print media pricing report

Prepared By :

Chandan Priyadarshi

Gagan Pareek

Ishaque Mulla

Shashank Singh

Pricing in print media

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Contents

INTRODUCTION: Print Media .................................................................................................................. 3

Prominent Players ................................................................................................................................... 5

Modular Pricing Strategies ...................................................................................................................... 5

Customer base and strategy. .............................................................................................................. 5

Option 1: Keeping it Simple with Linear Modular Pricing ................................................................... 5

Linear Modular Pricing .................................................................................................................... 6

Option 2: Using a Combination of Line Rates and Modular Rates ..................................................... 7

Option 3: Using Optimization Curves to Determine Module Prices ................................................... 7

Common Modular Pricing Curves ................................................................................................... 8

Price Wars in Newspaper Segment ......................................................................................................... 9

DNA warfare rocks Mumbai: ............................................................................................................. 12

Yearly Discounted Rates: .................................................................................................................. 13

Online Advertisement V/s Print Media: ............................................................................................ 14

Magazine Section .................................................................................................................................. 15

Prominent Players ............................................................................................................................. 15

MARKETING STRATEGY W.R.T PRICE ............................................................................................... 17

PROMOTIONAL PRICING STRATEGY .................................................................................................. 17

References: ........................................................................................................................................... 18


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INTRODUCTION: Print Media There has been a frenzy of activities in the Indian newspaper industry - some eye it with pleasure, some with anxiety, but this spur of fresh developments is continuing. New editions, new titles, all-colour pages, acquisitions and mergers, internal co-operation these are just a few of the happenings that have transformed the entire scenario. Undoubtedly, the newspaper industry is in its full bloom, posing a win-win situation for everyone; newspaper publishers, readers, advertisers, web offset manufacturers, consumable suppliers, etc. Such is the potential of the Indian newspaper industry.

Newspapers shape the nation and it holds true for India as well. Even before India got independence, newspapers played a major role in spreading the issue of independence. James Augustus is considered the "father of Indian press" as he was the one who started the first Indian newspaper from Calcutta, the `Bengal Gazette` or `Calcutta General Advertise` in January, 1780 which was a weekly publication. In 1789, the first newspaper from Bombay (now Mumbai), the `Bombay Herald` appeared, followed by the `Bombay Courier` in the following year. Later, this newspaper merged with the Times of India in 1861. The first newspaper published in an Indian language was the Samachar Darpan in Bengali on May 23, 1818. The first Hindi newspaper, the Smachar Sudha Varshan started its circulation in 1854. Since then, the prominent Indian languages in which newspapers had been published over the years are Hindi, Marathi, Tamil, Malayalam, Telugu, Urdu and Bengali. India consumed 99 million newspaper copies as of 2008, making it the second largest market in the world for newspapers. Today, India has over 300 big newspapers, besides hundreds of medium and small-sized ones. And the number is increasing almost every day as existing newspapers bring out new editions apart from new players joining the bandwagon, the future of the newspaper industry at large looks promising.

Distribution Strategy of News papers

• Sales involve distributing highly perishable products under severe time constraints.

• It has to be dispatched to various distributors across the region.

• The revenue of distributor is based on a commission on the every sale.

• Circulation is normally through salesmen appointed and salaried by the distributors, who in turn pass it on to hawkers.

• Hawkers, vendors and book stall owners are the last link of the supply chain before it reaches the readers.

• Responsiveness and efficiency is an important in newspaper distribution channel.


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There was a time when select group of newspapers were ruling a particular region and they all were self-contained and did not wish to foray into other regions. But now regional newspapers like Dainik Jagran, Dainik Bhaskar, Rajasthan Patrika, Amar Ujala, etc have also started spreading their hold over B class cities by bringing out region specific editions. Business newspapers have branched into new editions in newer territories. Financial Express, Business Standard, Mint and DNA Money are giving competition to Economic Times.

