The Marketing Strategy of The Most Circulated Newspaper in Bangladesh Prothom Alo

Introduction

A newspaper is one of the most important reading materials in the life of a literate people. In the modern age, without a newspaper a person cannot think of his/her daily routine life. The need for a proper marketing of the newspaper marketing has arisen because of the rapid change in the communication process. An effective marketing strategy is required to retain the current customers as well as to attract potential ones. A newspaper as a product can satisfy the need for getting the information that helps in decision-making process of the social and family life.

A newspaper’s most valuable asset is customer acceptance .Newspaper publishers spend millions of dollars annually to ensure that the newspaper arrives at the newspaper stand or the subscriber’s doorstep every day. Reporters track down stories and editors diligently maintain the editorial integrity of the newspaper. The production department meticulously guarantees that advertisements make it onto the right page. It is no small feat that this daily production process has continued for centuries across every city and town in the world. Therein lies the rub. With a resolute focus on both the published newspaper and production efficiencies, newspapers have become true stalwarts of the industrial age. The last decade has ushered in a new era, the information age, which is characterized by an unwavering focus on customers.. Today, customer service means more than delivering the newspaper on time, every time. Many newspapers are transforming their organizations from manufacturing-oriented enterprises to customer-centric businesses and relying on customer relationship management solutions to help catapult newspapers into the new age (Margaret’ 2002). In the early of the eighty’s of the last century the then government of Bangladesh had declared the newspaper sector as an industry.

Now a day it has become a wide and very important industry of the economy of our country. At present there are about four hundreds national daily newspapers and more than two thousand magazines in the country. This is one of the most dynamic sectors of our economy. A revolutionary change has been occurring in this industry especially from the last ten years. Technological revolution has brought a dramatic development in this sector. Our newspaper industry has been flourished highly during this period. A number of renowned daily newspapers are ready to face the challenge of the era of information age. It has crossed a long path from the era of letter compose to today’s updated computer compose. Internet has changed the way of the newspaper business. Now a day, publishing of newspaper is not an adventure; it has become a business. And the ultimate objective of any business venture is to maximize the profit for the owner, not to maximize the social welfare. The newspaper industry has been transformed from its old entity, social work, to a for-profit business venture.

Marketing is the most critical factor of today’s market-oriented newspaper industry. That’s why today’s entrepreneurs of this industry have to think for various marketing variables i.e. the development and maintenance of product’s quality; developing price strategies; establishing effective distribution channel; and lastly conducting promotional programs to pursue consumers to buy their product. And they have to do all these things keeping the needs, wants and demands of their consumers in their minds. In this way we can see that the understanding and application of modern marketing concepts is very significant in getting success in this industry.

Objectives of the Study

The primary objective of the study is to identify and describe the use of various elements of marketing mix in the newspaper industry of Bangladesh through focusing the marketing practices of the highest circulated newspaper, Prothom Alo. This paper has been carried out with the following specific objectives:

i.          To cite the price determination process of a leading newspaper.

ii.         To describe the marketing cost of Prothom Alo.

iii.        To narrate the distribution channel of a national newspaper.

iv.        To illustrate the promotional activities of Prothom Alo.

v.         To identify the current marketing problems of a daily newspaper.

vi.        To find out the ways of increasing the marketing efficiency of Prothom Alo.

 Methodology of the Study

This is basically a descriptive research by nature and is prepared on the basis of secondary data. The sources of these secondary data are the relevant official documents of The Prothom Alo, the published articles of different research works, magazines, and reports of various government authorities and independent market research projects of various private research firms. A direct study had been conducted in the head office of the Prothom Alo during the period of June- July’2005 to collect relevant information about its marketing practices. The editor, the deputy editors, the news editor, chief reporter, administrative manager, accounts manager, the commercial manager, the press manager and the divisional heads have been interviewed to obtain the required data.

