Market Research Homework

USA Today Case Analysis #1

Read the following case and follow instructions on page 11.

Case 1 USA Today: Innovation and Evolution in a Troubled Industry

Synopsis: As the entire newspaper industry sits on the brink of collapse, Gannett and USA Today are working to avoid disaster and transform the nation’s most read newspaper into tomorrow’s best resource for news and information. This case reviews the history of USA Today, including its continued use of innovation to stay on top of the technological and sociocultural shifts that are rapidly changing the newspaper industry. In the face of continual competition across a variety of media sources, the future of USA Today depends on its ability to continually push the envelope of innovation and offer value-added, proprietary content to ensure continued differentiation and the future of the USA Today brand.

Themes: Product strategy, innovation, target marketing, distribution strategy, changing technology, changing sociocultural patterns, customer relationships, competition, differentiation, strategic focus, SWOT analysis

USA Today, subtitled “The Nation’s Newspaper,” debuted in 1982 as America’s first national general-interest daily newspaper. The paper was the brainchild of Allen H. Neuharth, who until 1989 was Chairman of Gannett Co., Inc., a diversified international news, information, and communications company. In 2014 Gannett split into two publicly traded companies—Gannett Broadcasting, which includes its broadcast media channels and digital sites such as CareerBuilder, and Gannett Publishing, which includes USA Today. Gannett is a global information juggernaut that publishes 81 daily community newspapers and affiliated websites as well as 35 U.S. Community Publishing (USCP) local print editions. Gannett is currently the largest U.S. newspaper group in terms of circulation. Gannett Publishing estimates that more than 73.5 million unique desktop, smartphone, and tablet visitors access its online USA Today monthly. Over 21 million downloads of the USA Today mobile application have been carried out. Additionally, Gannett estimates that 30 million unique visitors visit its USCP digital media.

When USA Today debuted in 1982, it achieved rapid success due to its innovative format. No other media source had considered a national newspaper written in shorter pieces and sprinkled with eye-catching, colorful photos, graphs, and charts. Designed to address the needs of a sound-byte generation, readers found USA Today’s content refreshing and more engaging than other papers. Circulation grew rapidly from roughly 350,000 in 1982 to approximately 4.1 million today. USA Today remains the number one print newspaper, with 1.08 million daily papers and 1.6 million “branded editions” in circulation, and USA Today’s website, www.USAToday.com, is one of the Internet’s top sites for news and information. However, as newspapers struggle to stay relevant amidst technical and cultural changes, USA Today must continue to deliver innovative content and continuously improve its marketing strategies.

The History and Growth of USA Today

In February 1980, Allen Neuharth met with “Project NN” task force members to discuss his vision for producing and marketing a unique nationally distributed daily newspaper. Satellite technology had recently solved the problem of limited geographical distribution, so Neuharth was ready to take advantage of two trends in the reading public: (1) an increasingly short attention span among a generation nurtured on television, and (2) a growing hunger for more information. Neuharth believed that readers faced a time crunch in a world where so much information is available, but there is so little time to absorb it. His vision for USA Today positioned the paper as an information source that would provide more news about more subjects in less time. Comment by Ronald Christian: Opportunities (SWOT) This also describes the target consumer (customer analysis – psychographic)

Research suggested that USA Today should target achievement-oriented men in professional and managerial positions who were heavy newspaper readers and frequent travelers. While the New York Times targeted the nation’s intellectual elite, thinkers, and policy makers, and the Wall Street Journal targeted business leaders, USA Today was targeted to Middle America—young, well-educated Americans who were on the move and cared about current events. Comment by Ronald Christian: Key descriptor for psychographic component of customer analysis

By early 1982, a team of news, advertising, and production personnel from the staffs of Gannett’s daily newspapers developed, edited, published, and tested several different prototypes. Gannett sent three different 40-page prototype versions of USA Today to almost 5,000 professional people. Along with each prototype, they sent readers a response card that asked what they liked best and least about the proposed paper, and whether they would buy it. Although the content of each prototype was similar, the layout and graphics presentations differed. For example, one prototype included a section called “Agenda” that included comics and a calendar of meetings to be held by various professional organizations. According to marketplace feedback, readers liked the prototypes. The Gannett Board of Directors unanimously approved the paper’s launch. On April 20, 1982, Gannett announced that the first copies of USA Today would be available in the Washington and Baltimore areas. Comment by Ronald Christian: Take note of the research-based approach prior to launch

USA Today Launches

On September 15, 1982, 155,000 copies of the newspaper’s first edition hit the newsstands. On page one, founder Neuharth wrote a short summary of USA Today’s mission statement, explaining that he wanted to make USA Today enlightening and enjoyable to the public, informative to national leaders, and attractive to advertisers. The first issue sold out. A little over a month following its debut, USA Today’s circulation hit 362,879—double the original year-end projection. In April 1983, just seven months after its introduction, the newspaper’s circulation topped the 1 million mark. Case Exhibit 1.1 compares the circulation of USA Today with its top competitors, the Wall Street Journal and the New York Times. The typical reader turned out to be a professional, usually a manager, about 40 years old, well educated, with an income of about $60,000 a year. The typical reader was also a news or sports junkie. Comment by Ronald Christian: Do you think this mission statement is still relevant? Be sure to consider key language for Step 1 in your Case Analysis – you may use the current USA Today mission statement, or modify it. Ultimately, the mission statement must be relevant to and speak directly to the consumer.

