STRATEGIC MARKETING IN THE MEDIA
STRATEGIC MARKETING IN THE MEDIA
STRATEGIC MARKETING IN THE MEDIA How does Condé Nast segment their UK markets and target and position themselves in the branded magazine market?
ASSIGNMENT: STRATEGIC MARKETING IN THE MEDIA STUDENT NAME: KAREN RYAN STUDENT NUMBER: S4679591 WORD COUNT: 5367 pp3-23 MA REFLECTIVE BLOG: http://hellomastudy.tumblr.com/ ASSIGNMENT CONTENTS: 2
STRATEGIC MARKETING IN THE MEDIA PART ONE 1.0 Introduction - Condé Nast Multi-Media Publishing 2.0 Literature Review – Evaluating Strategic Marketing Definitions 3.0 Definition of Market Segmentation, Targeting and Positioning 3.1 Nature of Market Segmentation 3.2 Choice of Target Markets 3.3 Positioning and Competitive Positioning
PART TWO 4.0 Reflection 4.1 Analyse Condé Nast’s Segmentation, Target Market and Competitive Positioning in the UK 4.2 Factors Influencing Condé Nast’s choice of targeting strategy 4.3 Competitive Positioning 4.4 Formulate considerations and conclusions of Condé Nast Segmentation, Target Market and Competitive Positioning in the UK
5.0 Appendices Appendix I Competitors Financials Appendix II Condé Nast Audience Profiles
6.0 Glossary 7.0 Reference List
3
STRATEGIC MARKETING IN THE MEDIA How does Condé Nast segment their UK markets and target and position themselves in the branded magazine market? 1.0 Introduction - Condé Nast Multi-Media Publishing Condé Nast International is the international arm of the New-York based publishing company which produces many of the world's best known magazine brands. The publisher is regarded in the industry as an ‘upmarket’
1
publisher, and attracts more
than 164 million consumers across its 37 brands in 27 countries. Condé Nast’s mission statement commits to delivering “influential, content and brand experiences for discerning individuals who demand to be inspired” [Condé Nast 2017]. One of the first publishers to establish international editions; Condé Nast expanded its most established brand: Vogue – launched in 1916 – to Vogue Paris in the 1920’s, an Italian edition in the 1960’s, and later into further global and emerging markets. The multi-media publisher currently has 124 magazines, close to 100 websites, and more than 200 tablet and mobile apps. The publishers head office is in London and has seventeen British titles with a global reach, including: Ars Technical
House and Garden
Brides
Love
Condé Nast Johansens
Tatler
Condé Nast Traveller
Vanity Fair
Glamour
Vogue
GQ
Wired
GQ Style
World of Interiors
1
For the purposes of this essay ‘upmarket’ is also widely referred to as premium or
luxury within the fashion, beauty, lifestyle publishing market.
4
STRATEGIC MARKETING IN THE MEDIA
Fig. 1. Condé Nast Britain’s Brand Architecture (Amended from Conde Nast 2017) In terms of Condé Nast’s competition, the most prominent publishers with similar ‘premium’ titles are notably Hearst and Time Inc. – who have grown over the last decade through acquisitions and mergers – Hearst Communications [formerly Nat Mags and Hachette/Lagardere titles] and Time Inc. [formerly IPC Media]. And to a lesser extent – but also direct competition – Bauer Media, Immediate Media Co and the Haymarket Media Group. Recently Campaign Magazine [2017] reported the latest consumer magazine ABC figures; with a decline in circulation for Condé Nast whose titles were down 8.9% on the year. And of its competitors: Hearst titles were down 4.4%, Time Inc. were down 7.6% and Bauer Media were down 7.4%. The sixth monthly decline was largely seen as due to the decline of a number of weekly titles, whilst luxury print and digital saw levels of growth and stability. Gillian Doyle in Understanding Media Economics explores the theories of the “reliance on economies of scale, as opposed to economies of scope” and the relationship of “focussing on a particular social group rather than the largest possible readership” [2002, p.135]. Differentiating products and audience groups are key to understanding these discussions and are explored in 4:3 Competitive Positioning Strategies. In terms of differentiated product Condé Nast have the ability to adapt just as fast as its competitors; and to date have introduced: Condé Nast Entertainment [2011], expansion into education with the opening of The Condé Nast College of Fashion and
STRATEGIC MARKETING IN THE MEDIA Design [2015], and the launch of Condé Nast International - Luxury Conference [2015]. The forthcoming topics of 2017’s Luxury Conference include: New markets for the luxury industry and the evolution of global trade routes; both equally significant in terms of strategic development. Condé Nast has recently partnered with a data first influencer platform, Influential and IBM to “tap unstructured data for new insights to inform marketing strategies” [PR Newswire 2016]. It is clear that Condé Nast have found success in widening their portfolio from print to digital over the last ten years and are using new untapped data to grow their target market and revenue streams. This assignment looks at segmentation, targeting and positioning and how Condé Nast uses these strategies to position themselves to an ever-wider audience across multiple media channels; this essay focusses specifically on the UK market. 2.0 Literature Review – Evaluating Strategic Marketing Definitions There are many definitions in academic theory surrounding the domain of strategic marketing or marketing strategy. The terms themselves are under constant review by academics over the decades; from the AMA to Day, Hunt and Varadarjan; to name but a few. Varadarjan [2009] in particular explores the fundamental theories of marketing; examining the conceptual distinction between (1) marketing strategy and marketing tactics and (2) marketing strategy and marketing management. Segmentation, positioning and target marketing pertains to the first of Varadarjan’s concepts: (1) marketing strategy and marketing tactics. However, alongside Varadarjan, Webster [1991] explored a further definition between marketing strategy and tactics; confirming three levels of strategy: (1) corporate, (2) business and (3) operational. In terms of how to compete in a chosen market; the segmentation, positioning and target marketing aligns to the business strategy under the definition; marketing strategy, with market tactics aligned to the 4 P’s.