Scope of the Study

This article does not focus on the marketing practices of all the major newspapers of  Bangladesh. Rather it pays attention on the Prothom Alo, the number one (according to the volume of circulation) daily newspaper of the country. The research paper only attempts to describe the 4 Ps i.e. the product, price, place and promotion programs of the particular newspaper.

Limitations of the Study

Despite of the level best effort of the researchers, this article is not fully free of certain obvious limitations. The basic limitation of this article is its sole dependence on secondary data. Secondly, the sources of secondary data were very limited. Relevant data is not available regarding this field. For this reason the accuracy of this report depends on the accuracy of the information furnished by the secondary sources.

The Prothom Alo was first published on 4th November, 1998 under the ownership of Transcom Ltd., a leading corporate giant of the country. Transcraft Ltd., a subsidiary company of  Transcom Ltd., is playing the role of publisher of this daily. Prothom Alo is a sister concerns of ‘Shaptahik 2000’ and ‘The Daily Star’ which are the leading Bangla weekly and the leading English daily of the country respectively.

Corporate Mission & Strategy

The mission of Prothom Alo is to prolong the market leadership and protect the business interest of the newspaper.

Prothom Alo’s product strategy is to provide independent, unbiased, nonpartisan, upholding social values, non-communal and modern out look to the consumers (readers) for the betterment of the whole society. Critical Success Factors of Prothom Alo are honest journalism, teamwork, freedom in decision-making, social interaction & involvement and strong financial support (investment). The main differentiators of Prothom Alo from its competitors are quality of news presentation, professionalism and journalistic approach. It believes that volume of revenue depends on competitive market position of the newspaper. So it focuses on increasing the volume of circulation as a part of its strategy to actualize revenue.

 Organizational Structure of Prothom Alo

The Prothom Alo follows a very flexible organization structure in which various departments enjoy sufficient freedom and they cooperate with each other.

Board of Directors (BOD) and the Editor

As the agent of the Board of Directors the editor of Prothom Alo is directly controlling the overall activities of the daily. All the news and advertisings are published according to his decision. As the Chief Executive Officer (CEO), he plays the coordinating role between the Board of Directors and the management of the newspaper. He is leading the team from the front in developing and executing different policies and strategies in light of the expectation of Board to achieve the ultimate objective of the organization.

 Departments and Divisions

Two departments – office department and press department perform all the activities of Prothom Alo. The office department is also divided into two sections- news section and general section. Within the news section there are three divisions- editorial division, news division and feature division. These three divisions are directed by three deputy editors who perform their job under the direct supervision of the editor of the daily. It is mentionable that in Bangladesh Prothom Alo has introduced the position of Deputy Editor. Within the general section under the supervision of the administrative manager there are four divisions- administration, advertising, accounts and circulation. And finally, the general manager with the cooperation of a press manager and a press supervisor controls the press department. Besides the head office there is a branch office in Chittagong, which is managed, in the same fashion of that of the head office. (Jogajog’ 2002)

Work Force

Prothom Alo has three hundred and thirty five (335) full time employees including female employees. For compensating employees, Prothom Alo offers the salary structure of the fifth Wage Board of Bangladesh government. It also provides various benefits such as provident fund, gratuity, individual employee insurance coverage, group insurance coverage to its employees. Prothom Alo is offering its employees a very cordial working environment with a high opportunity to build up their career.

Target Market Decisions

One of the major differences of newspaper marketing is that the marketer has to satisfy two major groups of customers:

a.        Readers (who buy the product for their personal consumption i. e, final consumers)

b.        Advertisers (who buy the advertising space for their business use i. e. business buyers)

In developing the target market decision, a newspaper marketer has to consider both of these two types of customers as well as other factors such as the different variables of market segmentation, the competitive situation of the market, the SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of the business venture etc. which influences the overall performance of newspaper business. Like other newspapers of our country, Prothom Alo is developing their target market decision by considering all of these factors.

