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  1. 1. The Market Demand for Books in the U.S.: 2006-2011 Albert N. Greco Professor of Marketing Fordham University Graduate School of Business Administration New York City and The Institute for Publishing Research, Inc. 201-439-1839 [email_address] November 2008
  2. 2. Areas of Research <ul><li>Book Publishing Industry </li></ul><ul><li>Publishers (Editorial; Sales/marketing; Intellectual property issues; Exports and imports; Market/consumer demand issues) </li></ul><ul><li>Retailers (B & N; Borders; BAMM; Mass merchants; Price clubs; etc.) </li></ul><ul><li>Distributors (B & T; Ingram; Hudson News; etc) </li></ul><ul><li>Libraries (Public; School; College/university; Special libraries) </li></ul><ul><li>Scholarly Journals Publishing </li></ul><ul><li>Scholarly Communications </li></ul><ul><li>Marketing Entertainment (Industries) </li></ul><ul><li>Newspapers and Magazines </li></ul><ul><li>Motion Picture Industry </li></ul><ul><li>Broadway and the Performing Arts </li></ul><ul><li>Toys, Games, and Theme Parks </li></ul>
  3. 3. Market Demand Research Methodology <ul><li>U.S. Department of Commerce Bureau of the Census </li></ul><ul><li>U.S. Department of Education U.S. Department of Labor </li></ul><ul><li>The Congressional Budget Office National Endowment For the Arts </li></ul><ul><li>International Trade Administration B.E.A. </li></ul><ul><li>The Federal Reserve Bank S.E.C. Reports </li></ul><ul><li>Quarterly Reports Annual Reports </li></ul><ul><li>Conference Calls Interviews/Visits </li></ul><ul><li>Wall Street Analysts’ Reports Publishers Weekly </li></ul><ul><li>Subtext The Wall Street Journal </li></ul><ul><li>The Financial Times The L.A. Times </li></ul><ul><li>The Washington Post CNBC </li></ul><ul><li>The New York Times Bloomberg </li></ul><ul><li>Detailed Data Since 1982 ARIMA Models </li></ul>
  4. 4. Marketing Data: Major Trade Book Publishers FY 20007-2008 ($ Millions) <ul><li>U.S. % of U.S. World U.S. % </li></ul><ul><li>Sales Market Sales World </li></ul><ul><li>Share Sales </li></ul><ul><li>Random House $1,266 13.2% $2,388 53% </li></ul><ul><li>Penguin 1,015 10.6 1,692 60 </li></ul><ul><li>HarperCollins 970 10.2 1,388 70 </li></ul><ul><li>Simon & Schuster 730 7.6 886 82 </li></ul><ul><li>Hachette 515 5.4 515 100 </li></ul><ul><li>Wiley 390 4.1 469 83 </li></ul><ul><li>Scholastic 390 4.1 422 92 </li></ul><ul><li>Holtzbrinck 225 2.4 350 64 </li></ul><ul><li>HM/Harcourt 180 1.9 197 91 </li></ul><ul><li>Rodale 193 2.0 193 100 </li></ul><ul><li>Thomas Nelson 190 2.0 190 100 </li></ul><ul><li>Sterling 150 1.6 150 100 </li></ul>
  5. 5. Marketing Data: Juvenile Book Publishers (Net Publishers’ Revenues; $ Million) <ul><li>2007 2006 % Change </li></ul><ul><li>Scholastic $432 $226 91.1% </li></ul><ul><li>Random House 320 322 -6.2% </li></ul><ul><li>HarperCollins 228 225 1.3% </li></ul><ul><li>Penguin 224 223 0.4% </li></ul><ul><li>Simon & Schuster 160 163 -1.8% </li></ul><ul><li>Disney 80 84 -4.8% </li></ul><ul><li>Candlewick Press 65 60 8.3% </li></ul><ul><li>Little, Brown 52 47 10.6% </li></ul><ul><li>Houghton Mifflin * 50 53 -5.6% </li></ul><ul><li>Holtzbrinck 27 25 8.0% </li></ul><ul><li>Harcourt * 20 23 -13.0% </li></ul><ul><li>TOTAL $1,658 $1,451 14.2% </li></ul><ul><li>*Merged in 2008 </li></ul>
  6. 6. Market Demand Data Forecasts <ul><li>Determine “Top Line” Forecasts for Books in the U.S. </li></ul><ul><li>Revenues Projections Projections Release </li></ul><ul><li>Estimates Release Date Date: U.S. Department </li></ul><ul><li>of Commerce </li></ul><ul><li>2004 AG: Jan. 2004 Com. Dept. Dec. 2005 </li></ul><ul><li>2005 AG: Jan. 2005 Com. Dept. Dec. 2006 </li></ul><ul><li>2006 AG: Jan. 2006 Com. Dept. Dec. 2007 </li></ul><ul><li>2007 AG: Jan. 2007 Com. Dept. Dec. 2008 </li></ul><ul><li>2004- 98.4% of </li></ul><ul><li>2006 Commerce’s data </li></ul>
