Strategic Account Plan

STRATEGIC ACCOUNT PLAN
Information Resources Incorporated and News America Marketing
Connor Achim, Danny Jarecki, Alex Larson, Kyle von der Linden
MKT 325, Section 001
4/20/16

TABLE OF CONTENTS
Executive Summary……………………………………………………………………………………...
IRi Situation Analysis…………………………………………………………………………………….
Summary of IRi…………………………………………………………………………………….
Internal Analysis………………………………………………………………………………….
External Analysis…………………………………………………………………………………
News America Marketing Situation Analysis…………………………………………….
Summary of News America Marketing………………………………………...……
Internal Analysis………………………………………………………………………………….
External Analysis…………………………………………………………………………………
Purchasing Characteristics…………………………………………………………………
Value Chain Sequence……………………………………………………………………...
Positional Assessment………………………………………………………………………………….
Current Relationship…………………………………………………………………………..
SWOT Comparison……………………………………………………………………………..
Strategic Account Plan…………………………………………………………………………………
Vision Statement………………………………………………………………………………...
Value Proposition………………………………………………………………………………..
Goals & Objectives……………………………………………………………………………..
Implementation Schedule…………………………………………………………………..
References……………………………………………………………………………………………………..
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EXECUTIVE SUMMARY
The purpose of this Strategic Account Plan is to explore the relationship between
Information Resources Incorporated (IRi) and News America Marketing and to identify
potential areas of growth and development for their relationship. The Strategic Account
Plan will begin with a situation analysis of both IRi and News America Marketing which
will include internal and external analyses of the firms. The plan will then discuss the
current relationship between IRi and News America Marketing in a Positional
Assessment. Finally, the plan will conclude with goals and objectives that specify how IRi
is to strategically grow their account with News America Marketing.
In this scenario, IRi is the supplier firm to News America Marketing and is selling
them marketing research data. Drawing from research, the plan will identify key
opportunities for IRi to help News America Marketing gain a greater competitive
advantage in their marketplace that will support their long-term strategies. Key
opportunities that have been identified include upgrading current point-of-sale (POS)
data capabilities, increasing the use of IRi technologies across the salesforce of News
America Marketing, and adding digital advertising data analytics to the arsenal of News
America Marketing.
Overall, the plan will synthesize the current strategies of both firms and will align
their long-term goals in order to create a mutually beneficial relationship. Through careful
planning and implementation, IRi will be able to use this Strategic Account Plan to grow
their business with News America Marketing as well as help News America Marketing
increase sales with their current customers and achieve new business in the future.
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IRi SITUATION ANALYSIS
IRi SUMMARY
IRi Worldwide is an American company that
delivers growth to client firms through the form of
strategy, analytics, intelligence, technology, and
media. The company was founded in 1979 by two
professors who decided to take advantage of the newest technology to hit the storefront:
bar codes. Through tracking this data, they were able to capture, analyze, and predict
the behavior of shoppers. While that mainly involves data analysis, IRi has grown
immensely from its genesis, and has continued to add value to it’s clients in many forms.
Headquartered in Chicago, IL, IRi has strong roots domestically, and is a major
international player as well, with operations in 58 countries that reach as far as Australia.
Many firms trust in IRi’s reputation and results, so much so that 95% of Consumer
Packaged Goods (CPG), retail, and health and beauty companies in the Fortune 100 work
with IRi.
IRi has three major tools to capture their data, and they each bring more insight to
the consumer’s behavior as a whole. Their access to data, innovative mindset, and
2,500 determined employees really exemplify the motto that IRi has recently attained,
growth delivered. All of IRi’s tools give unprecedented insight to client firms. With their
track record of success and dependability, IRi has brought in the top clients from around
the nation and are truly recognized as a cutting-edge company. In a 2015 American
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Marketing Association chart, IRi ranks 5th
on the top 10 marketing research companies in
the world, and the top private marketing research company.
Overall, according to IBISWorld, the NAICS has an optimistic expectation of the
marketing research industry. “The expected revenue growth of 2.5% in 2016 is a more
accurate depiction of recent industry performance.” While IRi is doing well, the industry
is growing at a slower pace. Additionally, “industry revenue began to improve after 2013,
profit grew from 5.9% of revenue in 2011 to an expected 8.1% of revenue in 2016.”
History
The inception of IRi happened in 1977 with John Malec, a market research veteran,
and University of Iowa professor, Gerald Eskin. Their genius idea was sparked by the
works of a company called Adtel, Inc. based out of the Philippines, and the revolutionary
creation of barcodes in the early 1970s.
“Adtel used purchase diaries kept by consumers to compare the effects of
alternate TV ads run by separate cable systems. The main drawback of the Adtel system
was that it took rather long to decipher the data. Malec figured that if scanners could be
used as a tool for collecting the same types of information, that problem would be
solved” (Funding Universe). The problem at the time was their ambitious idea was too
expensive. After several banks rejected their financing requests, the two – along with
the help of the third founder of Adtel – turned towards their would-be prospective clients.
After pitching their idea to major companies like Coca-Cola, Quaker Oats, Kraft, and
Procter & Gamble, they had received $2 million in contracts from 11 companies. With
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their startup fund secured, the two then bought $2 million worth of scanners from Nation
Semiconductor, and IRi was officially formed in 1979.
With their first few years under their belt, IRi had reached revenues of $12 million
by 1982. With an ambitious mindset and a seemingly bright future, IRi went public in
March 1983. With stock prices nearly doubling in the first day, the company had raised
$20 million to help fund their long-term debts and allow them to be more innovative and
expansive.
IRi introduced a cutting-edge product in 1987, InfoScan, the first nation-wide
supermarket tracking service based on Universal Product Code (UPC) scanning. This
gave IRi the upper hand in marketing research and analysis over their upcoming
competitor Nielsen. What kept the two companies alive while delivering a unique, almost
niche, service, was IRis aggressive buying of companies that would help them gain
deeper insight in the US market, and Nielsen’s stronger international presence.
IRi was strong in telling clients what their consumers did and how to classify each
consumer or household, but the Symphony Technology Group, who specialized in
predictive analytics wanted to take IRi to the next level and allow IRi’s clients to know
how to classify and predict trends among its end consumers. IRi was bought out in 2003
and became Symphony IRi under the leadership of Romesh Wadhdwani. Thus IRi’s
Liquid Data platform rolled out to help accomplish that mission.
A few years down the road, Symphony IRi had a major investment from New
Mountain Capital LLC for an undisclosed amount, but shortly thereafter, Symphony IRi
was rebranded as IRi Worldwide. IRi entered the China market in 2015 with the
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acquisition of market research firm Datasea. Also just last year, IRi began a
groundbreaking partnership with MasterCard advisors. This allowed the company to offer
a full view of purchasing habits for consumer segments. It also introduced Shopper
Marketing Cloud, which is the largest set of integrated data in the world, built from the
Liquid Data mentioned earlier.
Locations
IRi has a very strong presence nationally as well as internationally. With their
global headquarters in Chicago, IL, it is a very common place for CPG growth and
startups. They also have domestic offices in Arkansas, California, Connecticut, Georgia,
New York, New Jersey, North Carolina, Ohio, Pennsylvania, and Virginia. This allows for
all of IRi’s major clients to have a major location relatively nearby no matter where they
client is located. For instance, IRi’s top clients are Altria, PepsiCo, and Procter & Gamble
which are located in Virginia, New York, and Ohio respectively. Along with their strong
national presence, IRi has been expanding since the 80s and have locations across the
world in France, Italy, South Africa, Canada, Germany, Netherlands, Sweden, China,
Greece, New Zealand, UK, Spain, and most recently, Australia.
Mission
IRi is founded on the basis of being able to understand an end consumer and
predict their behavior. With their extreme amount of data and insight, they are charged
with continually providing the most accurate and actionable insights to their client’s year
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after year. IRi’s motto that is used very liberally in their workspace and even in their logo
is, “Growth Delivered.” They deliver growth in five key areas that were briefly mentioned
earlier, and they are: market performance and strategy, consumer and shopper
intelligence, in-market execution and analytics, media, and technology. By keeping
those five areas at the front of their mind and business model, they will continue to keep
the client in mind while developing themselves to become the principal provider of data
in the world. All of those areas of constant improvement and dedication to the client and
the client’s customers can be summed up with their motto Growth Delivered.
Products
IRi has a multitude of solutions and products that it offers its clients, but the three
that would make the most impact for News America Marketing are the following. These
data sources have been collected, created, and built over the last 20 to 30 years.
Originally it started with just scan data in grocery stores, but continued to grow and
innovate with new technology and methods.
First, they have household panel data of over 100,000 households where each
participating household has a known income, ethnicity, children or lack thereof,
education level, employment, etc. They are issued scanning devices that, once any item
anywhere is purchased, they scan it. This happens multiple times each day, and the data
is instantaneously updated to a central location where the data is then stored for future
use. With this data, researchers are able to know where, when, what, how much, how
frequently, and which products were purchased. With that information as well as the
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information about family, researchers can analyze the spending habits of a sample that is
very representative of the U.S. population.