Case Exhibit 1.1 Circulation of Nation’s Top Three Newspapers

Source: Alliance for Audited Media, 2014.

Compared to other newspapers, USA Today was truly unique. Designed for the TV generation, the paper was laid out for easy access and quick comprehension by time-pressed readers. Examples of this formatting included extensive use of briefs, columns, secondary headlines, subheads, breakouts, at-a-glance boxes, and informational graphics. These techniques captured the most salient points of a story and presented them in a format that readers appreciated. Gannett’s research had shown that readers got most of their information from such snippets and that they were just as interested in sports, movie reviews, and health information as they were in traditional news. Each issue presented four sections: News, Money, Life, and Sports. The paper’s motto fit its design: “An economy of words. A wealth of information.” Comment by Ronald Christian: Take note of the ongoing research-based approach – continuously seeking feedback from consumers

Because USA Today was nontraditional, its critics were numerous and fierce. In their view, the paper was loaded with gimmicks—tight, short stories; no jumps from page to page, except for the cover story (stories that jump to another page are one of newspaper readers’ major complaints); splashy, colorful graphics everywhere; a distinctive, casual writing style; a colorful national weather map; a round-up of news items from each state, one paragraph each; summary boxes; little charts and statistics-laden sports coverage; and a focus on celebrity and sports, with more detailed sports stories than almost any other paper in the nation. There was no foreign staff and little coverage of the world outside the United States. USA Today was quickly derided for its shallowness by journalists and labeled “McPaper”—junk-food journalism or the fast food of the newspaper business—due to its terse, brash writing style and its short coverage of complex issues. Even within Gannett, Neuharth met with bitter resistance from some senior executives . Nevertheless, readers admired the paper for its focus on brevity and clarity, short sentences, and short words . Comment by Ronald Christian: Important to consider for use in your SWOT. Remember, the SWOT should be from a consumer perspective, as opposed to a manager’s perspective. Even though critics were harsh on the format, ultimately consumers liked it, so this would be good information to help the strength portion of your SWOT

Clearly, the newspaper filled a gap in the market, satisfying several unmet needs and wants. USA Today’s success came from listening to its readers and giving them what they wanted. The paper communicates with readers on a personal level very quickly (many of the short, fact-filled stories are under 250 words), clearly, and directly, in an upbeat and positive way. The color is riveting and gives the paper a contemporary look, and so is the space-defying number of stories, factoids, larger than usual pictures, bar graphs, and charts, all squeezed onto each page without seeming too crowded. Instead of confusion, readers get neatness and order. The paper’s dependably consistent organization enables readers to go directly to any one of USA Today’s major sections. As a result, it takes an average of only 25 minutes for a reader to peruse the paper. Comment by Ronald Christian: Important for your customer analysis

Marketing Program Innovation

In spite of its critics, USA Today’s circulation surpassed 1.4 million by late 1985 as the paper expanded to 56 pages in length. The cover price had also increased to 50 cents, double its original price of 25 cents per issue. By this time, USA Today had become the second-largest paper in the country, with a circulation topped only by the Wall Street Journal. Although Neuharth had predicted that USA Today would quickly turn a profit, it took about 5 years to move into profitability, with the newspaper losing an estimated $600 million during its first decade. By 1993, however, USA Today’s profits were approximately $5 million. One year later profits doubled to about $10 million.

During its early growth, the paper unearthed a class of newspaper reader few others had stumbled upon: the business traveler. Airline deregulation had led to a large general price decline for airline tickets, inducing a swell in business travel. On-the-road business travelers wished to keep abreast of both world and national news as well as what was going on in their home state and how their local sports teams were doing. USA Today rushed in to fill the void, but in doing so quickly entered direct competition with the Wall Street Journal. By this time, hardline newspapers, including the New York Times, began adding color; shorter, more tightly written stories; and beefed up circulation campaigns to compete with “The Nation’s Newspaper.” The Wall Street Journal followed suit by introducing two new sections—Money & Investing and Marketplace—to broaden the paper’s coverage of media, marketing, technology, and personal investing. In the face of this competition, as well as an awareness of changing reader needs, USA Today responded through innovation of its own.

Product Innovation To stay ahead of the imitative competition, USA Today decided to become a more serious newspaper with improved journalism. The shift from primarily soft news to hard news began with the space shuttle Challenger disaster in 1986. By 1991 editors began focusing much more sharply on hard news rather than soft features, and by 1994, under president and publisher Tom Curley, there was a massive drive to upgrade the paper to be a more serious, more responsible news-oriented product.

