News International
Corporate challenges
Analysis and Decision
Case Study
June 2012
David Kilburn
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Scenario
You are a Marketing Consultant working in the media sector. You
have been asked by News International to analyse the factors that
are impacting on the future of the organisation and its parent
company, News Corporation.
In particular you have been asked to evaluate News International’s
strategic position, taking into account its strengths and
weaknesses in relation to corporate governance, organisational
culture, resource capabilities and competencies, competitive
position and the value of the corporate brand.
You have also been asked to assess the potential for strategic
uncertainty in the external market and the extent to which these
macro factors will impact upon News International.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Where are we now ?
Audit of current situation
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
The UK newspaper industry today
• Fiercely competitive market
• Fast moving industry
• Circulation figures and revenues have
been falling for years
• Customers switching to the internet and
other media to obtain their news, etc.
• NI has developed alternative revenue
streams by switching to digital publishing
• Most content is freely available online so
the challenge is to persuade readers to pay
for newspaper content online.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Brand issues
• BRAND DOMAIN
(brand’s target market)
• BRAND HERITAGE (how it has achieved success)
• BRAND VALUES
(core values and characteristics)
• BRAND ASSETS
(what makes brand distinctive)
• BRAND PERSONALITY (character of brand)
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
UK newspaper industry SWOT
Strengths
Opportunities
•
•
•
•
Profiting from technological
advances – smartphones, ereaders
•
Leveraging online interaction
•
Established market
Well known newspapers
Online versions encourage more
active participation with readers
Technical innovation
Weaknesses
Threats
•
•
The market for national
newspapers in the UK is in a
steady but sure decline. In 2006
it was worth £2.7 billion and in
2010 it had dropped to £2.4
billion – a drop of around 10% in 4
years. It is forecast to shrink
another 20% by 2015.
•
Highly competitive and turbulent
market
Online has increased and will
continue to do so to the
detriment of newspaper sales
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
•News International - SWOT
Strengths
• Clear market leader in the UK national newspaper market -37% share
• The Sun was the leading daily newspaper in 2010 – 31% market share
Has almost a third of the daily national newspaper market, selling on
average 2.7 million copies daily and being read by 7.7 million people
daily
• Experienced management team and staff. Strong leadership from Rupert
Murdoch – took the decision to cease publication of the News of the
World.
• Some people argue that there will always be demand for hard copies of
newspapers - research shows that 20% of newspaper readers enjoy the
experience of reading a hard copy version of a newspaper (tactile
experience),and almost as many believe that reading an online version
is not as good.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
•News International - SWOT
Weaknesses
• Customers can switch between suppliers very easily
• Customers can also read newspapers online e.g. The Guardian has 9.2
million UK visitors a month to its website, yet daily circulation of its
newspaper is only 230,000
• Phone hacking scandal – Clive Goodman pleaded guilty to tapping into
phones of Max Clifford, Elle McPherson, Sienna Miller , Gordon Taylor
and Steve Coogan.
• Andy Coulson, whilst editor of the NOTW had condoned payments to
police officers to obtain information about cases
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
•News international - SWOT
Opportunities
•
Newspaper publishers could tie in subscriptions to their online sites via Internet
service providers’ or mobile phone operators’ contracts
•
Related diversification – opportunities to make its extensive photo news library
available so customers can purchase them. (Similar to the Mirror Group who
already do this).
•
Shedding manpower to reduce costs – they are already doing this. In 2010 its
workforce comprised 51,000 worldwide which was a decrease of 7.3% on the
previous year.
•
Could explore further investments in fashion related websites such as
www.brandalley,co.uk
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
•News International - SWOT
Threats
• Newspaper circulation continues to decline
• Revenues reducing due to falling circulation
• All UK national newspaper publishers have seen their circulation figures
drop year after year. (except the recently introduced i newspaper)
• News International’s brand could be damaged by further bad publicity
• Loss of advertising revenue could weaken the company’s overall position
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
•Issues affecting the newspaper industry
• Decline of print – ongoing decline in circulation figures
• Decline of print revenues – as readership levels shrink,
newspapers become less attractive to advertisers
In 2005, 39% of total UK advertising spend was spent on press
advertising – by June 2009 this had fallen to 29%
• The switch to purely digital is still many years away but the
switch to digital is under way – the majority of newspapers
offer most or all of their content free online, accessible via
computers, laptops, mobile phones and tablets.
• There is strong evidence that newspapers have grown their
readership by offering digital content. The Guardian has 9.2
million UK visitors a month to its website, yet its daily
circulation of its newspaper is only 230,000 (December,2011)
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Map of competition in the U.K
Quality Sunday
newspapers
Sunday newspapers
Sunday Times
The Observer
Financial Times
Sunday Telegraph
Sunday Mirror
Sunday Express
Mail on Sunday
The People
Quality Daily
newspapers
Daily newspapers
The
The
The
The
Daily Mirror
Daily Mail
The Sun
Times
Guardian
Telegraph
Independent
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
PESTLE
Political
• Government legislation
C A M B R I D G E M A R K E T I N G C O L L E G ES
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Economic
• Global credit squeeze impacts on interest
rates and dampens consumer spending
• Possible downturn in world economy
• Disposable income levels have declined
C A M B R I D G E M A R K E T I N G C O L L E G ES
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Sociological
• ‘Must have now’ society. We want it now!