Their next product is IRi Liquid Data (ILD) which breaks the barrier that normal data
providers have set. Most data providers are able to provide some sort of comprehensive
overview of the market and/or a product within a market in a static view. The way it is
usually laid out is in the form of a pyramid, with Stock Keeping Units (SKUs), Brands, and
then the corresponding Manufacturer. This view allows some insight to what’s going on,
but it is very hard to rework once a change has been made within that structure, likely
taking weeks or months to restructure. With new brands, manufacturers, and SKUs
coming out every week, month, quarter, the traditional method of data visualization is not
the most helpful. With IRi’s Liquid Data platform, it transcends the static, concrete
hierarchy that traditional data providers use, and breaks every bit of data down into the
most granular, or small, form possible. This in turn allows for a much deeper knowledge
of products, brands, manufacturers, etc.
The data is broken down by features like flavor, color, size, package type, scent,
etc. This very intricate classification system allows you to see trends across markets,
brands, competing products, and much more. ILD also allows a client to find out the
performance not only by brand, but by brand in one store, a cluster of stores, or a store
nationally. Being able to see data at such a granular level also allows the user to see
where new consumers are coming from and leaving to. The data that needs to be pulled
for any client is aggregated, or compiled, on the fly. This allows for very customizable
results that are produced in seconds. ILD is a popular product with amazing potential for
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any company, there are more than, “15,000 users globally, 1 million queries a month are
executed, 95% of which are answer in less than 10 seconds” (YouTube). Very recently,
ILD has been upgraded to an even more sophisticated version called CSIA. As you will
see later, we will recommend this version be used by News America Marketing.
The last big platform that IRi has that this paper will be focusing on is IRi’s
ShopperSights platform. Clients who want to know if they should appeal to the more
active people or those who are heavy into computer use or those who have pets are the
ideal users of SS. ShopperSights (SS) was a very recent invention that looks at data as a
household, much like the panel data does. However, SS is a combination between ILD
and panel data. By taking the knowledge of each household’s income, ethnicity,
education, and hundreds of other factors and combining with the purchasing habits and
insight of ILD, IRi is able to predict, with astounding accuracy, the lifestyle of each
household. Lifestyle is a broad concept and might seem very hard to know without
knowing each individual household.
For example, if Anheuser-Busch InBev wanted to find out how to effectively and
efficiently target the consumers of Michelob Ultra, they would use SS. Through SS,
Anheuser-Busch InBev would find out that the consumers of Michelob Ultra tend to be
60% female, in their 30s, educated with at least a college degree, making more than
$35,000 each year, likely to be married, have children, and are extremely active in
running, hiking, rock climbing, and very rarely watch television. One might think ‘what
the heck does all that have to do with beer?’ By knowing the ideal target and what they
are more likely to do or be involved in, ABI can very efficiently target that consumer.
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With that information, ABI should advertise in marathon events, hiking events,
family-friendly environments, and focus more on print, radio, or event marketing. This
marketing is one of the most effective tools that IRi offers, in fact, “one of our large
manufacturer clients was able to partner with a major retailer to develop programs to
reach target consumers in high opportunity stores, resulting in an estimated $5.3 million
in incremental sales” (IRi Worldwide).
To break it down more fundamentally, here’s a brief overview of IRi’s areas of
expertise:
● Market Performance and Strategy- Features market measurement/point-of-scale
(POS) tracking to in-store performance audits and forecasting. Answers questions
like, “How can you achieve growth in a mature market? “Are you missing key
innovation or category opportunities?”
● Consumer and Shopper Intelligence- Solutions that focus on deep shopper
insights, segment planning, opportunity sizing, and activation strategies to win the
sale and the shopper.
● In-Market Execution and Analytics- For optimizing pricing, promotion or
assortment, or be more productive with a manufacturer, this analytical tool helps
decipher vast amounts of data.
● Media- Answers questions like, “Can you be more efficient with your media
spend? “Did your advertising lead to any sales? These media solutions include
household level to actual purchases for deeper insights, targeting, activation, and
measurement.
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● Technology- Features Liquid DataTM platform, offering insights with the touch of a
button. This is the biggest reason clients leave competitors for IRi.
Key People & Positions
With such an intricate business, several products, hundreds of clients, and global
expansion, there are many people that are essential the the success and growth of IRi.
There are the C level important people, but the presidents that report into them are the
real drivers of growth. I will elucidate each important member in due chorus.
Andrew Appelis the current President and Chief
Executive Officer of IRi. As the former Chief
Executive Officer of Aon Consulting and Senior
Vice President of Revenue Operations at
Accretive Health, Appel is a driven leader with a
portfolio of growth in the companies he has previously been involved with. He continues
to look forward into IRi’s future and be a cunning and determined leader, with his main
goal of expanding IRi globally.
Jane Altobelliis the current Executive Vice President
and Chief People Officer of IRi. Continuing the
company’s efforts in building a high-performance
culture, Altobelli is responsible for global human
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resources efforts, talent and performance management, organizational change efforts,
staffing, benefits and compensation.
Susan E. Bennettis the Executive Vice President
and general counsel for IRi, is responsible for all
corporate legal matters. She has extensive global
experience in corporate governance, commercial
transactions, employment, intellectual property,
litigation management, mergers and acquisitions, distribution and risk management.
Piyush Chaudhariis the currentPresident of the
Americas for IRi. He has responsibility for Client
Insights, Client Service and Pre-Sales. He focuses on
bringing IRi’s strategy to life with clients in North
America as well as with select multi-national, global
clients. He ensures collaboration between the client insights and service organizations,
and the company’s Centers’ of Excellence to help clients achieve fundamentally
enhanced performance and growth through new capabilities.
Krishnakumar Daveyis the currentPresident of
Strategic Analytics for IRi. Bringing to this role more
than 25 years of experience at leading consulting,
media/advertising, syndicated research and custom
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market research companies, Dr. Davey is focused on generating even further growth for
the CPG and retail consulting practices at IRi.
Mike Samuels is the currentChief Financial Officer for
IRi. As the CFO of IRi, Mike Samuels is responsible for
overall financial management of the company and its
financial reporting and transparency, including
accounting, financial planning and analysis, treasury,
tax, audit, real estate and procurement.
Srishti Guptais president of IRi’s Media Center of
Excellence (COE) and a member of IRi’s Executive
Leadership Team. The Media COE has a mission to
increase return on media dramatically through
unparalleled insight into the relationship between
media interactions and purchase behaviors. These capabilities empower IRi’s clients to
create scalable, targeted cross-media 1:1 marketing activation campaigns, plan and
allocate resources across media in real time, improve marketing mix effectiveness and
optimize ROI across all marketing activities.
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John McIndoeis the current Senior Vice President of
Marketing for IRi. As senior vice president of marketing,
John McIndoe is responsible for IRi’s marketing efforts,
including corporate branding, communications strategy,
thought leadership, events, media and analyst relations and
marketing communications supporting the company’s
ongoing transformation, innovation and growth initiatives.
Ash Patel is the currentChief Information Officer of IRi.
Ash M. Patel leads IRi’s global technology and oversees
the company’s onshore and offshore teams. He focuses
on generating value from innovative technology
solutions, ensuring client satisfaction with technology
deliverables and strengthening technology alliances.
Michael Rosenthalis the current Executive Vice
President of Global Operations for IRi. As executive
vice president of Global Operations, Michael
Rosenthal is charged with supporting and
accelerating IRi’s operating excellence efforts as well
as bringing to market the company’s next-generation data-integration solutions. He leads
IRi’s efforts to deliver a unique competitive advantage in the consumer packaged goods
(CPG) market with advanced technology that delivers forward-looking insights,
prescriptive analytics, and an open, democratized, real-time set of platforms.
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Robert Tomeiis the current President of Consumer & Shopper
Marketing Core Content & Insights for IRi.As president of
Consumer & Shopper Marketing, Robert Tomei oversees
growth, development and management of the company’s
consumer and shopper insights, consumer segmentation, new
product innovation, shopper marketing and activation services
and solutions. He also manages IRi’s product management
function around the company’s core content (point-of-sale, consumer, shopper,
third-party supplied).
What IRi Does
Throughout this initial summary of IRi, it is necessary to keep in mind that IRi looks
to grow its client base through trust, transparency, and results. By delivering growth in as
many areas as possible for its clients, IRi continues to make its mark on the marketing
research world. Since 1979, IRi has looked to improve itself while making sense of the
multitude of data that is out in the world today. With constant innovation, collaboration,
and the onboarding of the smartest minds in marketing research, IRi captures, analyzes,
and predicts almost better than any competitor in order to deliver growth.
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INTERNAL ANALYSIS
Financials Performance
IRi sets very high expectations for growth from year to year. While 6% annually
can seem like a very menacing goal, and it is, especially for a $1 billion company, it has
been achieved several years out of the last decade. IRi sets high standards for growth
for many reasons: to eliminate complacency, encourage innovation, and to attract more
employees and business. However, many companies wouldn’t dream of a 6% growth
year after year after year. At some point, it becomes literally impossible, so why does IRi
still have this ambitious mindset? To go public. It has been briefly mentioned before, but
IRi has been completely privately held for almost a decade after it was purchased by
Symphony Technology Group. This has made acquIRing financial numbers quite the
hassle. However, thanks to Senior Vice President of Consumer & Shopper Marketing,
Christopher von der Linden, there is some evidence of growth in the face of such
tremendous goals. With this 6% goal in mind, and the success it has had in achieving it,
IRi has some great clout within the industry when it goes public.
Pulled from a slideshow from a 2013 presentation, one can see that from 2013, the
globalgrowth from 2012-2013 was 5.8% which is just shy of the global expectation.