Gannett also incorporated less traditional value-added features to keep readers interested. The paper added 1-800 and 1-900 “hot-line” numbers that readers could call for expert information on financial planning, college admissions, minority business development, taxes, and other subjects. Thousands of readers responded to reader-opinion polls and write-in surveys on political and current event issues. Editorial pages were also redesigned to provide more room for guest columnists and to encourage debate. For a deeper view of the redesign, view this informational video produced by USA Today. Gannett also initiated a high school “Academic All Star” program that was later expanded to include colleges and universities. The increasing ubiquity of the Internet in the late 1990s also resulted in some changes in content. For instance, the Money section began to focus more on technology issues and to look at business through an ecommerce perspective. Comment by Ronald Christian: Consider this content for the “What” column of the customer analysis in Table 1.b. This content describes a “heavy” user who might read online, receive the print version, and utilize the call-in service.

The first major redesign in USA Today’s history occurred in 2000 as the paper moved from a 54-inch to a 50-inch width. The goal of the redesign was to make the paper easier to read and cleaner in design. The pages were slimmer and easier to handle, especially in tight spaces like airplanes, trains, buses, and subways, and the paper fit more readily into briefcases, reflecting what Gannett had learned from focus groups. Comment by Ronald Christian: Take note how ongoing research efforts resulted in redesign to suit consumer needs and wants.

In 2012 USA Today went through another redesign. The year marked the newspaper’s 30th anniversary, and the company hoped that an innovative design would make it more appealing to readers. Design firm Wolff Olins was hired to help with the redesign. The redesign included more color pages and the addition of a “tech” page. Perhaps the biggest change was to USA Today’s logo. The company replaced its blue-boxed logo that it had featured since its founding with a more dynamic “ball icon” infographic that varied in color depending on the section of the paper. For instance, the news section has a blue icon, while the money section icon is green. The infographic changes daily depending upon the major news story in that section. The USA Today website and mobile apps were also redesigned, and digital platforms were overhauled to feature more live video coverage, bigger images, and stories with more graphics. Although some were skeptical of this wide-scale design change, the design won Fast Company’s 2013 Innovation by Design Awards.

Promotional Innovation USA Today also innovated in its promotional activities. Historically, the paper had limited its promotion to outdoor advertising and television. However, in the late 1980s Neuharth undertook a “BusCapade” promotion tour, traveling to all 50 states to talk with people about USA Today. Neuharth succeeded in raising public awareness of his paper, which was credited for USA Today’s move into profitability. Encouraged by his success, Neuharth forged ahead with a “JetCapade” campaign where he and a small news team traveled to 30 countries in 7 months, stimulating global demand for the paper. During a visit to the troops of Operation Desert Storm in the Persian Gulf in 1991, General Norman Schwarzkopf expressed a need for news from home. USA Today arranged for delivery of 18,000 copies per day. The overseas success of USA Today led to the publication of USA Today International, which is now available in more than 60 countries in Western Europe, the Middle East, North Africa, and Asia.

Early on, USA Today faced a challenge in selling ad space because advertisers were not convinced that it would pay to advertise in the paper. Gannett’s first strategy for enlisting advertisers was the Partnership Plan, which provided 6 months of free space to those who purchased 6 months of paid advertising. USA Today also began to accept regional advertising across a wide variety of categories such as travel, retail, tourism, and economic development. Color advertisements could arrive as late as 6:00 pm the day before publication, giving local advertisers increased flexibility. The paper also moved aggressively into “blue-chip circulation,” where bulk quantities of USA Today are sold at discounted prices to hotels, airlines, and restaurants, and are provided free of charge to customers.

USA Today pulled off another promotional first in 1999 when it broke one of the most sacred practices of daily newspapers and began offering advertising space on the front page (1-inch strips across the entire width of the bottom of the page). This highly sought after front-page position was sold through 1-year contracts for $1 million to $1.2 million each, with each advertiser taking 1 day a week. As USA Today continued to prosper, advertisers became attracted to the paper’s large volume of readers. To help cope with advertiser demand, the paper implemented the technology to allow advertisers to transmit copy electronically 24 hours per day.

Distribution Innovation Fast delivery has always been important to USA Today. By the late-1990s, the paper was earning kudos for its ability to deliver timely news, thanks to its late deadlines. For instance, in many parts of the country USA Today could print later sports scores than local or regional papers. In hard news, USA Today was able to offer more up-to-date coverage by rolling the presses over 4 hours earlier than the Wall Street Journal and almost 3 hours later than the New York Times. The paper added print sites around the world in a move to further speed up distribution. An innovative readership program was also added that brought USA Today to more than 160 college campuses around the nation. Likewise, technological advances allowed the paper’s production to become totally digital. A new computer-to-plate technology was implemented to give newsrooms later deadlines and readers earlier delivery times.