Competitive Position of Prothom Alo

Companies can be classified into four categories in terms of their competitive position in the industry:

a.         Market leader– the firm with the largest market share in an industry

b.         Market challenger– a runner-up firm that is fighting hard to increase its market share in an industry

c.         Market follower– a runner-up firm that wants to hold its share in an industry without rocking the boat

d.         Market nicher-a firm that serves small segments that the other firms in its industry overlook or ignore (Kotler 2003)

From circulation point of view, The Prothom Alo is the unparalleled market leader of present newspaper market of Bangladesh. Prothom Alo supplies everyday on an average 2, 37,715 copies to the agents for sale. In terms of circulation (actual sale), Prothom Alo is ahead of the market challenger, The Daily Jugantor (the difference is 88,927 copies). Out of 64 districts Prothom Alo is the market leader in 43 districts. Out of the rest 21 districts, Prothom Alo is the market challenger in 11 districts and market follower in 9 districts and market niche in only one district. Except Barishal, Prothom Alo is the market leader in all the Divisional Headquarters of the country i.e. Dhaka, Chittagong, Khulna, Rajshahi and Sylhet with a big difference of 57,656

copies than the market challenger in selling point of view.

Table 1: Country Wide Print, Supply, Sales and Unsold Copies of the Top Three Dailies

 Table 2: Market Share of the Top Three Dailies from Sales Point of View

Marketing Mix of Prothom Alo

Marketing mix is the set of controllable variables of marketing. In general it is expressed in 4 Ps: product, price, place and promotion of a particular company (Kotler, 2003). The marketing mix of Prothom Alo is described below:

Product

In a narrow sense, a product is a set of attributes assembled in an identifiable form. In marketing, we need a broader definition of product to indicate that consumers are not really buying a set of attributes, but rather benefits that satisfy their needs. Product is an umbrella term that covers goods, services, places, persons, and ideas (Stanton 1994). Marketing offer is some combination of products, services, information, or experiences offered to market to satisfy a need or want (Kotler, 2003).

 Types of products

Even though the product type being sold here is communication of information, apart from the target group of readers newspapers also attract advertisers. Therefore the other type of product that is represented here is space. Space denotes the place in the papers that are offered for putting advertisements that also serves as the source of revenue for Prothom Alo.

Level of products

A product planner must think about three levels of products and services (Kotler, 2003). Each level adds more customer value. The most basic level is the core benefit that addresses the problem solving benefit of the marketing offer. For Prothom Alo, the basic product is information i. e. news & views. At the second level, marketers turn the core benefit into an actual product. In this stage product features, design, quality level, brand name, and packaging are developed. The actual product of Prothom Alo is the newspaper itself. In the third stage, to differentiate their offers from competitors’ a marketer offers some additional benefits with core benefit and actual product, which is referred as the augmented product. Prothom Alo offers different supplementary as its augmented product. In Appendix C there is a list of supplementary offered by Prothom Alo.

 Core Benefit

Actual Product

Augmented Product

Now-a-days firms do not rely on a single product rather they sell many products. According to Stanton (1994), the set of all products offered for sale by a company is called a product mix. Kotler (2003) explained the term as the set of all product lines and items that a particular seller offers for sale. The different elements of Prothom Alo’s product mix are:

i.          Daily news & views

ii.         Space for advertisements

iii.        Web edition of Prothom Alo

Like its regular issue, Prothom Alo is enjoying the market leadership in its web edition also. On an average worldwide more than One Hundred Fifty people read Prothom Alo daily. The web address of Prothom Alo is www.prothom-alo.com.

Space sold for advertisement

It’s found that the total space of Prothom Alo’s each issue is 7,040 square inches (2008-2009). The total space for matter is 6,130 square inches, which is 87% of the total space, and the rest of the 13% is the space for margin. The total space for news of that particular issue is 3558 square inches, which is 50.5% of the total space and 58% of the total matter space. The total space for advertising is 2,572 square inches, which is 36.5% of the total space and 42% of the total matter space.

