International Baccalaureate Diploma Program – May 2010Extended Essay - EconomicsWhy has ‘Jakarta Globe’ not been able to s...
IB Extended Essay             D 000902 046                      Sriraj G S                      Table of Contents         ...
IB Extended Essay                D 000902 046                         Sriraj G S                                AbstractSi...
IB Extended Essay                 D 000902 046                          Sriraj G S                       AcknowledgementsO...
IB Extended Essay                               D 000902 046                                      Sriraj G S              ...
IB Extended Essay                  D 000902 046                            Sriraj G S                     Approach for res...
IB Extended Essay                         D 000902 046                                       Sriraj G S            Market ...
IB Extended Essay                              D 000902 046                                           Sriraj G S          ...
IB Extended Essay                            D 000902 046                         Sriraj G S          Factors affecting de...
IB Extended Essay                     D 000902 046                          Sriraj G S                    Figure 1: Increa...
IB Extended Essay                             D 000902 046                                Sriraj G S           Factors aff...
IB Extended Essay                  D 000902 046                            Sriraj G SThe price lists of the newspapers pro...
IB Extended Essay                           D 000902 046                     Sriraj G S3) Presentation      - Overall Desi...
IB Extended Essay                             D 000902 046                           Sriraj G SAs seen from the GCR data c...
IB Extended Essay                               D 000902 046                          Sriraj G SMoreover, the value-for-mo...
IB Extended Essay                      D 000902 046                                   Sriraj G Slikely to happen in the lo...
IB Extended Essay                           D 000902 046                    Sriraj G S         Cross price elasticity of d...
IB Extended Essay                             D 000902 046                             Sriraj G SAn important factor dicta...
IB Extended Essay                  D 000902 046                           Sriraj G Sshort time period while the theoretica...
IB Extended Essay                  D 000902 046                             Sriraj G S                                   C...
IB Extended Essay                  D 000902 046                            Sriraj G S                Suggestions for Jakar...
IB Extended Essay                    D 000902 046                             Sriraj G S                       Limitations...
IB Extended Essay                  D 000902 046                                Sriraj G S                              Bib...
IB Extended Essay      D 000902 046   Sriraj G S                    Appendices                            23
IB Extended Essay      D 000902 046      Sriraj G S                    Appendix 1    Transcript of interview with Chief   ...
IB Extended Essay           D 000902 046                     Sriraj G S                    Appendix 2                    C...
IB Extended Essay      D 000902 046   Sriraj G S                    Appendix 3       Gross Consumer Ratings (GCR)         ...
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The impact of 'Jakarta Globe' on the demand for 'The Jakarta Post' in the market for local English newspapers in Jakarta

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My International Baccalaureate Extended Essay submission investigating the competition in the market for for local English newspapers in Jakarta, Indonesia.

