Marketing plan for AFR on www.newsstand.com

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University Degree Business and Administrative studies

24738 International Marketing Management                                            

International Marketing Plan for AFR on www.newsstand.com

                   

UNIVERSITY OF TECHNOLOGY, SYDNEY

Faculty of Business

School of Marketing

GROUP REPORT

MARKETING PLAN FOR AFR

ON WWW.NEWSSTAND.COM

Report to:

Iain McDonald

Class: Wednesday 6-9

28.05.2003

                              By:                                   Student No.

                              Natalie Bosilkov                02114419        

                          Ya-Hui (Anita) Chiu        10078715

                        Poutintseva Svetlana        00094476

        Gaurav Sood                    02121251

        Keyur Thakrar                 02097576

        ############

                        

Completed as part of the requirements for

24738 International Marketing Management

1.0 EXECUTIVE SUMMARY        

2.0 INTRODUCTION        

3.0 SITUATION ANALYSIS        

3.1 Business environment        

3.1.1 Economic conditions        

3.1.2 Social and Cultural factors        

3.1.3 Technological factors        

3.1.4 Political/ Legal/ Institutional factors        

3.2. Market analysis        

3.2.1 The product market        

3.2.2 Market Forecast        

3.2.2.1 Market characteristic, Developments & Trends        

4.1 Strengths and Weaknesses        

11.0 REFERENCE        

TABLE OF CONTENTS

1.0. Executive summary

2.0. Introduction

3.0. Situation analysis

        3.1. Business environment

        3.2. Market analysis

        3.3. Competitor analysis

        3.4. Organisation’s assets and skills

4.0. SWOT analysis

        4.1. Strengths and weaknesses

        4.2. Opportunities and threats

        4.3. Implications of SWOT analysis

5.0. Evaluation of alternative marketing strategies

6.0. Objectives

        6.1. Organisation mission and corporate strategy

        6.2. Company product/market objectives

7.0. Recommended marketing strategy

        7.1. Target markets

        7.2. Market positioning

        7.3. Marketing mix

                7.3.1. Product/service

                7.3.2. Place (distribution)

                7.3.3. Price

                7.3.4. Promotion

8.0. Economic evaluation

        8.1. Planning Assumptions

        8.2. Forecast Sales (and market share) and Costs (capital, Operating, marketing)

        8.3. Forecast profitability (or break even analysis)

        8.4. Sensitivity Analysis (incorporating contingency issues)

9.0. Implementation and control

        9.1. Formal project plan for implementation of recommendation

        9.2. Monitoring of action plan

        9.3. Formal contingency plans

10.0. End notes, Bibliography, appendices

  1. EXECUTIVE SUMMARY

In recent decades, companies tend to do business in the international market rather than simply staying in their home country. There are several forces for companies doing business this way. These are such things as the management orientation changes, the world trading systems, the communication and transportation improvement. An another important element to consider which enables international growth and thus the Australian Financial Review (AFR) to expand into the UK market is technology. Technology enables people’s life to be more convenient and comfortable. (Richard Fletcher, Linden Brown, 2002, p6-9).

A review was undertaken in April – May 2003 to determine the feasibility of AFR. The marketing strategy of AFR will be covered in four sections. Product strategy used for electronic publishing of the AFR. Place strategy, is the electronic publishing by NewsStand Inc. The price strategy will be the same as the printed version in Australia. The promotion strategy will be if you buy a copy of the AFR you will receive two weeks free subscription and also some gifts will be provided for subscribers of one year to attract customers.

The total investment required is only fixed cost- salaries and delivery cost. We will employ four executives, which will take care of the all the operations for the United Kingdom market. The salary cost will be $280,000 per year. NewsStand Delivery Charges are directly related to the number of copies sold. We are assuming these charges to be 15 cents per copy subscribed so they are calculated accordingly.

Based on the both internal and external analysis of the situation of UK market and Fairfax, the expectation for ROA in 2004 is 1.6%, and 5.3% for year 2005, and it will increase to 14% in year 2006. For the Return on sales, it will increase from 17% to 78% from year 2004 to 2006. The revenue we are expecting is $1,246,256.55 in year 2004 to $3,214,170.44 by year 2006. The net profit after tax would be $211,580.11 in year 2004 to $801,317.67. The market share is also increase from 30% to 50%.

