association of America, 2010. Web 26 April 2012 Porter, M. Competitive Strategy:Techniques for Analyzing Industries and Competitors. New York: Free Press, 1980. Print. Potter, W.J. (2005). Media literacy. Thousand Oaks, California: SAGE. Print Pulizzi, J. & Barrett, N.. Get Content Get Customers: Turn Prospects Into Buyers with Content Marketing. McGraw Hill Professional, 2009. Print. Rayport. Introduction To E-Commerce. Tata McGraw-Hill, 2003. Print. The New York Times Company. “Newspaper Circulation Falls Nearly 9%.” The New York Times Company, 2010. Web 26 April 2012 http://www.nytimes.com/2010/04/27/business/media/27audit.html Tuncalp, S. “Newspaper Advertising in Arabian Gulf Country: Examples of Careless Appeals.Management Research News, 24(8/9) (2010): 35-44. Print. Read More