Market Segmentation and SWOT Analysis of Fairfax Media in Australia - Case Study Example

Case Study: Fairfax Media Name Course Name and Code Instructor’s Name Date Executive Summary Fairfax Media is a leading media company with its headquarters in Australia. The company has offices in New Zealand, Australia and United States of America. Moreover, it has an online platform whereby customers from across the world can access. The company was established in 1841 and later on was privatised. According to the industry analysis, the media industry is competitive because of advancement in technology and change of consumer behaviour. These factors have affected the operations of Fairfax Media whereby the company has been reporting loss of revenues due to fall on newspapers. The major issues indentified are change of consumer requirements and huge amounts of free content. Fairfax Media can counter this problem through maximising the experience staff in production of high products and also provision of free content that would entice consumers to purchase the organisational resources. Table of Contents Executive Summary 2 Table of Contents 3 Introduction 4 Industry Analysis – Media Industry 4 Industry Definition 4 Product Market Definition 4 Porter’s Five Forces 4 Macro-Environment (PESTn Analysis) 5 Competition (Porter’s Generic Strategies) 6 Customers (Market Segmentation) 8 Targeting 8 Internal Analysis 9 Marketing 9 Non-marketing (Porter’s Value Chain) 9 SWOT Analysis 10 Problem-Opportunity Analysis - TOWS Matrix 11 Problem to be solved 12 Three Alternative Solutions 12 References 13 Introduction Fairfax Media is among the leading Australia media companies. Its operations are diversified and have branches in Australia, United States and New Zealand (Australian Securities Exchange 2013). Some of its operations include magazines, newspapers, digital media and radio. Fairfax Media is a publically listed company and it was established in 1841 (Fairfax Media, 2013). The operations of Fairfax Media is based on three parts, which are defending and growing newspaper line, increase earnings from Internet and enhancement of digital media. Industry Analysis – Media Industry Industry Definition The media industry brings together governing bodies, people and businesses that are involved in processing, manufacturing, creating and distributing of both print and digital materials to the end users (Koekemoer, 2008). The print and digital media incorporates print media e.g. newspapers and periodicals, audio media e.g. radio stations, video-audio e.g. television and online media e.g. Internet publications. Product Market Definition Fairfax Media operates in general media provisions to its consumers. The general media include online, print, audio and video in which Fair Media operates. Porter’s Five Forces Factor Attractiveness Why Threat of New Entrants Low Constraints associated with getting access to important media space and channels and public frequencies that are regulated by the government (Shimp, 2010) Difficulty in attracting and retaining important talent is challenging and expensive (Carroll & Buchholtz, 2009) Engagements are usually based on long term relationships Difficulty in deep connection with consumers attitudes, regional demographics, values and behaviours (Hunt, 2002) Bargaining power of suppliers High Spaces and premier are limited while supply is lower than demand Seasonal campaigns/programs affects supply (Kotler and Amstrong, 2010) The suppliers are industry independent Possibility of forward integration Bargaining power of buyers High Consumers can switch easily between channels/prints Substitutes such as Internet and social media can affect the entire process (Jonathan and Smith, 2004) Rivalry among existing competitors High High stakes because each organisation aims to increase market share Larger budgets for infrastructural development Niche based competitors (Burrow, 2011) Threat of Substitute products High No substitute to media dispensation based on Fairfax Media operations but there are numerous companies offering similar services (Vega, 2001) Allows for forward integration because of constant evolving technological background but should be utilised in appropriate manner (Kant, 2011) Macro-Environment (PESTn Analysis) Factors Why Political/Legal Legal and legislative requirements that guides the business (Keillor, 2007) Positive diplomatic relations with New Zealand and United States Socio Cultural Many people are utilising different means and strategies to access information (Yeshin, 2012) Expansion of consumer segments Differentiation and diversification of contents Economic Stable economy Technological Online competition Numerous means of service and product payments Diversification of network and technologies on media industry Natural Disruptive climate that can prevent distribution of content Fairfax Media strategic decisions Investing heavily in innovation and technological development to ensure Fairfax Media becomes more competitive on analogue and digital platforms (Jain, 2008) Entering positive collaborations and acquiring additional media outlets to maximise on economies of scale Addressing on production costs with the aim of producing at a cheaper rate and hence increase on revenues generation Competition (Porter’s Generic Strategies) In ensuring that Fairfax Media succeeds in a competitive market that is continuously facing decline sin terms of revenues and profitable, the most appropriate strategy base on the following image are focused strategy and differentiation strategy with the aim of championing product uniqueness. Integrating these two strategies will ensure: The focus strategy concentrates on satisfying the needs of a specific segment with the aim of achieving coast advantage(Koekemoer, 2010) Improves on customer loyalty and preferences to the company’s brand resulting in higher sales compared to competitors Differentiation enables development of services and products that are unique and can easily be valued by customers Differentiation is based on quality, additional services and product image Customers (Market Segmentation) Source: http://www.asiamedia.net.my/segmentation-media-industry Fairfax Media consists of digital and print forms of media. These types of media appeals to different segments. To fulfil the requirements of different segments, Fairfax Media has: Developed products that satisfies requirements of each segment (Kitchen & De Pelsmacker, 2004) Diversification through the use of new technologies (Yeshin, 2006) Strategic acquisitions and mergers to increase market share Targeting Fairfax Media has