The Chronicle Gazette - Term Paper Example

? The Chronicle Gazette 01/04 The Chronicle Gazette Introduction A leading newspaper of United s, The Chronicle Gazette has a base of 225,000 customers. The past couple of years have been tough for The Chronicle Gazette as it is witnessing a decline in revenues and customer base both. This is particularly due to the ever persistent increase of Internet as a means of propagating news and information. This newspaper agency is going through a tough phase with diminishing revenues. Both advertising and subscription revenues are decreasing. The main cause of this downturn is that readers are now using Internet to receive all the news content for free. This advancement has increased reluctance in people to pay for newspapers now. Global recession has also obligated people to go for internet and free news instead of newspapers. It has distanced the customers from the traditional system of newspapers and also the increase in price of newspapers. The publishing costs have increased and majority of newspapers have increased their prices too. Today, online newspaper websites have gained popularity among different people (The New Times Company, 2010). The main aim of this report is to offer the management of The Chronicle Gazette a strategic vision of where the newspaper publishing industry stands today and where it is headed over the next decade. Also, this report proposes strategies the newspaper can investigate to survive in the new business environment. It also analyzes the details of this company’s present and future performance. It also gives facts on factors which cause the turn down of this industry. The trends in newspaper industry are also analyzed with regard to strategies that leading companies of the industry follow. This report will also give details about the measures that different companies adapt to beat the losses of the industry. It will also offer details about the measures that most companies adapt to eschew the losses encountered. By considering the external and internal factors affecting industry and also the publishers, the report will give measures that The Chronicle Gazette should adapt to increase its revenues and customer base (The New Times Company, 2010). 2. State of the newspaper publishing industry today 2.1. Data on declining circulation and revenues The state of national economy is one of the basic drivers of industry of US newspaper. The economy has a distinct impact on both the circulation and advertising; Most of the costs that companies face are fixed. As a consequence, the profitability is achieved by marketing and sales. The companies need to be innovative and strategic in their market strategy to enhance the circulation and to increase profits. The bigger companies take the advantage of the economies of scale as they used variety of sources in publishing newspapers (Hoover’s Inc., 2010). The past few years have witnessed a decline in newspaper readership. More and more people are now using Internet so that they can view online and read for free. The innovations in Internet have given people the opportunity to log in and receive information twenty four hours a day. This news content is also available in genuine time and it is available everywhere all around the world all the time. Most of these news providers don’t even charge a fee. A result of this is numerous readers are not willing to pay for news content now and has an enormous impact on newspapers’ sales (Honnold, 2000). A huge reduction has been seen in the total number of newspaper in circulation in United States over a period of ten years. The number of newspapers circulated in 2000 was 115, 194,000 and now this number has been reduced to 97, 712, 000 in the year 2008. At the same time, the revenues of advertising have gone down during the past few years. The revenues have declined from $48,670 in 2000 to only $24,821 in the year 2009 as reported by Newspaper Association of America. The past decade has shown a constant downturn in profits and revenues for publishers of newspapers. This reduction in circulation was under one percent (Honnold, 2000). 1.1. Status of newspaper leaders The United States newspaper publishing industry comprises of three leaders which are The Wall Street Journal, The New York Times, and USA Today. The largest selling daily newspaper is The Wall Street Journal. It was published by Dow Jones & Company, which is now under the News Corporation. Aside from US editions, the Wall Street Journal also has European and Asian versions. For the six months which ended on March 31, 2010, the daily circulation of Wall Street journal has a customer base of 1,913,284 customers as mentioned in Audit Bureau of Circulations in 2010. It also has robust e-subscription rate. It has largest numbers of e-readers with subscriber base of about 414, 025 customers (Audit Bureau of Circulations, 2010). New York Times is one other large daily newspaper of United States. It was founded and was published in New York City. This paper is under the ownership of New York Times Company. The six months which ended in March 31, 2010 New York Times had been circulated among 951,063 for the daily newspaper. The weekend edition also fell by 8.5% as compared to about 950,000 copies. The Sunday edition also witnessed a 5.2% to about 1.4 million copies in total (The New Times Company, 2010). 3. Why newspapers are facing declining circulations and revenues 3.1. External assessment 3.1.1. Economic forces This globalization era has posed great concern on environmental protection and sustainable development for future. Businesses are under pressure to increase the social responsibility to gather information in a manner that increases environmental protection. This also applies to newspaper industry. Over the past few years, more awareness and emphasis has been placed on newspapers towards environmental protection and take measures to follow it. Many newspapers are now using recycled paper to publish. They are motivating the newsprint manufacturers to use more and more recycle content. Today, many publishers are taking many steps to use printing paper. These measures are to be used sensibly and to use positively (Honnold, 2000). 