• Ideally suited to electronic products and
services – apps, kindle, etc. to download
news articles, sports results,etc.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Technological
• Technology is ever changing
• Opportunities are endless
• New media – apps, hand held devices. The
internet and social media makes reading a
newspaper to catch up with the news
largely redundant – hence the ongoing
decline in newspaper circulation.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Legal
Legal
• Freedom of information versus careful
database management. Newspapers are
constantly faced with ensuring their
journalism does not overstep the mark
leading to costly libel cases.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Environmental
Environmental
• Environmental concerns over the
consumption of wood for paper with a
very limited shelf life (just 24 hours for
newspapers) and difficulties over the
litter created, especially by the
distribution and casual disposal of free
newspapers, have increased the pressure
on newspapers to act in an
environmentally friendly manner.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Where do we Want to be?
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Objectives
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Decide
Objectives
Deliver
Outcomes
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Segmentation
• Described and Profiled for each sector
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Segmentation
16-29 segment
This segment has always known mobile and
has been brought up in a digital environment.
Internet and computer savvy, they use
mobiles as a permanent appendage, like to
live life to the full and enjoy individuality,
whilst using social networking sites like
Facebook, YouTube and Twitter to communicate
with people. They are turned on by celebrity
endorsed products and like to use the latest ‘hot’
products.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Segmentation
30-49 segment
This segment is comprised of couples with children
who are also au fait with the digital environment.
They are Internet and computer savvy and
live a full and active lifestyle and use social
networking sites to communicate with friends and
family.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Segmentation
Segment – 50-65
‘Baby Boomers’ –
Have relatively high disposable income,
possibly paid off mortgage, want to enjoy
life, spend money.
‘Empty Nesters’ – new media savvy – so can
be targeted effectively
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Targeting
Use social networking sites which are
content driven and interactive such as
MySpace, YouTube, etc.
Use websites, use of blogs, SMS messages to
mobiles. Use popular websites, such as
Facebook and introductory offers to elicit
trial and purchase.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Positioning
• Clear and defensible
– Set out USP and Positioning for each sector.
– Are there any commonalities or Single Brand
options
• Vision
• Values
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
USP and Positioning
The Sun -USP – it is down to earth, easy to
read and does not use complicated language
Positioning – easy to read, informative,
straight forward, affordable price, news,
sport and celebrity gossip instantly
available
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
USP and Positioning
The Times/Sunday Times –
USP - comprehensive coverage,
informed journalism
Positioning – expert opinion, highly
informative, national and global news
covered in a very professional manner
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
How do we get there?
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Action
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Decide
Objective
Deliver
Outcomes
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Strategic Development
• Product
– Sector Selection
– Core/ Physical/Augmented Proposition
– Branding
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Pricing
Distribution
Promotion
People
Process
C A M B R I D G E M A R K E T I N G C O L L E G ES
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Implementation and Control
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Budgeting Areas
Metrics
Balanced Scorecard
McKinsey 7S
C A M B R I D G E M A R K E T I N G C O L L E G ES
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Comms Strategy
• Audiences –Internal and External, domestic and
international
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Media
Messages
Timing/Budget
Stakeholders
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Investors
Suppliers
Partners
Customers
Celebrities
Media
Manufacturers
Wholesalers
Retailers
Who else ?
C A M B R I D G E M A R K E T I N G C O L L E G ES
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Internationalisation
• Where, when and how
– GE/ Harrel and Keiffer
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Implementation and Control
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Budgeting Areas
Metrics
BS
McKinsey 7S
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Critical success factors
• Create a sustainable brand image and position
amongst competitors
• Change management (PLC,BCG)
• Internal marketing (stakeholder management,
CRM)
• Funding (Borrowing/J.V/Debt/ Licensing/I.P)
• Constraints – Overstretching
- Competitive landscape
- Changes within the media sector
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Vision
For News Corporation to become a highly
successful force in the media sector with a
strong and loyal customer base, enabling it
to invest in a robust, innovative marketing
plan which will keep it top of mind within all
its target markets and ensure its continuing
success.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Mission statement
To deliver excellent service and the latest
news to consumers worldwide.
At the same time valuing honesty,
integrity, empowerment and openness. By
consistently aiming for excellence in
communicating key messages in the media
we believe we will stay close to our
consumers and communities.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Values
• Committed to high quality, informed
journalism which delights our readers
• Committed to a strategy of continual
journalistic development, within a
framework of excellent corporate
governance
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Corporate objectives
• To ensure that the company can operate
successfully in all our markets
• To continue to develop new resource
capabilities and competencies which will
give us a crucial competitive advantage
• To ensure that News Corporation can
assess the potential for strategic
uncertainty and successfully manage these
macro factors that will impact the
organisation
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Strategic management of marketing mix
• Product
Core – high quality reporting bringing the
world’s news to your doorstep
Augmented – specialist knowledge,
accuracy and professionalism guaranteed
• Price
Affordable price – value for money
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Strategic management of marketing mix
• Place
Global player – but needs to drive more sales in
all key markets and open new markets in
emerging BRIC countries
• Promotion
Web site – continually update the content.
