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CHAPTER II
LITERATURE REVIEW
With the current investment opportunity, and massive global migration towards the
online channel from the print, a literature review serves as an imperative discussion.
Despite significant number of articles have constantly report the ongoing news of
this shift, there are only a few number of details in newspapers, magazines, and
other scholarly journals – that answers the question on, “why are the society
shifting?”
In this modern age of the Internet, and digital era, it’s a “cliché” thing for a business
to establish itself in the digital world. Entitling themselves with a web presence to
run their company activities, is simply a priority in today’s company agenda. Aside
from gaining efficiency on running their business marketing, and communication,
the Internet has become a powerful channel for various businesses to create new
marketing channels to market the product/service. Besides, with less cost of running
these online platforms, the Internet itself has provided maximum, and effective
results on every financial situation. (Kamarulzaman, 2010).
In the case of magazine, apart from strengthening, broadening the readership base,
most magazines also went online because of the bright future it shows. (Jacob,
2011). Since 2000, advertisers were propelled by the need for each fresh audience.
Seeing the ability to repurpose an advertising campaign to reach a larger market,
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advertisers are more willing to support publishers by venturing into online
publishing (Jacob, 2011).
In this chapter, the author will provide a basic conceptual view of the attributes, and
variables that are believed to be a part of the antecedents to adopt digital replica
magazines.
2.1 Definitions
Considering the few technical aspects that will be discussed in this research, the
meaning of these terms can be found as follows:
Tablet
Devices with touch screen interface, screen sizes ranging from 5 inches to 12
inches, color displays, Wi-Fi or 3G Internet connectivity, and advanced mobile Oss
such as Apple iOs, Google Android, Windows 7 or Blackberry. Examples are:
Apple’ iPad, Blackberry Playbook, Samsung Galaxy Tab. (MPA, 2011).
E-Reader
A portable electronic device that is designed primarily for the purpose of reading
digital books and periodicals uses e-link technology to display content. Some ereaders have multi function capabilities offering traditional features such as the
ability to access the Internet, download and playing apps, listening to music and
much more. Some examples are: Amazon Kindle, Barnes & Noble Nook. (MPA,
2011).
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Smartphone
A handheld device that integrates mobile phone capabilities with the more common
features of a handheld computer or PDA. Smartphones allow users to store
information, e-mail, and install programs, along with using a mobile phone in one
device. Examples are: Blackberry, Apple IPhone, and Samsung Galaxy SII. (MPA,
2011).
Despite their different names and specifications, these state of the art technologies
have managed to share similar characteristics such as: portability, interactivity,
location awareness and multimedia.
Digital Replica Magazine
The board of the Audit Bureau of Circulations has recently modified its definition of
a digital magazine in the U.S. and Canada to accommodate new reading devices
such as the Apple iPad. In this new standards, it is stated that a replica digital
edition
must
a
print
edition’s
full
editorial
content
and
advertising.
(PRNewswire,2010).
2.2 Variables
Through the author’s preliminary research, the author have found from various
journals such as, “Predicting Online Channel Use for An Online and Print
Magazine: A Case Study”, by Paweena Srisuwan, and Stuart J.Barnes, “Customer
Intention to Return Online: Price Perception, Attribute-Level Performance,
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and Satifaction Unfolding Over Time” by Pingjun Jiang, and Bert Rosenbloom,
and “Exploring the Potential of Electronic Magazine Among Internet Users”,
by Yusniza Kamarulzaman, Azian Madun, and Anna Che Azmi, these are the
variables that the author believed – to have a firm effect on this very research:
Marketing Efforts, Price Perception, Brand Loyalty, Individual Differences, and
Supporting Facilities.
2.2.1 Marketing Efforts
The marketing variables could be said to serve as one of the significant antecedent
to the digital magazine adoption. Throughout the author’s observation, it can be
seen that companies have used their own print magazine mostly to socialize their
web presence to the current readers. Another strategy that is used is mostly on social
media account such as Twitter – to update their followers – on the recently launched
magazine, these publishers publish.
Figure.2.1 On Print Magazine Marketing View
ON PRINTMAGAZINE
MARKETING
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Figure 2.2
SOCIAL
MEDIA
MARKETING
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According to businessdictionary.com, a marketing strategy/efforts integrates
organization marketing goals-to achieve profit and increase sales- into a cohesive
whole. However, despite the 4P that the usual marketing company use, the author
would like to define that the marketing strategy that will be used for this research
is the advertisement on various media (print magazine, websites and social
media)- as thtough observation, these are the focal advertising digital replica
magazine in Indonesia. (businessdictionary.com. n.d).
Channel preference becomes a key influence in this very case. If firms contribute
a significant effort on its marketing. For instance, most online magazines provide
an email service, or other promotional item on their web site, print magazines,
which serve as an alternative for consumers to decide their preference.
(Sriwusan, 2008). Study from Ansari et al. (2005) has revealed that marketing
communication medium, such as, catalogues, emails, etc. can influence the
consumer behavior both in channel choice and purchase volume.(Sriwusan,
2008).
