The Case Of Metro Monthly

Background b City magazine that has won national awards. b Hard-hitting journalism, humorous features, personality profiles of important community members. b Won several national awards in 1 st 10 years.

Background b Profits declining in last 3 years b 3 of original founders fell out over content. b Remaining 2 founders sold the magazine company.

Task b Prepare a budget that would increase profits by 10% over estimated level for current year’s budget. b Explain process of creating budget. b Explain possible impact of any price changes or budget cuts suggested.

The Problem #1 b Competing magazine, Metro Magazine started 4 years ago. b Free publication b Contains ‘good’ news – public relations tool for businesses.

Problem #2 b Rising prices for paper and ink. b Increasing printing costs

Problem #3 b Decrease in advertising dollar due to economic recession. b Expected to continue over 1 year.

The Three Legged Stool Content Advertising Readership

Effects of Problems b Readership: - competition from Metro Magazine. Leads to fall in readership, then fall in advertising b Advertising: - direct competition for advertising with Metro Magazine. b Content: - Change in management could affect outlook of magazine b External: - Rising costs and recession

Goals & Objectives b Increase profits by 10% over estimated level of current year’s budget.

Strategy b Increase revenue through: Increasing advertising revenueIncreasing advertising revenue Increasing readership revenueIncreasing readership revenue b Decrease costs

Possible Solutions b Increase/reduce subscription/single issue rates. b Make magazine free. b Increase/reduce ad prices. b Reduce salaries.

Possible Solutions b Replace regular staff with freelancers. b Dismiss regular staff. b Bring back 3 founders who left. b Change type of coverage. b Reduce number of pages.

Appraisal & Choice b Production costs have increased despite cut in pages b Price does not have a significant impact on circulation rates

Appraisal & Choice b Conclude that falling ad revenue is the factor with the most impact on profit margins. b To increase profits, we decided to concentrate on maintaining advertisers’ sentiments despite recession. b This will be done by lowering ad rates. b Advantage to us since competitor survives solely on selling advertising.

Demand for Magazine in Advertising Market Dd P1 P2 Q1Q2 $ Qty