Highly interactive with customer base encourages viral marketing. Underline the quality
of the news content which is worth paying for as
it gives the reader the ‘inside track’ knowledge
that you can only get from highly professional,
competent reporting
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Strategic management of marketing mix
• People
Train and develop the existing staff. Selective
recruitment of key sales/marketing/technical
personnel. Recruit proven staff in overseas
markets to develop sales and distribution.
• Processes
Regular internal/external communication. Long
term relationship building. B2C customer
involvement. Relationship marketing. Customer
Lifetime Value. Branding strategy.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Implementation and Control
McKinsey 7S
Structure
News International Head office based in New
York.
Where will subsidiaries be sited? London, Bombay
Beijing, Moscow and Sao Paolo
Strategy
Focus differentiated aimed at loyal customer
base and potential customers in U.S.A, U.K. and
in time other markets, such as Brazil, Asia, Russia
China and Australasia
C A M B R I D G E M A R K E T I N G C O L L E G ES
Implementation and Control
Systems
Develop MKIS and control systems to regularly
review and monitor effectiveness of all marketing
strategies
Develop benchmarking system to monitor against
key market indicators and main competitors
Staff
Continual development of key staff. CRM
development. Key relationship building with
newspaper editors, distributors, agents and
retailers.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Implementation and Control
Skills
Ensure correct training and development
programmes are established to keep News
International at the leading edge of new product
development, systems and processes
Shared values
Ensure that the corporate strategy is shared by
everyone in the organisation. Growth strategy
and national and international expansion shared
with all staff, agents, distributors, and key
stakeholders.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Strategic management of marketing mix
Physical evidence
Interactive, quality news stories and
information on web sites, and in print
Compile feedback, and number of blogs,
endorsements from consumers
The News Corporation logo and brand
ROI table – comparison with other global
news providers
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Implementation and Control
Style
Creative, innovative, dynamic
C A M B R I D G E M A R K E T I N G C O L L E G ES
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Control – Balanced Scorecard
Internal
Develop CRM databases for collecting
customer,consumer feedback and insights
into future needs, wants, industry trends,
(market intelligence)
C A M B R I D G E M A R K E T I N G C O L L E G ES
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Control – Balanced Scorecard
Innovation and learning
Skills training – advanced B2C selling, web
development to inform consumers about
the inside track on breaking news stories,
etc.
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Control – Balanced Scorecard
Financial
Sales vs. targets in each sector –U.S.A.,
U.K. etc. Profitability metrics, Customer
Lifetime Value
Customer
Customer satisfaction surveys – customer
feedback. Customer endorsements - web
based
Brand recall/awareness of brand
C A M B R I D G E M A R K E T I N G C O L L E G ES
© CMC 2012
Possible questions
1.1 Assess the internal strengths and weaknesses
of News International (20%)
1.2 Assess the competitive positioning of
N.I.(20%)
1.3 Assess the value of the Corporate Brand
(10%)
C A M B R I D G E M A R K E T I N G C O L L E G ES
Possible questions
2. Devise a corporate governance charter for
News Corporation to mitigate recent highly
publicised challenges within the organisation.
C A M B R I D G E M A R K E T I N G C O L L E G ES
Possible questions
Corporate governance charter for News
Corporation
Clear and unequivocal
Available and accessible to all staff
All key areas of the business need to be included.
Probity, honesty, professionalism, respect for
fellow workers, managers, directors, all grades
of staff will be treated with respect
Culture of the organisation needs to embrace CG
All parts of the business appreciate its
importance
C A M B R I D G E M A R K E T I N G C O L L E G ES
Possible questions
2. Prepare a marketing plan to maintain News
International’s position as the leading player
in the U.K. given the demise of the News of
the World newspaper.
3. Prepare a customer relationship marketing
campaign which will effectively increase
News International’s customer loyalty and
their lifetime loyalty
C A M B R I D G E M A R K E T I N G C O L L E G ES
Possible questions
4.
Prepare an international marketing plan
to ensure that News Corporation expands
its markets beyond the USA, U.K. and
existing markets to leverage the benefit of
emerging markets.
5.
Evaluate three strategic options for News
International to consider
C A M B R I D G E M A R K E T I N G C O L L E G ES
Possible questions
6.
What branding and positioning strategy should
News International adopt to mitigate the
damage to its brand reputation and increase
the value of its corporate brand?
(How should NI set about restoring its
corporate reputation?)
7. There is considerable potential for strategic
uncertainty in the external market. To what
extent are these macro factors likely to
impact News International.
C A M B R I D G E M A R K E T I N G C O L L E G ES