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However, there was some decrease from 2013 – 2014. From a 2014 Research
Accessarticle found on the web, they report a global increase of 3.8%, which didn’t hit
the goal set by the company.
There is still room for improvement from a YTD (Year-to-date) standpoint, but
when you think about it, they are pushing their luck if the idea of going public is truly on
their to-do list. As an investor, I would imagine that seeing growth year after year for the
last decade would be a huge selling point. With numbers falling just shy of their goal of
6% year after year growth, it would be in IRi’s best interest to go public sooner rather
than later.
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Market Position
IRi is always viewed as a top competitor in the marketing research world, and has
been for quite some time. From a relatively recent American Marketing Association
study, IRi was voted the top 5 out of 25 companies that operate near the same capacity
as IRi. IRi was preceded by Westat, Ipsos, Kantar, and its biggest competitor, Nielsen. IRi
continues to remain in the middle of its top 10 competitors in the marketing research
world, but is constantly trying to move up and make itself bigger and better than its
competition.
IRi realizes they are not a perfect company, and in many ways, this is what makes
them one of the best. Not blinded by its success, IRi keeps their feet on the ground,
egos in check, but their goals as ambitious and exciting as possible. Lifted from one of
the presentations given in 2013, IRi looks back on their progress as a firm and asks two
major questions that any good business should constantly ask themselves: what do we
do well, and what can we improve on.
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Continually asking themselves these two questions and making it clear that they are
doing well, but can always be doing better is what wins them the admiration and
continued business of all their clients.
Strategic Orientation
The above graph displays in one of several ways how IRi is positioned within the
industry and among its competitors. This particular graph is laid out so that the variety of
the company’s services are on the x-axis. Perpendicular to the Variety of Services, the
graph shows the level of innovation for each company, and where it roughly would fall.
This graph very much accentuates IRi’s best features by showing that IRi is a leader in
number of services offered to a client as well as the ongoing endeavor to constantly
improve the services and products offered. Compared to all of IRi’s competitors, it is
obvious that they lack in either innovation or number of services. Although IRi is lesser
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on the totem pole monetarily, market share, and a few other factors, these two are major
in the industry.
Core Competencies
Support
Activities
Human Resources
Technology/ R&D
Procurement
Primary
Activities
Data Programs Data Collaboration Acquisitions
Referring to the Porter’s Value Chain above, you can see where IRi excels and
where its core competencies lie. It is imperative to understand these core competencies,
because it shows why IRi is attractive to the multitude of clients and potential clients in
the industry. It also shows why News America Marketing shows interest and continues to
renew its contracts for IRi’s services. IRi collects data, interprets and analyzes data, and
reports its data to its clients; however, everyone in this industry does that just the same.
First IRi creates value in the form of its data programs and its services. As
previously stated, IRi has a bevy of solutions, products, patents, and services. IRi has the
ShopperSights platform which allows the predictive analysis of consumers through
cross-indexing, and they also have the IRi Liquid Data platform which gives unlimited,
customizable, granular data insights. Through these unique data programs, IRi is able to
go deeper in depth into it’s end consumer’s minds and see not only where, when, how
much, how frequently the purchase, but also the likelihood of them being active, having
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children, being educated, etc. Because of the vast amount of information that each of
these services create, it sets them apart from all the other competitors in the industry.
Many clients will leave competitors and break contracts just to have one or both of these
services available to them.
Data collaboration is one of the biggest ways IRi creates value for its clients and
their end consumers. It seems simple enough of an idea, that when IRi wants to
understand end consumers more and make its predictions more accurate, then it will
need more data. This is accomplished through two companies partnering up and sharing
their data with one another. This makes both of the parties more successful, and this is
actually a fundamental way that IRi is able to have so many scanners for its ILD platform.
By a store allowing IRi to use its scanner data to track sales, IRi then has the knowledge
that can make that store sell more efficiently. So weekly, monthly, quarterly, or yearly
reports can be generated for each store to let them know how much of which product
was sold and what products are often bought together, thus hopefully leading to more
traffic to that particular store.
Take that concept and apply it to IRi and another data provider. For instance, IRi
has recently partnered with comScore, which collects data on individuals and households
through the use of television and mobile data. By giving IRi access to its database, IRi
can now tell its clients which TV or mobile ads produced the most sales, in which areas
of the country those ads were most effective, what age group they most influenced, etc.
And IRi can tell comScore the same info, which allows them to hone their processes and
make their data that much more valuable to its clients. IRi looks to continue to find the
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right partners where they will be mutually beneficial which makes IRi more valuable to its
clients. In many ways, this is where News America Marketing becomes involved. By
each other relying on the others products and knowledge, they are both able to help
each other accomplish their own goals.
The last primary activity that adds value to the firm is IRi’s acquisitions. Much like
their partnerships and data collaborations, IRi does a phenomenal job at acquIRing
companies that will allows them to take an existing technology and learn more from it
while expanding their footprint. With IRi’s resources and thirst to deliver growth, they
have always looked for the next best opportunity that will make them more
knowledgeable about a consumer. Through acquIRing companies like Datasea, one of
China’s leading analytic services and market research companies which has deep
knowledge and expertise in the retail and CPG industries, IRi has more access to the
Chinese markets which it entered a relatively short time ago. IRi also most recently
acquired Aztec, “a leading provider of market measurement and related services for
consumer packaged goods (CPG), liquor and pharmaceutical manufacturers and retailers
in Australia, Canada, Hong Kong, New Zealand, South Africa, Sweden and the United
Kingdom” (Reuters). These acquisitions are allowing much more knowledge of
consumers globally, which gives IRi much more knowledge, insight, and value, especially
for its global clients.
The support activities that add value to IRi and, more importantly, IRi’s clients are
the human resources, technology, and procurement. With IRi’s extensive expectations of
its hires, phenomenal training program, and transparency with its needs, IRi is able to
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attract and retain the best and brightest minds in the marketing research industry. This
leads to harder working, more driven, enthusiastic, and caring employees. Which, in turn,
leads to better relationships and more relationships with clients.
The technology and research & development that IRi keeps at the front of its
business model adds value through the want and need to innovate, create, improve, and
repeat. Through the technology that it has and the incessant want to better itself, IRi
constantly sets the bar higher with its technology. With technology becoming smaller,
more powerful, and faster every single year, there will always be new, more efficient
ways to deliver growth to a client.
Lastly, through procurement, or the way that companies acquire the resources
they need to operate, IRi continues to add value. Through not only acquIRing
businesses, but allowing business, clients, partners, etc. to work off of each other’s
successes and resources, IRi sets itself ahead of the competition. IRi’s goal isn’t to
dominate the market by buying out every competitor and it isn’t to earn the most
revenue, because it doesn’t. IRi’s goal is to deliver growth, and it does that through
smartly partnering with as many people as possible in order to learn the most about the
industry and end consumers.
Organizational Culture and Structure
In class we had discussed how truly important culture is in an organization. So for
IRi, everything is about bettering their client’s business and delivering growth. The
client’s goals become IRi’s goals. This creates an interesting dynamic especially with
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relationships because client’s rely on IRi for information and data, and IRi would hope to
see their information better a business. Even from the company’s website, one can tell
the culture is described as innovative. It all comes down to meeting client’s needs and
doing whatever it takes to do so. The business marketplace is constantly evolving, and
when the marketplace and client’s businesses evolve, IRi does as well. IRi does a terrific
job with client relationships, because in this industry, it is imperative that firms establish
multi-year contracts. One of IRi’s constant goals is establishing new partnerships, in order
to increase the amount of resources they have. This entails the company having great
communication from management down.
The culture of offices is generally very laid back, but intense at the same time.
Employees dress corporate casual, which creates a comfortable but productive
environment. The structure of the offices themselves encourages high communication
because of the layout of the desk cubicles. It is designed to have the walls low, so every
employee can communicate effectively from the comfort of their own desk. The ability for
employees to bounce ideas off each other, ask questions, and communicate effectively is
what makes IRi a great environment to work in.
EXTERNAL ANALYSIS
Markets and Customers
IRi’s main customer target market is specifically in the CPG or Consumer
Packaged Goods industry. In addition, IRi also provides data to the retail,
over-the-counter healthcare and media companies. The main purpose of this industry
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especially for IRi is providing value in terms of data that the business can in turn use to
develop growth strategies. This market is mainly dominated by a couple of major players
and this includes IRi and their main competitor Nielsen. The industry is in a constant state
of innovation. Innovation in terms of today’s complex technological world, and for big
data companies like IRi, innovation has been their DNA since the start of the company.
As new technology develops, the way that companies can find and interpret data is
changing as fast as ever before. Companies today simply do not have the time or
resources to seek this data internally, so they seek services like IRi to help them out.
Marketing research today has changed drastically in the last decade or so. Market
research then included phone surveys, door-to-door surveys, and many other
non-efficient ways to collect data. Today, the Internet and social media have taken over
the industry, and is the largest product segment. “Research can be broadly divided into
two forms of measurement and interpretation: quantitative research and qualitative
research. In this industry, quantitative market research is used for the collection and
analysis of data to measure consumers' response to a particular product, issue, campaign
or related phenomenon. During the past five years, quantitative research has changed
significantly with the application of new technology and the ability to link various
databases. This has increased the sophistication of techniques used by market research
firms. Qualitative research attempts to explain how and why consumers make decisions
and is expected to account for 19.0% of industry revenue in 2016” (Ibisworld.com). The
following graph shows broadly the markets and segmentation in the market research
industry.