6
STRATEGIC MARKETING IN THE MEDIA In the last decade, The Chartered Institute of Marketing [2009], offered the following definition for marketing: “Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.” It warns that even for the smallest organisation [SME], to proceed without a marketing strategy is done so at their peril. A successful marketing strategy should be easily identifiable; leading to and from the 4Ps, Product, Price, Place and Promotion. Kotler, in his preface of Ries and Trout’s revolutionary – and now classic book – ‘Positioning’ stated “there is one more step before 4P planning can take place, and that is P, Positioning” (1980). In more recent times marketers have extended this to the 7Ps, which is sometimes referred to as the ‘marketing mix’ [The Chartered Institute of Marketing 2009] which includes the additional: Process and Physical evidence; creating a simple platform on which to develop successful marketing strategies. Within this literature review, segmentation, targeting and positioning strategies will be examined in order to formulate a reflection of Conde Nast’s position in Part Two. 3.0 Definition of Market segmentation, Targeting and Positioning Bespoke, ready to wear and tailor-made are all frequently used in the fashion industry to denote the specific requirements of a consumer, user or suitable market place. As an analogy, this aligns itself to the description of strategic marketing and how targeted sectors could have been reached in the first instance. Different demands require different outcomes and differentiation is key to a successful marketing strategy. In order to fully understand how to analyse a specific market, an organisation must consider what Proctor [2002] described as “the three pillars of the modern marketing strategy: segmentation, targeting and positioning” or STP. Here is a simplified definition of the three processes which are examined in greater depth in the subsequent sections: •
Segmentation – Research and analysis of consumer buying behaviour. 7
STRATEGIC MARKETING IN THE MEDIA •
Targeting – Financial viability/return on marketing investment [ROMI].
•
Positioning – To differentiate or stand out from one’s competitors.
Fig. 2 Stages in segmentation and positioning [Amended from Hooley, 2012, p.183] Businesses implementing segmentation, targeting and positioning processes, are able to operate more effectively, opening a strategic window and analyse their business; this in turn can create positive opportunities which can lead to improved resources, capabilities and financial returns. 3.1 Nature of Market Segmentation If anyone can design a new product, how do they go about finding the most suitable market for that product? This section explores the known marketing management technique of segmentation; which used to identify a suitable market, then becomes a segment. According to Proctor “in order to establish a segmented market, research and analysis of consumer buying behaviour should be carried out. Sectors can then be constructed from the most common characteristics to produce a sector or range of sectors that may be appropriate” [2002].
8
STRATEGIC MARKETING IN THE MEDIA Similarly, Hooley et al describe market segmentation as “how we marketers can divide the market into groups of similar customers, where there are important differences between those groups” [2012:183]. A segment, in itself should have some of the following characteristics: unique, identifiable, distinctive and different. These characteristics establish a competitive advantage against the competition within a similar market. Proctor’s definition of segmentation is, “A market segment is a section of the market which possesses one or more unique features that both give it an identity and set it apart from other segments” [2002 pp189]. Hooley et al [2012] underpin market segmentation as: •
Segments are to differ from one another.
•
Segments are to be identified my measurable characteristics
•
Segments are to be isolated/distinct
The key is to start by establishing common characteristics. As a business, if you can establish enough common characteristics across current and future product areas you can target market communications, platforms and media output effectively. Proctor [2002] uses traditional examples of segmentation which are used to identify the consumer market using the following variables: •
Geographic
•
Psychographic
•
Demographic
•
Behaviour patterns
•
Geodemographic
There is a shift however, for marketer’s not to rely on some of the above variables; demographics alone are no longer thought as reliable, and an opportunity to use advanced analytics to identify behavioural traits and establish segmentation is prevalent.
9
STRATEGIC MARKETING IN THE MEDIA Joel Rubinson highlights in Marketing in the Era of Long-Tail Media [2008] “behavioural analytics as blending research and marketing to become a dominant force”, an insightful method in the age of digital. Social class is seen with less importance in determining marketing behaviour. Lifestyle and geo-demographic; including a classification of residential neighbourhoods [Acorn 2017] are seen as more reliable characteristics [multiple variable a priori method], using classification schemes: ACORN, Opinion Research Services [an independent social research practice, working across the UK], and Warner’s ISC [Index of status characteristics to determine socio-economic factors]. There are other variables used in segmentation to broadly group markets, which were identified by Hooley et al [2012] and fall into three main categories: •
Background customer characteristics: demographics [gender, age, geographic and subculture]; socio-economic [income, occupation, education]; consumer lifecycle; personality characteristics; lifestyle characteristics.
