The Importance of Adapting to the New Publishing Trends for The Economist Magazine - Research Paper Example

? The Economist The Economist The Economist group has a dedication to maintaining its sovereignty and integrity so that it can provide high quality insight, analysis and services that will be valued by its customers (The Economist Group, Our mission, 2012). Their main editorial philosophy as an international brand is to emphasize their position by maintaining the links between global politics and business independently. It was founded in the year 1843, with the main purpose of maintaining free trade and their publications have always preferred hard facts even if it has led to radical opinions at times (The Economist Group, Editorial Philosophy). The main publications and services offered by the Economist include The Economist newspaper, The Economist online, Economist intelligence unit, Economist Conferences, Economist Corporate Network, The World In and Intelligent Life; along with many other government and financial brands, a well represented reflection of the fact that this newspaper that had only 6,000 copies circulated in 1920, has expanded its operations widely by keeping up with the demands of the modern times (The Economist Group, Our Brands). Unlike many of its peers, who suffered immensely by the global recession of 2008/09, The Economist has been able to report a steady growth every year. In the year 2011, the Economist has reported an increase of 10% in its profits whereas its revenue grew by 9% as compared to the last year. Such an increase in profit has led to the 10% increase in the dividend s to the shareholders in the year 2011 as compared to that of last year and the credit has been given to their advertising recovery along with increased investments in their brands, which led to an increase in their print as well as e-circulations (The Economist Group, Press Releases 2011). Marketing is the primary management function that devises a pathway for all the other activities of a corporation that will eventually work towards converting the customer purchasing power through which an effective demand for the product can be created that will in turn help the organization to achieve its desired profit margins (Foxall, 1981). The foundation of marketing strategies is driven by two main concepts; targeting and positioning (Parry, 2005). The Economist always had pride in targeting the smart and the successful of the lot as their target market and it was successful too, The Economist was and is always considered as a status symbol for the respective target market but in July 2009, the Economist launched a whole new approach to its marketing strategies by targeting not only the smart and successful readers but the readers of the curious kind. The sudden change in the overall approach to the magazine’s target market has proven to be very beneficial for the company as the magazine industry grows more competitive. It has helped the company in a consistent rise in the profitability and ensuring a positive return on the shareholder’s investments. According to the Porter’s Five Forces model, there are five main factors that contribute in determining the overall competitiveness of the magazine industry (Hill et al, 2010). Every factor will be discussed separately: Risk of entry by potential competitors: The magazine ‘The Economist’ competes both on the levels of print media and electronic media as with the passage of time the whole industry has moved to more electronic versions of distribution. Although the internet media creates both excitement and paranoia at The Economist, still the magazine has been trying to maintain its individuality on the internet. Every article on the internet is always somehow related to any other article online, thus the same individuality that the magazine pertains on the print media has proven somewhat challenging. The magazine has introduced many new features online but to say that they haven’t reached their full potential will not be unjustified, whereas new emerging magazines are utilizing the online media to their full extent, for example The Week and the most successful among many other emerging magazines; the Huffington Post. The Week is UK based in origins and it has scored a reputation of being the highest selling weekly magazine. Their motto of providing the user with all the information that they need to know has been assisting them in covering all the important news that the magazine can gather form other published resources by rewriting under the doctrine of ‘fair use’. Huffington Post on the other hand is a liberal news website and opinion blog. This website has been declared among the highly reputed websites by both The Observer and The Time Magazine. Though the liberal use of aggregate news publications from other news sources by these emerging new magazines have been highly frowned upon by the major publications, still these websites are able to secure more and more customers with every passing day. Such emerging competitors are a clear threat to the published resources in the Industry. Bargaining power of Suppliers The main supplier to the industry will be based upon their print medium. The Economist mainly focuses on the print media rather than the online media, with the emerging trends that compels the users on relying more upon online resources than print which in turn proves to be somewhat more reasonable than the print medium can prove to lead to an increase in costs for the magazine, this can also be further proven by the decrease in the overall profitability of the company in the last few years, as in the year 2009 the profit of the company had increased by 26% whereas the increase in the profits in the year 2011 was only 10%. Bargaining Power of Buyers The Economist’s subscription rates are the highest among all the competing magazines. The Economist charges $ 6.99 for its cover price; their subscribers pay $ 127 per 51 issues which is far more expensive as compared to the other competing magazines, like 47 cents for Newsweek, 77 cents for Business Week, and 89 cents for Fortune. The magazine relies more on subscription for income than advertisements that it publishes in the magazine. When the over all industry was cutting down its prices by 10% from the year 2005 to 2009 the magazine were increasing its prices. Such increased prices can be reason why the customers are moving towards far cheaper online resources even though because of their individuality the magazine still holds a reputed