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The 56% of market research by electronic means has been increasing drastically in the
last several years and will continue to increase as new, innovative technology develops.
Looking at the major market segments in the market research industry paints an
interesting picture. “This industry’s markets can be divided into three broad segments:
providers of consumer goods and services wishing to measure and understand their
market; providers of media and advertising wishing to measure and understand their
viewers; and government institutions and political candidates wishing to measure and
understand their constituents” (Ibisworld.com). The following graph illustrates the major
market segmentation within the industry in 2016.
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In analyzing the market segmentation of the market research industry, it is not
surprising to see that IRi only focuses on the major segment percentiles of the pie chart.
This includes media, CPG or consumer goods businesses, and the pharmaceutical and
healthcare businesses. This equates to 58% of the market segmentation, which also may
include additional business from the “other businesses category”. The largest market in
the industry is from businesses that produce or sell consumer items, such as packaged
goods. Once again, it is not surprising that IRi’s primary focus is this market segment.
“Demand for market research from consumer goods and services providers has been
growing in the past five years, fueled by companies’ investments in research and
development. Industry demand from this market is expected to grow at a faster rate
during the next five-year period (Ibisworld.com). The other big segment is media. “Media
research includes measuring and profiling audiences across television, the internet and
mobile platforms. This research includes collecting ratings and viewer data for print and
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electronic media. Clients use media research to better understand their audiences and
maximize the value of their content” (Ibisworld.com). News America fits into this market
segment as they utilize IRi for their advertising production. This answers whom exactly to
target and advertise to, where to place these advertisements, and many more aspects
that News America uses to pinpoint and get the most attention/use.
As we can see from the pie graph, there is still a good percentage of business that
can be penetrated into. IRi may look in the future to penetrate these markets, such as
automotive, finance, banking, insurance, and potential from once again the “other”
category. Perceptibly, the current target market is the three broad segments as
mentioned above, and IRi is exceeding in the penetration of these segments. It will be
interesting to see what other markets it penetrates in the near future.
Industry/Competition Analysis
Competition
There are only a few major players, which hold significant market share that
dominate the market research industry. However, the major players are highly
competitive especially in terms of innovation. The firms within the industry compete
mainly with price and the quality of services. The services again change with innovation,
and the top player is the firm who consistently brings innovation to acquIRing data for
businesses to utilize. Large companies have the upper hand as, “Larger companies,
aside from leveraging their name recognition, have extensive data gathering systems
and infrastructure in place, allowing them to accurately obtain large amounts of
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information at lower costs” (Ibisworld.com). This makes it very difficult for smaller firms
within the industry to compete with the major players; hence the amount of mergers and
acquisitions has been steadily increasing.
As far as market concentration, the industry displays a low level of concentration.
“The Market Research industry exhibits a low level of concentration, with the top four
players expected to account for a combined market share of 28.9% in 2016. The industry
is largely comprised of smaller companies; more than 80.0% of industry enterprises
employ fewer than 20 people. In the five years to 2016, revenue growth facilitated a rise
in the number of firms operating in the industry. Over the next five years, the number of
market research firms is forecast to increase at an annualized rate of 3.8% to 41,373
enterprises” (Ibisworld.com). Looking into the major players, it is noteworthy to mention
Nielsen Holdings NV, one of the largest market research companies in the world. It
currently holds 15.9% market share. The following graph illustrates the major players.
For IRi, it is very difficult to compete with a player like Nielsen, however it has
been on track to compete on a very high level simply due to their innovation. The
success of Nielsen is primarily due to the fact that 85% of the company revenue is
recurring. This means that Nielsen’s clients typically commit to multi-year contracts. In
September of 2013, Nielsen gained a massive acquisition in Arbitron Inc. for an
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astounding $1.3 billion. Nielsen’s financial performance is continuing to improve as their
clients expand across new territories and again increase their budgets for market
research.
Another noteworthy main competitor of IRi in the industry is the Kantar Group,
which currently as the graph shows holds a 6.5% market share. Kantar is a global
advertising and marketing services company headquartered in the United Kingdom. A
familiar pattern is starting to develop in the industry, as Kantar was also a part of an
acquisition back in 2008. The company acquired market research company TNS with its
Research International business. This significantly increased their market share and still
continued to head in the right direction post-acquisition with the average revenue annual
rate was rising at an average annual rate of 3.1% up until 2016. (Ibisworld.com)
There exist many key success factors within this industry that have proven to work
for companies across the board. These include the following: Firms who have the ability
to quickly adopt new technology, Access to skilled and flexible workforce, Provision of
relevant results, Good project management skills, and lastly Development of a symbiotic
relationship with another industry” (Ibisworld.com). The last factor correlates with IRi with
their relationship with the consumer packaged goods industry in which remains their top
priority market. The first factor has definitely been IRi’s biggest one by far as the
innovation it has developed has been rather impressive in the last decade. Working on
these success factors is crucial to remain relevant in this highly competitive industry and
in order to have or maintain a competitive edge.
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Industry
The industry of market research has come a long way in terms of progression
through innovation and technology. There is a considerable amount of demand for data
that companies seek, and this should continue to improve looking ahead into the future.
“During the five years to 2021, revenue for the Market Research industry will grow as
businesses increase marketing budgets due to recovering economic conditions. The
rebounding labor market will lead to a rise in consumer spending, in turn expanding
corporate profit. With recovery underway, revenue is forecast to increase at an average
annual rate of 1.9% to total $22.2 billion over the five years to 2021, as businesses
continue spending more on advertising and research and development” (Ibisworld.com).
This information leads for reason to believe that the partnership between IRi and News
America has without a doubt room for growth in the next five or so years. In order to gain
a competitive edge, businesses will constantly seek to understand their customers and
target markets. As talked about in class, the last decade or so there has been a record
amount of mergers and acquisitions across the board in many different industries. In the
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market research industry, that is no different. For example, Nielsen, the industry’s largest
player and IRi’s main competitor in which we will assess next, gained approval to
purchase Arbitron. Arbitron is one of the industry's largest firms, and a major player in
radio research. This phenomenon will make it very difficult for new companies to enter
the industry. Another factor that would generate demand is media. With new media come
new opportunities. The fastest growing segment within the industry recently has been
mobile advertising. A 2013 report from ZenithOptimedia showed that mobile advertising
has been growing seven times faster than desktop Internet advertising. This is displaying
the constant adaptation that companies incur in this industry as technology continues to
progress. Also, “The continued fragmentation of consumer markets highlights the
importance of market research. During the past five years, social networking and
user-generated content increasingly allowed interest groups to create online
communities, making it easier to target specific demographic groups. Furthermore,
technology that tracks online information will continue to improve, integrating comments
made about brands on Facebook, Twitter and other social media platforms with real-time
sales numbers. Implementing this data in marketing strategies will become crucial in the
coming years and will improve many companies’ ability to manage brand development
and reputation” (Ibisworld.com). Looking at the industry from outside in, it is easy to
notice the potential that market research firms like IRi will have and what is still billions of
dollars of revenue to pursue in the near future.
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Influences of Porter’s Five Forces
Porter’s Five Forces Model was first introduced back in 1979 and started a
strategic revolution in the business environment. The five forces include rivalry among
existing competitors, threat of new entrants, threat of substitutes of service or products,
bargaining power of suppliers, and bargaining power of buyers. “The strongest
competitive force or forces determine the profitability of an industry and become the
most important to strategy formulation” (Porter). Using Porter’s model IRi can get a good
sense of where they stand strategically in the industry and how they match up against
competitors. The chart below illustrates Porter’s Five Forces Model.
The first aspect of Porter’s model is the industry competition. Currently in the
market research industry, competition is at a high level and firms compete on a variety of
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different factors like price and quality of services as mentioned previously. There exist
intense rivalry because only a few major players dominate the industry. (Kantar, IRi, Ipsos,
Nielsen, Westat, etc.) The major players also have significant leverage over other firms
competing just with their name, and can acquire much more data and information at a
much lower costs. The competition has been and will continue to steadily increase as the
major players continue to acquire smaller firms, which in turn increases their market
share.
The next aspect of Porter’s Model is the threat of new entrants and entry barriers.
According to Quickmba.com, “It is not only incumbent rivals that pose a threat to firms in
an industry; the possibility that new firms enter the industry also affects competition. In
theory, any firm should be able to enter and exit a market, and if free entry and exit
exists, the profits should be nominal. In reality, however, industries possess
characteristics that protect the high profit levels of firms in the market and inhibit
additional rivals from entering the market, or ‘barriers to entry’” (Quickmba.com). Barriers
to entry in the market research industry are low but significantly increasing because of
the market share of its’ top players especially through acquisitions. There is not much as
far as qualifications and licenses and even few barriers to entry, but the amount of
resources and multi-year contracts that top firms have makes it substantially hard to
compete against if a firm does so choose to enter the market.
The third aspect of Porter’s model is the threat of substitute products or services.
In the market research industry, and in IRi’s case, the threat is low. This is because of the
amount of resources that companies have developed that makes it very difficult to
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substitute. Clients typically, if they choose to do so externally, have a small range of
companies to choose from to better their business. Price allowing, they will typically pick
the major player’s services because of the strategic results that occur from the
information they are supplied with. Also, because of the constant innovation in the
industry, it would be hard for other substitutes to be relevant at all.