3.1.2. Social, cultural, demographic, and environmental forces A huge demographic factor for the reduction in readership base of newspapers is that most young people have moved away from the printed paper industry for many online sources of news. Free news are available readily on the Internet for information and news needs. All the content of news is seen with the advantage of video coverage. This online news content is readily available all the time everywhere in the world. The newspapers today cannot enhance their circulation figures because they are not able to enhance their readership base by attracting youngsters. A decline in the percent of people who read newspaper on daily basis has declined sharply in United States. In 1990, about 63.4% people read daily newspaper and now this number has reduced to 56.9% in 1999 to 55.1% in the year 2000. Also, the Sunday magazine newspaper was 65.1% during 2000, which came down from 66.9% in 1999 and 72.6% in 1995. Also the readership of newspapers has shifted among various market segments such as women. The percent of women who read newspapers have sharply reduced over the last decade. Newspaper industry must take into account this immense demographic of this market and come up with strategies to attract more and more women. They can increase the women sections in newspapers by increasing special women sections n topics such as careers, health, children, and family (Rayport, 2003) 3.1.3. Political, Government, and legal forces Political, government, and legal forces also influence the circulation and revenues of newspaper industry. The support required by newspaper agencies is not given by political parties. There is more money given to promotions and online campaigns so that these campaigns can be further increased at less cost. Also, the advertisers do not lay out much budget for the print advertising. The economic recession also restricts the government from budget allocation. Small newspaper agencies suffer a lot of losses due to this reason and as a result have to close down their operations sometimes (Potter, 2005). 3.1.4. Technological forces The Technological forces have revolutionalized the way that we receive newspapers, and the way they are reported and delivered to the final customers. Internet and mobile technology has transformed the way these business run. The technological factors that influence the newspaper industry the most in United States of America were to come up with new models. Most of the newspapers have digitalized the news by offering it on their websites. In United States alone, there are 900 websites which are run by newspaper publishers. These websites are sponsored by online advertisements. Simultaneously, the print news division is also strengthened to enhance the circulation (Rayport, 2003) This competitive landscape has transformed the newspaper industry with new entrants such as media platforms and concepts, mobile phones, internet agencies such as YouTube, Google, and Facebook, Twitter that provide real time, online coverage along with attracting young people. They have also taken the readers far away from conventional printed media to the practical content space. They draw a lot of people towards their websites as most of their content is free. This increased traffic has drawn many advertisers away from printed media to online advertisements. Online advertising has its cost benefits as well. Operating costs are also less as compared to the print advertisements. These factors have enacted pressure on the new companies to minimize their cost, maximize profits, and increase customer base. The conventional newspaper publishers today have to struggle hard to adopt these technologies in their business to enhance profits (Rayport, 2003) 3.1.5. Competitive forces (e.g., Porter’s model) Porter Model was developed by Michael E. Porter during the year 1979. It is an important tool that assists in assessing and analyzing the forces of competition in market. It was first developed on competitive strategy which came into existence on account of threats and opportunities in industry. Porter has also identified the five forces which determined the landscape of market and industries. The five forces that affect a business were threat from new entrants, competitive opposition between the suppliers, power of suppliers and substitute product threat. The business strategy was developed in a way that competitive forces were developed to take advantage of company (Chapman, 2010). 3.1.6. External Factor Evaluation (EFE) matrix The growth of Internet has allowed people to assess news the most desirable way. Everything is a click away. A paradigm shift has been seen in U nited States. The recession globally has slowed down the newspaper publishers. As a consequence, the figures of circulation are still very low. This has changed the way that income for publishers which has decreased advertising revenues. Now businesses are at advertising space on the web as a feasible option that print advertisements according to cheaper costs and visibility. To rise above the decline in advertisements and readership, the newspaper agencies have increased subscription price and newsstand. The publishers have controlled this supply on profitable areas where newspapers must be in circulation (Potter, 2005). 4. Internal assessment 4.1. Organizational processes and structure The Chronicle Gazette is behind the competition because of the deficiency of existing distribution channels. Feinman was not efficient in taking in all the benefits of technological advancements unlike the major competitors. The executive committee also plays an important role in decision making of company (Potter, 2005). 4.2. HR capabilities The Chronicle Gazette is able to hire gifted writers as shown by the awards received. It is easier to assume that one of the HR’s abilities is to build up highly efficient people. Therefore the HR is driven by performance of the writers (Potter, 2005). 4.3. Financial position The revenues of the company are affected by the decreasing volume of subscriptions and online competitors and advertising. But, it is clear that Feinaman is now all ready to embark and invest on new changes as online alternative format for the company, The Chronicle Gazette (Potter, 2005). 