•
Customer attitudes: benefit segmentation; perceptions and preferences; summary of attitudinal bases.
•
Customer
behaviour:
purchase
behaviour;
consumption
behaviour
communication behaviour; response to marketing mix; relationship seeking characteristics. Recently benefit segmentation [also referred to as first order segmentation] has become the preferred market orientated approach to segmenting markets; as explored in Weinstein’s Book of Market Segmentation [2004]. Benefit segmentation is particularly useful when it comes to identifying specific gaps in the market [Weinstein, 2004], and the analysis of segmentation focuses more on buying behaviours and motives than psychographic and attitudinal approaches [Proctor, 2002]. Weinstein [2004] refers to “cultivating the long-term, benefit-seeking customer” which builds loyalty and customer relationships that are strategically financially positive. In modern marketing the focus on personalisation and the customer centric approach has led to driving down sectors even further to ‘micro-segmentation’ or ‘one-to-one’
10
STRATEGIC MARKETING IN THE MEDIA marketing [Hooley et al, 2002 pp187]. This sub division into smaller groups can provide even more sophisticated targeted markets on which to place a product or brand. With a segment of the market having been established, a business must address how it uses those segments to target their market and positon their product. Proctor [2002] discusses the strategy of using a ‘single market segment’ [seen widely as a risky strategy] but sometimes suitable for specific niche markets. Or ‘multiple market segments’ [which spreads the risk in times of uncertainty] and provide a business with the flexibility of re-addressing capabilities and resources. In summary of the literature reviewed in this section, the benefits of segmentation are: smaller companies can create a niche; it gives the company an opportunity to identify any gaps in the market; in mature or declining markets, new growth can be sought; segments can be matched closely to target markets; and lastly competitive advantages are identified. 3.2 Choice of Market Targets Once the market or market segments have been defined the marketer needs to decide which consumer groups to target. In order to target consumers, “the financial viability needs to be assessed and the need for shareholders to be confident that they will receive a return on their marketing investment” [Proctor, 2002]. It is clear however that it is not just a case of statistical analysis but “subjective and highly creative process” [Hooley et al. 2012]. Hooley et al discuss the case for “choosing markets and industries where prospects are attractive; but also, where they can establish a strong defensible position” [2012]. Other strategies commonly used to decide which target markets to approach include: The mass marketing strategy; this is a risky strategy and Proctor [2002] refers to it as ‘undifferentiated marketing’ in that it is marketed to a wide group of consumers with little to differentiate them.
11
STRATEGIC MARKETING IN THE MEDIA The single segment strategy [Proctor, 2002]. As a current example, there is a mattress brand: Eve. They sell one thing, a memory foam mattress. And they have the tag-line ‘a revolutionary mattress’ and ‘the world’s most comfortable mattress’ [Eve, 2017]. Investing in prime-time TV advertising they have sold 45260 mattresses to date by cutting out the middle man and selling online. They have also competitively positioned themselves to take a chunk of `Tempur’s’ market; the only other branded memory foam mattress. The branding is very slick and the marketing more akin to a tech start-up, directed at the millennial’s. Eve will need to perform well within their single segmented market in the future, as the specific nature of the product and market would be difficult to re-position. And the multi segment strategy [Proctor, 2002]. This strategy targets a range of consumer segments within a product or brand architecture, and uses an extensive range of resources and capabilities. Proctor & Gamble and Unilever are examples with their products: Dove, Tetley, Ben & Jerry’s, Pampers, Gillette, all sit under an extensive brand architecture. The target market areas Hooley et al [2012] advise to be avoided, are paraphrased here: Peripheral business: which as the name suggest sits on the outskirts, making a ripple more than a wave and uses unsubstantiated resources and time. Illusion business: an area whose large and blossoming nature is initially attractive, yet full of competition and difficult to defend long term. And the dead-end business: an area which may have been undermined and should probably look to exit from. Core business is the target market companies are ideally looking to place themselves within. An area of strength and growth, offering benefits and returns on investment; suitably positioned and defensible to competitors [Hooley et al, 2012]. In terms of determining the market segment potential there are four groups of factors to consider: 12
STRATEGIC MARKETING IN THE MEDIA •
Market factors – market characteristics that influence the market attractiveness [Hooley et al, 2012].
•
Economic and technological factors – issues reflecting the broader economic characteristics of the market and the technology [Hooley et al, 2012].
•
Competitive factors – the competition to be faced within those markets [Hooley et al, 2012].
•
Environmental factors - the general business factors surrounding the market or segment [Hooley et al, 2012].
Market factors Size; growth rate; life cycle stage;predictability; price elasticity; bargaining power of buyers; cyclicality of demand
Economic & technological factors Barriers to entry and exiti; bargaining power of suppliers; technology utilisation; investment required; margins
Competitive factors Intensity; qulity; threat of substitution; degree of differentiation
Business environment factors Economic fluctutations; political and legal; regulation; social; physical environment
Fig. 3 Factors affecting market segment attractiveness [Amended from Hooley et al., 2012] The market factors described in Marketing Strategy and Competitive Positioning [Hooley et al, 2012] crossover with Proctor’s, in Strategic Marketing, “Market factors that influence choice of targeting strategy” [2002]. To understand these factors, a product/brand is used as an example to illustrate Proctor and Hooley’s approaches: •
Stage of product-market maturity – e.g. Old Spice, an example of an older brand in an over competitive market which through targeted marketing was relaunched to appeal to broader and new segmented markets.