Next, the power of suppliers is the fourth aspect to the model. So who actually
supplies the market research industry in this case? It includes industries such as
commercial leasing, data processing and hosting services, VoIP, and wired
telecommunications carriers. The power of suppliers is low, because the industries
competitors have continually been developing methods of acquIRing vast amounts of
information.
The last force in Porter’s Model and the final aspect is the bargaining power of
buyers. “The power of buyers is the impact that customers have on a producing
industry… In reality few monopsonies exist, but frequently there is some asymmetry
between a producing industry and buyers” (Quickmba.com). In this case, the market
research industry has low buying power. This is mainly because of the fact that clients of
this industry even increase their marketing budgets as the economic conditions improve
to utilize companies like IRi and its resources. Also, clients can negotiate the multi-year
contracts as mentioned however because of the power of competitors, companies like
Nielsen and IRi have more price control than the buyers.
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SWOT Analysis
INTERNAL EXTERNAL
POSITIVE
Strengths
Research & Development
Procurement
Wide Product Portfolio
Client Loyalty
Acquisitions and Partnerships
Flexibility
Opportunities
Acquisition of Mobile Competitors
Innovation and R&D
Growth and Expansion
Internationally
Public Funding
NEGATIVE
Weaknesses
International Presence
Mobile Experience
Private Company
Not Process-Driven
Threats
Saturated Market
Privately Held
Nielsen Gaining CPG Knowledge
Strengths
Through the analysis of IRi’s environment and industry that it works in, it can seem
like the company is in danger of getting swallowed by the multitude of competitors.
While that can loom in the background, it is no surprise why clients continue to stick with
and defect to IRi. IRi has many strengths, most of which come from its core values,
innovation, and decades of experience. IRi has a solid R&D department that is constantly
bettering the technology currently available, while making sure to try and utilize and
discover new technological advancements that better their clients. The procurement of
IRi’s data is simply astounding with more than 100,000 households of data and scanners
in thousands of stores internationally. With the astonishing amount of data that is
collected and retained by IRi, this gives them the ability to use it in several different ways.
Their vast array of solutions and platforms is a major strength and asset to the company.
With all the data they pull, the solutions they have, advice they offer, and the overall care
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for the client, IRi’s loyalty is their lifeblood. With the majority of their clients resigning
multi-year, multi-million dollar contracts, this keeps IRi near the top and keeps them from
failing. With knowing their clients needs and really focusing on the end consumer in
every situation, IRi is able to very strategically align their goals and services with that of
their clients. This, of course, being the basis of MKT 325, is a central factor in IRi’s
business model, and is a major part of their continued success. This allows them to
partner with companies that will not only benefit IRi’s clients, but allows for a mutual
benefit between the two companies. It truly is a win-win-win situation between IRi, the
partner, and the end consumers. Lastly, IRi’s flexibility is key. From a recent interview
with Dave Buisson from IRi, “Nielsen and other companies are very process-driven … but
IRi’s flexibility allows for greater autonomy and use of resources for every individual
client’s needs and schedule” (Buisson).
Weaknesses
It would be naïve of any company to believe that they are immortal. Oftentimes,
the ones who allow that thought to corrupt their mindset, they end up filing for
bankruptcy. I wholeheartedly believe that IRi has management that constantly survey the
weaknesses, and the most obvious one is their lack of international presence. It is almost
laughable that a company with more than 35 years of experience and a product that is
essential to every business worldwide has such little international presence. Nielsen
dwarfs IRi with offices in hundreds of countries compared to IRi’s 9. This is not only an
embarrassment, but a massive weakness. However, within the last 5 years, many
Nielsen employees have been poached and brought to IRi to start a global penetration
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strategy according to Buisson. With IRi only testing the waters of mobile and electronic
marketing with comScore, they are leagues behind the curve, and are losing valuable
experience, time, and clients. However, the partnership is a step, and if funding allows,
IRi would be foolish to not make an offer to acquire a company with that expertise.
Speaking of funding, with IRi privately held, there is potentially less in their operating
budget compared to those who are public. IRi is losing market share, clients, and funding
because of Symphony Technology Group. However, with their great financials,
experience, and need to grow, many would bet that IRi goes public within the next 5
years. Lastly, Dave Buisson had mentioned that IRi is not process-driven. While this
breeds flexibility and autonomy, it limits the structure for the future. By not being
process-driven, IRi has a difficult time showing new minds how to operate and what to
do. This can limit client satisfaction if there is no consistency between solutions and
communication.
Opportunities
IRi has several observed strengths, but that doesn’t mean they can remain steady;
they need to encourage innovation, eliminate complacency, and be on constant lookout
for the next opportunity. A few opportunities that IRi has are apparent throughout this
report, but one that is a necessity is the acquisition of companies that are more
mobile-centered. IRi is just beginning to understand that some of their biggest
competitors are ahead of them because they fell short on a growing mobile and
electronic industry. IRi has the opportunity to look into purchasing companies that will
allow them a greater field of view of the market through a mobile and electronic lens.
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The biggest company that should be on their short list is their current corporate partner,
comScore. Another opportunity is the incessant technology growth. With better
technology, the more IRi can do. By being very involved in technology improvements,
and capitalizing before competitors can, IRi can be very successful. IRi is very strong
within the U.S., and arguably one of the best domestic data providers. By growing their
footprint abroad, they will not only capture more data from other parts of the world, but
will gain clients. Not only clients who want to know more about their business abroad,
but also those foreign companies who want to understand U.S. consumers better. One
of the last great opportunities that lie before IRi is their ability to go public. IRi has been
privately held for close to a decade, and while it was a great change of leadership then,
by going public with the advancements they have made, they can bring in many more
ideas and much more funding. This stands to benefit every stakeholder within IRi.
Threats
With everything supporting this in the industry analysis, the industry, by it’s nature,
is a threat to IRi. With over 41,000 firms expected to be in the industry in the next 5
years, IRi needs to make substantial moves in order to minimize the threat that other,
developing firms pose to them. By seizing the opportunities listed, IRi can get ahead of
their upcoming competitors and potentially capture more market share. While it is an
internal weakness, being privately held is also a threat. This could potentially limit IRi’s
growth, but also lead more investors, clients, and partnerships towards IRi’s competitors.
IRi needs to understand they are being held back by being privately held, and they need
to open themselves up to the public. Lastly, to continue playing a broken record, Nielsen
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poses a threat. Nielsen has been mentioned more that one would care to read at this
point, but for good reason. Nielsen is the leader in the industry, they have the most
clients (along with most client loyalty), and they are quickly “boxing out” IRi. They are a
leader in mobile and electronic data and are a giant in the international sense. With
Nielsen gaining more knowledge about the CPG realm through recent partnerships, this
could render IRi literally useless. IRi needs to make drastic changes to remain a sizeable
threat to Nielsen.
Quantitative SWOT Assessment
Strengths
Research & Development
Wide Product Portfolio
Client Loyalty
Acquisitions & Partnerships
Flexibility
Procurement
M ● I = R
3 ⚫3= 9
3 ⚫ 3 = 9
3 ⚫ 2 = 6
3 ⚫2= 6
2 ⚫ 3 = 6
2 ⚫ 3 = 6
Opportunities
Acquisition of Competitors
Growth and Expansion
Innovation and R&D
Public Funding
M ● I = R
3 ⚫ 3 = 9
3 ⚫ 3 = 9
3 ⚫ 2 = 6
3 ⚫ 2 = 6
Weaknesses
International Presence
Mobile Experience
Privately Traded Company
Not Process-Driven
M ● I = R
-3 ⚫ 3 = -9
-3 ⚫ 3 = -9
-2 ⚫ 2 = -4
-1 ⚫ 1 = -1
Threats
Privately Held
Nielsen Gaining CPG Intel
Saturated Market
M ● I = R
-3 ⚫ 3 = -9
-3 ⚫ 3 = -9
-2 ⚫ 2 = -4
M = Magnitude of element Magnitude scale ranges from +/- 1 to +/- 3
I = Importance of element Importance scale ranges from +/- 1 to +/- 3
R = Rating of element
Strengths
Referring to the chart above, IRi’s highest rated strengths are R&D and the variety
of products they have. Both factors scored a 9 because they are the most valuable
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aspect of IRi’s business. Referring to the Strategic Positioning section, IRi prides
themselves on, and surpasses major competitors in variety of products as well as their
ability to develop new technologies to enhance the outputs to the client. Ranking in the
middle for strengths, IRi’s client loyalty is a major part of its success, hence the 3 in
importance. The ranking of the 2 signifies that while they are doing well, they aren’t
doing the best. Nielsen has a 90%-95% resigning contract rate. IRi still has room to grow
to hit that number. Also ranking in the middle, IRi’s corporate partnerships and
acquisitions. IRi understands that this will help them grow and understand markets they
could never understand on their own. This is vital to their business now and will be more
vital going forward, hence the 3. While they have many partnerships like comScore,
Rentrak, and News America Marketing, they still know they aren’t doing the best they can
be, hence the 2 in magnitude. On the lower end of IRi’s strengths, flexibility and
procurement. These rank near the bottom because, while they do a great job at both,
they aren’t of utmostimportance. Flexibility allows IRi to work around each of their
client’s schedules, and procurement allows IRi to sift through mounds of data, but if IRi
wasn’t asflexible it wouldn’t be the end of IRi. Likewise, having 100,000 households is
great, but technically IRi only uses 60% of that data, so more isn’t necessarily always
better.