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The impact of 'Jakarta Globe' on the demand for 'The Jakarta Post' in the market for local English newspapers in Jakarta

  1. 1. International Baccalaureate Diploma Program – May 2010Extended Essay - EconomicsWhy has ‘Jakarta Globe’ not been able to significantly affect thedemand for ‘The Jakarta Post’ in the market for local English newspapers in Jakarta?Name of candidate: G.S.SrirajCandidate Number: D 000902 046Name of School: Gandhi memorial International SchoolSchool Code: 000902Number of words: 3898
  2. 2. IB Extended Essay D 000902 046 Sriraj G S Table of Contents Page no.1) Abstract…………………………………………………………………………….. 22) Acknowledgements……………………………………………………………. 33) Introduction………………………………………………………………………. 44) Approach for research………………………………........................ 55) Market for local English newspapers………………………………… 66) Factors affecting demand in the market for local English newspapers………………………………………………………………………. 87) Factors affecting the price elasticities of demand of ‘The Jakarta Post’ and ‘Jakarta Globe’………………………………………………….. 108) Cross Price Elasticity of demand of The Jakarta Post……….. 169) Conclusion………………………………………………………………………… 1910) Suggestions for Jakarta Globe………………………………………… 2011) Limitations of the study………………………………………………….. 2112) Bibliography……………………………………………………………………. 2213) Appendices…………………………………………………………………….. 23 1
  3. 3. IB Extended Essay D 000902 046 Sriraj G S AbstractSince its inception, ‘The Jakarta Post’ has been the leading newspaper, nearlyholding a monopoly, in the local market for English newspapers in Jakarta.However, a new competitor ‘Jakarta Globe’ recently sprung up. This created amini-flurry in the market as it was launched with great hype and promotions.Subsequently The Jakarta Post followed with sweeping changes to its service. Iwas very interested by this new battle which threatened The Jakarta Post’sdominance. However, it was later seen that The Jakarta Post was not greatlyaffected by Jakarta Globe despite the media flurry. I was intrigued by thisoutcome and hence I decided to study this issue under the research question“Why has ‘Jakarta Globe’ not been able to significantly affect the demand for‘The Jakarta Post’ in the market for local English newspapers in Jakarta? ”.The scope of this investigation was to study the market for local Englishnewspapers and determine some of its key natures like structure and elasticity.This was done with a consumer survey narrowed to 50 people. The Jakarta Postwas also interviewed to obtain some statistics as well as their view of thesituation. The two newspapers were also compared head-to-head based on somecriteria along with a study of the changes incurred by The Jakarta Post using aGross Consumer Rating (GCR) I created. Based on these data collected, I analyzedthe cause of the situation using my economic knowledge and put forth somesuggestions for Jakarta Globe to compete efficiently.The conclusion reached was that The Jakarta Post was not deeply affected byJakarta Globe mainly due to the long-standing reputation of the newspaper andits relatively inelastic demand. Timely changes made to newspaper also led theconsumers to rate The Jakarta Post to be more superior in quality.Word Count: 299 2
  4. 4. IB Extended Essay D 000902 046 Sriraj G S AcknowledgementsOn the completion of my Extended Essay, I would like to thank sincerely from thedeepest of my heart all people and organizations who have been of help to methroughout.I am extremely grateful to The Jakarta Post and its chief editor, Mr. Endy Bayuni,who took some time out of their schedule to give me an interview of their view ofthe market. I would also like to thank Mr. Suryana of The Jakarta Post whoarranged the interview.I also sincerely thank my Extended Essay supervisor, Mr. Sandeep Lyall, whoguided me throughout the whole process. I also thank my Economics teacher, Ms.Anuradha Gulati, who also helped me.I am grateful to all the respondents of my survey who were kind enough to sparetheir time to fill them up. I am also gratified by the people who completed myGCR as it was a pretty long activity.I am extremely indebted to my parents who gave me filial support whenever I wasin difficulty. My father was very helpful with the process as he was the personwho first introduced me to Economics and business in my life. He also helped megain the contact details of The Jakarta Post and do the consumer survey amonghis office colleagues.I also sincerely thank all other people who have helped in my product of theExtended Essay which include the website authors I have cited and the text I havereferred to. I am also highly appreciative of the software ‘Dia’ which helped medraw economic graphs easily on the computer as well as Microsoft Office forcreating some amazing work software. Without all these people and help, myExtended Essay would not have been possible.Sriraj G S 3