13
STRATEGIC MARKETING IN THE MEDIA •
Extent of buyer differentiation – Pedigree Chum appeals to a wider segment of the market and has less opportunity for segmentation, the characteristics of the consumer are similar and directed to a broad, economy driven, market.
•
Market position – is dependent on identifying and exploiting unique segments, such as niche brand Levi Root’s Reggae sauce; who developed his product from a cottage food industry into a broad range of products, now available widely.
•
Structure and intensity of competition – Farrow & Ball, Little Greene, Zoffany, Sanderson are all small paint companies, competing in a very similar market where extensive targeting is needed to differentiate their products.
•
Adequate resources –Proctor & Gamble and Unilever promote a wide range of products in target markets with access to widening resources and capacity, this offers them both flexibility when targeting new and existing markets.
•
Production and marketing scale economies – Heinz Baked Beans and Coca Cola are both examples of global products that reap the financial benefits of large scale production and enormous marketing resources.
•
Choice of segments – Mobile phone companies e.g. Nokia and Samsung have to consider the positives and negatives of competing in such a large over populated segment of the market and the competitive positioning alongside the likes of Apple.
3.3 Positioning and Competitive Positioning Positioning is primarily a marketing communications role and specifically targets and promotes a product to sit within a segment where it is most likely to succeed in the market. Often a controversial area, positioning is largely defined by the consumer and how a product is perceived, where it sits in the market, and its appeal. The challenge for the marketer, is to analyse the target market and segments using positioning research to correctly position a product. Thus, creating the effect that the customer thinks they have chosen or switched to a particular product based on their own instincts.
14
STRATEGIC MARKETING IN THE MEDIA This idea relates directly with Ries and Trout’s Positioning, where they define positioning as a “basic positioning premise…to touch base with reality…. retie the consumer’s connections that already exist” [2001]. Proctor (2002) uses three concepts of positioning: functional – the need for a product to significantly solve a problem or need. Symbolic – the idea of elevating one’s status. And experiential – creating a sensory or cognitive experience. Kotler defined “Positioning as a revolutionary idea, precisely because it cuts across the four P’s, it informs the other P’s and adds consistency to them” (1980, p. 9). The relationship between positioning and the four P’s correlates with Proctor’s definition [2002]. In terms of promotion and price – the product should be in a sector which is differentiated enough to sit away from its competitors; the product should be identifiable in terms of defined characteristics; and placed where it can reach a successful target market in order to provide enough financial gain. Targeting and positioning strategies are interrelated and therefore success of positioning is often proven when the product meets with the consumer’s expectations and needs as outlined by Hooley et al [2012]: •
Market segmentation: identifying the most productive bases for dividing a market, identifying the customers in different segments and developing segment descriptions;
•
Choice of target markets: evaluating the attractiveness of different market segments, parts of segments [niches] or groups of segments, and choosing which should be targets for our marketing;
•
Competitive positioning: identifying the positioning of competitors [in the market and in the target segments or niches], to develop our own positioning strategy;
•
Iteration: understanding competitors positioning and the possible positioning strategies open to us should influence our thinking about the attractiveness of different market segments and the choice of market targets, and may change the way we segment our market, leading to revised target choices and positioning approaches.
15
STRATEGIC MARKETING IN THE MEDIA Kotler [1997] refers to errors that can occur with incorrect positioning: underpositioning – seen as nothing special; over-positioning – too narrow an understanding; confused positioning – frequent changes; and contradictory and doubtful positioning – un-substantiated claims.
Fig. 4 Competitive positioning and market segmentation model [Amended from Hooley, 2012] In summary, the purpose of positioning is to achieve a distinct and desirable product that targets similar markets as the competition but at the same time sits comfortably alongside its competitors. 4.0 Reflection 4.1 Analyse Condé Nast’s Segmentation, Target Market and Competitive Positioning in the UK Condé Nast describe themselves as a multi-media publisher, they have been extremely strategic with their segmentation, target market, and positioning of branded titles to date, focussing on high-value core audiences.
16
STRATEGIC MARKETING IN THE MEDIA Condé Nast have formulated their marketing and branding strategy around building strong titles and brands, which transcend their segmented lifestyle and niche target markets to appeal to a larger geographic proposition; which reflects the publisher’s success of their key titles in the UK, these translate across many geographic markets. This area of the consumer magazine market is lucrative – by appealing to a wider geographic audience, as it is not constrained by local or national issues. In Understanding Media Economics, Gillian Doyle refers to this area of the magazine publishing industry as “transnational readership segments” [2002 pp135]. With a focus on consumer lifestyle magazines, the publisher’s segments differ across titles, yet the target markets they are aimed at on the whole have a global appeal. This could be said to give Condé Nast a competitive advantage in terms of its approach towards its competitors: Hearst Magazines UK, Time Inc., Bauer Media Group, Immediate Media Co and Haymarket [5.0 Appendix I - Competitors Financials]. The competition cover a much broader range of differentiated product using a predominantly multi segment strategy. They include weekly and monthly titles, local, national and global markets, specialist and non-specialist audiences at a range of cover prices and subscriptions. Condé Nast’s target market is largely dependent on their identification and exploitation of unique segments or niches aimed towards the ‘upmarket’ or high-value core customer. The following positioning map shows the publishers in terms of x = the availability of titles weekly and monthly, and y = higher price ‘premium’ titles V lower price ‘economy’ titles in the UK market [Fig. 5 Ryan 2017]. The comparison between weeklies and monthlies was used predominantly because of the recent wide spread reporting of an 8.4% decline of year on year of weekly sales [Campaign, 2017]. This was supported by NRS data released in 2016, which established that 72% of UK adults consumed magazines across print and online of which 41% consumed women’s monthly’s and 26% consumed women’s weekly’s [NRS 2017].
