1. The Case Of Metro Monthly

2. 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.

3. 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.

4. 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.

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

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

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

8. The Three Legged Stool Content Advertising Readership

9. 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

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

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

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

13. 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.

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

17. 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.

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