Another popular way seen to enter into other territories quickly has been by acquisitions. It’s really surprising that how fierce competitors join hands to form new strategies - first it was in collective marketing campaigns and now a joint newspaper as well which leads to an increase in number of circulation.

In terms of adopting new technologies, the newspapers have realized that customer is the king and amidst so many choices, readers would go for newspapers that are more reader-specific, content-rich and give value for money. The black and- white technology is becoming passé whether it is a mobile phone or a newspaper. Today, readers prefer all-colour editions and more and more newspapers have come out with all-colour editions. This has necessitated the newspaper publishers to opt for CTP technology, which by default has improved the print quality and reduced the waste percentage. Besides, the newspapers are also going in for makeover of their publications, in terms of layout, font and sometimes even masthead. For this, they are spending substantial money and are even taking help of international designers. The price of the newspapers also dwindled and some newspapers even went to the extent of offering their newspaper at Re 1 only.

In the coming years Indian newspaper industry is slated to grow manifold with a growth rate circling around 6%. Market share is projected to grow from Rs 56,300 crore to Rs 92,900 crore by the end of 2013, as per the research by the Pricewater house cooper. It is high time that the high end manufacturers from developed countries may enter into India either in collaboration with local manufacturers or independently to tap the growing demand.


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Prominent Players

Modular Pricing Strategies There are several approaches to modular pricing; which one works best will depend on the newspapers

Customer base and strategy.

Option 1: Keeping it Simple with Linear Modular Pricing


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Linear modular pricing maintains a pricing format similar to that used with line-rate pricing. Regardless of the ad size, the total amount owing is calculated by multiplying the line rate by the line count. The Difference with modular pricing, however, is that the advertiser has only a select number of ad-size options from which to choose.

Linear Modular Pricing

Advantages to this technique include the ability to manage ad sizes (e.g., limit “page buster” ads), and to indirectly encourage customers to upgrade to larger sizes. A limitation to this approach is that modules don’t receive psychological price points since these are dependent on linear price points. This pricing strategy might be useful if there are serious concerns about advertiser backlash from changing basic line rates or if there is a desire to use a phased approach to modular pricing while still using a line-rate-type pricing concept. But then, why consider doing this in the first place? This is a classic example of being “neither fish nor fowl,” since the paper is not fully benefiting from a modular strategy (i.e. pricing for value), and yet it is giving up some of the benefits of a line pricing strategy (i.e., flexibility).


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Option 2: Using a Combination of Line Rates and Modular Rates At times, a modular newspaper may opt to continue offering line-rate options if there is a strong resistance from advertisers to the transition to modular units. A Canadian national newspaper offers a modular/line-rate combination (termed “MALs,” defined as Modular Agate Lines) that uses module sizes while still pricing its general rate cards with standard line rates. This approach might encourage customers to use a fixed-size format while still using line rates as the reference price point. The strength of this option is that it moves to modular while still allowing customers who want unique sizes to have access to them. The problem is that this slows the implementation of modules and creates inertia among customers and the sales force, who may feel that if they complain enough, the company will pull back on its modular initiative. One way to overcome this resistance is to charge a premium for any non-standard size (i.e., not a module). This allows advertisers to decide for themselves whether the value of a non-standard module is worth it. However, this can create problems with large customers who are used to getting what they want (i.e., size and price). A newspaper company has to be prepared to negotiate with contract customers who feel strongly about their need for flexibility.By keeping modular intact for all but the largest customers, newspapers reaps the benefits of it for a large proportion of their business.

