Print media pricing report

Prepared By :
Chandan Priyadarshi
Gagan Pareek
Ishaque Mulla
Shashank Singh

Pricing in print media

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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Distribution Strategy of
News papers

• Sales involve distributing
highly perishable
INTRODUCTION: Print Media products under severe
time constraints.
There has been a frenzy of activities in the Indian newspaper
industry - some eye it with pleasure, some with anxiety, but this • It has to be dispatched to
spur of fresh developments is continuing. New editions, new various distributors
titles, all-colour pages, acquisitions and mergers, internal co- across the region.
operation these are just a few of the happenings that have
• The revenue of distributor
transformed the entire scenario. Undoubtedly, the newspaper
is based on a commission
industry is in its full bloom, posing a win-win situation for on the every sale.
everyone; newspaper publishers, readers, advertisers, web
offset manufacturers, consumable suppliers, etc. Such is the • Circulation is normally
potential of the Indian newspaper industry. through salesmen
appointed and salaried
Newspapers shape the nation and it holds true for India as well. by the distributors, who
Even before India got independence, newspapers played a major in turn pass it on to
role in spreading the issue of independence. James Augustus is hawkers.
considered the "father of Indian press" as he was the one who
• Hawkers, vendors and
started the first Indian newspaper from Calcutta, the `Bengal book stall owners are the
Gazette` or `Calcutta General Advertise` in January, 1780 which last link of the supply
was a weekly publication. In 1789, the first newspaper from chain before it reaches
Bombay (now Mumbai), the `Bombay Herald` appeared, the readers.
followed by the `Bombay Courier` in the following year. Later,
• Responsiveness and
this newspaper merged with the Times of India in 1861. The first
efficiency is an important
newspaper published in an Indian language was the Samachar
in newspaper
Darpan in Bengali on May 23, 1818. The first Hindi newspaper, distribution channel.
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.

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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 format while still
-size
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 Readership
Magazine
newspaper company gives the wrong figure about the (Thousands)
circular for which nothing thing can be done.
General 42651
4. No way have you to produce more things.
Sports 8621
5. There are only few areas on Print media where
advertisements can be seen. Business 2135

Online Advertisement Women 33127

1. Advertisement are in the Graphical form or in the form of Men 595
flash which is very good to represent.
Health 6704
2. Advertisement on hundred of websites can be viewed by
Children 12685
lacks of people and charged for only 100 of websites.
News 15904
3. List of the sites where ads will be displayed can checked
at any time. So that we can not give the fake figure IT 1520
against you.
Auto 748
4. advertisement can be placed on any home page of
website, people can open the site through the single click Home
470
of mouse and they are connected with the website. Interiors

5. People from all over the world can see. Travel 937

Lots of more benefits to give the advertisement on website Lifestyle 803
comparison to newspaper or any others print media.

READERSHIP OF
MAGAZINES BY TYPE

Magazine Section

Prominent Players

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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

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