This plan can be put in place and ready for an official launch by 2004. This period is recommended so as to reach the most target customers, and so that exposure will be at its highest.

  1. INTRODUCTION

The Australian Financial Review (AFR) is one of major publication under Fairfax business group and is a leading national newspaper in Australian. We believe 2004 to be the time for the AFR to expand and to increase market penetration with the electronic print. The objective of this marketing plan is the reduction of margin and market share erosion. In the other word, we want to attract more customers, and to expand market coverage into the UK market, thus increasing the sales revenue of Fairfax.

Based on previous experience with physical copies (where the Sydney Morning Herald (SMH) is sent electronically to the UK for a small digital print run), it was found to be not profitable. The major reason for this is that newspapers rely heavily upon advertising to make profits. We learnt from this mistake and thus we decided to be one of publisher on www.newsstand.com. The advantages of NewsStand are that customers can view the whole newspaper not just a few sections such as the electronic edition in the AFR website. Moreover, it can be delivery to you at your convenience via the Internet. This is a new way of promoting the AFR to business companies that will increase sales to this market and further reinforce the loyalty relationships between customers and the AFR.

NewsStand Inc. is a digital/electronic partner for premier publishers of newspapers, magazines and printed media. Publications delivered by NewsStand are in demand by paying customers in more than 100 countries. Headquartered in Austin, Texas and it is privately held.

The current population of United Kingdom is 59 million of which 18% are immigrated Australians which totals roughly around 10 million. There is an overall 49 million readers of the newspapers daily, among this 49 million 576,000 weekly readers read the “Financial Times” which is the local paper in the United Kingdom. (Source: ) 

Finally, the purpose of this marketing plan is to see the current newspaper market situation in the UK and in Australia. Moreover, it will enable us to plan how the AFR will be able to launch itself into the UK market.

3.0 SITUATION ANALYSIS

3.1 Business environment

3.1.1 Economic conditions

3.1.1.1 Economic strategy of UK

The United Kingdom has an open economy in which international trade plays a vital role. In 2000, export of goods and services accounted for 27 per cent of gross domestic product (GDP).

The main elements of the Government’s economic strategy, designed to deliver high and stable levels of economic growth and employment, are as set out in the 2002 Budget:

  • delivering macroeconomic stability;
  • meeting the productivity challenge;
  • increasing employment opportunity for all
  • building a fairer society;
  • delivering high quality public services; and
  • protecting the environment.

In 2001, growth in the UK economy continued for the tenth consecutive year. GDP at constant market prices rose by 1.9 per cent, slightly below its post-war average of around 2.5 per cent a year. Recent decades have generally seen growth dominated by the service sector.

             In 2001 GDP at current market prices – ‘money GDP’ – totaled £988 billion. Average annual growth in GDP at 1995 market prices over the past five years has been 2.8 per cent.

The Department of Trade and Industry (DTI) aims to increase UK competitiveness and scientific excellence in order to generate higher levels of sustainable growth and productivity. It has four specific objectives:

  • to promote enterprise, innovation and higher productivity;
  • to make the most of the UK’s scientific, engineering and technological capabilities;
  • to create strong and competitive markets within a fair and effective regulatory framework; and
  • to assist the competitiveness of UK companies through export promotion and inward investment.

3.1.1.2 Inflation

In 2001, the all items Retain Prices Index (RPI) averaged 1.8 per cent: goods inflation averaged 0.3 per cent and services inflation 3.8 per cent. UK inflation on the Harmonised Index of Consumer Prices (HICP) was 2.6 per cent in 2000 as a whole, reducing to just 0.2 per cent in 2001, as output prices fell towards the end of the year, driven by a decline in the price of oil. They continued at this lower level into the early part of 2002.

RPI inflation, UK (all items)¹

3.1.1.3 Unemployment

The following table compares UK with other European Union (EU) nations on the unemployment and employment rates.  