17
STRATEGIC MARKETING IN THE MEDIA
Fig. 5 Positioning Map of Conde Nast Competition [Ryan 2017] 4.2 Factors Influencing Condé Nast’s choice of targeting strategy In terms of Condé Nast’s market segment, on the print side their target market is an older affluent/premium customer with 16 titles currently aimed at this target market in the UK all available at a higher price premium and predominantly available as monthly titles [Fig.6 Ryan 2017]. Where customers engage with digital platforms [social media/mobile] the dominant audience segment is millennials and this has been reflected in increased traffic, user experience and revenue (Conde Nast Media Pack 2017). The number of Condé Nast UK titles are differentiated in terms of lifestyle and attitude, and broadly fit into the categories: Fashion, Interior, Travel, Bridal and Technical. Each of these titles has specific differences in terms of subject matter that drive the initial segmentation e.g. a Vogue reader whose interest is principally fashion, beauty and style; versus a Wired reader interested in the future of digital technology. It is interesting to note when comparing data [Condé Nast Media Packs 2017] that the household average income [HHI] and age demographic of Vogue and Wired is almost identical, with the average readership age 35-37 [readership/unique users] and HHI of £58 -100,000 [digital/print]. In relation to the Warner Index of Status Characteristics
18
STRATEGIC MARKETING IN THE MEDIA [ISC], Condé Nast also target the top three tiers of the index for the majority of its current publications: Upper-middle, Lower-upper and Upper-upper or AB and ABC1 profiles [a socio-economic classification produced by the ONS] with a 35/75% split. The figure below illustrates a comparative overview of Condé Nast titles [5.0 Appendix II for a wider overview of Conde Nast Audience Insights].
Fig. 6 Condé Nast Publications: Audience Insights [Amended from Conde Nast 2017] Whilst Condé Nast has relied heavily on traditional demographic, socio-economic and life cycle characters [a priori method] – from data which they have collected from general survey’s including: ‘Condé Nast Word of Mouth Surveys’ [conducted by NRS], and the TGI survey [conducted by You/Gov]. Part One established that some of these earlier segmentation methods can be less reliable to create specific segmented markets alone. Some of the most familiar variables Condé Nast use in their segmentation strategy to broadly group their markets are: background customer characteristics, customer attitudes and customer behaviour.
19
STRATEGIC MARKETING IN THE MEDIA Their background customer characteristics include: demographics [gender, age, geographic and subculture]; and socio-economic [income, occupation, education]. With the advent of online analytics, they have been able to analyse data more effectively using: consumer lifecycle; personality characteristics; and lifestyle characteristics.
Fig. 6 Background customer characteristics [Amended from Hooley 2012]. In terms of their customer attitudes: benefit segmentation; perceptions and preferences; and summary of attitudinal bases. CondĂŠ Nast have used data analysis of benefit segmentation [the market orientated approach to segment its markets] to focus on customer attitudes, and use this method to identify specific gaps in the market. This method is referred to as first order segmentation [Hooley 2005] or post hoc/cluster based segmentation. And lastly CondĂŠ Nast focus on customer behaviour, including: purchase behaviour; consumption behaviour; communication behaviour; and relationship seeking characteristics. Purchase behaviour is particularly important in that it includes those customers classed as innovators and those that demonstrate brand loyalty and this can be established by analysing their print and digital markets. These behavioural or relationship seeking characteristics are a significant segmentation variable which relate directly to the relationship marketing stance that CondĂŠ Nast have adopted with their products.