The marketing efforts that are meant by the author here are no other than the
promotion of these digital replica magazines through both, electronic (websites,
social media, blog, on-application advertisement), and traditional media (print
magazines). With additional incentives, such as price skimming, -which is a
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“habit” on online magazine; conducted at the right time, marketers could also use
it as a right tool for migrating their customer. (Sriwusan, 2008)
2.2.2 Brand Loyalty
Brands have been known as the vehicles for garnering, and retaining consumer
trust. (Sriwusan, 2008). As a product becomes more familiar to consumers, it’s
an inevitable thing for consumer to eventually develop trust on this very brand –
and the product it represents. (Sriwusan, 2008). With this, it can be concluded
that consumers may select their channel choice, based on the influence of brand
loyalty. A comparison had also been conducted – comparing online and offline
consumer brand loyalty. The result is that brand loyalty for high market share
brands brought online is significantly greater than expected. (Sriwusan, 2008).
2.2.3 Price Perception
Price plays a vital role on the Internet as consumers cannot actually see or handle
the product. Consumers are typically unsure about the consistency of the product
presented on the web, with the consistency that is actually perceived. Hence
therefore, with this performance uncertainty, price perceptions are likely to play.
And increased the role in determining consumer role’s on post purchase
satisfaction, and intention to return. (Jiang, 2004).
The content of a magazine is widely known as information goods. Unlike other
products, information has fixes costs, while the marginal costs are low or
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virtually non-existed. While the cost of producing the first copy of information
goods may be costly, the cost to produce the extra copies is minor, especially in
this digital era where everything is easier to be conducted by copy paste.
(Kamarulzaman, 2010). In other words, most of the costs are considered sunk as
the information goods had been produced. Therefore, the pricing of information
good is not based on the production cost – but according to consumer value
itself. (Kamarulzaman, 2010).
However, seeing the fact that readers are accustomed to the free content of web
pages, hence many new comers are eventually pressured to publish their content
online free of charge (Kamarulzaman, 2010). With observation, the back issues
of various magazines have been set free of charge, whereas the new issued
magazines charge themselves – however, with a major price difference,
compared than the actual print magazine. (Kamarulzaman, 2010). For instance,
on iPad application, luxury magazine, Indonesia Tatler is sold under the price of
Rp.15.000,- ; whereas to get a real copy of this magazine, consumers are required
to pay Rp.85.000,-
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Figure.2.3 Digital Replica Magazine Store View
A case study on discovering the potential of online magazine among Internet
users showed that these users were more likely to subscribe the magazine – at a
competitive price, in other words, significantly lower than the traditional print
magazines. (Kamarulzaman, 2010).
2.2.4 Internet Expertise
With recent studies conducted on the online users on Malaysia, it has been
shown that characteristics of online shoppers in developed countries are very
much similar with traditional shoppers, as they are familiar with the Internet
online shopping. In other words, it’s reasonable to assume that consumers, who
are more familiar with the Internet, will be more receptive towards purchasing
digital magazines online. (Kamarulzaman, 2010).
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Among some of the findings, the studies have shown that online shoppers usually
have higher purchasing power, spent more time on the Internet, bought a
products/services that were less complex, low in price financial risk (cheaper
price), emphasizing the importance of brand name (brand loyalty) – as a reliable
measure of quality. (Kamarulzaman, 2010).. These characteristics could easily be
associated to the adoption of e-magazine.
With the questionnaires given, most respondents have admitted that they have
made a purchase on the Internet at least once a year. About 51% of respondents
have purchased online more between 1-5 times, during the past year, followed by
6-10 times (29%). However, 17% of them have never made any online purchase.
(Kamarulzaman, 2010).A further analysis also showed that, respondents who
earned less than RM4000 (Rp.11.950.000,-),
a month made most of the
purchases. A possible reason for this result is because of the younger age groups,
who are inclined to buy online – have less income. (Kamarulzaman, 2010).
2.2.5 Supporting Facilities Possession
The last variables that needed to be accounted for this research conceptual model
is the medium possession of digital replica. Among the mediums that are
accounted includes, IPad, Blackberry Playbook, Samsung Galaxy, and other
smartphones. For a better depiction of the case, the author will use the iPad – as
it’s the current most talked, and owned tablet in the world according to a report
by Morgan Stanley analyst, Katy Huberty. (Yudu, 2010)
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In the report, it’s stated that within its first year launch, the “hot item” is
projected to reach a staggering amount of 16 million units in its sales. With
research on the consumer’s antecedents on buying product comes as 56%
entertainment, 42% cool factor, 40% convenience, 28% brand (apple). For the
users, the product itself has a high penetration in the age below 20, and 35-44.
(Yudu, 2010)
4 months after the launch, the first iPad generation had already been shipped,
and dubbed as the fastest ever consumer device to achieve $1 billion in sales. In
tandem with the launch of the iPhone 4, Apple’s latest quarter (April-June), had
also brought in profits of $3.25 billion, a full ten percent higher than Wall
Street analyst had expected. (Yudu, 2010)
Lastly, with the introduction of iPad, the rules of digital publishing have simply
been changed. For instance, web based magazine viewing from desktop
compyters has traditionally been at a lot of a few minutes a month – from
ComScore, the figures for GQ.com, and Vanityfair.com, are 3.8 minutes, and
2.1 minutes per month respectively. However, on the same titles’ iPad apps are
seeing 60 minutes worth of online browsing – which creates a new opportunity
on digital publishing (Yudu, 2010).