  7. 7. The Law of Supply and Demand* <ul><li>Supply and demand are the forces that make market economies </li></ul><ul><li>work. </li></ul><ul><li>Law of Supply : </li></ul><ul><li>A microecnomic law stating that, all other factors being equal, as </li></ul><ul><li>the price of a good or service increases, the quantity of goods or </li></ul><ul><li>services offered by suppliers increases or decreases. </li></ul><ul><li>Law of Demand: </li></ul><ul><li>A microecnomic law that states that, all other factors being </li></ul><ul><li>equal, as the price of a good or service increases, consumer </li></ul><ul><li>demand for the good or service will decrease and vice versa. </li></ul><ul><li>* There are exceptions; e.g. gas used in cars, etc. </li></ul>
  8. 8. Supply <ul><li>A fundamental economic concept that describes the total amount </li></ul><ul><li>of a specific good or service that is available to consumers. Supply </li></ul><ul><li>can relate to the amount available at a specific price or the amount </li></ul><ul><li>available across a range of prices. </li></ul><ul><li>Each product will have its own supply and demand patterns </li></ul><ul><li>based on price, utility, or personal preference. If consumers </li></ul><ul><li>demand more of a product and are willing to pay more for it, then </li></ul><ul><li>producers will add to the supply. </li></ul><ul><li>As the supply increases, the price will fall given the same level of </li></ul><ul><li>demand. </li></ul>
  9. 9. Demand <ul><li>An economic principle that describes a consumer’s desire and </li></ul><ul><li>willingness to pay a price for a specific good or service. </li></ul><ul><li>Holding all other factors constant, the price of a good or service </li></ul><ul><li>increases as the demand increases, and vice versa. </li></ul><ul><li>Companies spend money to determine the amount of demand </li></ul><ul><li>that the public has for its products and services. </li></ul><ul><li>Incorrect estimates will either result in money left on the table if it </li></ul><ul><li>underestimates demand OR looses money if it overestimates </li></ul><ul><li>demand. </li></ul>
  10. 10. Market Demand: Media Usage (Hours Per Person per Year Above the Age of 18; Selected List) <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Consumer </li></ul><ul><li>Books 110 109 109 108 108 108 </li></ul><ul><li>Magazines 125 125 126 124 124 122 </li></ul><ul><li>Newspapers 178 171 164 159 155 152 </li></ul><ul><li>Videogames (+12) 76 85 101 116 125 131 </li></ul><ul><li>Broadcast TV (Net/Ind.) 650 639 639 642 643 644 </li></ul><ul><li>Cable TV (Basic/Prem.) 962 973 964 964 964 958 </li></ul><ul><li>Internet (+12) 182 189 193 195 197 197 </li></ul><ul><li>Mobile (Downloads) 12 15 19 24 29 32 </li></ul><ul><li>Box Office 12 12 12 12 12 12 </li></ul><ul><li>Total media 3,499 3,496 3,493 3,493 3,509 3,502 </li></ul><ul><li>Source: The Statistical Abstract of the U.S . </li></ul>
  11. 11. Market Demand: Media Expenditures (Dollars Per Person per Year Above the Age of 18; Selected List) <ul><li>2006 2007 2008 2008 2010 2011 </li></ul><ul><li>Consumer </li></ul><ul><li>Books $99.56 103.60 105.52 107.96 110.75 114.03 </li></ul><ul><li>Magazines 44.46 44.35 44.42 43.97 44.31 43.10 </li></ul><ul><li>Newspapers 49.23 47.74 45.78 44.61 43.85 44.20 </li></ul><ul><li>Video Games 33.91 43.91 55.77 67.60 75.36 80.76 </li></ul><ul><li>Cable TV (Basic/Prem.) 306.60 330.93 354.51 378.15 400.78 422.82 </li></ul><ul><li>Internet 54.06 55.45 59.53 63.88 67.42 70.65 </li></ul><ul><li>Mobile 12.33 15.66 19.4 23.42 27.22 30.70 </li></ul><ul><li>Box Office 36.36 38.01 38.16 37.66 38.80 39.29 </li></ul><ul><li>Total all media 813.19 851.57 903.30 950.64 998.07 1,038.70 </li></ul><ul><li>Source: The Statistical Abstract of the U.S. </li></ul>