UK compared with other European Union (EU) nations

Variations in three crucial factors help explain the inconsistent performance of UK in the two rates:

  • there has been a growing female working population;
  • there has been a growing aged working population; and
  • more and more young people are now receiving post-secondary school education, thus postponing their age of entering the labour market.

The following table shows the adult population (over 16 of age) between 1989 and 2001 for UK, and compares the economically active, the employed and the unemployed population during this period.

Adults over 16 (spring quarters in each year)

  • The employed population dropped from 26.791 million in 1989 to 25.568 million in 1993, but went up steadily to 28.180 million in 2001.
  • The unemployment rate (in % of the economically active) increased significantly from 7.3% in 1989 to 10.5% in 1993, but dropped to 7.2% in 1997, and moved further down to 4.9% in 1997.

3.1.1.4 Population

The population of the United Kingdom was estimated to be 58.8 million in mid-2001. Over the last 20 years more people have emigrated than was previously thought, causing the population to grow a little more slowly than expected.

According to the 1951 Census, there were an estimated 50.2 million people in the UK. Since then the population has increased by 17 per cent. This compares with an average growth for the EU of 23 per cent.

Some 8.3 million people were living in Greater London in 1951. By the early 1990s this had fallen to 6.9 million, but the population of the capital has been increasing again and reached 7.2 million in 2001.

Over the last 50 years there has been a gradual increase in the proportion of people over state pension age and a fall in the proportion of working age. In 1951, 14 per cent of the population were over state pension age and 63 per cent were of working age. By 2001, 18 per cent of the population were over state pension age and 61 per cent were of working age.

                                                                 Per cent

                                             1951            2001

Under 16                               24                 20

Working age                         63                 61

Over state pension age         14                 18

The ageing of the population is particularly evident when the number of people aged 85 and over is considered. In 1951 there were 0.2 million people in this age group. This had grown to 1.1 million by 2001.

3.1.1.5 Inward and outward investment

The UK has an open economy, with no restrictions on the outward flow of capital. Foreign investments in new manufacturing and internationally traded service businesses are encouraged. Foreign companies or individuals generally may establish or acquire businesses within the country and buy securities, land or mortgages without a special license or permission.  Outward investment helps develop markets for UK exports while providing earnings in the form of investment income. This inward investment is seen as a means of improving UK productivity through the introduction of new technology, knowledge, products and management styles into the UK.

International trade policy

The Department of Trade and Industry (DTI) seeks to:

  • create a framework for free and fair trade;
  • minimize barriers to the free movement of goods, services and international investment across the world;
  • promote open, dynamic and sustainable markets; and        
  • ensure coherence between commercial, financial, environmental and social policies.

3.1.2 Social and Cultural factors

3.1.2.1 Culture

The United Kingdom has a diverse cultural heritage, with many artists and performers having contributed to the development of rich traditions in art, music, drama, literature and, more recently, TV, film and radio. Many people come from abroad to visit the UK for cultural reasons. Collections in the UK’s museums and galleries are considered among the best in the world. British popular music has enjoyed success at home and overseas.

Religious groups

Belonging to a religion,¹ Great Britain, 2001

3.1.2.2 Ethnographies

In 2001–02, 97 per cent of people from minority ethnic groups in the UK lived in England, with relatively small numbers in Scotland, Wales and Northern Ireland. Thirty-eight per cent of the total minority ethnic population lived in Greater London, where they comprised 28 per cent of the population.

Population by ethic group, 2001-2002,¹ Great Britain

3.1.3 Technological factors

3.1.3.1 Information and communications

Technology

The Government is keen to ensure that the UK benefits fully from the growth of the Internet and of ‘e-commerce’. Its e-commerce strategy is being taken forward by the Office of the ‘e-Envoy’, within the Cabinet Office. The ONS e-commerce survey of UK businesses indicates that in 2001, excluding the financial sector, there were £18.4 billion sales made online, that is, over the Internet. This represented 1.0 per cent of total sales by the non-financial sectors of the UK economy. Sales by firms in the non-financial sectors over electronic networks other than the Internet were provisionally estimated at £182 billion in 2001. The survey found that 50 per cent of businesses reported use of the Internet in 2001:

  • 12 per cent had permanent Internet connections;
  • 17 per cent of those not already online in 2001 planned to be during 2002;
  • 39 per cent of businesses had their own website;
  • 49 per cent used e-mail in 2001;
  • 64 per cent used personal computers, work stations or terminals in 2001; and
  • of those online, 7 per cent were selling online and 25 per cent were purchasing online, while 9 per cent and 10 per cent of businesses were selling and purchasing via other electronic networks respectively.