Option 3: Using Optimization Curves to Determine Module Prices The use of modular price curves (Figure below) will likely be a main point of interest for many who are planning to implement modular formats. Key questions will arise from using various curves, including: How does one optimally price module units to ensure there is growth in revenue, profitability, and ad sizes? Or, from a financial risk standpoint, one might ask: How can module prices are used to ensure there is no decrease in ad sizes and no drop in frequencies while also ensuring that advertisers remain loyal long-term customers? It is important to make use of modeling and analytical skills in order to determine an optimal modular curve that best reflects anticipated customer reactions. An exciting and unique approach, modular curves require a “paradigm shift” to think beyond standard line rates. Each module is now treated as if it were its own product, with its own price points that cater to specific advertiser segments and behaviors. In this case, a ¼-page ad will not necessarily be priced as ¼ of a full-page; it will be priced to encourage upgrades with some advertisers while preventing downsizing with others. The key to understanding which modular curves work best is to understand how your advertisers purchase today, and anticipate how they will purchase with the new modular formats. Not all newspapers are the same, and not all advertisers are the same. What works for one newspaper might not be applicable for another. It is important to realize that different


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curves drive different behaviors. Which behaviors newspaper companies want to drive will ultimately depend on your current account base. Perhaps as a small community paper, to encourage more half- and full-page ads. In this case, the Multi-Curve might be a favorable option—providing discounts for half- and full-page modules while premium-pricing neighboring modules. Or maybe there is a need to entice smaller advertisers to increase their ad sizes. The Reverse Bow may provide the incentive needed to encourage ad-size upgrades at minimal incremental prices. Regardless of which module strategy you use,

Common Modular Pricing Curves


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It is important to model and analyze how accounts potentially react to new module designs and rate structure.

Price Wars in Newspaper Segment We have already discussed the distribution mechanism of newspaper; now let’s focus on how competitive the newspaper market is in reality. We will try to understand both past and present pricing strategies of newspaper industry by taking various examples.


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Fig 3.1 Flood of Newspaper Brands

Let’s consider Mumbai’s market for understanding the price war in Newspaper industry:

“Time of India” was considered to be the market leader in English newspaper segment till 2005. However, lately during this year two new newspaper Hindustan Times and DNA planned to enter Mumbai’s market. TOI before competition by these two newspapers was enjoying a premium price of 4 Rs on weekdays and 6 Rs on weekends. However after competition from these two companies they adopted a lot many marketing and pricing strategies which are discussed below.

Fig 3.2 Old man confused which paper should I choose today

TOI market share of 80 % in Mumbai's Rs 1,500 Cr market is now being targeted by both HT and DNA through line sales; the subscription route and news stand sales .HT offers a year-long subscription for Rs 398. Market survey also proves that sales of TOI post competition has dropped by say 40,000 copies a day because a causal buyer prefers to pick a 2 Rs paper from newsstand instead of a 4 Rs one. DNA has also adopted a strategy of


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paying a sum of 6 Rs to a vendor on getting a customer for one year. TOI pre competition had a strict policy of not taking any unsold newspaper from the market however post competition they have deleted this rule completely so that they can retain their market share.

Fig Newspaper vendor selling newspaper on cycle

Times of India launched Mumbai Mirror against Mid Day to target the potential customers of Mid Day a leading daily. But to fight against DNA and HT they started distributing it completely free of cost to all TOI readers. So all TOI readers now started getting two newspapers instead of one for the same amount.

Fig: Price comparison of Newspapers

Looking at the table 3.1 a clear cut picture can be drawn about the three leading daily in Mumbai.

As per the sources Times of India sells 5 lakh copies per day, Hindustan times sell 1 lakh where as Daily News and Analysis sells around 3 lakh copies daily.


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Table 3.1: Market share and advertisement Rate Comparison.

Looking at the revenue models of newspaper no newspaper company generated any amout of profit by selling price of any newspaper , now the probable question that arises from this is that than how do they generate profit . Well they make profit by selling the advertisment space in their daily. Post competition advertisment rate in Times of India was much higher compared to it current rate of 1300 to 1400 per sq cm rate. In fact many times even they are ready to bargain on this rate to attract more advertisers .In comparasion to this DNA and HT have their advertisment rate just half of TOI.