  12. 12. Market Segmentation <ul><li>Refers to the aggregation of prospective buyers </li></ul><ul><li>into clearly defined groups (i.e., market </li></ul><ul><li>segments) that have common wants and needs </li></ul><ul><li>and will respond similarly to a marketing </li></ul><ul><li>“ action”. </li></ul>
  13. 13. Market Demand Shock And Market Anomaly <ul><li>A sudden surprise event (sometimes called a “Black </li></ul><ul><li>Swan”) that increases or decreases demand for goods or </li></ul><ul><li>services and has an impact on prices. </li></ul><ul><li>A positive shock increases demand. </li></ul><ul><li>A negative shock will decrease demand </li></ul>
  14. 14. Market Equilibrium <ul><li>The state in which market supply and market </li></ul><ul><li>demand balance each other and, as a result, prices </li></ul><ul><li>become stable. Generally, when there is too much </li></ul><ul><li>supply for goods or services, the price does down , </li></ul><ul><li>which results in higher demand. </li></ul><ul><li>The balancing effect of supply and demand results </li></ul><ul><li>in a state of equilibrium (which is often not </li></ul><ul><li>achieved). </li></ul>
  15. 15. Market Equilibrium <ul><li>The equilibrium price is where the supply of </li></ul><ul><li>goods and services matches demand. </li></ul><ul><li>Is there “market equilibrium” in the U.S. book </li></ul><ul><li>industry? </li></ul>
  16. 16. Supply: U.S. New Book Title Output <ul><li>2003 2004 2005 2006 2007 </li></ul><ul><li>Agriculture 1,535 1,501 1,483 1,426 1,298 </li></ul><ul><li>Arts 8,431 8,779 8,762 9,201 9,423 </li></ul><ul><li>Biography 9,837 9,765 8,904 11,271 10,615 </li></ul><ul><li>Business 7,614 7,905 7,885 8,719 7,651 </li></ul><ul><li>Computers 8,955 6,928 6,092 5,472 5,709 </li></ul><ul><li>Cookery 2,590 2,857 3,062 2,705 2,673 </li></ul><ul><li>Education 7,562 7,135 6,951 6,449 7,335 </li></ul><ul><li>Fiction 24,666 38,832 34,927 42,777 50,071 </li></ul><ul><li>General Works 2,195 4,266 2,017 2,078 2,346 </li></ul><ul><li>History 13,192 14,191 12,686 15,241 14,764 </li></ul><ul><li>Source: R.R. Bowker </li></ul>
  17. 17. Supply: U.S. New Book Title Output <ul><li>2003 2004 2005 2006 2007 </li></ul><ul><li>Home Economics 1,628 1,760 1,634 1,755 1,682 </li></ul><ul><li>Juveniles 33,469 37,976 32,112 30,395 30,063 </li></ul><ul><li>Language 6,899 6,088 5,669 5,134 4,846 </li></ul><ul><li>Law 4,675 4,509 5,468 5,359 5,380 </li></ul><ul><li>Literature 6,493 7,972 6,297 8,227 9,796 </li></ul><ul><li>Medicine 10,552 11,834 11,688 10,931 10,720 </li></ul><ul><li>Music 3,740 4,859 4,076 3,545 3,407 </li></ul><ul><li>Personal Finance 402 552 542 582 538 </li></ul><ul><li>Philosophy/Psych. 10,040 11,410 10,556 12,961 12,635 </li></ul><ul><li>Poetry/Drama 7,007 9,891 9,414 10,700 10,258 </li></ul><ul><li>Source: R.R. Bowker </li></ul>
  18. 18. Supply: U.S. New Book Title Output <ul><li>2003 2004 2005 2006 2007 </li></ul><ul><li>Religion 14,517 21,669 16,785 19,854 18,956 </li></ul><ul><li>Science 12,962 12,639 12,626 12,655 12,872 </li></ul><ul><li>Sociology/Economics 23,530 23,222 23,750 27,675 24,596 </li></ul><ul><li>Sports/recreation 6,323 6,196 6,438 6,666 6,363 </li></ul><ul><li>Technology 7,142 7,753 7,138 7,262 6,858 </li></ul><ul><li>Travel 4,172 5,304 4,941 5,376 5,793 </li></ul><ul><li>Subtotal 240,098 275,793 251,903 274,416 276,649 </li></ul><ul><li>POD/Short Run/Misc. 26,224 19,730 30,597 21,936 134,773 </li></ul><ul><li>Total 266,322 295,523 282,500 296,352 411,422 </li></ul><ul><li>Annual % Change -- +11% -4.4% +4.9% +38.8% </li></ul><ul><li>Source: R.R. Bowker </li></ul>