20
STRATEGIC MARKETING IN THE MEDIA In the last decade, Condé Nast have potentialised their network of subscribers to gain a more detailed audience insight into opinions not always covered in their previous general ‘word of mouth’ surveys. This development is called Condé Nast Catalyst: Audience by Design and matches its distinctive audience segments with brand advertisers in order to increase revenue over and above the cover price – which has traditionally been seen as the major source of revenue for consumer magazines. In Marketing in the Era of Long Tail Media, Rubinson (2008 pp302) discusses “a shift from traditional approaches where survey research insights are translated into a media strategy that is often demographically based” and later to “moving towards advance analytics, this hi-lights the route Condé Nast have taken strategically in the last decade and the trend many publishers are taking by actively harnessing their offline and online data, to provide a more effective response to audience segmentation and targeting. Many, including Condé Nast are investing heavily in online data analytics such as Adobe Marketing Cloud, the previously mentioned Influencer/IBM platforms and Condé Nast Catalyst: Audience by Design. In a recent interview, Chris Reynolds, vice president of data and marketing analytics at Condé Nast confirmed that the use of advance analytics, “enables us to segment our audience and develop meaningful messaging for each market. Through detailed profiles, we’re optimizing both our editorial and advertising messages to grow our audiences in the digital age” [Adobe 2017]. The alignment of digital, offline, and survey data through analytics and audience management is a critical aspect to Condé Nast’s success. “Advertisers love having greater access to audiences through insight-based profiles,” says Reynolds. “These audiences are high-quality engaged consumers, enabling advertisers to increase basket sizes and attract more repeat customers” [Adobe 2017]. Recently in direct response to analytics of customer behaviour, Condé Nast responded to declining sales of its ‘handbag size’ Glamour magazine by reverting back to the original larger format. Condé Nast intention is to regain an advantage against its rival Hearst, with its highly successful Cosmopolitan magazine. Condé Nast said “it is making the change in recognition of print magazines becoming luxury products that 21
STRATEGIC MARKETING IN THE MEDIA consumers are more likely to read at home than carry around with them, reading sections in short bursts between other activities” [Mintel, 2017]. Based on segment performance this decision will surely influence the upward circulation of Glamour magazine going forward. 4.3 Competitive Positioning Unlike some of their publishing competitors, Condé Nast have successfully established enough common characteristics across their current and future product areas to use targeted market communications, platforms and media output effectively. Condé Nast reduces it risks – long term – by positioning products towards similar target markets with differentiated segments based on more specific geographic, demographic, psychographic and behavioural segmentation variables [Hooley 2012 pp183]. This method of using more than one segment creates a ‘synergy’ [Proctor, 2002] and allows Condé Nast to maximise its potential across manufacture, distribution channels, workforce and use established segments to access new global markets. And, where some of their competitors have a vast range of titles which span an array of market segments and target markets, Condé Nast have established a specialist and high-quality market. Their differentiated segmentation across niche titles leads to a core target market: an affluent/premium customer. [5.0 Appendix II wider overview of Conde Nast Audience Insights]. A large number of Condé Nast publications are identified in company data as having a combination of loyal customers who are happy enjoy a long-term relationship with the brand. This is a positive situation for Condé Nast to be in as some of their competitors – with more diverse segmentation and wider ranging target markets – attract exploiters and arm’s length customers which makes it difficult to develop any long-term relationships. Condé Nast also have the enviable position of having a long-established heritage brand going back more than a century. In the customer’s mind this can be translated 22
STRATEGIC MARKETING IN THE MEDIA into feelings and attitudes of long established value and brand loyalty? “Familiarity with a publication is more likely than any other factor to influence a consumer’s choice of which magazine to buy” [Mintel, 2017] and this could be said to give Condé Nast a distinct competitive advantage. 4.4 Formulate considerations and conclusions of Condé Nast Segmentation, Target Market and Competitive Positioning in the UK In conclusion, the fall in circulation of print magazines in the UK has continued in 2016 and shows no signs of slowing down. Mintel projects that the market will decline further by 32% between 2016 and 2021, and publishers are being forced to adapt in order to survive [Mintel 2017]. A loss of market share often brings with it a re-structure of an organisation and this January 2017 it was announced Nicholas Coleridge the managing director at Condé Nast Britain and president of Condé Nast International will step down after 26 years at the helm. For Condé Nast, the decline in print magazine circulation has motivated a shift to a more focussed digital marketing strategy, but not at the risk of undermining the highquality print brands of their core target market. Wide spread reporting in the 2015/2016 media press outlined the team changes; in particular, the growth of the digital team [including head of digital, digital strategy and video content]. The digital team works across titles with an integral approach to digital and their editorial colleagues in order to effectively analyse and compare audience data on and offline and generate customer engagement through digital channels. Despite the strong performance of some individual publications – Vogue and Tatler – some are critical that the diversification of channels into more digital formats [social media/apps] will continue to dilute the audience for print magazines. It is widely suggested that publishers would have more success pursuing both print and digital channels, and given the strong preference Condé Nast consumers display for the print format this would be sensible strategy to pursue. Condé Nast rather than 23
STRATEGIC MARKETING IN THE MEDIA replacing print channels, has engaged with digital channels which seems to be stimulating customer engagement and subscriptions. At present Condé Nast target markets are relatively predictable and can make progressive gains. Some titles such as – the previously mentioned Glamour magazine, which saw some drop-in sales – have changed the format in order to regain the market share. It is clear from analysing audience insights that some titles could be nearing the stage of product-market maturity and would benefit from an evaluative marketing strategy fit for the 2020’s and beyond. The World of Interiors has a longstanding and loyal customer base yet readership and circulation figures are low in comparison to similar titles in the market, and could be re-positioned combining a print and digital strategy to compete alongside Homes & Gardens, Elle Decoration, Country Living, and Living Etc. The forecast for media publications is challenging. The incremental increase of digital sales, particularly in the UK and the analysis of consumer/customer data across social media channels is dominating marketing channels. There is increased competition and economic uncertainty ahead for Condé Nast and as an organisation it will need to further analyse its segmentation according to changing dynamics in the environment, comparing print and digital data on an ongoing basis. Condé Nast target markets are secure but with digital growth the millennials are creating a new area of growth and micro-segmentation. This needs to be sensitively aligned whilst managing their existing core markets, Condé Nast will need to carefully consider their strategic positioning against their competitors in the future.