However now the question comes that is the market of mumbai saturated for any new entrant. The answer to this question is no, for this we compared Mumbai market with Delhi market and came across some interesting inferences. Mumbai city consumes just 75 per cent of the English newspaper copies that Delhi does and not many households are 2-3 paper homes. Hence Mumbai print market can easily support much more than this level.

DNA warfare rocks Mumbai:


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The campaign, in its first leg, consisted of hoardings featuring people from various walks of life with grey tapes covering their mouths

In the second phase of the campaign, the line "Speak up. It's in your DNA" was added. Simultaneously, DNA strands appeared in Mid-Day group-owned private radio channel GO 92.5 FM, fuelling public curiosity

"Speak up. It's in your DNA - Maharashtra Times".

Advertisement threw up questions like

"What's BMC digging for? Gold? Oil? Fun? Speak up. It's in your DNA“

or

"Why can't pubs be open all night? Speak up. It's in you DNA"

These were the strategies used by DNA before its launch in Mumbai market.

Some experts from Rediffmail about DNA newspaper launch:

“ If you thought biological warfare was waged only by Saddam Hussein & company, you were dead wrong. Mumbai is the Ground Zero in a fierce battle fought over the building block of life, DNA. For Times of India, which has successfully taken the newspaper wars to enemy fortresses, the battle has finally come home. Get me some oxygen kits please!

Suddenly, within the span of a couple of days, there appeared a new series of DNA ads, this time in print form in the Times of India. These ads had 5 people very similar to those featured in the previous ads but with two differences. The people were seen removing the grey tapes from their mouths and the slogan said "Speak up. It's in your DNA - Maharashtra Times". To many unsuspecting people, this was the logical conclusion of the DNA campaign - Bennett Coleman was celebrating the "victory" of its group newspaper Maharashtra Times, for attaining the top slot among Marathi dailies in Mumbai.“

Yearly Discounted Rates: Table 3.2 gives the yearly discount package which the customers are getting due to the price war which has taken place in the newspaper industry.


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Readers are getting discount of upto 50% if they assure the company they tey will be with the company for next one year.

Table 3.2 : Price Deals from Newspaper

Experts of an article from Hindu about the price war in Delhi between HT and TOI when TOI entered HT’s market.

“THE two big dailies are slugging it out once again. Both Times of India ToI and Hindustan Times (HT) have slashed the masthead prices to Rs 1.50 on weekdays between Monday and Saturday for Delhi. And the price reduction was also extended to the Sunday edition. HT brought down the cover price of its Sunday edition to Rs 2.75 from the earlier Rs 3.50,

while TOI cut the price from Rs 2.90 to Rs 2.”

-- The Hindu Jul 14, 2002

Online Advertisement V/s Print Media:

In the struggle for retaining readers print media has completely gone online too. Because of this their advertisment generation model has also gone through huge number of changes. Below you can find the difference between online and offline advertsiments:

Print media

1. Print media is not very good to represent a product comparison to flash.

2. Charged are for lacks of people but only hundred of people generally see an dvertisement.


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3. Circular of the newspaper are not fixed. Lots of newspaper company gives the wrong figure about the circular for which nothing thing can be done.

4. No way have you to produce more things.

5. There are only few areas on Print media where advertisements can be seen.

Online Advertisement

1. Advertisement are in the Graphical form or in the form of flash which is very good to represent.

2. Advertisement on hundred of websites can be viewed by lacks of people and charged for only 100 of websites.

3. List of the sites where ads will be displayed can checked at any time. So that we can not give the fake figure against you.

4. advertisement can be placed on any home page of website, people can open the site through the single click of mouse and they are connected with the website.

5. People from all over the world can see.

Lots of more benefits to give the advertisement on website comparison to newspaper or any others print media.