  19. 19. Supply: U.S. New Book Title Output: 2007 <ul><li>New Annual Titles: 411,422 </li></ul><ul><li>Net Title Published Every Day: 1,127.18 (365 Days) </li></ul><ul><li>New Title Published Every Hour: 46.97 </li></ul><ul><li>New Fiction Title Published Every Hour: 5.72 </li></ul><ul><li>New Juvenile Title Published Every Hour: 3.43 </li></ul><ul><li>New Religious Title Published Every Hour: 2.16 </li></ul><ul><li>New Sociology/Econ. Title Pub. Every Hour: 2.81 </li></ul>
  20. 20. <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Publishers Net </li></ul><ul><li>Dollar Sales </li></ul><ul><li>Millions USD $ 35,685.9 37,264.1 38,298.6 39,371.0 40,653.7 42,009.9 </li></ul><ul><li>% Change 4.4 2.8 2.8 3.3 3.3 </li></ul><ul><li>Publishers Net Units </li></ul><ul><li>Millions 3,100.2 3,126.8 3,106.3 3,107.0 3,116.4 3,132.2 </li></ul><ul><li>% Change 0.9 -0.7 0.0 0.3 0.5 </li></ul><ul><li>Domestic Consumer </li></ul><ul><li>Expenditures </li></ul><ul><li>Millions USD $ 54,244.0 56,625.1 58,128.8 59,739.3 61,574.7 63,525.0 </li></ul><ul><li>% Change 4.4 2.7 2.8 3.1 3.2 </li></ul>All Books (Excl. Stand. Tests)
  21. 21. <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Publishers Net </li></ul><ul><li>Dollar Sales </li></ul><ul><li>Millions USD $ 9,180.4 9,576.9 9,750.2 9,988.1 10,256.1 10,511.6 </li></ul><ul><li>% Change 4.3 1.8 2.4 2.7 2.5 </li></ul><ul><li>Publishers Net Units </li></ul><ul><li>Millions 824.3 838.8 835.8 839.6 841.7 844.2 </li></ul><ul><li>% Change 1.8 -0.4 0.5 0.3 0.3 </li></ul><ul><li>Domestic Consumer </li></ul><ul><li>Expenditures </li></ul><ul><li>Millions USD $ 16,133.5 16,842.6 17,140.4 17,561.4 17,989.0 18,416.6 </li></ul><ul><li>% Change 4.4 1.8 2.5 2.4 2.4 </li></ul>Adult Trade Books (Total)
  22. 22. <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Publishers Net </li></ul><ul><li>Dollar Sales </li></ul><ul><li>Millions USD $ 3,399.9 3,656.6 3,658.9 3,752.0 3,842.2 3,931.2 </li></ul><ul><li>% Change 7.5 0.1 2.5 2.4 2.3 </li></ul><ul><li>Publishers Net Units </li></ul><ul><li>Millions 873.4 900.9 888.3 886.9 887.4 888.2 </li></ul><ul><li>% Change 3.1 -1.4 -0.2 0.1 0.1 </li></ul><ul><li>Domestic Consumer </li></ul><ul><li>Expenditures </li></ul><ul><li>Millions USD $ 5,995.9 6,423.8 6,436.6 6,585.1 6,737.0 6,893.0 </li></ul><ul><li>% Change 7.1 0.2 2.3 2.3 2.3 </li></ul>Juvenile Trade Books (Total)
  23. 23. Juvenile Trade Book Categories <ul><li>2006 2007 </li></ul><ul><li>Fiction/YA/Fantasy $ 529.9 * $ 736.9 </li></ul><ul><li>Picture Books 1,355.6 1,369.2 </li></ul><ul><li>Chapter Books 457.5 462.6 </li></ul><ul><li>Readers: Early Beginners 305.8 324.7 </li></ul><ul><li>Workbooks/Activity Books 452.0 457.1 </li></ul><ul><li>Religion 58.7 59.6 </li></ul><ul><li>Reference 129.7 132.3 </li></ul><ul><li>Novelty/Film Tie-Ins/”Other” 110.7 114.2 </li></ul><ul><li>*Net Publishers’ Revenues </li></ul>
  24. 24. Juvenile Trade Books: Hardbound Best Sellers <ul><li>How Many Copies Do You Have to Sell to Make the Top Ten List? </li></ul><ul><li>2007 H.P & The Deathly Hallows ( 13,114,692 ) </li></ul><ul><li>2006 The End (Series of Unfortunate Events) ( 2,089,054 ) </li></ul><ul><li>2005 H.P. & The Half-Blood Prince ( 13,500,000 ) </li></ul><ul><li>2004 The Grim Grotto ( 1,404,367 ) </li></ul><ul><li>2003 H.P & the Order of the Phoenix ( 12,193,840 ) </li></ul><ul><li>2002 Carnivorous Carnival (Series of Unfort. Events) ( 726,543 ) </li></ul><ul><li>The Prayer for Jabez for Kids ( 478,957 ) </li></ul><ul><li>H.P. and the Goblet of Fire ( 7,900,000 ) </li></ul><ul><li>H.P. and the Prisoner of Azkaban ( 3,600,000 ) </li></ul><ul><li>N.B. H.P is Harry Potter </li></ul>