developed products and services that satisfy the requirements for specific consumers. For example, there are magazines aimed for women while at the same time online services for business consumers are available (Australian Securities Exchange 2013). In addition, there are print and digital information that brings together all the consumers such as news. Therefore, Fairfax Media maximises on sourcing information from numerous sectors and structuring the information based on targeted market (Belch et al., 2011). Internal Analysis Marketing The most appropriate marketing tool to analyse the Fairfax Media is the 7Ps: Product – the company produces numerous products that satisfies and fulfils the needs of different segments. Place – the products are strategically located and can be accessed easily by consumers. The products are found online, convenience stores and on newspaper stands on the street (Fairfax Media, 2013a). Promotions – Fairfax Media promotes frequently through public relations, targeted selling, sales promotions, advertising and participation in corporate social responsibility activities. Price – the products are affordable based on the requirements of the consumers. The magazines and periodical are more expensive because of the content. In addition, the online content is paid based on consumer viewership. People- these are the consumers that purchases products. The business operations of Fairfax are located in more than three countries plus the huge online platform. This improves the accessible market and it is the responsibility of Fairfax Media to engage the consumers to purchase products from the company (Czinkota & Ronkainen, 2007). Physical appearance – the products produced by Fairfax are unique and the appearance entice consumers to purchase the products and frequent the online platform Process – The entire process is important in determining the quality of the product and also the way the consumers would receive the product and services (Trehan and Trehan 2009) Non-marketing (Porter’s Value Chain) The image illustrates the steps and procedures followed by Fairfax Media to produce products and services that fulfil the requirements of consumers. Source: http://www.mindtools.com/pages/article/newSTR_66.htm SWOT Analysis Strength S1: Entertainment and media are booming sectors S2: Growing middle income with high disposal income S3: Change in spending and lifestyle on entertainment (Percy, 2012) S3: Technological advancement (Fairfax Media, 2012) S5: Passionate and experienced writing staff S6: Sustainable financial model Weaknesses W1: Entertainment and media sector is fragmented W2: High staff turnover W3: Outdated publishing equipments W4: Falling newspaper and print media sales Opportunities O1: Poor media penetration in poor regions O2: Fragmented news market O3: High barriers for entry O4: Increased volume of information both locally and internationally Threats T1: Increase in amount of free content T2: Decreased interest in news (Burrow, 2008) T3: Rapidly changing distribution and technological methods T4: Increase in production cost T5: Competition Problem-Opportunity Analysis - TOWS Matrix External Opportunities (O) O1: Poor media penetration in poor regions O2: Fragmented news market O3: High barriers for entry O4: Increased volume of information both locally and internationally External Threats (T) T1: Increase in amount of free content T2: Decreased interest in news T3: Rapidly changing distribution and technological methods T4: Increase in production cost T5: Competition Internal Strengths (S) S1: Entertainment and media are booming sectors S2: Growing middle income with high disposal income S3: Change in spending and lifestyle on entertainment S3: Technological advancement S5: Passionate and experienced writing staff S6: Sustainable financial model S5 and O4 S3:T3 Internal Weaknesses (W) W1: Entertainment and media sector is fragmented W2: High staff turnover W3: Outdated publishing equipments W4: Falling newspaper and print media sales W4:O1 W2:T5 Proposed operation approach: Fairfax Media maximise on its strong technological capacities in distributing and ensuring consumers access content Utilise the skilled staff to create free content for the market that will pull the consumers towards purchasing Fairfax Media Diversify into new markets through merging and collaboration to increase the market share Problem to be solved The major issue to be solved is integrating technology with distribution channel to address the falling sales of products Three Alternative Solutions The solutions to address the falling product sales are: Concentrate on online publication and introduce numerous means of payments plus some discounts that enables attracting of more consumers Creating a huge presence online through offering free content and marketing Providing an abstract of the content of an article with the aim of enticing consumers to purchase the content References Australian Securities Exchange 2013. Fairfax Media Limited (FXJ). Retrieved from http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=FXJ Belch, G., Belch, M., Kerr, G., & Powell, I (2011) Advertising & promotion: An integrated marketing communications perspective (2nd ed). Sydney: McGraw-Hill Australia. Burrow, J (2008) Introduction to business: Finance, marketing, operations Sydney: Cengage Learning Burrow, J (2011) Marketing, 3rd ed. Sydney: Cengage Learning Carroll, A., & Buchholtz, A (2009) Business & society: Ethics and stakeholder management, 7th ed. London: Cengage Learning Czinkota, M., & Ronkainen, I (2007) International marketing, 8th ed. London: Cengage Learning Fairfax Media (2012) Annual Report 2012. Retrieved from http://www.fairfaxmedia.com.au/shareholders/2012FXJAnnualReport.pdf Fairfax Media (2013) Home. Retrieved from http://fairfaxmedia.com.au/ Fairfax Media (2013a) Corporate profile. Retrieved from http://www.fairfaxmedia.com.au/corporate-profile/corporate-profile.dot Hunt, S. 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Pennsylvania State University: Prentice Hall Percy, L (2012) Strategic integrated marketing communication. London: Routledge Shimp, T. A (2010) Advertising, promotion, and other aspects of integrated marketing communication. New York: Cengage Learning Trehan, M. and Trehan R (2009) Advertising and sales management. Ambala City: FK Publications 45 Vega, G (2001) A passion for planning: Financials, operations, marketing, management, and ethics. New York: University Press of America Yeshin, T (2006) Advertising. New York: Cengage Learning Yeshin, T (2012) Integrated marketing communication. London: Routledge Read More