  5. 5. IB Extended Essay D 000902 046 Sriraj G S Introduction‘The Jakarta Post’ is the leading local English newspaper in Indonesia and is owned by PTBina Media Tenggara. It has been in circulation for 26 years since its inception on 25thApril 19831. It has weathered all those years to establish a stronghold as a quasi-monopoly in the market for local English newspapers in Indonesia. However, this statuscame under threat in November 2008 when a new English newspaper – ‘Jakarta Globe’– emerged. Jakarta Globe took up this challenge of breaking the shackles with the helpof the large financial support from its owner – Lippo Group which is one of Indonesia’smost reputed conglomerates. They entered by distributing free copies throughout thecity of their flashy and full-colour newspaper.Though The Jakarta Post has successfully overpowered competition in the past withpapers like The Indonesian Times and The Indonesian Observer, they quickly came upwith a revamped layout and increased coverage. However after 1 financial quarter, itwas seen that The Jakarta Post had not really suffered from the new competition. Theirdaily circulation remained constant around 40,000 copies a day despite a nearly 25%hike in their price2. Though their total revenue fell, it was because of a decrease inadvertising revenue as a result of the economic recession and their sales revenueactually improved a bit2. As I was curious of this non-competitive outcome, I decided tofind out the reasons why Jakarta Globe could not compete despite heavy monetarypromotions, free copies and a glitzy product.Under the research question “Why has ‘Jakarta Globe’ not been able to significantlyaffect the demand for ‘The Jakarta Post’ in the market for local English newspapers inJakarta?”, I intend to study the characteristics of the market’s consumers which willdetermine the changes in demand for a newspaper. I will also investigate the relativeelasticity of The Jakarta Post which will give an idea as to how its demand will beaffected by external factors. I will base my analysis on my knowledge of certaineconomic concepts like monopoly markets, elasticity and revenue etcetera and furtherprovide suggestions as to how Jakarta Globe can compete better in the market.1 “Company Profile | The Jakarta Post” Web. 24 July 2009. < http://www.thejakartapost.com/company_profile>2 Obtained from Interview – See Appendix 1 4
  6. 6. IB Extended Essay D 000902 046 Sriraj G S Approach for researchIn order to research about the products and the market of local Englishnewspapers, I have divided my work into three main tasks.First I will conduct a consumer survey among the customers of the Englishnewspaper industry. This will mainly help me assess their attitude towards themarket and also deduce the level of elasticity for the good. I will also particularlycheck brand loyalty towards The Jakarta Post and the awareness level aboutJakarta Globe. I have scaled the number of surveys to 50.Next I have designed a simple comparison scale for the two newspapers based onfew criteria like layout, presentation, content and value-for-money. On this scale,consumers will rate the two newspapers head-to-head and decide whichnewspaper is better. I have named this test ‘Gross Consumer Rating’ (GCR) and Iwill conduct 5 such GCRs. I will also include the older version of The Jakarta Postto infer if the changes in their newspaper were effective.Thirdly, I will personally interview the chief editor of The Jakarta Post. This willenable me to collect some genuine statistics of the market. I will also get to knowthe firm’s main objectives and strategies. I will also be able to assess theirreaction to the entry of Jakarta Globe.Overall, the data collected from these primary researches will enable me toanalyze the situation and carry out my investigation effectively. 5