  25. 25. <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Publishers Net </li></ul><ul><li>Dollar Sales </li></ul><ul><li>Millions USD $ 1,886.2 1,814.7 1,777.7 1,765.4 1,771.5 1,790.6 </li></ul><ul><li>% Change -3.8 -2.0 -0.7 0.3 1.1 </li></ul><ul><li>Publishers Net Units </li></ul><ul><li>Millions 575.1 541.8 520.8 506.5 495.3 488.9 </li></ul><ul><li>% Change -5.8 -3.9 -2.8 -2.2 -1.3 </li></ul><ul><li>Domestic Consumer </li></ul><ul><li>Expenditures </li></ul><ul><li>Millions USD $ 3,242.2 3,125.4 3,069.2 3,047.7 3,054.9 3,081.8 </li></ul><ul><li>% Change -3.6 -1.8 -0.7 0.2 0.9 </li></ul>Mass Market Paperback Books
  26. 26. <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Publishers Net </li></ul><ul><li>Dollar Sales </li></ul><ul><li>Millions USD $ 2,422.0 2,575.0 2,719.6 2,864.2 3,021.5 3,190.0 </li></ul><ul><li>% Change 6.3 5.6 5.3 5.5 5.6 </li></ul><ul><li>Publishers Net Units </li></ul><ul><li>Millions 263.4 275.5 284.1 293.3 302.7 312.2 </li></ul><ul><li>% Change 4.2 3.5 3.2 3.2 3.1 </li></ul><ul><li>Domestic Consumer </li></ul><ul><li>Expenditures </li></ul><ul><li>Millions USD $ 4,685.1 4,981.7 5,255.4 5,538.3 5,838.0 6,154.2 </li></ul><ul><li>% Change 6.3 5.5 5.4 5.4 5.4 </li></ul>Religious Books (Total)
  27. 27. <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Publishers Net </li></ul><ul><li>Dollar Sales </li></ul><ul><li>Millions USD $ 8,893.0 9,240.9 9,611.5 9,848.4 10,084.9 10,363.2 </li></ul><ul><li>% Change 3.9 4.0 2.5 2.4 2.8 </li></ul><ul><li>Publishers Net Units </li></ul><ul><li>Millions 280.9 285.6 287.3 287.3 287.7 289.0 </li></ul><ul><li>% Change 1.7 0.6 0.0 0.1 0.4 </li></ul><ul><li>Domestic Consumer </li></ul><ul><li>Expenditures </li></ul><ul><li>Millions USD $ 11,648.5 12,104.0 12,594.2 12,882.8 13,188.7 13,539.9 </li></ul><ul><li>% Change 3.9 4.0 2.3 2.4 2.7 </li></ul><ul><li>* Print. Digital books TBA. </li></ul>Professional Books (Total)*
  28. 28. <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Publishers Net </li></ul><ul><li>Dollar Sales </li></ul><ul><li>Millions USD $ 4,748.9 5,051.9 5,246.3 5,434.4 5,770.9 6,115.8 </li></ul><ul><li>% Change 6.4 3.8 3.6 6.2 6.0 </li></ul><ul><li>Publishers Net Units </li></ul><ul><li>Millions 177.2 178.4 181.9 185.1 192.4 199.8 </li></ul><ul><li>% Change 0.7 2.0 1.7 4.0 3.8 </li></ul><ul><li>Domestic Consumer </li></ul><ul><li>Expenditures </li></ul><ul><li>Millions USD $ 5,374.8 5,713.4 5,942.1 6,168.1 6,544.4 6,949.4 </li></ul><ul><li>% Change 6.3 4.0 3.8 6.1 6.2 </li></ul><ul><li>*Includes printed textbooks and supplementals. Digital TBA. </li></ul>K-12/Elhi [Elementary and High School] Books (Total)*
  29. 29. <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Publishers Net </li></ul><ul><li>Dollar Sales </li></ul><ul><li>Millions USD $ 2,396.6 2,672.2 2,928.7 3,165.0 3,422.4 3,658.6 </li></ul><ul><li>% Change 11.5 9.6 8.1 8.1 6.9 </li></ul>Standardized Tests (Total)
  30. 30. <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Publishers Net </li></ul><ul><li>Dollar Sales </li></ul><ul><li>Millions USD $ 4,642.1 4,801.2 4,971.1 5,138.3 5,309.7 5,493.9 </li></ul><ul><li>% Change 3.4 3.5 3.4 3.3 3.5 </li></ul><ul><li>Publishers Net Units </li></ul><ul><li>Millions 77.0 77.9 79.0 80.2 81.2 82.2 </li></ul><ul><li>% Change 1.2 1.4 1.5 1.3 1.2 </li></ul><ul><li>Domestic Consumer </li></ul><ul><li>Expenditures </li></ul><ul><li>Millions USD $ 6,522.3 6,750.6 6,986.8 7,231.4 7,477.2 7,723.7 </li></ul><ul><li>% Change 3.5 3.5 3.5 3.4 3.3 </li></ul><ul><li>*Includes printed textbooks. Digital TBA . </li></ul>College Books (Total)*