USA Today Moves Online

A decade after USA Today’s launch, Gannett found itself in the enviable position of owning one of America’s most successful newspapers. USA Today was the most widely read newspaper in the country. However, rising distribution and promotion costs were beginning to make the newspaper slightly unprofitable. Print sales were falling dramatically as consumers increasingly turned toward the Internet to get their news. This has required USA Today to adapt and embrace the digital realm.

To reverse this trend, USA Today created several spin-offs, including its first special interest publication, Baseball Weekly. During its first month of operation, Baseball Weekly’s circulation reached 250,000 copies. Baseball Weekly was eventually expanded to include a variety of sports coverage and was renamed Sports Weekly. At the end of 2007, Sports Weekly was ranked the highest sports magazine in newsstand sales. Due to the success of the Sports Weekly format, USA Today launched a similar magazine in March 2009. USA Today’s Open Air magazine was geared toward the “busy, well-informed, affluent customer” and designed to inspire “millions of readers to find adventure and its rewards in their everyday lives.” According to USA Today, “Open Air offers a compelling new look at the possibilities for adventure that surround us each day—from regular activities like improving your golf game with a stretch the pros use, or finding the best gear for your next softball tournament, to once-in-a-lifetime opportunities like a six-day hike into the spectacular Rio Grande Gorge in New Mexico.” However, rather than marketing the publication as a stand-alone product, Open Air was used to increase demand in the print sector and made available four times a year in Friday editions of USA Today. Also, venturing into news media, USA Today joined with CNN to produce a football TV program and launched SkyRadio to provide live radio on commercial airline flights.

The major spin-off, in terms of current success and future potential, was USA Today Online, which the company introduced on April 17, 1995. The online version was seen as a natural companion to the print version of USA Today, given the paper’s worldwide distribution. The first version was available through CompuServe’s Mosaic browser and required special software, a CompuServe Network connection, and a monthly subscription of $14.95 plus $3.95 per hour. By June 1995, USA Today Online converted to a free service that worked with any web browser and Internet service provider. The “online” was later dropped in favor of USAToday.com.

Like its print sister, USAToday.com is bright, upbeat, and full of nugget-sized news stories. The online version allows readers to receive up-to-the-moment news that incorporates colorful visuals and crisp audio. It provides one of the most extensive sites on the Internet, featuring thousands of pages of up-to-the-minute news, sports, business and technology news, 4-day weather forecasts, and travel information available 24 hours a day, 7 days a week.

Another revenue generator, launched in 1998 in response to frequent reader requests for archived material, was the pay-per-view archives service (http://pqasb.pqarchiver.com/USAToday/search.html). The USA Today Archives section allows readers to do a free, unlimited search of the paper’s articles that have appeared since April 1987. Articles may be downloaded for $3.95 per story or as a part of the site’s daily, monthly, and yearly access plans.

In the past few years, USA Today has undergone even more changes in the digital area. For instance, it developed mobile applications users can download on their mobile phones or tablet computers so they can receive the latest information on the go. Within 18 months, USA Today ranked fourth place in digital traffic. USA Today also offers a sports app for sports enthusiasts. Another way in which USA Today has increased traffic to its sites is by adding online commentary from columnists such as Michael Wolff.

In the process of converting stories into print and digital form, USA Today must understand the reading habits of its audience as it utilizes print and digital sources. For instance, a long narrative in a print article will not work on a tablet or smartphone. Digital content must often be condensed for ease of use and readability. USA Today has been widely successful in developing engaging stories through digital networks that make for easy access.

USA Today Provides On-Demand News and Information

USAToday.com has evolved from an online news media source to an on-demand, information-rich community. This movement toward online media was the result of rising newsprint costs, which, in fact, forced virtually all newspaper firms to add online news to increase readership and cut distribution expenses. In addition, to align with the advancing pace of communication and technology, former Gannett CEO Craig Dubow announced his commitment to “getting news and information into the hands of consumers faster than ever before.” To aid the company in this initiative, USAToday.com added blogs, RSS (really simple syndication), and podcasts to ensure that its news stayed relevant to busy and mobile readers. Gannett also purchased interest in a company with unique technology that aggregated news on the Internet and categorized the information into 300,000 topics. Other acquisitions included PointRoll, a service that allowed Internet advertisers to expand their online space. One innovative way Gannett leveraged this service was to help advertisers to direct consumers to local merchants. When a user rolled their cursor over an ad, the ad expanded to reveal information about the closest retailer.

Also, in an effort to become the one-stop shop for all types of information, USAToday.com began providing readers and site visitors with the opportunity to search for their unique interests and connect with like-minded individuals. For instance, in the first quarter of 2008, USAToday.com introduced a site that combines professionally created content from USA Today writers, with consumer-generated content, comments, and recommendations, as well as instant message news alerts and advanced search functions. The company also created online communities with discussion forums, polls, and other interactive content. Today, USAToday.com’s online community groups continue to expand, with forums targeting individuals interested in topics such as MMA (Mixed Martial Arts), cars (“Open Road”), and video gaming.