24
STRATEGIC MARKETING IN THE MEDIA 5.0 Appendix I Competitors Financials
25
STRATEGIC MARKETING IN THE MEDIA 5.0 Appendix II Condé Nast Audience Profiles
26
STRATEGIC MARKETING IN THE MEDIA 6.0 GLOSSARY
Term
Definition
ABC’s
Audit Bureau of Circulations
ACORN
A classification of residential neighbourhoods
AMA
American Marketing Association
B2B
Business to business
B2C
Business to consumer
CIM
The Chartered Institute of Marketing
ISC
Warner’s index of status characteristics
NRS
National readership survey
ONS
UK office for national statistics
ROMI
Return on marketing investment
SIC
Standard industrial classification code
SME
Small to medium size enterprise
STP
Segmentation, market targeting, differentiation, and positioning
TGI
Target group index [marketing and media survey est. 1969]
27
STRATEGIC MARKETING IN THE MEDIA 7.0 REFERENCE LIST ACORN., 2017. A classification of residential neighbourhoods [online]. CACI Ltd. Available from: http://acorn.caci.co.uk/ [Accessed 5th April 2017]. Adobe., 2017. Condé Nast, fashioning quality brands [online]. Adobe Systems Inc. Available
from:
http://wwwimages.adobe.com/content/dam/Adobe/en/customer-
success/pdfs/conde-nast-adobe-marketing-cloud-case-study.pdf [Accessed April 6th 2017]. Adweek., 2017. Condé Nast’s Answer to Programmatic Buying [online]. Available from:
http://www.adweek.com/digital/cond-nasts-answer-programmatic-buying-
147724/ [Accessed 6th April]
Angoss., 2017. Condé Nast: Marketing Analytics [online]. Available from: http://www.angoss.com/wpcontent/uploads/2011/06/Conde_Nast_Segmentation_Re sponse_Modeling.pdf [Accessed 6th April] Bournemouth University, 2016. BU Guide to citation and referencing in the Harvard style.
Poole:
Bournemouth
University.
Available
from:
http://libguides.bournemouth.ac.uk/bu-referencing-harvard-style/pdf-guide [Accessed March 19th 2017]. Bruce, M. and Kratz, C., 2007. Competitive marketing strategies of luxury fashion companies. Fashion marketing: Contemporary issues, pp.130-50. Campaign Magazine., 2017. Condé Nast suffers biggest audience decline as magazine market drops 6% [online]. Haymarket Media Group Ltd. Available from: http://www.campaignlive.co.uk/article/conde-nast-suffers-biggest-audience-declinemagazine-market-drops-6/1423814#yJEZcUyrfaWHUyf6.99 [Accessed 9th Feb. 2017].
28
STRATEGIC MARKETING IN THE MEDIA Campaign Magazine., 2017. Eve “Sleep” by in-house [online]. Haymarket Media Group
Ltd.
Available
from:
www.campaignlive.co.uk/article/eve-sleep-in-
house/1402990. [Accessed 4th April 2017]. Campaign Magazine., 2017. Magazine ABC’s: Top 100 for first half of 2016[online]. Haymarket
Media
Group
Ltd.
Available
from:
http://www.campaignlive.co.uk/article/magazine-abcs-top-100-first-half2016/1405423. [Accessed 17th April 2017]. The Chartered Institute of Marketing., 2009. Marketing and the 7Ps: A brief summary of
marketing
and
how
it
works
[online].
Available
from:
https://www.cim.co.uk/files/7ps.pdf. [Accessed 3rd April 2017]. Condé Nast., 2017. Vogue UK Media Pack [online]. Condé Nast Britain. Available from:
http://digital-
assets.condenast.co.uk.s3.amazonaws.com/static/mediapack/vg_media_pack_latest .pdf. [Accessed 27th February 2017]. Condé Nast., 2017. Condé Nast Mission Statement [online]. Condé Nast Britain. Available from: http://www.condenastinternational.com/about-us/mission/ [Accessed 3rd April 2017]. Condé Nast., 2017. International Luxury Conference [online]. Condé Nast Britain. Available from: http://www.cniluxury.com/ [Accessed 3rd April 2017]. D’Arienzo, W., 2016. Brand Management Strategies, Luxury and Mass Markets. 255275. London: Fairchild Books. Chapter 12. Doyle, G., 2002. Understanding Media Economies, 2nd ed. pp119-138. London: Sage. Chapter 7. Doyle, G., 2013. Understanding Media Economies, 3rd ed. pp141-159. London: Sage.
29
STRATEGIC MARKETING IN THE MEDIA Eve., 2017. Available from: https://www.evemattress.co.uk/ [online]. [Accessed 4th April 2017]. Eurib.,
2017.
Strategic
Management
[online].
Available
from:
http://www.eurib.net/strategisch-management/ [Accessed 27th February 2017]. Hinchcliffe. D., 2012. Social Business by Design. Hoboken: John Wiley & Sons Inc. Available from: ProQuest E-book Central. [Accessed 19 February 2017]. Hooley, G, J., et al., 2011. Marketing Strategy and Competitive Positioning. pp182258. London: FT Prentice Hall. Chapters 8, 9,10. Hoovers., 2017. The Conde Nast Publications Limited Profile PDF [online]. London: Dun
and
Bradstreet
UK.