  31. 31. <ul><li>2006 2007 2008 2009 2010 2011 </li></ul><ul><li>Publishers Net </li></ul><ul><li>Dollar Sales </li></ul><ul><li>Millions USD $ 531.0 546.9 563.3 580.2 597.0 613.7 </li></ul><ul><li>% Change 3.0 3.0 3.0 2.9 2.8 </li></ul><ul><li>Publishers Net Units </li></ul><ul><li>Millions 29.0 28.7 29.1 28.2 27.9 27.7 </li></ul><ul><li>% Change -1.0 1.4 -3.1 -1.1 -0.7 </li></ul><ul><li>Domestic Consumer </li></ul><ul><li>Expenditures </li></ul><ul><li>Millions USD $ 641.7 683.6 704.1 724.5 745.5 766.4 </li></ul><ul><li>% Change 6.5 3.0 2.9 2.9 2.8 </li></ul>University Press Books (Total)
  32. 32. Market Demand: U.S. Books <ul><li>Certain book categories have or will experience declines </li></ul><ul><li>in unit sales. Why? Problem with the “marketing mix”? </li></ul><ul><li>Product (not what consumers want?) </li></ul><ul><li>Price (too expensive for consumers?) </li></ul><ul><li>Placement (books are hard to find? </li></ul><ul><li>Promotion (publishers and retailers do not promote?) </li></ul><ul><li>or </li></ul><ul><li>Economic issues (discretionary expenditure?) </li></ul>
  33. 33. Demographic Data: Who Reads Books? <ul><li>Percent of U.S. Population </li></ul><ul><li>1982 2002 </li></ul><ul><li>Read any book 60.0% 56.6% </li></ul><ul><li>Read literature 54.0% 46.7% </li></ul><ul><li>Literary Reading 1982 1992 2002 </li></ul><ul><li>Males 48.1% 47.4% 37.6% </li></ul><ul><li>Females 63.0% 60.3% 56.1% </li></ul><ul><li>Source: National Endowment for the Arts </li></ul>
  34. 34. Demographic Data: Who Reads Books? <ul><li>Men’s Favorite Book Categories </li></ul><ul><li>Under 18 Science Fiction & Fantasy </li></ul><ul><li>18-24 Science Fiction & Fantasy </li></ul><ul><li>25-34 Science Fiction & Fantasy </li></ul><ul><li>35-44 Science Fiction & Fantasy </li></ul><ul><li>45-54 History </li></ul><ul><li>55-64 Mystery </li></ul><ul><li>+65 Mystery </li></ul><ul><li>Source: Codex Group </li></ul>
  35. 35. Demographic Data: Who Reads Books? <ul><li>Women’s Favorite Book Categories </li></ul><ul><li>Under 18 Young Adult </li></ul><ul><li>18-24 Literary Fiction </li></ul><ul><li>25-34 Literary Fiction </li></ul><ul><li>35-44 Romance </li></ul><ul><li>45-54 Romance </li></ul><ul><li>55-64 Romance </li></ul><ul><li>+65 Romance </li></ul><ul><li>Source: Codex Group </li></ul>
  36. 36. Demographic Data: Who Reads Books? <ul><li>Literary Reading By Age </li></ul><ul><li>1982 1992 2002 </li></ul><ul><li>18-24 58.6% 53.3% 42.8% </li></ul><ul><li>25-34 62.1% 54.8% 47.7% </li></ul><ul><li>35-44 58.7% 58.8% 46.6% </li></ul><ul><li>55-64 54.8% 56.8% 51.6% </li></ul><ul><li>65-74 52.8% 52.8% 43.8% </li></ul><ul><li>+75 47.2% 50.8% 45.3% </li></ul><ul><li>Source: National Endowment for the Arts </li></ul>
  37. 37. Demographic Data: Who Reads Books? <ul><li>Literary Reading By Age (Millions) </li></ul><ul><li>1982 1992 2002 </li></ul><ul><li>18-24 17.8 12.9 11.4 </li></ul><ul><li>25-34 24.9 23.1 17.6 </li></ul><ul><li>35-44 17.0 23.4 20.5 </li></ul><ul><li>45-54 12.7 15.8 20.1 </li></ul><ul><li>55-64 12.0 11.3 12.6 </li></ul><ul><li>65-74 7.8 9.3 8.0 </li></ul><ul><li>+75 4.1 5.0 5.7 </li></ul><ul><li>Source: National Endowment for the Arts </li></ul>
  38. 38. Demographic Data: Who Reads Books? <ul><li>Literary Reading by Percentage of Population </li></ul><ul><li>by Geographic Region: 2002 </li></ul><ul><li>Northeast 49.7% [N.E. 50.0%; Mid-Atlantic 49.7%] </li></ul><ul><li>Midwest 46.7% [West No. Cen. 49.9%; East No. Cen. </li></ul><ul><li>45.5%] </li></ul><ul><li>South 42.1% [South At. 43.3%; West So. Cen. 40.9% </li></ul><ul><li>East So. Cen. 40.9%] </li></ul><ul><li>West 51.2% [Mountain 53.4%; Pacific 50.4%] </li></ul><ul><li>Source: National Endowment for the Arts </li></ul>
  39. 39. Demographic Data: Who Reads Books? <ul><li>Literary Reading by Gender </li></ul><ul><li>1982 1992 2002 </li></ul><ul><li>Males 49.1% 47.4% 37.6% </li></ul><ul><li>Females 63.0% 60.3% 55.1% </li></ul><ul><li>Overall 56.4% 54.2% 46.7% </li></ul><ul><li>Source: National Endowment for the Arts </li></ul>