In addition, USAToday.com launched nearly 200,000 unique online topics pages available via links threaded in the story pages or through a stand-alone topics section. According to Jeff Webber, publisher of USAToday.com, “USA Today has always focused on what America is talking about and provides the content that fuels the nation’s conversation. Our new topics pages go in-depth into subjects ranging from Sarah Palin to Starbucks; Barack Obama to Bono; and American Idol to the iPhone, all the things that make America tick.”

Brand Extensions and Partnerships

A key part of USA Today’s marketing strategy is forming partnerships to expand their reach. In 2008, USA Today began to look beyond the scope of daily news media and ventured into brand extensions by way of retail locations and television. As an attempt to capture more share of customer (rather than market share), USA Today opened three USA Today Travel Zone retail locations in airport terminals in late 2008. These retail shops carry all products travelers expect to find, including reading materials, sundries, travel accessories, and other convenience items. To align with the current look and feel of the paper its customers recognize, sections of the store are clearly identified and utilize colors representing USA Today’s signature sections: News (blue), Money (green), Sports (red), and Life (purple).

In January 2011, USA Today acquired Reviewed.com, a company that tests and rates consumer electronics such as cameras, camcorders, and HD televisions. USA Today also worked with Learning.com in 2012 to give teachers and students better access to digital teaching resources and educational content. Other recent partnerships include major league baseball, Doritos, Seat Geek, and National Geographic. These brand extensions are part of USA Today’s strategy to develop an “integrated consumer media strategy” and add more value to its products.

USA Today—Today and Tomorrow

Looking at the total national newspaper market, USA Today has been quite successful. It has seen more than 30 years of success and is one of the most widely read newspapers in the United States. Together, USA Today and USAToday.com have 7 million daily readers. It is a leader in mobile applications with 21 million downloads. Although the newspaper’s print circulation has declined, USA Today still has the largest print circulation with 3 million daily readers. Paid subscribers total 2.9 million. The print edition of USA Today trails slightly behind the Wall Street Journal, at 1.2 million (the Wall Street Journal has 1.4 million). However, USA Today is more popular among online readers. The fact that digital content can be accessed for free has given it a boost over its competitors the Wall Street Journal and the New York Times, which have paywalls. The number of readers accessing USA Today over mobile devices increased 50 percent in a 1-year period.

USA Today continues to face fierce competition in both print and digital sales. With more media turning toward digital, USA Today has been gaining new rivals in online information distribution through television and magazine sites, blogs, and podcasts. Internet-based companies like Yahoo! and Google have moved into the advertising market. The multitude of choices for both consumers and advertisers means that USA Today will have to work harder at innovation, finding a way to differentiate its products from the sea of competition. This will be a challenging task given the continuing decline in newspaper readership and the growing consumer demand for free online news.

As USA Today looks ahead, a number of issues must be considered. The following sections describe some of the key issues that the company faces as it plans for its future.

USA Today’s Customers

The overwhelming majority of USA Today’s circulation is within the United States. Most USA Today readers work in middle- to upper-management positions and are often purchasing decision makers for their offices and households, as well as technological junkies and sports fans. They also participate in a wide range of leisure activities such as attending movies and traveling. One study found that print newspaper’s readers are 65 percent male and 35 percent female, with an average age of 50 and an average income of $89,731. Just over a third of print readers are considered to be professional or managerial, although 44 percent of readers are college graduates. When USAToday.com’s readers are included, the median age of readers is 49 with an average household income of $91,725. Newspaper readership tends to be higher among consumers with higher levels of education. However, these trends are shifting as more young people access the news on mobile devices. Mobile news readers tend to be younger in age, and it is estimated that print readers are on average 17 years older than those who typically access the news through mobile devices.

Important players in the purchase process are subscribers, single-copy buyers, and third-party sponsors, often referred to as blue-chip buyers. USA Today’s most loyal customers are print subscribers, who buy Sunday or daily newspapers delivered directly to their home or office for $275 in the first 12 months. Subscribers also include consumers who pay for full access to USAToday.com. Single-copy buyers tend to purchase the paper out of daily routine (heavy users) or on occasion based on specific newsworthy events (light users). Single-copy editions of USA Today are distributed via newsstand retailers, large grocery store chains, bookstores, and coin-operated vending machines. Twenty percent of paid copies are purchased by third parties, which distribute complimentary copies to end users to add value to their own goods or services. For example, hotels, restaurants, banks, college campuses, airports, and other service organizations offer customers the opportunity to enjoy a copy of USA Today during breakfast or while waiting in the lobby. USA Today content is also available in electronic formats from USAToday.com, mobile devices, and e-mail updates. The e-edition costs $99 per year. The availability of USA Today via electronic distribution may deter some consumers from purchasing the print product.