  7. 7. IB Extended Essay D 000902 046 Sriraj G S Market for local English newspapersA market is defined as a group of consumers or organizations that is interested ina product, has the resources to purchase the product and is permitted by law orother regulations to acquire the product from producer(s).3 However it issufficient to understand that a market consists of producers and consumers of agood. The consumers represent the demand for the product while the producersrepresent the supply of the product.In the market for local English newspapers in Jakarta, there are currently threeproducers of which only two are for commercial sale – The Jakarta Post andJakarta Globe. Name Inception Location(s) Price of Circulation single copy per day Jakarta, 1 The Jakarta Post Apr’ 1983 Surabaya, Rp. 6,500 40,000 Bali 2 Jakarta Globe Nov’ 2008 Jakarta Rp. 8,500 N/A 3 The Point Oct’ 2006 Jakarta N/A N/A Table 1: Current local English newspaper producersFurthermore, there have been two local English newspaper producers in the past.3 Adapted from "Market Definition." Web. 11 Aug. 2009.<http://www.netmba.com/marketing/market/definition/>. 6
  8. 8. IB Extended Essay D 000902 046 Sriraj G S Name Inception Closure1 The Indonesian Observer 1955 20022 The Indonesian Times 1960 1998 Table 2: Previous local English newspaper producersThe consumers of the local English newspaper market are represented by a verysmall number in comparison to the country’s population. The number ofconsumers is estimated to lie between 120,000 to 150,000 while the populationof Indonesia is estimated at 237,512,352.4 The population of Jakarta itself isestimated at 8,792,000. This shows that this market is extremely tiny – justaround 1% of the city population.The chief reason for this is the lack of English literacy in the country. Thoughstatistics are not available, it is well-known that English has not penetrated theIndonesian community deeply. Many regional dialects are spoken in the countryof which the most common is the unified Bahasa Indonesia.It has been estimated that half of the consumers consist of English-speakingexpatriates working in Indonesia. The other half which represent Indonesians aretypically locals who use English in their daily profession. These Indonesian readersalso tend to belong to the high-income group or hold relatively higher educationalqualifications5.The market is further heavily concentrated in Jakarta compared to other cities. Itis estimated that nearly 75% of the readers are from Jakarta while the remaining25% are from other small cities5.4 "Indonesia - Population." Web. 30 July 2008. <https://www.cia.gov/library/publications/the-world-factbook/print/id.html>.5 Obtained from Interview – See Appenix 1 7
  9. 9. IB Extended Essay D 000902 046 Sriraj G S Factors affecting demand in the market for English newspapersThe main factors which affect the demand for a newspaper are its price, quality,accessibility, English literacy and the economic condition of the country6. Of thesemain factors, the market as a whole is influenced by the economic condition andthe English literacy in Jakarta while price, quality and accessibility affect thecompetition between the producers of the newspapers.The economic condition of Jakarta is in a positive trend despite the globalrecession and is one of the 3 top Asian economies currently. Indonesia’s economyis expected to grow by 5.5% to 6.1% in 20097. This condition is likely to lead togrowing FDI in the country and more foreign expatriates will be attracted to livehere. An increase in expatriates will naturally increase the demand for Englishnewspapers. This condition will also lead to a growth in the requirement ofEnglish-speaking Indonesians. Hence, the demand for English newspapers fromIndonesians is also likely to increase.The growing economy will also lead to a growth in English literacy in Jakarta.Hence, the demand for English newspapers will be propelled if the firms canattract the potential customers from reading Bahasa Indonesia newspapers totheir English counterparts. The Jakarta Post is also actively involved in aNewspapers in Education (NIE) program which directly aims at encouraging theyounger generation to learn and read English. They are also trying to providenewspapers to students at subsidized prices. This will lead to an increase inEnglish literacy and demand for English newspapers in the long run.6 Obtained from Interview – See Appendix 17 ANN. Web. 30 July 2009. <http://www.asianewsnet.net/news.php?sec=2&id=2059> 8
  10. 10. IB Extended Essay D 000902 046 Sriraj G S Figure 1: Increase in demand for newspapers in futureHence, the increasing demand for in the market will lead to a growth in themarket size. The Jakarta Post and Jakarta Globe will benefit greatly from thissituation and there are opportunities for both firms to grow well in this marketwith healthy competition. However, the fact that Jakarta Globe has not greatlyaffected The Jakarta Post’s performance indicates that the factors affectingdemand between the two producers ‘in’ the market might be adverse to JakartaGlobe. 9