  40. 40. Demographic Data: Who Reads Books? <ul><li>America’s Most Literate Cities </li></ul><ul><li>Minneapolis </li></ul><ul><li>Seattle </li></ul><ul><li>St. Paul </li></ul><ul><li>Denver </li></ul><ul><li>Washington, DC </li></ul><ul><li>St. Louis </li></ul><ul><li>San Francisco </li></ul><ul><li>Atlanta </li></ul><ul><li>Pittsburgh </li></ul><ul><li>Boston </li></ul><ul><li>Source: Jack Miller. Based on: booksellers; educational attainment; Internet </li></ul><ul><li>resources; library resources; newspaper circulation; and periodical publications. </li></ul>
  41. 41. Marketing Information: Where Do Consumers Find Out About New Books? <ul><li> Under 25 55-64 </li></ul><ul><li>Browsing in local bookstore 67% 74% </li></ul><ul><li>Recommendation friends 63 62 </li></ul><ul><li>Displays in local bookstore 45 47 </li></ul><ul><li>Info. In author’s prior book 32 32 </li></ul><ul><li>re new book </li></ul><ul><li>Library/librarians 25 22 </li></ul><ul><li>E-mail from bookseller 24 25 </li></ul><ul><li>Rec. Bookstore staff 16 14 </li></ul><ul><li>E-mail from author/bookseller 12 10 </li></ul><ul><li>TV/radio ad 6 7 </li></ul>
  42. 42. Marketing Data: Favorite Authors: Under 25 <ul><li>Stephanie Meyer 20% </li></ul><ul><li>Kanye West 7 </li></ul><ul><li>Chuck Palahniuk 6 </li></ul><ul><li>Meg Cabot 9 </li></ul><ul><li>Dave Eggers 3 </li></ul><ul><li>Chelsea Handler 2 </li></ul><ul><li>Gregory Maguire 5 </li></ul><ul><li>Chris Paolini 5 </li></ul>
  43. 43. Marketing Data: Favorite Authors: +25 <ul><li>Stephen King 14% </li></ul><ul><li>Mitch Albom 7 </li></ul><ul><li>Harper Lee 13 </li></ul><ul><li>Jodi Picoult 6 </li></ul><ul><li>John Steinbeck 11 </li></ul><ul><li>Philip Roth 2 </li></ul><ul><li>Bill Bryson 2 </li></ul><ul><li>John Updike 2 </li></ul><ul><li>Daniel Silva 1 </li></ul><ul><li>Carl Hiaasen 2 </li></ul><ul><li>Janet Evanovich 4 </li></ul><ul><li>John Grisham 7 </li></ul><ul><li>Ian Fleming 2 </li></ul><ul><li>Lee Child 1 </li></ul><ul><li>Patricia Cornwell 2 </li></ul><ul><li>Ken Follett 1 </li></ul>
  44. 44. Marketing Data: Top 15 Trade Book Categories: 2007 <ul><li>% of Total Revenues </li></ul><ul><li>Adult Fiction 17.97% </li></ul><ul><li>Juvenile 16.26 </li></ul><ul><li>Religion 15.4 </li></ul><ul><li>Romance 6.97 </li></ul><ul><li>Health/Diet 5.22 </li></ul><ul><li>Business 4.62 </li></ul><ul><li>Self-Help/Inspiration 4.19 </li></ul><ul><li>Gen. Ref. 3.94 </li></ul><ul><li>Computer/Tech 3.42 </li></ul><ul><li>Cooking/Home Ent. 3.25 </li></ul><ul><li>Art/Illus/Coffee Table 3.17 </li></ul><ul><li>Sci-Fi/Mystery 2.74 </li></ul><ul><li>Travel 1.88 </li></ul><ul><li>Biography 1.63 </li></ul><ul><li>Personal Finance 1.37 </li></ul><ul><li>Other/Misc. 7.96 </li></ul>
  45. 45. Marketing Data: Trade Books 2007: Where Do Consumers Purchase New Trade Books? <ul><li>Revenues Units </li></ul><ul><li>Bookstores 48.84% 49.83 </li></ul><ul><li>General Retailers 25.80 25.90 </li></ul><ul><li>College Adoptions 7.80 7.49 </li></ul><ul><li>Libraries & Insts. 8.28 4.43 </li></ul><ul><li>Elhi Schools 3.34 2.08 </li></ul><ul><li>Direct to Consumers 5.95 10.29 </li></ul>
  46. 46. Marketing Data: Juvenile Books: Where Do Consumers Purchase New Juvenile Books? <ul><li>Revenues Units </li></ul><ul><li>Large Bks.Chain 25.3% 18.3% </li></ul><ul><li>Book Clubs 15.3 16.2 </li></ul><ul><li>Internet 11.9 8.3 </li></ul><ul><li>Mass Merchants 6.5 7.9 </li></ul><ul><li>Indep/Sm. Book Chains 9.0 8.6 </li></ul><ul><li>Mail Order 5.2 4.5 </li></ul><ul><li>Price Clubs 5.0 3.8 </li></ul><ul><li>Food/Drug 2.1 2.9 </li></ul><ul><li>Dollar Stores 2.1 5.7 </li></ul><ul><li>Used Bookstores 1.6 5.3 </li></ul><ul><li>Books Fairs 0.5 0.8 </li></ul><ul><li>Other 15.6 17.9 </li></ul>