Table 1: Space Management of Prothom Alo (2008-2009)

 Table 2: Space Management of Prothom Alo (2008-2009)

Pricing

Price is the exchange value of product. Price is the amount of money and/or other items withutility needed to acquire a product (Stanton 1994). Kotler (2003) explained price as the amount of money charged for a product or services, or the sum of the values that consumers exchange for the benefits of having or using the product or service. Pricing is a critical factor in the successful operation of for-profit and not-for-profit organizations. Setting prices for new and existing products appears simple enough. To find out the selling price of a product, a marketer apparently has to estimate the costs, add a margin for overhead and profit. Price is the primary element of the marketing mix that generates revenue. The pricing strategy for newspaper industry is different from other consumer products. Prothom Alo is following a special type of competition based pricing approach to determine of the price of its product. The details of per unit production cost of Prothom Alo are as follows:

Step 1:  Determination of Per Unit Production Cost

Newsprint                   Tk        6.90

Printing                                   1.43

Factory Overhead                   0.55

8.88

Indirect Overhead       1.46

Total cost    10.34

Step 2:            Determination of Per Unit Sales Revenue

Per unit sales price                                          Tk        8.00

Agent’s Commission (42.5%)                         Tk        3.40

                                                                      ___________

Per unit sales revenue                                               Tk       4.6

Step 3:            Determination of Per Unit Marketing Cost

i.          Annual promotion expenditure

Bill board                                Tk        0 .75 crore

Incentive to the hawker & agency      0.40 crore

Trade promotion                                 0.91 crore

(85000 copy x 12 x 8.88)

special promotion package                  1.00 crore

Tk        3.06 crore

ii.         Annual distribution cost         Tk        1.45 crore

iii.        Annual production cost          Tk        89.83 crore

Total Annual Marketing Cost Tk        95.34 crore

Per Unit Marketing Cost      Tk       10.98

Step 4:            Determination of Per Unit Target For Advertisement Revenue

Cost of marketing                   Tk        10.98

Sales revenue                            4.60

Advertisement target            Tk         6.38

(If we multiply this per unit advertisement target by the total sales volume we will get the total daily target of the advertisement revenue.

Step 5:            Determination of Deficit In Pricing

Per unit marketing cost           Tk        10.98

Per unit price                                         8.00

Per unit deficit in pricing      Tk         2.98

Unlike other consumer products, Prothom Alo is not setting its product’s price by adding a markup with its total marketing cost. Rather they have to make up the deficit in pricing and to make the targeted profit with the revenue of advertisement. So it’s really tough to define the pricing strategy of Prothom Alo in the light of pricing approaches of marketing management.

Table 03: Per Unit Price Changes of Prothom Alo

 Table 4: Sources & Daily Cost of raw Materials [Newsprint]

Place Decisions

A critical task for marketers in the new millennium is the efficient movement of goods and services from the point of production to the points of consumption. There are hundreds of ways in which goods and services can be distributed to consumers. There is no standard distribution system that can satisfy the needs of every firm. Many organizations use several distribution channels to reach different market segments. A distribution channel consists of the set of people and firms involved in the transfer of title to a product as the products move from producer to ultimate consumer or business user (Stanton 1994). In other words, channel of distribution is a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer and business user (Kotler, 2003).

Circulation of Prothom Alo

Circulation refers to the sales of a newspaper. Circulation is the lifeblood of a newspaper. Study shows that there is a positive correlation between the volumes of circulation and the advertising revenue, which is the main source of earnings of a newspaper. The daily circulation print of Prothom Alo is shown in the following table from its inception till 2005:

Table 6: Daily Circulation Print (1998-2005)

 Territory Analysis of Circulation

Study shows that Dhaka city is the largest territory of Prothom Alo’s total circulation. About 46% of its total circulation covers by the circulation of Dhaka city only. The major sales territories are

shown in the following table:

Table 7: Monthly Sales of Prothom Alo Based on Territory [June, 2005]

