Posted in Marketing & Strategy Articles, Total Reads: 911
, Published on 01 November 2016
The newspaper print industry is one of the most vast and exhaustive industries, with a distribution network second only to FMCG. Like every distribution network in the market, the newspaper DN has its own stakeholders, and the role they play is very crucial to the eventual sales. The most important aspect of the Newspaper sector is the product itself, the basic content of which is more or less same across competitors. So what exactly are the parameters that govern the buying behavior of the consumer?
The answer to the question could vary based on demographics, For eg: Majority of the male consumers of Age group 45+ will mostly be interested in all the sections, the news content then becomes the most important criteria for this segment, while for Females of the same age group, majority would be having an inclination towards specifically local news, similarly for the age group of 15-30, for males, sports is one of the important sections while for females entertainment is an important section. Hence most of the newspaper print media companies are trying their best to balance all these aspects to maximize their newspaper sales.
Now Let us try to understand the basic Distribution network of newspapers. The DN may vary from company to company but the basic structure should be more or less the same. The newspapers are printed in a manufacturing facility that caters to the market within a radius of 200-250 Km. The newspapers are then transported to Distribution centers that are dispersed across different locations and the newspapers are then dropped off in these centers. The newspaper agency then takes over from here. The agency is the mediator between the company and the hawkers. The agent is responsible for making all the payment to the newspaper company and in turn in responsible for making any kind of payment to the hawkers. The agent then hands over the newspapers to the Hawkers based on the number of copies the hawker distributes. And finally the distribution reaches its final destination when the hawker delivers the newspaper to the consumer.
However the most distinguishing aspect of this Industry is the importance of the final player in the distribution network, the touch point with consumers, that is, the Vendors/Hawkers. Such is the dependence that the consumers often do not have their tea before this person delivers the newspaper. Going to majority of the Tier 2 cities, specifically the Hindi Newspaper belt, an interaction with vendors will reveal that at least each of the vendors will have 30-40% consumers whom they could easily convince to subscribe to any particular newspaper. How many of us have had an experience where the vendor asks us to change the newspaper? If you have been to the Hindi belt of the country, the answer will be almost 70-80%. The bargaining power in some cases is such that, if the vendor decides not to supply a specific newspaper in a particular area, and there is no other vendor in that area, the consumers are forced to subscribe to the newspaper the vendor has an allegiance to. Even though such cases have become rare, but the fact that they still exist is sufficient proof of their bargaining power.
So what are the crucial trade strategies that the Newspaper print media companies employ to increase their sales? The first trade strategy generally lies in the sharing of revenues on the final cover cost. Majority of the newspaper companies pass on 30-40% of the cover price revenues to the agents and Hawkers with agent getting a minimal share per copy and the latter getting the lions share. The justification is obvious as the agent earns commission for each copy he distributes to all the vendors/hawkers, which is a much larger number compared to the number of copies a hawker takes.
The variation of this distribution is one crucial aspect of the trade strategy. Often a lot of companies also have some form of security deposit for the agents, and this security deposit is generally set for a definite duration, for example, the agent has to deposit an amount equal to the amount he has to pay per day for certain x days as prescribed in advance in order to open the agency. A lot of companies also try to play on the x value mentioned and influence distribution by setting up as many agencies as possible specifically in rural areas.
Another important aspect is the pushing of newspaper sales. How often have you seen some salesperson coming to your door and trying to sell a newspaper subscription scheme? The answer is almost 100% in NCR, UP, Bihar, Jharkhand, Uttarakhand. So what is the benefit that the trade stands to gain from these schemes? First of all majority of the newspaper media companies incentivize the final implementation of newspaper for each of these schemes. So the trade gains a certain amount for each copy switch through these direct booking schemes. Secondly even for the discounts that the customers stand to gain from these schemes, not only is the trade fully reimbursed for the discounts, they also get a certain amount as incentivization for each of the discount coupons. This strategy ensures that the hawker tries his best to continue supplying the same newspaper for getting this benefit. Another strategy that some companies employ is that instead of asking a salesman to do the direct bookings, they ask the vendor to do the bookings and the vendor gets a certain commission per booking that he does. Hence the direct bookings become a crucial part of the trade strategy of any company as it entirely upon the Hawker for the last mile implementation.
How many days do you find that the Hawker has supplied you a different newspaper contrary to the one you have subscribed? Why does this happen? And then you find that your neighbour has got the newspaper that you have subscribed. It is because often the agents offer newspapaers to the hawkers at reduced prices to push sales for a certain period. So the hawker stands to gain from each of these sales and often the benefit is twice as compared to the conventional benefit they stand to make.
This article tries its best to analyze some trade strategies that newspaper print media companies employ to appease its partners. They are not exhaustive but it tries to stress upon some of the basic trade schemes offered.
This article has been authored by Swagat Kumar from IIM Raipur
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