  47. 47. Market Demand: Will Consumers Accept Digital “E-Books”? <ul><li>Are you ready and willing to read a </li></ul><ul><li>digital book? </li></ul><ul><li>On a desktop computer? </li></ul><ul><li>On a laptop computer? </li></ul><ul><li>On a SONY Reader ($270)? </li></ul><ul><li>On a Kindle ($350)? </li></ul><ul><li>On a smart phone (Black Berry, etc.)? </li></ul><ul><li>On a “Palm Pilot” type hand-held device? </li></ul>
  48. 48. Marketing Issue: Disruptive Technologies <ul><li>Michael Porter’s Five Forces provide a framework to </li></ul><ul><li>analyze this question: </li></ul><ul><li>Competition in the industry </li></ul><ul><li>Potential of new entrants into the industry </li></ul><ul><li>Power of suppliers </li></ul><ul><li>Power of customers </li></ul><ul><li>Threat of substitute products </li></ul>
  49. 49. Market Demand: Threat of Substitutes <ul><li>A product or service that partly satisfies the wants and needs </li></ul><ul><li>of consumers. </li></ul><ul><li>For a product to be a substitute of another good, it must have a </li></ul><ul><li>particular relationship with that good OR provide a better service. </li></ul><ul><li>When a product’s price increases, the demand for its substitute </li></ul><ul><li>will increase because consumers will go looking for a cheaper </li></ul><ul><li>alternative. </li></ul><ul><li>When a product’s price decreases, the demand for its substitute </li></ul><ul><li>decreases. </li></ul>
  50. 50. Market Demand: Threat of Substitutes <ul><li>Switching Costs </li></ul><ul><li>This is the cost a consumer incurs as a result of switching to </li></ul><ul><li>another product or a supplier. </li></ul><ul><li>The switching “cost” could be financial or psychological. </li></ul><ul><li>Many companies try to employ marketing strategies that trigger </li></ul><ul><li>some sort of high switching costs to dissuade consumers from </li></ul><ul><li>switching to a competitor’s product (e.g., cell phone companies; 2 </li></ul><ul><li>year contracts; high cancellation clauses) </li></ul>
  51. 51. Market Demand <ul><li>Would you have a “switching cost” if you </li></ul><ul><li>decided to read your books as “digital books”? </li></ul><ul><li>What would be the “switching cost”? </li></ul>
  52. 52. The Changing Marketing Landscape: E-Book Sales: 2003-2007 <ul><li>E-Book Wholesale Revenues: Trade Books </li></ul><ul><li>2003 $7.34 Million </li></ul><ul><li>2004 $9.62 Million </li></ul><ul><li>2005 $10.83 Million </li></ul><ul><li>2006 $20.00 Million </li></ul><ul><li>2007 $31.80 Million </li></ul>
  53. 53. Marketing Data: Kindle Owners Percentage of Age Cohorts <ul><li>Percent of U.S. Book Buyers </li></ul><ul><li>18-24 0.2% </li></ul><ul><li>25-34 0.5 </li></ul><ul><li>35-44 0.5 </li></ul><ul><li>45-54 0.5 </li></ul><ul><li>55-65 0.9 </li></ul><ul><li>+65 0.6 </li></ul>
  54. 54. The Changing Marketing Landscape: E-Books <ul><li>When will consumers switch to digital e-books? </li></ul><ul><li>Adult trade books </li></ul><ul><li>Juvenile trade books </li></ul><ul><li>Mass market paperbacks </li></ul><ul><li>Religious books </li></ul><ul><li>Professional books </li></ul><ul><li>College textbooks </li></ul><ul><li>K-12 Elhi textbooks, supplementals, stand. tests </li></ul><ul><li>University press books </li></ul>
  55. 55. Marketing Data: Library and Institution Sales: 2006-2012 Net Publishers’ Revenues ($ Million) <ul><li>2006 $3,478.8 2010 $3,975.2 </li></ul><ul><li>2007 3,655.8 2011 4,091.3 </li></ul><ul><li>2008 3,766.9 2012 4,213.4 </li></ul><ul><li>2009 3,869.1 </li></ul><ul><li>N.B. Includes: Public Libraries; School Libraries; College/University Libraries; and Special Libraries </li></ul>

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