  11. 11. IB Extended Essay D 000902 046 Sriraj G S Factors affecting the price elasticities of demand of The Jakarta Post and Jakarta GlobeThe price elasticities of demand of The Jakarta Post and Jakarta Globe influencethe competition between the newspapers. Their price elasticities of demand areaffected by their relative price, quality and accessibility. However, the accessibilityfor both newspapers is relatively the same in the market as all major retailers arecurrently stocking both newspapers. Both firms are also actively distributing theirpapers to all major residences and offices.The demand for newspapers as a whole will be inelastic as they are widelyconsidered a necessity in a home. Though they are losing popularity among theyounger population, many families find a home without newspapers incomplete.Even if a family doesn’t read newspapers, they buy it to have a feel-good factor.Despite the fact that the world has seen great advances in technology, dataindicate that only 14% of the population use mobile feeds for news. Internet athome has caught up faster with 74% usage. Yet it is found that people are stillsticking to conventional means as 94% readers still use television as well asnewspapers for catching news8. This is because consumers believe theseconventional media are more reliable.The Law of Demand states that the quantity demanded of a good is inverselyproportional to its price ceteris paribus. Therefore, it is most likely that thenewspaper with the lesser retail price is likely to attract more demand. The retailprices of both the newspapers are listed below. Name of newspaper Price (Single-Copy) Price (1 Year Subscription) The Jakarta Post Rp. 6,500 Rp. 1,800,000 Jakarta Globe Rp. 8,500 Rp. 1,404,0009 Table 3: Price list of newspapers8 Obtained from Consumer Survey – See Appendix 29 Obtained from newspaper copies directly 10
  12. 12. IB Extended Essay D 000902 046 Sriraj G SThe price lists of the newspapers provide contrasting information. While thesingle-copy price of Jakarta Globe is significantly higher by Rp. 2,000 (due to full-colour printing and more pages), the 1 year subscription price of Jakarta Globe issignificantly lesser by nearly Rp. 400,000! The Jakarta Post readers will get adiscount of 22.5% on 1 year subscription while Jakarta Globe readers will get45%! Jakarta Globe has planned its sales strategy in such a way that the readersare attracted to directly subscribe to the newspaper rather than buy single-copies. Hence, they are likely to attract long-term readers who would subscribefor a year to avail cheaper prices. As subscription is like a bond, readers whosubscribe to Jakarta Globe are likely to persist with the product once bought.Thus, Jakarta Globe has an advantage over The Jakarta Post in terms of long-termprices but whether they will be able to attract greater demand will largely dependon how much importance consumers place on the prices.Meanwhile, the quality of the newspaper is directly proportional to its demand aslong as the consumers’ value-for-money is satisfied.In order to estimate the newspaper to which readers will be more inclined, theirperception of the newspapers’ quality is required. I have used a Gross ConsumerRating (GCR) in order to measure the quality of the old The Jakarta Post, its newversion and Jakarta Globe. In the GCR, respondents are given copies of eachnewspaper to make observations and comparisons. Then, they fill in a form wherethey rate each newspaper against particular criteria stated below.1) Layout - Section layout - Article layout2) Content - Variety - Depth - Supplements 11
  13. 13. IB Extended Essay D 000902 046 Sriraj G S3) Presentation - Overall Design - Easy-to-read factor - Color - Language4) Value - Value-for-moneyThere are 10 criteria each worth 3 points. Hence, the GCR of a newspaper will beout of 30 points. Below are the average GCRs of each newspaper as rated by 5consumers. GCR of The Jakarta Post – Old Version = 20.4 GCR of The Jakarta Post – New Version = 24.2 GCR of Jakarta Globe = 22.510 30 24.2 22.5 25 20.4 20 15 10 5 0 Old JP New JP JG Figure 2: GCR comparison of competitors10 Obtained from GCR – See Appendix 3 12
