Consultant’s Report
The Chronicle Gazette Case Study
3. Why newspapers are facing declining circulations and revenues
3.1. External assessment
3.1.1. Economic forces
The newspaper publishing industry is flooded with powerful brands such as New York Times and Wall Street Journal and with their equally powerful marketing skills (Fink, 2005). Although The Chronicle Gazette has a relatively voluminous customer database, the publication’s reach is limited. Overall, the company lacks of business intents on leveraging its scale.
3.1.2. Social, cultural, demographic, and environmental forces
Readers are looking for newspaper contents that are of enduring value and interest. This means that newspapers should also focus on reflections on the best of humanity to balance good news and bad news (Wilkinson, 2002). This is also in line with the changing interests of the readers. For instance, the ageing population yearns for more relevant news items with aggressive, factual-based approach (Wilkinson, 2002). To wit, the changing demographics of the customer base could be one reason why subscriptions are declining.
3.1.3. Political, governmental and legal forces
Levels of restrictions and policies differ from country to country. As such, newspaper companies are adapting to differentiated processes of governing the control of delivery and consumption of the rightfully acquired materials. This is also particular for newspapers whereby media/broadcasting ethics is a must.
3.1.4. Technological forces
One such law that modern, global newspapers companies are adapting are information technology-related laws. Digital rights should be upheld thus legislations relate fairness in information practices as notice, choice, access, security and enforcement (Drennan. 1999).
3.1.5. Competitive forces (e.g., Porter’s model)
Competition in modern newspaper publishing is business-driven and profitability is the primary measure of success. Entry costs for newspapers are higher since there is the need to acquire economies of scale, printing access, suitable packages to advertisers and obtain finance. Supplier power within this industry is high since the relative size and the concentration of the suppliers are also relative to industry participants (Henry, 2003). Further, the relative low cost of the Internet provides opportunities to exploit product substitution although the maintenance of this channel is also costly (Drennan, 1999). Bargaining power of buyers is relatively high since there are many players in the newspaper industry. Newspaper products such as The Chronicle Gazette are also standardised.
3.1.6. External Factor Evaluation (EFE) matrix
Major newspaper companies possess controlled access to distribution channels, and this serves as the biggest threat for The Chronicle Gazette. Some companies are able to maximise the use of direct mail, display marketing, direct responsive television and the Internet (Drennan, 1999). While also, there are newspaper companies that are capable of innovating and diversifying such as into multi-media formats. To focus on the Internet, the printing operations became highly-automated and the skills required changes as technology advances. As such, the computerization has a significant impact on the newspaper industry (Drennan, 1999). Readership is still up, however, subscriptions are declining for many years now as more people are turning into the television and the Internet.
4. Internal assessment
4.1. Organizational processes and structure
Basically, the The Chronicle Gazette lags behind the competition because of insufficiency of prevalent distribution channels. Feinman was not able to exploit the advantages of technological advances unlike their major rivals. The executive committee also serves as the decision-making body of the company.
4.2. HR capabilities
Because The Chronicle Gazette was able to recruit talented writers as evidenced by the awards received, it is easy to deduce that one of the HR’s capabilities is to develop highly effective people. The HR is also therefore driven by results particularly in terms of the performance of the writers.
4.3. Financial position
Revenues are affected by the declining volume of subscriptions and advertising and online competitions. However, it is also clear that Feinman is now ready to invest and embark on changes such as online alternative format for The Chronicle Gazette.
4.4. Marketing/sales capabilities
Obviously, Feinman only focuses on print media, making this their only distribution channel. The company, nonetheless, is engaging into a marketing analysis of the position of the The Chronicle Gazette within the newspaper industry.
4.5. Operational capabilities (e.g., How efficient are we? How effectively are we adopting new technologies?)
Within the company, there is the drive to intensify contents to level with major players which are also currently operating Internet-based. The problem is that the advantages of technology are set aside therefore is not efficient enough. New forms of subscriptions are also not explored which ensures that price for the customer is provided at a fair level.
4.6. Our strengths and weaknesses as a publisher
The company is in a strong position to explore new markets, channels and diversify into new print products physical and online. One weakness is that Feinman is hesitant to explore this new media. Digitisation is viewed as the biggest challenge for the newspaper publishing industry.
5. How companies in the publishing industry are adjusting their strategies to cope with the challenges (provide at least three examples)
Diversify
The company should engage in product differentiation in order to meet the changing demographies of its customer database. Feinman should launch new publications in diverse markets and innovative formats such as audio, CD-ROMs and other electronic media. Classified advertising should be also intensified. The company could also converge into localizing their publications which means using local language on newspapers (Tuncalp 2001). This can be also used electronically by providing readers with the option to view news in various languages or simply translating the contents of publications especially on in-depth reports.
On the other end of the spectrum, the company could consider outsourcing printing, employment on commission-basis, engagement of freelance editors, writers, etc. and selling spare capacity.
Synergies
The Chronicle Gazette should also develop new promotional techniques to keep the business sustainable. The company could diversify through expanding the use of marketing channels and by better leveraging the existing ones. Somehow, traditional practices prevails which include promoting new publications through creations of elaborate publicity campaigns. E-commerce capabilities of the company and the products must be realized as well.
Organic growth
Whether writers independently conceive and write news for the The Chronicle Gazette or writers create in-depth analysis of a certain issue of interest in order to compete with successful titles, both are seen healthy for the industry and proves to produce high quality news items.
Mergers in the industry have made publications efficient and this could be also explored by the company.
6. Steps the The Chronicle Gazette might take in order to deal with the challenges
6.1. Short-term steps
Publishers consider the impact of changes in copy sales in revenues from both advertisers and consumers when setting cover prices. Publishers have an additional incentive to hold down cover prices in order to increase circulation because advertisers are often too willing to pay more for advertisements in newspapers that have higher levels of circulation. Advertisement packages should be reviewed so that the company would be able to decide whether to offer advertising on a cheaper package.
Through collaboration with the suppliers, the company would be able to provide new products in new formats. The Chronicle Gazette should ensure that suppliers can provide on-line options for the customers. Website should be created therefore. I should take not in here that the newspaper product is extremely perishable. This means that the product has value for a very short period of time.
6.2. Long-term steps
Demand for newspapers can vary from issue to issue. The focus therefore is to treating contents the way readers want news to be treated – factual, unbiased and timely. Having said this, perking the demand could be through the introduction of new reading materials for them other than the newspaper. These could be compilation books that features in-depth analysis of various events for the last decade or that features th4e best stories among the roster of best writers.
If the company would not be able to do this alone especially this requires new budget, Feinman could consider a merger with a promising small company. If a merger will not be appropriate for the The Chronicle Gazette, then the company could consider inviting freelance writers to write for the newspaper. This could be a great mean of contributorship.
References
Drennan, J. (1999). The introduction of intranets into the newspaper industry. Aslib Proceedings, 51(8): 269-274.
Fink, B. A. (2005). Market-driven journalism: Creating special sections to meet the reader’s interest. Journal of Communications Management, 9(2): 145-154.
Henry, H. (2003). Newspaper Cover Prices: Management Behavior in Conditions of Joint Supply. Marketing Intelligence & Planning, 1(1): 3-14.
Tuncalp, S. (2001). Newspaper advertising in Arabian Gulf Country: examples of careless appeals. Management Research News, 24(8/9): 35-44.
Wilkinson, G. (2002). Factors affecting newspaper choice. European Journal of Marketing, 6(2): 107-116.
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