Weaknesses
As aforementioned, IRi is not blind to their flaws. They understand the gravity of
all their weaknesses, and have plans to handle them accordingly. However, to reiterate,
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International presence is arguably their weakest point. The importance of moving into
more territory to expand their name and client base is a principal concern among top
management. As their biggest flaw and with the importance of international business
today, it scored a -9. If not tied with international presence, mobile experience is a close
second in major flaws of IRi. As more people are implementing more technology in their
day-to-day lives, it becomes an essential aspect of marketing research that IRi lacks.
With the importance of technology in marketing research, and the lack of IRi’s
involvement in it, that scored a -9. Being privately held is holding back from IRi
streamlining their process, limiting funds that could be used internally, and is overall
limiting growth. With it being bothersome but not necessarily essential, and with the
impact it’s having on the company, it is ranked at -4. The last factor that was outline
above has to do with a process to IRi’s methods. This could help IRi replicate more
consistent, concise results, but with no push from outside sources (being private) and no
major impact, it is only a minor inconvenience.
Opportunities
IRi has many opportunities that, if seized, could probably land them among the top
3 in the industry. IRi’s acquisition of mobile competitors ranks highest, and if it could go
higher, it would. IRi understands the need for a mobile aspect of their business. This
ranked 3 on importance and 3 on magnitude, because this opportunity will not be around
long. While they have great relations with comScore, they should be using this as a way
to get exclusivity to their methods and practices in perpetuity. Growth internationally is a
major endeavor that will take many resources and is no child’s game. Putting more
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pressure internationally should be very high up on IRi’s short list of things-to-do. With
expansion in general high on the list, this factor received a 3 on importance and on
magnitude. Innovation and R&D comes in just below expansion because, while very
important and paramount to IRi’s success and values, nobody can make breakthroughs
overnight. Constantly surveying the technology horizon and testing new methods and
techs should be at the front of their mind, however since it can be a slow process, the
magnitude of this falls at a 2. Lastly, public funding is extremely important to IRi. With
the ability to employ 2,500 employees, train them, support their current technology while
investing in better tech, IRi simply needs more funding. Going public is a major deal, but
also shouldn’t be on the backburner. The importance is definitely a 3, but the magnitude
of this is a 2 because they shouldn’t get greedy.
Threats
Not only is IRi being crippled from within by being privately held, but it is allowing
other major competitors to gain more traction and overcome what IRi cannot while being
privately held. Like being in the pits during a NASCAR race, IRi can fix issues and
reorganize themselves, but it is not getting ahead. This is severely detrimental to
domestic and foreign growth, global brand image, and long-term goals. This is very
much a threat, and accordingly scored a -9. Worrying about their chief competitor,
Nielsen is taking advantage of IRi’s lack of mobile knowledge and trying to hit them
where it would hurt, CPG. With Nielsen being a leader in media and mobile tracking, as
well as moving heavily into CPG, IRi could find themselves redundant within a market
where redundancy fails. This threat is real and needs to be addressed. This scored a -9
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as well. Lastly, the entire market that every marketing research firm is in technically
qualifies as a threat. With new businesses springing up frequently, and stagnant
businesses either failing or being acquired, this threatens everyone within the industry.
IRi must keep innovation at the forefront of their plans, and must continue to add value to
clients where others do not. With this constant threat looming over, but with IRi’s
decades of experience and knowledge, this factor scores a -4.
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NEWS AMERICA MARKETING SITUATION ANALYSIS
NEWS AMERICA MARKETING SUMMARY
News America Marketing is a premier
marketing services company in the United
States that prides itself on being able to
reach consumers at every point on the path
to purchase: at home, online, and in the store. Through of broad portfolio of advertising
products, News America Marketing is able to help its customers grow their business
through selling them a consultative marketing solution that will effectively target
consumers. Some of their portfolio products include: Smart Source Magazine™ , Smart
Source In-store Media, Smart Source Media Group Custom Production, and
Programmatic Digital Display Advertising.
News America Marketing competes in the print advertising Industry (US - 54186)
as well as various others including in-store advertising and digital advertising. As of
recently, the print advertising industry has been steadily declining while the in-store
industry has been growing through technological advancements. Of the three industries,
the digital advertising industry has been achieving the most robust growth.
History
News America Marketing is a wholly owned subsidiary of News Corp. News Corp
was formed in 1979 by Rupert Murdoch as a holding company for News Limited. Since its
birth, News Corp has grown to become the largest news and information service
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provider. News Corp has found success by acquIRing companies such as The FOX
Entertainment Group, The Wall Street Journal, Dow Jones & Company, GQ, Vogue,and
many more.
News America Marketing (US - 54186) was founded when News Corporation
purchased the marketing divisions of two Free Standing Insert business competitors:
Quad/Marketing Inc. and Product Movers Inc., in 1988. News America Marketing has
since been a subsidiary of News Corp. In 1997, News America purchased an in-store
marketing company called Actmedia. As a result, the company changed its News
America to “News America Marketing”(America Pink). Since then, News America
Marketing has become arguably the largest source that controls most of the in-store ads
and grocery coupons in the United States.
More recently, News America Marketing has been making larger strides in the
digital realm of advertising. One of the largest factors contributing to their growth in this
segment is due to their merger and acquisition growth strategy. On July 24, 2015 News
America Marketing acquired Checkout 51. Checkout 51 is known as “the data-rich, digital
and mobile coupon company based in Toronto” (News America Marketing). Checkout 51
uses a digital platform so consumers can redeem coupons using their smartphones to
make couponing easier. The technology allows consumers to save money by keeping
their receipts and applying the coupons to their purchases. This is critical to the future for
News America Marketing because it makes the lives of the everyday consumer easier by
simplifying the process of couponing into a digital format. Since it goes along with one of
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the three main product lines, this gives News America Marketing an edge on their
competition.
In order to make everything possible, News America Marketing has formed
strategic alliances with various companies throughout their history. One of the most
significant partnerships they formed is with Information Resources Incorporated (IRi).
Through this partnership they have access to big data related to scanners across retail
grocery and drug stores throughout the entire United States. Another firm News America
Marketing has aligned with is Spectra Marketing. This firm has given them extreme
targeting capabilities in their direct mailer business as the company has an expertise in
gathering household data and information. In the digital realm, News America Marketing
has partnered with OwnerIQ. This company is a digital marketing firm that helps News
America Marketing run Programmatic Digital Display advertising programs. Their
competencies lie in tracking browsing behaviors of online users so that News America
Marketing can optimize their digital ad campaigns and allocate impressions based on the
highest percentage of conversion. Overall, these firms have helped News America
Marketing to deliver quality advertising programs to their key accounts.
Locations
News America Marketing is very widespread across the United States and even
reaches into Canada (referred to as News Canada Marketing). Within the United States
News America Marketing has locations in San Francisco, Los Angeles, Dallas,
Bentonville, Minneapolis, Chicago, Cincinnati, Atlanta, Charlotte, Pittsburgh, Wilton, and
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the global headquarters are in
New York City (refer to map on
right). Within Canada, there are
two offices in Toronto and
Montreal. Even though News
America Marketing is very well
established in the United
States, they are currently pursuing an organic growth strategy through continuously
researching viable markets to expand to domestically and internationally.
Markets and Products
News America Marketing competes in a variety of markets within the realm of
advertising. Their portfolio mainly spans through the markets of print, in-store, and digital
media. In the print and in-store markets, News America Marketing is considered to be a
powerhouse and industry dominator as it controls an estimated 50%-60% of the insert
market and as much as 90% of the in-store business (IBISWorld).More recently, the
company has been making large strides in the digital market through partnerships and
acquisitions. This sector of the business is by and large the fastest growing sector in the
company.
Products that News America Marketing produces in their print sector include
SmartSource Magazine as well as custom production items from SmartSource Media
Group. The magazine is essentially a large coupon book that is inserted into newspapers
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that are paid for through subscriptions of consumers. SmartSource Media Group is a
separate print sector of the business that offers higher customization of print products
that can be delivered in a more targeted manner than SmartSource Magazine. Products
offered through this sector include:
● Customized direct mailers
● Customized Newspaper inserts
● Newspaper bags
The in-store front is arguably the most market-dominant business unit of News
America Marketing. With a network of more than 56,000 stores, News America
Marketing has advertising rights all across the united states. The variety of store types
that News America Marketing advertises in include supermarkets, drug stores, dollar
stores, office supply stores, mass merchandisers and specialty stores. From national
chains such as Walgreens and CVS down to local community grocery stores, News
America Marketing has the capability to reach consumers anywhere. Products that News
America Marketing produces for in-store advertising include:
● Shelftalk Banners
● Tearpad Banners
● Coupon Machines
● Packaging Display advertisements
● Sampling advertisements
● Floortalk stickers
● Cart advertisements
● Ceiling banners
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For an in-store advertising campaign to be successful, News America Marketing often
bundles products into a mix that they think will bring the most ROI to their customers.
In an increasingly digital world, News America Marketing is shifting a lot of their
efforts to developing cutting edge products that will allow advertisers to remain
competitive. Currently News America Marketing offers:
● Digital couponing
● Direct-to-card downloading
● Targeted email blasts
● Digital display advertising
● Programmatic digital display advertising
Key People & Positions
Martin Garofalocurrently serves as the Chief Executive Officer and
President of News America Marketing (Bloomberg). He previously
served as Executive Vice President of all of News America
Marketing’s Sales divisions, and prior to that as Executive Vice
President, Shopper Marketing. During Martin’s 27 years at News
America Marketing, he has held numerous positions such as a few National Sales
Manager roles and some Senior Vice President roles. Before joining News America
Marketing in 1987, he spent several years as a marketing manager with NFL Properties.