  14. 14. IB Extended Essay D 000902 046 Sriraj G SAs seen from the GCR data collected, it is noticed that the new version of TheJakarta Post is perceived by the consumers to be of higher quality than JakartaGlobe. It is also found that it was effective for The Jakarta Post to revamp theirnewspaper as their older version is perceived to be of poor quality in comparisonto the others. Thus it can be predicted that the consumer demand for The JakartaPost will be stronger than that for Jakarta Globe based on quality.However, the price and quality factors of demand seem to contradict each otheras The Jakarta Post costs more on subscription but is considered to be of betterquality than Jakarta Globe. As these two factors oppose each other, their actualcombined effect will be determined by the characteristics of the consumers in themarket as in whether they give more importance to quality or price in theirchoice-making as there is an opportunity cost involved here. The price-qualityconsciousness of the consumers was determined through my consumer survey. 11 Figure 3: Price-Quality orientation of consumersThe data clearly indicate that the consumers in the market are more quality-oriented than price-oriented. In fact there are no consumers who put price astheir ultimate priority while 20% of consumers are purely quality-oriented. Themajority of the consumers are represented by people who are slightly quality-oriented.11 Obtained from Consumer Survey – See Appendix 2 13
  15. 15. IB Extended Essay D 000902 046 Sriraj G SMoreover, the value-for-money ratings collected from my GCRs also give aninsight into the consumers’ product inclination. The GCRs show that The JakartaPost is perceived to have a greater value-for-money than Jakarta Globe. Theformer newspaper has an 80% score while Jakarta Globe is rated much lesser.This is because though Jakarta Globe offers full-colour papers and more pages,they do not cover as much news as The Jakarta Post. Jakarta Globe’s extra pagesare filled with more potpourri content rather than the news which the consumersneed more. Newspaper Value-for-money The Jakarta Post 2.40 Jakarta Globe 1.7512 Table 4: Value-for-money ratings of competitorsAs the consumers have been identified to be more quality-oriented, they will bemore likely to be satisfied with The Jakarta Post which has been rated to be ofbetter quality and more value-for-money than Jakarta Globe by the consumersthemselves. Thus the consumer demand for The Jakarta Post is likely to bestronger than that for Jakarta Globe despite the fact that Jakarta Globe costscheaper on subscription and also distributed numerous free copies during theinitial times of circulation.These factors point that The Jakarta Post’s demand is inelastic. The consumermarket is more inclined towards them and hence they are likely to be lessresponsive to any changes in their prices. This is particularly depicted by the factthat their sales revenue has slightly improved despite a 25% increase in price13.Due to their inelastic demand, their sales revenue should fare better as thechange in demand will be of lesser proportion than their change in price. This is12 Obtained from GCR – See Appendix 313 Obtained from Interview – See Appendix 1 14
  16. 16. IB Extended Essay D 000902 046 Sriraj G Slikely to happen in the long run as the overall market size is consistently growing.Meanwhile the price elasticity of demand of Jakarta Globe is likely to be relativelyelastic. This is naturally opposite to that of The Jakarta Post’s as consumers areless inclined to them. This is particularly depicted by their high pricing of single-copies which have failed to attract strong demand in the market.As all the factors identified indicate that The Jakarta Post is relatively inelastic indemand, they are hence not likely to be affected deeply by Jakarta Globe. Thetheoretical demand curves for The Jakarta Post and Jakarta Globe are likely to beas shown below. Figure 4: Increase in revenue due to inelastic demand (The Jakarta Post) Figure 5: Fall in revenue due to elastic demand (Jakarta Globe) 15
  17. 17. IB Extended Essay D 000902 046 Sriraj G S Cross price elasticity of demand of The Jakarta PostThe cross price elasticity of demand (XED) is an important factor that will affectthe consumers’ reaction towards Jakarta Globe. The cross price elasticity ofdemand of a good is the degree to which the quantity demanded of the good willchange as a result of a change in the price of another good.The only direct substitute The Jakarta Post has is Jakarta Globe. Hence, TheJakarta Post’s cross price elasticity of demand is theoretically supposed to bepositive and an increase in The Jakarta Post’s price should lead to a fall in itsdemand and revenue. However in reality, despite a recent 25% increase in itsretail price, The Jakarta Post’s sales revenue has slightly improved14. This indicatesthat despite having