 Cost of Distribution

Cost of distribution of Prothom Alo is very high. It’s about 42% of per unit selling price. The major portion of the distribution cost is agent’s commission, which is about 85% of the total distribution cost. The details of distribution cost of Prothom Alo is shown below:

Agent’s commission —                                   35%

Unsold, Trade promotion, Bad debt —          6.5%

Total distribution cost —                                41.5%

Promotion Decisions

Promotion is an attempt to influence the consumers to react in favor of the company. In other words, promotion is the element of an organization’s marketing mix that serves to inform, persuade, and remind the market of a product. The organization is selling it, in hopes of influencing the recipients’ feelings, beliefs, or behavior (Stanton 1994). Using the concept of promotion a company carefully integrates and coordinates its many communication channels to deliver a clear, consistent, and compelling message about the organization and its products (Kotler, 2003). According to Kotler there are five elements of promotion mix: personal selling, advertising, sales promotion, public relations and direct marketing. Prothom Alo is using all of these elements of promotion mix except sales promotion. It’s using personal selling basically in collecting response from the advertisers; direct marketing in their web edition; advertising to increase their product image; and public relations to build up strong corporate image in the society. Study shows that Prothom Alo is using massive promotional activities than its competitors do. They are using print media (basically magazines), electronic media (satellite television channels) and out-door media (primarily banners & bill boards) for their advertisements. Sometimes they are using the different newspapers and magazines published from the same house to promote Prothom Alo, which is obviously free of cost. They are organizing seminars, talk shows, different competitions, contests, public rallies, award giving ceremonies, awareness build up programs in different social issues etc. as a part of their public relations \activities. The detail of the annual promotional expenses is shown below:

Table 5: Annual Promotional Cost of Prothom Alo

 Sales Return

Sales return is a crucial problem of newspaper industry. In terms of sales return, Prothom Alo is in  a convenient position. They are enjoying the lowest rate of sales return in the industry. The sales return position of Prothom Alo is shown in the following table:

Table 8: Retutn on Sales of Prothom Alo

 Sources of Revenue

Like all other newspapers, the main sources of revenue of Prothom Alo are advertising revenue and sales revenue. Prothom Alo is earning about Tk 3 crore 79 lac (after deducting the agent’s commission) as its advertising revenue and Tk 3 crore 30 lac as its sales revenue (after deducting the cost of sales) per month. Among the different sources of advertising revenue (figure 03) advertising agency is the largest one. 58% of its total advertising revenue is earned from this source. Prothom Alo is the market leader in terms of sales revenue too.

Table 11: Contribution of Different Sources of Advertising Revenue

Marketing Problem

This paper identifies the following marketing problems regarding the overall marketing practices of Prothom Alo:

1.         The management of Prothom Alo is not conscious about the modern concepts of marketing. It is found that it does not have any separate marketing department even though it is the market leader. At the same time, there is no research division to conduct survey about its consumer satisfaction. The study shows that in their organogram, there is no position of product manager also. It proves that their organizational structure should be redesigned.

2.         The channel of distribution is a crucial component for a particular product like newspaper. It is found that the distribution channel of Prothom Alo is very long. It occurs high cost, which decreases the efficiency of its marketing system. Moreover, there is no sound distribution network in the rural area of Bangladesh, which decreases the overall market coverage of its product.

3.         The price of Prothom Alo is higher in terms of the average household expenditure of Bangladesh. At the same time, it’s not enjoying the benefit of price leadership. The study shows that being the market leader, Prothom Alo follows the going rate pricing approach.

4.         The study identifies that Prothom Alo is sanctioning excessive space for theadvertisement (42% of the total matter space) in comparison to the total news space (58%). It indicates that its management is highly profit oriented. The higher dependence on advertising encourages corporate journalism, which is controversial of professional journalism based on ethics.

5.         There is a growing trend of price competition in our newspaper industry. It may create a real challenge for Prothom Alo.