position among all its subscribers. Threat of Substitutes As more and more publishing companies are switching towards online media, the inability of the Economist to utilize the online media to its full extent is definitely a threat to the company. The magazine definitely needs to focus more on increasing its capability to avail the best of the cheapest resource in the world. Even though the magazine is charging $95 per year for the online subscription which is less than the print medium of the magazine, still the magazine has to come up with more ideas to make the best of the emerging resources. Competition within the Industry. The main aspect of The Economist, while it’s competing with its well established competitors like Fortune, Business Week, and Wall Street Journal is its individuality. Its blunt and radical responses to hard facts provide the magazine with a competitive edge that is only somewhat threatened by its increased subscription prices. Even though the magazine is still the lead in the over all journalism industry but it has to come up with other tactics to make that position secure in the foreseeable future. The main reasons why the company has still been able to secure its reputation among its competitors is the magazine’s ability to focus on new target market strategies like the way it switched from only the smart and successful clientele to average clientele who are just interested in the true and hard facts. The switch of the magazine from the Red Poster campaign to the Red Wire campaign led to increased customer base which was able to secure the magazine the increased profitability even in the times of economical distress. This adaptation to emerging trends by the magazine is the main reason why the magazine is still on the top. But still there are a few areas where the magazine is either inflexible or lacks the ability to explore new regimes. The inability of the magazine to properly utilize the online media is a definite weakness, the magazine should be more adaptive towards the new publication medium or it is definitely losing its edge to the emerging competitors like The Week and The Huffington Post. The magazine’s pride to not fully recognizing the strength of its competitors as it does not even categorize Time and News Week as worthy of their competition can really leave the company blind from any upcoming threats that these resources might pose. But their current response to its competitors can easily be understood as the company has been able to secure a stronger foothold as compared to its competitors in the last few years where they withered and compromised with the economic downfall, The Economist strengthened its position as the one and only resource that did not bow down to challenges rather faced them and succeed. Ranking of the Strengths: New marketing strategies Strong Financial Performance Adaptation to emerging trends. Ranking of the Weaknesses: Inability to utilize Electronic resources to their full extent. Not fully recognizing the strength of the competitors. Alternative Marketing Strategies: The existing business model of the magazine is to rely more on the print medium rather than switching towards the online media. The magazine relies mainly on the revenue it generates through its subscriptions rather than advertisements like many other magazines. The effective evaluation of strategic options which can assist the company into gaining the most from the present environment is by meeting the criteria that is presented by the RACES model (Haberberg et al, 2008). The RACES model states that the strategic option that is chosen by the company should be supported by the necessary resources. The new strategy should be acceptable by both the internal and external influential shareholders, it must be coherent with the other proposals and operations that are currently run by the company and it must be effective to the extent that it is assisting the company in sustaining the competitive edge that is necessary for the company in its over all business environment. Currently the magazine is only focusing on its target market so that it could attract as many customers as possible, but it should focus on alternative marketing options too. First of all, the company should try and utilize the best of the online resources. It should show its customers that it is able to maintain its integrity both in the print world as well as the online world. Even though it relies mostly on revenue from subscriptions, still it should try and lower down its prices so that the customers could be attracted to the individuality of the magazine as well as the feasibility. By achieving this certain marketing mix, it will be like attracting the bees with the help of honey as the customers will be attracted to the whole package. Another approach that the company can avail is that it can focus on its branches that are not generating much circulation like Sports Illustrated besides mainly focusing on the business related publications. By making such publications more attractive it will be able to attract the sports fans as well. This can also lead to increased profitability for the company. Conclusion The Economist is one of the leading magazines in the publishing world; its individuality is almost incomparable with the other magazines, which helps it secure a loyal customer base. Still, the magazine should put more effort into adapting to the new publishing trends so that it could maintain its lead both in the print media and the online media. In order to achieve that the magazine can also modify its marketing approach in addition to the existing marketing strategy. It is necessary for the magazine in order to have a strong foothold that is not easy to be competed by any publication. Bibliography The Economist Group, Our Mission, [Online Resource], Available at: http://www.economistgroup.com/what_we_do/our_mission.html, [Accessed 6 Mar 2012] The Economist Group, Editorial Philosophy, [Online Resource], Available at: http://www.economistgroup.com/what_we_do/editorial_philosophy.html, [Accessed 6 Mar 2012] The Economist Group, Our Brands, [Online Resource], Available at: http://www.economistgroup.com/what_we_do/our_brands/index.html, [Accessed 6 Mar 2012] The Economist Group, Press Release, Results for the year ended 31 Mar 2011, [Online Resource], Available at: http://www.economistgroup.com/our_news/press_releases/2011/results_for_year_ended_march_31st_2011.html, [Accessed 6 Mar 2012] FOXALL, G. R. 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