Competition

Gannett has competitors from several fields, including other national newspapers such as the Wall Street Journal and the New York Times, cable networks, nationally syndicated terrestrial and satellite radio providers such as Sirius/XM, Internet sites such as Yahoo! and Google, and blogs such as the Huffington Post.

The Wall Street Journal USA Today’s biggest newspaper competitor is the Wall Street Journal, owned by Dow Jones & Co. Inc. The Wall Street Journal targets influential business readers as its primary audience. The company’s product lines include newspapers, newswires, magazines, websites, indexes, television, and radio. The Wall Street Journal’s website, www.wsj.com, adds over 1,000 news stories per day and includes price information on over 30,000 stocks and funds worldwide. The Wall Street Journal has strategic alliances with other information companies, including CNBC, Reuters, and SmartMoney.

Total print and digital circulation for the Wall Street Journal version is 2.3 million, which includes 1.4 million in print circulation and 916,000 online paying customers. The large number of paid subscribers causes the Wall Street Journal to beat USA Today in print circulation. About 26 percent of the online newspaper’s readers are employed as top management, and 87 percent are college graduates. The average household income is $248,828 and the average household net worth is $1.3 million. Seventy-one percent of online readers are male, and the average reader is 45 years old.

Dow Jones has made several improvements to the Wall Street Journal in an attempt to make it more competitive. It added a Weekend Edition in 2005, designed to help advertisers reach the paper’s audience at home on the weekends. The Wall Street Journal also implemented compact 48-inch width and new design. The newspaper followed USA Today’s lead and added ads to the front page, showing that this practice is becoming more common as newspapers look for ways to increase revenue.

The New York Times In addition to the New York Times, the New York Times Co. owns other newspapers and related websites, two New York City radio stations, and eight television stations. The newspaper’s target market is the intellectual elite. As explained in their press kit, “The New York Times—Influential people read it because influential people read it.” Like USA Today and the Wall Street Journal, the New York Times is available both in print and online at www.nytimes.com.

Total circulation for the New York Times is 2.2 million, with print circulation at 680,905. Its digital circulation is 916,000 and requires monthly subscriptions. The New York Times readers are 59 percent male, 86 percent college graduates, and 69 percent professional/managerial, and have a median age of 42. The median household income is $158,186.

The company has recently made changes in an attempt to be more profitable. The New York Times raised its home-delivery rates and reduced the number of pages in its stock section. Additionally, the paper has implemented cost-savings policies including staff reductions, reducing the width of its print version. However, while circulation has increased due to digital subscriptions, the New York Times has seen profits drop in recent years due to a decline in print advertising.

Other Media Competitors USA Today also faces competition for audience attention and advertising dollars from companies outside its industry, including network and cable television, television news websites, and Internet news aggregators. As shown in Case Exhibit 1.2, more people are accessing their news through television and the Internet than through print sources. This demonstrates how crucial it is for national news organizations to utilize digital media in their marketing mixes.

Case Exhibit 1.2 Sources of News for U.S. Adults

Source: American Press Institute, “How Americans get their news,” Harris Interactive, March 17, 2014, http://www.americanpressinstitute.org/publications/reports/survey-research/how-americans-get-news/ (accessed May 13, 2015).

More and more Americans, especially younger people, are turning to new sources of media consumption. Internet information providers or news aggregators are another source of competition for USA Today. Over 3 billion people globally have access to the Internet at home or work. Most Internet information providers make their money through subscriptions, advertising, or both. It is important to note that the Internet as a communications and advertising medium is no longer tied to desktop computers. Virtually all major Internet providers and content developers now make their content available via handheld devices, including USA Today.

Economic Woes

USA Today and other newspapers have been struggling with falling revenues and increased costs for several years. Both print and online advertising revenues have been falling steadily, declining 50 percent in the past 5 years alone. Although digital advertising has increased, it is not fast enough to replace the revenue lost from print ads. Case Exhibit 1.3 shows the drop in print advertising revenue and the increase in digital advertising.

Case Exhibit 1.3 Newspaper Media Revenue

Source: Newspaper Association of America, 2013.

In addition, the high cost of newsprint is also a problem for newspapers. The average cost per ton of newsprint consumed increased by 13 percent in 2011, but the effects of price increases were partially offset by a decline in print newspaper consumption. In an attempt to mitigate the print cost increases, Gannett continues to moderate newsprint consumption and expenses through press web-width reductions and the use of lighter-weight and recycled papers.