entered the market, Jakarta Globe has not really influencedthe market as a substitute. This is surely due to the time period in consideration.As Jakarta Globe has been present for only 1 quarter, we are studying a shortterm condition. It is generally noticed that a good tends to be inelastic in the shortrun and more elastic in the long run. This applies here to The Jakarta Post as well.This is because in the short run the consumers will not have time to change theirproduct. They need time to compare the products and arrive at the better choice.They also need time to gain awareness of the arrival of the new product. This isjustified as it is found that only 29.55% of consumers are aware of Jakarta Globe’sexistence15. Hence, Jakarta Globe clearly needs more time to affect The JakartaPost as people still have to know it. This view is confirmed by the editor of TheJakarta Post who says Jakarta Globe has not affected their sales and needs atleast 3 – 5 years to make an impact16.14 Obtained from Interview – See Appendix 115 Obtained from Consumer Survey – See Appendix 216 Obtained from Interview – See Appendix 1 16
  18. 18. IB Extended Essay D 000902 046 Sriraj G SAn important factor dictating whether The Jakarta Post readers are likely tochange to Jakarta Globe is how many people have subscribed to the former andhow loyal they are. Subscribers are not as likely to change product compared tonon-subscribers because the process is likely to involve some documentation andmonetary loss. It is found that 82% of readers are subscribers to The Jakarta Post.This is a very large amount and will hence benefit them as they are likely to loseonly few consumers to Jakarta Globe if at all.It is also found that 63.6% of their readers are brand-loyal and will remain withthem. When asked if the Jakarta Globe would ever be able to displace The JakartaPost, majority of the readers (54.55%) felt The Jakarta Post would continue todominate the market17. This indicates that majority of the consumer population isnot ready to change to Jakarta Globe. 54.55% No Yes 45.45% 0% 20% 40% 60% 80% 100% Figure 6: “Can The Jakarta Post’s dominance be affected?” (Poll)Hence it can be deduced that Jakarta Globe has not yet developed enough marketpresence to affect The Jakarta Post significantly in this short time period and hasnot quite assumed the role of a competitor in the market. However in the longrun, Jakarta Globe may be able to compete better with increased awarenessamong consumers. Hence the cross price elasticity of demand of The Jakarta Postcan be depicted as shown below. The actual XED will be unrelated due to the17 Obtained from Consumer Survey – See Appendix 2 17
  19. 19. IB Extended Essay D 000902 046 Sriraj G Sshort time period while the theoretical and potential XED in the long run will be innegative relation. Figure 7: XED of The Jakarta Post 18
  20. 20. IB Extended Essay D 000902 046 Sriraj G S ConclusionFrom the various factors affecting the demand of newspapers in the marketdiscussed above, it is found that The Jakarta Post is in a very strong position in themarket. Hence Jakarta Globe does not have a great chance of disturbing thedemand for The Jakarta Post. As The Jakarta Post holds a quasi-monopoly, hugebarriers to entry exist for Jakarta Globe in the market. The most significantadvantage for The Jakarta Post is that consumers rate their quality to be superiorto Jakarta Globe’s and more value-for-money as well. This is important in aquality-oriented market. Furthermore, The Jakarta Post has a long standingreputation and has built good brand loyalty from the older generations.The timely upgrade The Jakarta Post made to their newspaper also gave them anadvantage. The old version of The Jakarta Post was of poorer quality than JakartaGlobe. If the old version had been persisted with, Jakarta Globe could have had achance of upsetting The Jakarta Post. Instead they have been left competing witha better new version.It is also found that the demand for The Jakarta Post is relatively inelastic. Thismeans that the consumers are less likely to change from buying The Jakarta Postto any other newspaper. In order to woo them away from buying The JakartaPost, Jakarta Globe needs to have some strong attributes. However as the GCRshows, Jakarta Globe does not have any such major advantage over The JakartaPost as of now. However, if they make a few changes, they can be morecompetitive in the long run. 19