3.1.3.2 Internet

The Internet plays an increasingly important role in the provision and distribution of information and entertainment.  The use of the Internet in the UK is growing rapidly (see the following figure).

Households with home access¹ to the Internet, UK

According to the ONS Expenditure and Food Survey, in the first quarter of 2002 an estimated 10.7 million households (42 per cent) in the UK could access the Internet from home, over three times the number in the first quarter of 1999. Nearly all access the Internet through a home computer, although a small proportion accesses the Internet in another way.

According to the National Statistics Omnibus Survey, 55 per cent of adults in Great Britain had accessed the Internet at least once by April 2002, equivalent to 25 million adults. Over three-quarters of adults who have accessed it for private use have used it to find information about goods or services or for e-mail (see the following table).

Internet activities: adults who have accessed the Internet, by purpose, UK¹

3.1.4 Political/ Legal/ Institutional factors

3.1.4.1 Law regarding the press

There is no state control or censorship of the newspaper and periodical press, and newspaper proprietors, editors and journalists are subject to the law in the same way as any other citizen. However, certain statutes include sections, which apply to the press.

There are laws governing the extent of newspaper ownership in television and radio companies (see below), the transfer of newspaper assets, and the right of press representatives to be supplied with agendas and reports of meetings of local authorities.

There is a legal requirement to reproduce the printer’s imprint (the printer’s name and address) on all publications, including newspapers. Publishers are legally obliged to deposit copies of newspapers and other publications at the British Library.

Publication of advertisements is governed by wide-ranging legislation, including public health, copyright, financial services and fraud legislation. Legal restrictions are imposed on certain types of prize competition.

Laws on contempt of court, official secrets and defamation are also relevant to the press. A newspaper may not publish anything, which might influence the result of judicial proceedings. The unauthorised acquisition and publication of official information in such areas as defense and international relations, where such unauthorised disclosure would be harmful, are offences under the Official Secrets Acts. These are restrictions on publication generally, not just through the printed press. Most legal proceedings against the press are libel actions brought by private individuals.

3.1.4.2 Media ownership

Legislation in 1990 laid down rules enabling the ITC and Radio Authority to keep ownership of the broadcasting media widely spread and to prevent undue concentrations of single and cross-media ownership, in the broader public interest. The Broadcasting Act 1996 relaxed those rules, both within and across different media sectors, to reflect the needs and aspirations of the industry against the background of accelerating technological change, by:

  • allowing for greater cross-ownership between newspaper groups, television companies and radio stations, at both national and regional levels; and
  • establishing ‘public interest’ criteria by which the regulatory authorities can assess and approve (or disallow) mergers or acquisitions between newspapers and television and radio companies.

Local newspapers with more than a 50 per cent share of their market may now own a local radio station, providing at least one other independent local radio station is operating in that area.

Newspaper transfers and mergers are subject to the consent of the Secretary of State for Trade and Industry, usually after reference (where the total paid-for daily circulation of newspapers owned by the proprietors involved is 500,000 or more) to the Competition Commission.

Relaxing the media ownership rules

Proposals for changes in media ownership rules included in the draft Communications Bill is:

  • not allowing any newspaper group with over 20 per cent of the national market a significant stake in ITV (Channel 3);
  • the introduction of a parallel regional rule preventing anyone owning all the newspapers and the regional ITV license in any region or major city; and
  • the introduction of a scheme to ensure that at least three commercial local or regional media voices exist in addition to the BBC in almost every local community.

Press institutions

Trade associations include:

  • the UK Publishing Media, representing those involved in local, regional and national newspapers and publishers of business, professional and consumer magazines;
  • the Scottish Daily Newspaper Society;
  • the Scottish Newspaper Publishers Association; and
  • the Associated Northern Ireland Newspapers.