These costs have forced numerous newspapers to close, reduce publication days, lay off employees, reduce salaries, or adopt an online-only format. Gannet has started to focus on diminishing its newspapers’ reliance on print sales. In August 2010, USA Today restructured its newsroom to adjust to changes in the economy and the newspaper industry. The company made major changes to the circulation, finance, and news divisions, created 10 new executive positions, and cut 9 percent of its staff. The remaining staff was broken up into “content rings” instead of the News, Sports, Money, and Life sections. In addition, in 2012 Gannett named media industry veteran Larry Kramer as CEO of USA Today. Kramer is responsible for implementing a corporate strategy focused on digital media, starting with re-launching USA Today’s online, mobile, and tablet products.

To respond to rising costs and the loss of adverting revenue, USA Today and other newspapers are attempting to find new ways to generate revenue through their pricing strategies. After years of offering online news for free, a growing number of newspapers, including USA Today and other Gannett newspapers, have implemented metered pay walls, which give readers online access to a few free stories before requiring them to sign up for a digital subscription. Readers are limited to five to 15 free stories a month and can have digital access by purchasing at least a Sunday print subscription. Gannett is also raising single-copy prices by as much as a third for its printed newspapers. By reducing their print costs and pushing digital media, the company expects to add $100 million in annual profit.

Changing Technology

Technology has changed the way people access information. Consumers now have a variety of ways to get the latest news—print media, 24-hour television networks, news websites, mobile devices, search engines, blogs, and social media sites all provide up-to-the-minute news.

Not only does technology give consumers more options, but it also allows consumers to customize the news they receive at a level they were never able to do before. These changes have led to a marked decline in newspaper circulation as people use the Internet and other means to get timely news and information. In just 1 year, the digital audience for newspaper content rose 10 percent. Those who access digital news only from their mobile devices increased 53 percent. Another trend among digital newspaper readers is they tend to be younger than the Internet audience as a whole.

As mentioned earlier in the case, USAToday.com capitalized on the growth of mobile devices. For smartphone and tablet users (including the Amazon Kindle and the Apple iPad), the company created multiple applications. The USA Today applications provide readers with access to the latest news stories, weather, and photos at the exact same time the paper hits newsstands. The apps also feature interactive polls, and users can share News, Money, Sports, Life, Tech, and Travel articles via e-mail, text message, Facebook, or Twitter. Both USA Today’s iPhone and iPad applications lead the news category; the iPhone application has over 3.6 million downloads, the iPad application has over 1.8 million downloads, and the Android application has 2.6 million downloads. The USA Today application is one of the top 10 news apps.

In addition, USA Today offers several other mobile apps, including games and trivia. The company partnered with Hampton Hotels to offer the AutoPilot application, targeting business and travel consumer groups. The AutoPilot app offers users the ability to easily track trip and flight itineraries, utilize GPS capabilities in real time, get information on airport delays, monitor departing and arriving flight information, and access current and future weather conditions. The company’s mobile strategy appears to be working; average monthly readers on the USA Today mobile app increased almost 50 percent in 2014.

USA Today is also taking advantage of the rise of social media sites. It has an active presence on Facebook, Twitter, LinkedIn, YouTube, RSS, Google+, Tumblr, Instagram, Pinterest, TuneIn Radio, and SoundCloud. TuneIn Radio and SoundCloud feature audio clips of stories that most interest the audience. USA Today also entered a partnership in which its Tech section became a host and sponsor of Fark.com, a news aggregator and social networking site. The partnership features USA Today technology news on Fark’s “Geek” page. Through research USA Today has found that the majority of readers of its digital content are conversationalists who want to share interesting news information with other people. This viral nature of digital media is crucial for the company as more and more people spend time on social networking sites. USA Today’s digital marketing strategy makes it convenient for customers to access news and adds a social aspect to reading the news.

Overall, technology may have initiated the decline of the newspaper industry, but it also offers USA Today opportunities to maintain and even expand its readership. Technology allows USA Today and other newspapers to deliver news in more cost-efficient, customizable, direct, and useful ways than will ever be possible using newsprint. In particular, mobile technology has allowed USA Today to literally execute former CEO Dubow’s vision of “getting news and information into the hands of consumers faster than ever before.”

Cultural Shifts

The decline of the USA Today and other print newspapers is part of a wider cultural trend. People are increasingly getting their news from the Internet. The Pew Research Center shows that circulation for print newspapers declined by 3 to 4 percent while podcasting grew 41 percent in the same period. This trend reflects both the growth of digital media and the gradual decline in newspapers’ readership. This trend is even stronger among younger people. Seventy-three percent of 18- to 29-year-olds cite the Internet as one of their main sources of news.

To take advantage of this trend, newspapers are attempting to attract new and younger readers, offering more interactive and social components. The transition is a difficult one, however, because there are significant differences between the interests of current newspaper readers (mostly Baby Boomers) and younger consumers. Baby Boomers are most interested in major news stories and local news coverage, while younger readers are more interested in sports, entertainment, and comics.