4.4. Marketing/ Sales Capabilities Feinman only relies on print media, which implies to be their only distribution channel. Nevertheless, the company is getting into an analysis of the market of The Chronicle Gazette position in the newspaper industry (Hoover’s, Inc., 2010). 4.5. Operational Capabilities (e.g., How efficient are we? How effectively are we adopting new technologies?) Within the borders of the company, there is an increasing urge to intensify the contents to match with the major players who are currently internet-based. The dilemma is that the benefits of technology are kept aside that’s why it is not sufficient. New ideas about subscriptions are not considered which makes sure that the price for customers is received at a right level. 4.6. Our strengths and weaknesses as a publisher Company holds a strong position to explore novel markets, niches, channels, and diversify the market into novel print products both online and physical. One debility that Feinman does not want to get into is new media. Digitization is perceived as huge channel for the newspaper world off course (Hoover’s, Inc., 2010). 5. How companies in the publishing industry are adjusting their strategies to cope with the challenges (provide at least three examples) a) Diversify The company should take part in product differentiation in an attempt to meet the demographic changes of customer database. Feinman should also come up with new publications in different markets and come up with diverse ideas such as CD-ROMs, audio, and a lot of other electronic media. The intensity of classified advertising should be enhanced. The company should also take part in making their publications local by using the local language in newspapers. This can also be achieved electronically by giving readers with the choice to view news in many different languages or simply just translating contents of these publications basically on in-detail reports (Hoover’s, Inc., 2010). The other end of the spectrum is that company should take into consideration employment on the commission-basis, printing outsourcing, engagement of freelance writers, editors, etc and also trading the free capacity (Hoover’s, Inc., 2010). b) Synergize The Chronicle Gazette should also take into consideration the new techniques of promotion for the sustainability of the business. Company should also diversify via expansion of marketing channels and by also leveraging the ones existing. But, these traditional practices go through via promotion of new publications via manufacture of explainable campaigns of publicity. The E-commerce abilities of products and company must also be realized too (Hoover’s, Inc., 2010). c) Organic growth Some writers write independently for The Chronicle Gazette as they conjure up news by themselves. The in-detail analysis of certain problems and issues of interest are completed with victorious titles, which were both seen healthy and prosperous for industry and also it proves to give high quality news issues. The mergers in newspaper industry have made these publications effective and efficient and this problem should be emphasized by the company as well (Hoover’s, Inc., 2010). 6.  Steps The Chronicle Gazette might take in order to deal with the challenges 6.1. Short-term steps Publishers must take into account the affect that the moderations in copy sales in revenues from both the consumers and advertisers when checking cover prices. Publishers also have an extra bonus to keep the cover prices low in an attempt to increase the circulation because it is true that advertisers are more than willing to pay in newspapers with increased circulation levels. The packages of advertisements should also be reviewed so that company can decide on an advertising campaign on a cheaper rate (Newspaper Association of America, 2010). The suppliers’ collaboration also play an important role to give new products a new format to attract new customers. The Chronicle Gazette should make sure that its suppliers should give on-line options as well as offline for the customers Therefore, a website should be created. The newspaper product is always a perishable one. This also means that the product of newspaper is sustainable for only a small period of time (Newspaper Association of America, 2010). 6.2. Long-Term Steps The demand for newspapers varies from one issue to another. Therefore, the focal point is to treat the contents the way readers’ want it- unbiased, factual, and timely. The demand of the new reading material is always increasing with introduction of new unique and innovative ways of reading. These increase the compilation books which offer in-detail analysis of many different events for last decade or the featured stories which are the favorites among various readers. The company, if is not able to do it by itself so a new budget will be set. Feinman should take into consideration a merger with a capable small company. If this merger is not right for The Chronicle Gazette the company should think about inviting many freelance writers to write for newspaper. This is called “contributor ship” of the newspaper agency to make use of all the talents in the industry (Newspaper Association of America, 2010). References Audit Bureau of Circulations. (2010). FAS-FAX Report - 3/31/2010. Retrieved from http://abcas3.accessabc.com/ecirc/newstitlesearchus.asp Chapman, A. (2010). Porter's five forces model. Retrieved from http://www.businessballs.com/ Honnold, A. (2000). Newsprint. DIANE Publishing Hoover’s, Inc.(2010). Newspapers and News Organizations Industry Profile. Retrieved from http://www.firstresearch.com/industry-research/Newspapers-and-News- Organizations.html Newspaper Association of America. (2010). Advertising Expenditures. Retrieved from http://www.naa.org/TrendsandNumbers/Advertising-Expenditures.aspx Potter, W.J. (2005). Media literacy. Thousand Oaks, California: SAGE. Rayport. (2003). Introduction To E-Commerce. Tata McGraw-Hill The New York Times Company. (2010). Newspaper Circulation Falls Nearly 9%, from http://www.nytimes.com/2010/04/27/business/media/27audit.html Read More