Other organisations representing the views of those working in the media include:

  • the Society of Editors;
  • British Society of Magazine Editors;
  • National Union of Journalists;
  • Graphical Paper and Media Union;
  • Foreign Press Association; and
  • the Press Association, the national news agency of the UK and Irish Republic.

3.2. Market analysis

3.2.1 The product market

In this section, an analysis of the UK market through statistical data, such as Internet usage by business, will be examined. An understanding of the components of AFR and estimates of the sales we wish to achieve in the UK market will also be explored.

  • Internet use by business for sales and purchases in the UK market

- Based on the UK national statistic of e-commerce. `E-commerce is likely to have a huge impact on the way we do business. It has the potential to lead to dramatic growth in trade, increase markets, improve efficiency and effectiveness and transform business processes. In recognition of its significance, in the future performance of the economy, the UK Government set itself the target of becoming ‘the best environment in the world to do e-commerce.’ (reference:)

- The research paper shows that 61 per cent of businesses now have their own, or third party, websites, with a further 19 per cent planning to set one up within a year. Moreover, the percentage of large employee’s organization - over 1000 employees as opposed to smaller ones – 10 to 49 employees, using the Internet for sales is higher.

(reference:)

  • Statistic data of Internet usage

- The major reason for using the Internet is for the use of E-mail, second to this is finding information about goods and services. For the purpose of reading or “downing” on- line news has increase from 0% (2001) to 28% in year Oct 2002. (reference:)

- On the other hand, the major reason for not using Internet is lack of interest, about 25% of users have no computer or access and 23% of users lack the skills. (reference:)

- The characteristic of Internet user in the UK are (year 200 July to Oct 2002):

- Adult user has increase from 45% to 62%

- Male, in year 2000 was 52%, which has risen to 67% in year 2002

- Female, the percentage is not high as the males, however, it has also risen

from 39% to 58%

- By the age groups, the major users are in the 16-24 year old age bracket. The second largest group is 25 to 44 year olds. (reference:)

  • The components of AFR

- What sections appear each day – see appendix 1. (reference:)

- Every day news cover

- EGN: Early General News covers the daily National News, World News and events.

- It offers Australia’s most comprehensive coverage of companies making

the news.

- Information Technology: covering the information of Australia’s only IT daily

news section and the premier venue on news about the business of technology (analyzing the costs and benefits of the IT business from a business perspective rather than from a technical point of view).

- Financial Service: it analyses the sectors relating to retail banking, managed funds, life

and general insurance, investment banking, mortgage managers, building societies, credit unions, friendly societies, debt capital markets and analysis of the borrowing plans of Australia’s major companies

- Property: it carries a range of news, features, analysis and profiles focusing on the

listed property trusts, developers, fund managers and private investors.

- Market Wrap: including global markets, additional local and international editorial

coverage from Monday to Friday.

- Rear Window, focus on the inside back cover Rear Window takes a satirical look at

the day’s news.

- Moreover, different (specific) topics covered each day, for example, Monday includes Global markets, Capital markets, Global economy and Global communities. Tuesday covers Enterprise (small business), market and media and Peter Ruehl (humorist). Wednesday has managed funds, special reports. Thursday has Saleroom (collectibles) and Peter Ruehl (humorist), Friday covers Review (issues, opinions), Legal Services, Professional Services, Recruitment advertisements, and Pierpont (by Trevor Sykes). For the weekend, it has Smart Money, Perspective, Observer and After Hours.

Join now!

  • Estimated sales we wish to achieve in the UK market

- Based on above information, it is not difficult to find the relationship between a newspaper and on-line news. Users of the Internet for reading and researching are becoming a common trend. Moreover, the AFR’s circulation has decreased in comparison to the year 2001, however the web hits has increase. Therefore, in order to keep our goals in line with the trends we must provide on-time news over the Internet (through NewsStand). We will do this by specifically targeting the UK market.

  • The estimated sales we wish to achieve ...

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Marketing plan for AFR on www.newsstand.com
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