Evolving to Meet the Future

Although increasing digital options for news and information have some industry observers bemoaning the death of newspapers, some feel that newspapers will thrive if they develop a healthy online presence and adapt to evolving media consumption patterns. New technologies, shifts in readership, and increased printing costs present challenges to USA Today as well as opportunities to expand its reach to new customers and mediums. For over 30 years, the newspaper has met the needs of its customers in new and unexpected ways. In the face of competition in both print and digital markets, the future of USA Today depends on its ability to innovate and adapt according to changing needs of the market. To remain successful, USA Today must continue to use a value-added strategy to further enhance distribution of its proprietary content and ensure continued product differentiation.

USA Today Case Analysis #1 NAME: ____________

MKT 650 Marketing Strategy

I. Complete the 3 questions listed below about USA Today.

II. Complete only the highlighted parts of the 7-Step Framework (i.e., Steps 1, 3, 5). Submit this document with completed tables on Blackboard by 11:59 p.m. Sunday, March 7.

NOTE: students are encouraged to share ideas and work together to analyze this case using the Yellowdig-USA Today Forum. However, each student must submit original work .

QUESTIONS (20%):

1. How did USA Today utilize consumer feedback prior to launching the newspaper? Discuss the approach, sample size, and outcome.

2. How did “JetCapade” and Operation Desert Storm contribute to the global growth of USA Today? What new product innovation emerged as a result?

3. How has a continuous strategy of innovation (consider marketing and digital examples) proved successful for USA Today and USAToday.com? Provide 2 examples of successful innovation. (NOTE: you should also consider ongoing innovation ideas and strategies for Step 5 below)

7-Step Case Analysis Framework:

1. Situation Analysis (25%)

a. Provide mission and brief background. If there is not a clear mission statement available on USA Today official materials or annual report, you will develop a mission statement using the guidelines in Chapter 2 (i.e., customer-focused theme – see Starbuck’s example).

b. Produce a SWOT analysis (see p.98, exhibit 4.4 as a guide – NOTE: complete Table 1.a provided in this document)

c. Produce a Customer analysis using the 5W model (see p.64, exhibit 3.4 as a guide – NOTE: complete Table 1.b provided in this document)

d. Produce a Competitor analysis (see p.71, exhibit 3.6 as a guide – NOTE: complete Table 1.c provided in this document)

2. Assumptions and Missing Information – NOT REQUIRED FOR THIS CASE

a. Source provided in this document

3. Statement of the Problem (15%)

a. See examples in “How to Analyze a Case” document on Blackboard)

4. Development of Alternatives – NOT REQUIRED FOR THIS CASE

5. Evaluation of Alternatives & Recommendations (25%)

a. Select what you believe to be the best alternative from above for strategy moving forward. Then develop at least 3 goals with 2 objectives under each goal.

b. Goals & Objectives (see examples in “How to Analyze a Case” document on Blackboard). Goals are broad, objectives become more specific and aid in implementation.

1. EXAMPLE from Redbox: For an alternative strategy such as “Maintain kiosk service, and supplement with streaming service”, the following goal and objectives might look like this …

a. Goal #1 EXAMPLE: Identify available programming content for streaming service

i. Objective EXAMPLE: Form partnerships with 3 production companies in the next 6 months to secure specific programming content to reach target customer

6. Implementation – NOT REQUIRED FOR THIS CASE

7. Evaluation and Control – NOT REQUIRED FOR THIS CASE

8. Executive Summary – NOT REQUIRED FOR THIS CASE

Step 1: Situation Analysis – USA Today

Mission:

Brief Background (less than 250 words):

Table 1.a SWOT Analysis

Strengths (internal): · S · S · S · S · S	Weaknesses (internal): · W · W · W · W · W
Opportunities (external): · O · O · O · O · O	Threats (external): · T · T · T · T · T

Table 1.b Customer Analysis

Who are our current and potential customers?	What do our customers do with our products?	Where do customers consume our products?	When do customers consume our products?	Why (how) do customers select our products?
Demographic:	Consider Frequency (i.e., light vs. heavy user): EXAMPLE: a “heavy user” might read online news, receive the print version, and utilize the expert call-in service discussed on page	Do more customers prefer online?	How does innovation impact consumption?	Basic features that appeal to consumers? Online: Print:
Psychographic:		What type of customers prefer print?	Does consumption vary due to any external circumstances (i.e., world events, market trends)?	How are primary consumer needs fulfilled?
				Relational or transactional exchange with consumer? (i.e., how can we strengthen relationship?)

Table 1.c Competitor Analysis

Product Category	Brand Competitor	Price Ranges	Benefits/Value Proposition	Generic Competitor	Total Budget Competitor
News & Information	USA Today (print)
	USA Today.com
	Wall Street Journal
	New York Times

Step 3: Statement of the Problem

Step 5: Evaluation of Alternatives

· Based on your overall analysis, select what you believe is the best alternative for marketing strategy.

· Provide at least 2 directional Goals with 2-3 detailed Objectives for each goal

Goal	Objective 1	Objective 2	Objective 3

2