Available
from:
http://subscriber.hoovers.com.libezproxy.bournemouth.ac.uk/H/company360/compan yPDFReport.pdf?companyId=210067427 [Accessed 17th March 2017]. Kantar Media., 2017. Target Group Index (TGI) [online]. Kantar Media UK Ltd. Available from: http://www.kantarmedia.com/uk [Accessed 5th April 2017]. Kantar media., 2017. TGI survey data: identify, target and reach the right consumers [online]. Kantar Media UK Ltd. Available from: http://www.kantarmedia.com/uk/oursolutions/consumer-and-audience-targeting/tgi-survey-data
[Accessed
17th
April
2017]. Kotler. P., 1980. Preface in A Ries and J Trout (Ed.), Positioning the Battle for Your Mind, pp1-5, McGraw Hill Publishers, USA. Kotler. P., 1997. Marketing management: Analysis, Planning, Implementation and Control, 9th Ed. Hemel Hempstead: Prentice Hall Kung, L., 2017. Strategic Management in the Media: Theory to Practice. London: Sage
30
STRATEGIC MARKETING IN THE MEDIA Marketing Sherpa., 2017. Marketing Sherpa LLC [online]. Available from https://www.marketingsherpa.com/ [Accessed 19th February 2017]. Marketing Week., 2017. CondÊ Nast Outlines Digital Strategy [online]. Available from: https://www.marketingweek.com/2010/09/15/conde-nast-outlines-digital-strategy/ [Accessed 21st March 2017]. Mintel., 2016. Magazines – Segment performance [on-line]. Available from: http://academic.mintel.com/display/808579/?highlight#hit1 [Accessed 6 April 2017]. Napoli, P.M., 2012. Audience Evolution and the Future of Audience Research. The International Journal on Media Management, Vol 14, No 2, pp79-97. National Readership Survey (NRS)., 2017. [online]. The Publishers Audience Measurement Company (PAMCo). Available from: http://www.nrs.co.uk/latestresults/facts-and-figures/magazines-factsfigs/Office for National Statistics [Accessed on 19th April 2017]. Opinion Research Services., 2017. [online] Available from: https://www.ors.org.uk/ [Accessed 5th April 2017]. Perrott, B.E., 2008. Managing strategy in turbulent environments, Journal of General Management, Vol. 33 No.3, 21-30. Ping Heng, T et al., 2015. The power of customer values with social communication in the marketing segmentation. Annual International Conference on Enterprise Marketing & Globalization, pp. 26-31, Business Source Complete, EBSCOhost, [Accessed 4 April 2017]. PPA., 2017. The Voice of Professional Publishers. Professional Publishers Association [online]. Available from: http://www.ppa.co.uk/about/activities/consumermedia-group/news/abc-report-february-2017-ceo-comment/ 2017].
31
[Accessed
6th
April
STRATEGIC MARKETING IN THE MEDIA Proctor, T., 2002. Strategic Marketing. pp.188-211. London: Taylor and Francis. Chapter 10. PR Newswire., 2016. CondĂŠ Nast partners with Influential to integrate IBM WatsonEnabled Influencer Marketing Platform [online]. New York: Cision. Available from: http://www.prnewswire.com/news-releases/conde-nast-partners-with-influential-tointegrate-ibm-watson-enabled-influencer-marketing-platform-300323328.html [Accessed 22nd March 2017] Reynolds, R., 2011. Reflective practice: origins and interpretations. Action learning: Research and Practice, 8:1, pp5-13 Ries, A., & Trout, J., 2001. Positioning: the battle for your mind. New York; London: McGraw-Hill, pp5-11. Rubinson, J., 2008. Marketing in the Era of Long-Tail Media. Journal of Advertising Research, Vol. 48 Issue 3, pp301-302. Ryan, D., 2012. Understanding digital marketing: marketing strategies for engaging the digital generation, 2nd edn. Philadelphia, PA: Kogan Page. Spalding E, Wilson A., 2002. Teachers College Record, 104,7, pp1393-1421. Stalk, G., and Lachenauer, R., 2004. Five Killer Strategies for Trouncing the Competition. Harvard Business Review, April, pp. 62-71. Standard Industrial Classification Code (SIC)., 2017. [online]. Available from: https://www.ons.gov.uk/ [Accessed 4th April 2017]. Sweney, M., 2016. Still in vogue: luxury magazines defy print market gloom. The Guardian
[online],
20
Nov
2016.
Available
from:
https://www.theguardian.com/media/2016/nov/20/still-in-vogue-luxury-magazinesdefy-print-market-gloom [Accessed 22nd March 2017].
32
STRATEGIC MARKETING IN THE MEDIA Varadarajan, R., 2010. Strategic marketing and marketing strategy: domain, definition, fundamental issues and foundational premises. Journal of the Academy of Marketing Science, Vol 38, pp119–140. Weinstein, A., 2004. Handbook of Market Segmentation. Chapter 6 Benefit Segmentation. pp97-112. Taylor & Francis Ltd. [accessed 3rd April 2017]
33