Recommendation

Prothom Alo may follow the under mentioned steps to improve its overall marketing performance:

1.         The management of Prothom Alo should establish a separate marketing department. It needs to establish a research department and conduct market research on regular basis. At the same time it has to develop some feedback taking devices to monitor its consumer’s response.

2.         Prothom Alo ought to hire skilled employees who have proper academic expertise in their respective fields. It should train their employees of all levels in a way so that they can realize the importance of consumer satisfaction. It has to ensure professionalism (job security, higher salary, good corporate environment etc.) to minimize the turnover rate of its employees. And finally it needs to hire a product manager who will be responsible for its product development.

3.         To increase the consumer satisfaction level, Prothom Alo needs to adjust the newsadvertising space ratio of its daily offer. The allocation of advertising space should be decreased.

4.         As the market leader, Prothom Alo may enjoy the advantage of price leadership. It should adopt a differentiated pricing strategy for the market outside Dhaka city to face the growing challenge of price competition especially from the new entrants.

5.         Prothom Alo, as the market leader, will have to take initiatives to expand the overall market demand for daily newspaper in Bangladesh. It may enter into the rural market with the cooperation of different NGOs as its business partner to increase its market share. In this connection it can organize study circles in rural area and maintain newspaper stands at an increased number.

6.         Modern day promotional activities like web-marketing and SMS marketing should be given more focus. Prothom Alo can tie with the telecommunication sectors to provide important updates or even with the radio stations websites where the web radio surfers can get to hear the live pod-casts of recent news activity.

7.       To attract more consumers (readers) it should focus on different segments of the market such as different religious minority, ethnic minority, older people, lefty people, disable people, farmers etc. It can publish separate supplementary issues for each of these distinguished groups.

8.         It has to find out alternative distribution channel to minimize cost and gain more control over the distribution network so that it can increase the marketing efficiency. Prothom Alo can adopt e-marketing strategy to cope up with the latest trend of internet craze.

9.         It should appoint a brand manager and develop Prothom Alo as a brand.

Prothom Alo is one of the leading dailies in Bangladesh. It’s popular among the mass and is well received. But the only problem that the newspaper industry poses is the reluctance of introducing changes by implementing the concepts of modern day marketing activities. Customer needs and demands change over time and in this era of competition it’s important to convey the right values to the customers in order to attain their level of acceptance. Rather hanging onto traditional methods of Marketing Prothom Alo should embrace the modern day distribution tactics, promotional methods like SMS and web marketing, tagging with various radio stations and forming an effective distribution network.

References

1.         Chutir Dine, (2000) Weekly Magazine of Prothom Alo, No. 100, 11 November

2.         Chutir Dine, (2001) Weekly Magazine of Prothom Alo, No. 143, 03 November

3.         http:// www.inma.org/uams.cfm

4.         Kotler, P. and Armstrong, G. (2003), Principles of Marketing, Prentice–Hall

5.         Mamun, Mohammad Shamim Al, (2001) Songbadpotro Bajarjatkaron’, MarketingUpdate,

6.         Molloy, Margaret, ‘CRM best practices help newspapers uncover revenue  opportunities’, www.newsandtech.com/issues/2002/11-02/pt/11-02_crm.htm

7.         Pande, Prodeep Kumar, (1998) ‘Rajshahir ekti doinik songbadpotrer bitaron o  gganpon baboshthapona’, ADCOMSO JOURNAL, Vol. 2, No. 2, July-December, 1998

8.         Prothom Alo (27 December’05 – 02 January’06)

9.         Prothom Alo (24 October’05)

10.       Rahman, A. S. M. Anisur, (2002). ‘Jatio doinik songbadpotrer sanggothonik kathamo o sompadona prokria’, Jogajog, a Journal of Communication and Journalism, Vol. 4,March.

11.       Siddique, Abdul Hai, (2000). Sangbadpotro Biponon, ed: 01, August.

12.       Stanton, J., Etzel, J. and Walker, J. (1994), Fundamentals of Marketing, McGraw-Hill, international edition