Magazine Section

Prominent Players

Magazine Readership (Thousands)

General 42651

Sports 8621

Business 2135

Women 33127

Men 595

Health 6704

Children 12685

News 15904

IT 1520

Auto 748

Home Interiors

470

Travel 937

Lifestyle 803

READERSHIP OF MAGAZINES BY TYPE


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As per the association of Indian magazine currently there are 85 magazines in India with daily circulation of 31 million, weekly circulation of 8 million, monthly circulation of 5 million and fortnightly circulation of 3 million. While in terms of language there are 13 million Hindi magazine readers,10 million English magazine and 24 million others(other regional language).The India today group enjoy the clear dominance over its rivals .It has got India Today, Readers Digest, Business Today ,Cosmopolitan ,Men’s Health and Cosmopolitan etc. in its stable. The India Today Group enjoys more than 65% of the total market share (Volume).

SEGEMENTATION

Magazines like Cosmopolitan, Femina etc. served to the upper strata of the society, while Savvy and Women’s era targeted upper middle class women. Grihashobha and Manorama were targeted to Hindi speaking women especially in tier 2/3 cities. Storybooks like Tinkle, Chandamama and Champak were intended for kids.

“Science reporter” was meant for students who had scientific bent of mind.

Magazine like Men’s health was intended for the urban English speaking youth.

Business today, Business world etc. are targeted for business savvy reader.


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Magazines like CSR, Manorama Year book is aimed at students preparing for competitive exams.

MARKETING STRATEGY W.R.T PRICE

Prices were kept low so as to tap the customer from the bottom of the pyramid and middle class and lo.wer middle class are their target audience.Strong distribution network, emphasis was laid on tier 2 and tier 3 cities .Outlook, The week started the price war in this space as their unit copy was sold at Rs.10 against Rs 15 of India Today. Due to fierce competition from its competitor like outlook ,The week India Today Group had to offer supplements for its various magazines.Segmented pricing i.e. different offerings for different target audience. Femina, Men’s Health, Good house keeping, Travel Plus etc.Mastering the pricing “game” by targeting the “right” target audience. Managing resources for competitive advantage i.e. strengthening its distribution network. Manage pricing proactively to influence expectations not in reaction to them.

PRICING STRATEGY

Differential Pricing Strategy: Pricing is a key element of the marketing mix and impacts on the brand values. An innovative pricing policy has the ability to strengthen the brand but it can also undermine it.

They followed differential pricing in the sense that for the regular customer who had subscribed the magazine were charged less as compared to the ones who bought the magazine on monthly basis. Suppose if India today magazine cost Rs. 20 at stands but the same would cost Rs.180 on a subscription basis.

PROMOTIONAL PRICING STRATEGY This would involve extensive market research, as the idea is to charge what customers are willing to pay (within reason).If your product/service is new or unfamiliar in the market, you can expect potential customers to give it a low price. Alternatively, if your product/service is popular or unique in the market, you can expect people to be more favourable toward its value .If you adopt this strategy, you should review your research periodically, say, every six months as customers may develop a different attitude toward your product/service. Consequently, in time, customers may value your product/service differently and so you should change your price to correspond with customer expectations, whether they are higher or lower. What we are suggesting as of now to the magazine owners is to have a different price slab for its rural customers i.e. at a cheaper rate and the content of a rural edition magazine should also be different from that of a urban edition.


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References: • http://www.rediff.com/money/2005/aug/24media.htm

• http://www.dancewithshadows.com/media/dna-newspaper-mumbai.asp

•

•

http://www.hinduonnet.com/fline/fl2219/stories/20050923002509400.htm

https://rni.nic.in/webreport.asp

http://www.rediff.com/money/2005/aug/24media.htm�

http://www.dancewithshadows.com/media/dna-newspaper-mumbai.asp�

http://www.hinduonnet.com/fline/fl2219/stories/20050923002509400.htm�

http://www.hinduonnet.com/fline/fl2219/stories/20050923002509400.htm�

https://rni.nic.in/webreport.asp�

print media pricing report

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