He started his career in packaged goods as a brand manager for both Procter & Gamble
and Nestlé (News Corp). The role Martin carries with News America Marketing is
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overseeing the overall strategy of the organization. Articulating the total value
proposition that IRi has to offer is essential in correspondence with Martin. If IRi can
demonstrate how their services align with the long-term strategies of News America
Marketing, Martin will be on board and will sign off on further development of the
account.
Chris Blancocurrently serves as the Chief Financial Officer and
Executive Vice President of News America Marketing. Prior to his
appointment to Chief Financial Officer, Blanco held the title of Vice
President, Controller for eight years. He joined News America
Marketing in 1999, serving in many capacities in the organization's
Finance department where he has been responsible for the
company's accounting, financial reporting, accounts payable, and payroll departments
(PR Newswire). Chris will be the person that approves further spending with IRi.
Increased spending will require providing justifications and evidence for ROI to the
company.
Katy Dicksoncurrently serves as the Chief Marketing Officer of
News America Marketing (News America Marketing). Katy is an
experienced marketing executive, who has a vast knowledge of
marketing and CPGs to the News America Marketing. Katy
served as Vice President of Marketing for a number of General
Mills brands and has led three consecutive teams in receiving General Mills Champion’s
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Award (News America Marketing). Katy will be in charge of overseeing the
implementation of added products and services into the sales strategy of News America
Marketing. The conversations had with Katy will need to be very interactive and many
questions will need to be asked to assess the needs of the company’s sales strategy.
Katy will help to determine the level of customization IRi will need to provide in their
product offering.
Emmanuel Mirancurrently serves as the Chief Technology Officer
for News America Marketing (Bloomberg). Emmanuel is a seasoned
technology and digital executive with global experience in the CPG
industry. He spent a majority of the past 17 years at L'Oreal, starting
in their United States division in 1997 on the technology side of the
business. He took on a series of expanded roles that included
e-commerce and digital marketing before being News America Marketing the Global
Executive Director of IT for BioMerieux in 2012. He returned to L'Oreal in 2013, as the
Global Head of Digital Commerce Technology for the L'Oreal Group, where the was
responsible for the launch of ten brands online across all three L'Oreal zones (Americas,
Europe and Asia) (PR Newswire). Emmanuel will be in charge of managing the integration
of added products and services into the infrastructure and internal technologies of News
America Marketing. The conversations had with Emmanuel will need to be very
interactive and many questions will need to be asked to assess the specific needs of the
52

company’s technology. Emmanuel will also help to determine the level of customization
IRi will need to provide in their product offering.
INTERNAL ANALYSIS
Financial Performance
The direct mail advertising industry is currently a $12 billion industry. After the
recession, an increase in corporate profit margins led to a rise in advertising spending.
As a result, IBISWorld predicted that revenue for the Direct Mail Advertising industry
would increase over the five years leading up to 2016. During the next five years leading
up to 2021, industry revenue is expected to become stagnant and/or decline (IBISWorld).
From 2014 to 2015, News America Marketing experienced tremendous growth
primarily because of their digital markets expanding. We can see from the graph above
that they have seen a 16% increase in revenue from 2014 to 2015. There is also a 22%
increase in "Other" revenue recorded which is made up of their newer markets. In the
past year, News America has seen a 7% decrease in revenues, mainly due to a decline in
print sales. In fact the revenue of prints sales for News America Marketing declined to
only $87 million in 2015 for FSI products and direct mailers. These losses were partially
53

offset by a growth in digital advertising as well as in-store advertising. There was a partial
offset of an increase in $50 million in revenue, primarily due to the increase in in-store
advertising sales (News Corp Annual Report).
Source:Morningstar.com
Looking at the five year sales and profits of News America Marketing shows there
has been a steady decline from 2011 to 2015. In 2011, News Corp. had a revenue of 9,095
and in 2015 they recorded 8,633. Going along with that, their operating expenses have
increased from 3,078 to 3,286. The good news for News Corp. is that they're gross profit
54

has risen a great deal just from 2014-2015 alone, but still isn't up to what the gross profit
was in 2011. This should be a wakeup call for News Corp. because as we saw with News
America Marketing from 2014-2015, their operating expenses were increasing as well
because they had to make up for lost business. I think this may have something to do
with how News Corp. has acquired so many companies that they can't give their full
attention to all of them. For example, in 2011 News Corp. reported that MySpace.com had
been suffering a great deal under News Corp. "News Corp. reported third-quarter net
income of $639 million (MySpace.com), a 24% drop from $839 million a year earlier.
Revenues fell 5% to $8.3 billion, from $8.7 billion a year earlier," (LATimes.com). What we
can understand from this, is that News Corp. needs to be more particular with the
companies that they involve themselves with, because if one of these giants goes down,
they could bring the whole company with it.
Even though there has been a slight decline in print advertising sales, News
America Marketing will still rely on the FSI as their main revenue driver and will continue
to push it as one of their most successful products. Leveraging growth in both the digital
and in-store markets will ultimately help News America Marketing to continue to increase
profitability in years to come. There may come a time when print advertising, such as the
FSI, will become obsolete so News America Marketing will need to continue growing in
other aspects of their business such as digital advertising.
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Corporate Structure
News America Marketing is a relatively tall organization with a centralized
structure. This structure is necessary because the company employs more than 1,000
people and needs a strong hierarchy to effectively manage its efforts. As any corporation
does, there is an executive team consisting of a CEO, CFO, COO, CMO, and CTO. The
executive team manages the overall strategy of the company and focuses on “the big
picture”. This allows the company to maintain a focus on where they are headed while
simultaneously perfecting their current operations.
Below this team are Executive Vice Presidents (EVPs) that oversee the
performance of the Individual Strategic Business Units (SBUs). Within News America
Marketing, there are five distinct SBUs within the organization that serve a specific role to
the overall strategy of the company. These SBUs include Core, SmartSource Media
Group (SSMG), Digital, Shopper Marketing, and Partnerships. Outside of these SBUs are
sectors that cover the basic functions of the company including accounting and finance,
sales support, and field support.
Directly reporting to EVPs are Division heads (Head of Eastern, Central, and
Western Divisions) that oversee the efforts of sales staff in their respective geographic
region for all of the SBUs. Having this team not only allows the division heads to be
liaisons in communicating big-picture information, but it also allows them to oversee the
day-to-day progress of their sales teams.
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The sales force of News America Marketing is organized primarily by geography
(i.e. Western, Central, Eastern), secondarily by function (Core, SSMG, etc.), and lastly by
advertiser product category (i.e. beauty, pet food, hygiene, etc.) Sales teams are
overseen by a Group Sales Manager (GSM) who serves as the “team lead.” Group Sales
Managers typically handle the largest accounts and oversee the daily sales activities of
the entire team. Directly below the GSMs are numerous Account Directors with specific
product category assignments. The Account Directors (ADs) work closely with their
Account Associates and Account Coordinators who aid in account development to the
AD’s set number of clients through lower-level sales activities. The organization of the
typical sales team allows for a dynamic of checks and balances which promotes
efficiency and thoroughness.
Mission
News America Marketing's mission believes in making it easier for people to
access information. In Mark Cuban's book, "How to Win At The Sport of Business," Mark
Cuban talks about the path of least resistance. The path of least resistance states that
people are attracted to find the easiest method possible to acquire something. In
business, companies will thrive if they give their customers the simplest path to acquire
the product in their industry. Cuban believes that consumers are more concerned with
how simple is it to acquire more than the actual brand behind the product. News America
Marketing is taking a similar approach by saying that they understand the path of least
resistance and that they are appealing the most to their customers than their
57

competitors. Their mission statement says, "We're removing the boundaries for how and
where people access and enjoy high-quality content."
Organizational Culture
At News America Marketing, culture is extremely important and heavily influences
the way business is done. News America Marketing firmly believes in developing its most
valuable investment: its people. Additionally, they promote an “open door policy” that
applies to everyone in the company, including the CEO. This type of culture creates a
cohesive environment that fosters teamwork to achieve results.
The number one way News America Marketing develops its employees is through
the Sales Development Program. Through this program, the company teaches the skills
employees need to be successful salespeople and gives them the tools they need to
continue their growth. During the development program, salespeople will experience
both guided learning as well as hands-on experience.
Account Coordinators are responsible for performing various account
development duties to supplement their guided learning. After 15 months in this role,
salespeople become Account Associates (AAs). As AAs, employees are given additional
responsibilities and are challenged with generating new accounts. This not only builds
on what they know but helps them put it into practice before getting their own accounts.
After another 15 months, salespeople are then evaluated to determine if they are ready
for the role of Account Director. At this point, salespeople can become more autonomous
in their role and get to call the shots on how they handle accounts.
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All along the way, salespeople are receiving more compensation and higher
bonuses. This method of training not only incentivises growth and performance but it
increases a sense of accomplishment among salespeople and makes them feel more
valued as an employee. In the long run, this reduces employee turnover which proves to
be a very cost-effective strategy for the entire organization.