  21. 21. IB Extended Essay D 000902 046 Sriraj G S Suggestions for Jakarta GlobeBased on my observations and study of the market for English newspapers, Iwould like to provide a few suggestions for Jakarta Globe to help them competebetter.Jakarta Globe’s main problem is a lack of quality in comparison to The JakartaPost especially in value-for-money. In order to combat this, they should focus onimproving quality and cutting the prices of their single-copies. The best way to dothis would be to reduce the extra content like too much potpourri and comicswhich the consumers are less interested in. This will also save them printing costs.Another thing they could do is to take advantage of their huge media presencethrough their group firm ‘First Media’. First Media is widely prevalent in Indonesiathrough their cable TV and internet services. Jakarta Globe could be jointlypromoted using these services. For example a combined subscription systemcould be created where consumers will pay a little extra and receive both JakartaGlobe and the cable TV service. For a limited period of time, free copies of JakartaGlobe could be provided with the cable TV service in order to increase its brandawareness which is currently poor.The most important long-term motive for Jakarta Globe should be to target theyouth segment of the market as the older consumers are likely to be loyallybound to The Jakarta Post. Their full-color and glitzy presentation is already likelyto impress the youth but they need to immerse in a NIE program like The JakartaPost in order to spread awareness of their product to the youth. They can alsoprovide their newspapers at subsidized costs to students. For this, they couldcreate a new type of membership where the students can register using theiruniversity IDs in order to identify themselves. They can also provide frequentsupplements with their newspapers like The Jakarta Post’s ‘YouthSpeak’dedicated to students. 20
  22. 22. IB Extended Essay D 000902 046 Sriraj G S Limitations of the studyThere were several problems and drawbacks in my study which may have affected theactual results of the study thus leading to imperfections.  My survey had a total of only 50 respondents which is a small number compared to the actual size of the market. So the statistics collected are not likely to represent that of the whole market.  My GCR was based on just 5 respondents which is extremely small and this will not represent the views of all the consumers. This was due to consumers displaying lack of interest to indulge in a highly time-consuming task.  I was not able to arrange an interview with the editor of Jakarta Globe. Thus it is likely that I may have missed some important views or insights.  I was not able to collect numerical statistics like revenue and profit from The Jakarta Post as intended due to confidentiality. Rather I was given their general trends which reduced accuracy of the statements.  70% of my expatriate survey respondents were of Indian nationality which might not represent a balanced view of the whole expatriate community. Indian Indonesian Pakistani Korean Sri Lankan American Figure 8: Nationality distribution of survey respondents 21
  23. 23. IB Extended Essay D 000902 046 Sriraj G S Bibliography  Interview with The Jakarta Post editor – Mr. Endy Bayuni (Appendix 1)  Consumer Survey scaled to 50 respondents (Appendix 2)  Gross Consumer Rating scaled to 5 respondents (Appendix 3)  “The Jakarta Post”. Web. <http://www.thejakartapost.com> Accessed multiple times  “Jakarta Globe”. Web. < http://www.thejakartaglobe.com> Accessed multiple times.  “Indonesia – Population”. Web. < https://www.cia.gov/library/publications/the- world-factbook/print/id.html > 30 July 2009.  “ANN”. Web. <http://www.asianewsnet.net/news.php?sec=2&id=2059> 30 July 2009.  “Market Definition”. Web. < http://www.netmba.com/marketing/definition/> 11 August 2009.  “New Jakarta English Newspaper”. Web. <http://www.livinginindonesiaforum.org/showthread.php?t=1346> 26 April 2009. nd  Glanville, Alan. “Economics from a Global Perspective”. 2 ed. Glanville Books Ltd., 2003 22
  24. 24. IB Extended Essay D 000902 046 Sriraj G S Appendices 23
  25. 25. IB Extended Essay D 000902 046 Sriraj G S Appendix 1 Transcript of interview with Chief Editor of The Jakarta Post 24
  26. 26. IB Extended Essay D 000902 046 Sriraj G S Appendix 2 Consumer Survey (50 nos.)Note: Though 50 consumer surveys had been undertaken for theprimary research of the study, only a blank sample and 5 other filledsamples have been enclosed with the appendix. 25
  27. 27. IB Extended Essay D 000902 046 Sriraj G S Appendix 3 Gross Consumer Ratings (GCR) 26

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