In addition to developing the company’s human capital, News America Marketing
promotes an “open door policy” that creates open lines of communication between all
employees within the company. Entry level salespeople are not only allowed but are
encouraged to approach executives to have conversations with them. This culture is so
strongly embedded within the organization Martin Garofalo (CEO) has been known to
approach the lowest level of the company (the interns) without hesitation. This practice
builds unity within the company and helps to increase collaboration among all levels of
the organization.
Product Mix
News America Marketing boasts an expansive product portfolio that allows them
to target consumers at all points on the path to purchase: at home, online, and in-store.
Many of their product offerings stem from assets of the company while others are
facilitated through outside partnerships. Their product mix includes:
● Free-Standing Inserts
● Custom Production
● SmartSource Digital
● In-Store Advertising and Merchandising
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Free-Standing Insertsare multiple-page marketing booklets containing coupons,
rebates and other consumer offers, which are distributed to consumers through insertion
primarily into local Sunday publications. News America Marketing is one of the two
largest publishers of free-standing inserts in the United States Advertisers, primarily
packaged goods companies, pay News America Marketing to produce free-standing
inserts where their offers are featured, often on an exclusive basis within their product
category. News America Marketing contracts with and pays publishers as well as printers,
among others, to produce and/or distribute free-standing inserts in their papers.
Currently, News America Marketing has contracts with more than 2,000 publications
across the United States News America Marketing’s free-standing insert products, which
are distributed under the SmartSource Magazine brand, have a circulation of more than
73 million based on internal sources and are distributed 43 times a year. SmartSource
Magazine is an asset owned by News America Marketing. Campaigns that run through
SmartSource Magazine allow advertisers to reach a mass audience with repeated
impressions. This product offers the lowest cost per impression. The cost per thousand
(CPM) is roughly $5.00.
Custom Production embodies more targeted advertising tactics can easily be
delivered through Custom Production which is handled by SmartSource Media Group.
SSMG can deliver unique campaigns to highly targeted audiences through products such
as customized direct mailers, newspaper inserts, newspaper bags, and door hangers. To
distribute these products to specified groups of consumers, News America Marketing
has partnered with Spectra Marketing to gather geographic, demographic, and even
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purchasing behavior data. Campaigns that run through custom production will ultimately
achieve the highest conversion rate.
SmartSource Digitalincludes all of News America Marketing’s digital offerings in
the United States and Canada. It encompasses printable couponing, load-to-card
couponing, targeted email blasts and programmatic digital display advertising.
Campaigns utilizing printable couponing and load-to-card are facilitated by News
America Marketing while targeted email campaigns and programmatic digital display ads
are facilitated by partner company OwnerIQ and over 300 partner websites. Targeted
email blasts are distributed through email lists built by OwnerIQ that can be organized by
geography, demography, and purchasing behavior. Programmatic digital display
campaigns are programs that automatically optimize over time to target consumers that
show higher conversion tendencies. Going through digital products allows advertisers to
achieve higher quality impressions than any other product in News America Marketing’s
portfolio.
In-Store Advertising and Merchandising isNews America Marketing’s strongsuit.
They are a leading provider of in-store marketing products and services, primarily to
consumer packaged goods manufacturers. News America Marketing’s marketing
products include: at-shelf advertising such as coupon, information and
sample-dispensing machines, as well as floor and shopping cart advertising. Currently
News America Marketing’s in-store programs are found in more than 56,000
supermarkets, drug stores, dollar stores, office supply stores, mass merchandisers and
specialty stores across North America. News America Marketing also provides in-store
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merchandising services, including production and installation of in-store programs
through a field team made of part-time employees (NAM Annual Report).
Strategic Orientation
While their competitor chooses to compete as a low-cost supplier, News America
Marketing chooses to employ a differentiation strategy. By providing the highest quality
products along with a high level of service, News America Marketing targets customers
that are not low-cost shoppers but are high-value shoppers. This means that News
America Marketing’s main goal is to communicate their value proposition through
demonstrating the ROI to their customers. News America Marketing is able to do this
through conducting research and partnering with marketing research firms to provide
concrete evidence of value to their customers.
One research practice News America Marketing utilizes is conducting Matched
Panel Tests that track the effectiveness of in-store programs. These tests observe two
stores that are similar in nature. One store has an in-store program running for a specific
product while the other doesn’t, and the test tracks the difference in sales. Almost all of
the time, there is a significant difference in sales and News America Marketing is able to
use this evidence as a reason why their customers should buy their products.
In partnering with IRi, News America Marketing can do a similar test by observing
point-of-sale data. When a company runs a program in the FSI, salespeople can pull
real-time numbers that show sales lift data for the product the advertiser is promoting in a
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certain time frame and geographic region. When advertisers see proof of ROI, they
choose to continue giving News America Marketing their business.
Even though News America Marketing differentiates itself through providing
higher quality products and services than its competition, the company will become
stagnant if they do not continue to expand the business. Growth strategies that News
America Marketing uses include market penetration, market development, product
development, and diversification. Below is a chart that demonstrates strategies News
America Marketing employs in each of these categories:
Markets/Products →
↓
Current Products New Products
Current Customers
● Increase circulation for FSI
● Increase programs for In-store
● Increase scope of digital
campaigns
MARKET PENETRATION
● Increase Digital capabilities
● Increase In-store capabilities
● Increase complexity of
targeting tactics
PRODUCT DEVELOPMENT
New Customers
● Generate new business in
current industries
● Enter new industries (i.e. adult
beverage industry)
MARKET DEVELOPMENT
● Research and develop new
sales territories
● AcquIRing digital companies
(i.e. Checkout 51)
DIVERSIFICATION
Market Penetration
News America Marketing constantly strives to grow their current business by
leveraging the partnerships they’ve built. This would entail up-selling their current
purchasers to spend more on their current products. Examples of this would be
increasing circulation for a particular FSI program, Increasing the number of stores a
63

customer includes their campaign in, and increasing the scope of a digital campaign by
purchasing a higher number of impressions. Achieving market penetration requires the
salespeople of News America Marketing to consistently create and communicate added
value to their customers.
Market Development
Since News America Marketing is such a powerhouse in their industry, they have
built a reputable brand. Additionally, News America Marketing possesses supplier power
because advertisers do not have many options to choose from. This means that News
America Marketing has the liberty to be selective about who they choose to sell to.
Instead of trying to win any and every account, News America Marketing spends its time
trying to win larger accounts because they have more resources and higher spending
potential.
Salespeople at News America Marketing are always on the lookout for prospects
in current industries they sell to. This process involves researching and qualifying
companies to be potentially profitable relationships. Getting their foot in the door is not
difficult, the challenge is demonstrating the value that News America Marketing has to
offer.
Beyond selling to new customers in current industries, News America Marketing
explores new industries that are relatively “untapped”. If they see the industry as viable
opportunity, they will figure out a way to tap into that industry. A prime example is the
adult beverage industry. Very recently, News America Marketing realized the spending
64

potential in this industry and has begun to develop a plan to begin expanding into this
industry.
Product Development
In the advertising realm, it is important to constantly have fresh and innovative
ideas. In Key Account Management (KAM) it is very important to continually deliver
increased value to the customer. For News America Marketing this means increasing
their capabilities with their advertising products to deliver more efficient and more
targeted marketing solutions. More specifically, News America Marketing has been
making great efforts to increase their digital advertising capabilities and in-store
advertising capabilities. By continually investing resources in developing new products,
News America Marketing will be able to deliver added value to their customers for
long-term relationships.
Diversification
Arguably the most lucrative form of growth is diversification. Developing new
products to enter new markets can be hard to manage, but can bring immense
opportunities for growth. Essentially, with great risk comes great reward. One major
stride News America Marketing has made in diversifying is acquIRing the receipt
recognition company Checkout 51 this past summer. This acquisition has not only given
News America Marketing a whole new set of customers, but it has given the company a
tool to further develop the digital and in-store products in their current portfolio. With this
65

new technology, News America Marketing has strengthened its current and future
position in their current and new markets.
Core Competencies
Through best practices and company infrastructure, News America Marketing has
developed a set of core competencies that have led to competitive advantages. The
company’s best practice includes not only having high quality products and services but
also communicating the value of those products to customers. Structural characteristics
that provide strategic value include effective organization of salespeople and teams as
well as efficient internal order processing systems. Below is a “value constellation” that
illustrates the core competencies of News America Marketing:
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The best practice News America Marketing uses is quantify their total value
proposition and demonstrating it to their customers. In this day and age, selling has
become less about personal relationships and has become more about efficiency.
Anthony Iannarino argues in his article Your Price Is Too High!, “Regardless of the words
your prospect uses to bring up a discussion of price, what she’s really saying is she
doesn’t perceive enough value to pay the price you’ve quoted.” Iannarino also argues
that a customer isn’t paying for your product or service but is rather paying for the
outcome of your product or service. Essentially, a Key Account Manager must
demonstrate that their product or service is worth the premium price that the customer
will pay for it because it will bring about a positive outcome. In order to do so, the Key
Account Manager must create benchmarks to quantify the value and outcome of their
product and service.
News America Marketing organizes their FSI product into market segments based
on geography and they can calculate the exact amount of impressions a campaign will
achieve based on the newspaper publications they produce inserts for. By providing this
information to their customers, they communicate exactly how many impressions their
advertising program will obtain before they even run it. The number of impressions is an
important metric to customers because the more impressions their programs generate,
the higher the potential they will have to increase sales. After a program is run, News
America Marketing follows up by providing a data analysis that demonstrates the ROI of a
FSI campaign using LiquidData provided by IRi.
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