MICHAEL PORTER’S FIVE FORCES MODAL

1. BARGAINING POWER OF BUYERS

a) Importance of Buyers and Size of Each Order: For a Newspaper

Company – (1) vendor is a first customer (2) readers are second
customer. Vendors have
fix commission with company so they do not have bargaining power of
buyer
in their hand. Readers also do not have a bargaining power. But big
organization has bargaining power in their hand. Example when i took
the proposal of the business newspaper ‘Mint’ to a 5 start Hotel the
company was not ready to give the same deal what the competitor
was offering which made the hotel go in for a smaller deal.
b) Switching Cost and Price Sensitivity: The individual does not
have
bargaining power in his hand but an organization has example- I
visited a Business school and a 5 star Hotels for tie-up they were
negotiating with not only with prices and volume but also with Free
Copies, this made the business school take a better proposal which the
competitor was offering. In this, Vendors are also playing a major role.
If they get good commission from other newspapers they then promote
and deliver those newspapers. The Vendorwala commission is 75 paise
per copy.

c) Differentiations of Product: Every newspaper companies is

different from
each others, like “Hindustan Times” is a premium brand in Delhi and
Times of India in Mumbai.

2. COMPETATIVE RIVALRY AMONG FIRMS

a) Switching Cost: Switching cost of one English newspaper to

another
newspaper is very low so people can easily switch over from one
company to
another. Eg:- Price of The Economic Times and Business Standard
newspapers is around Rs. 2.50 to 4 and cost of “Mint” is around Rs. 2,
So readers “Consumers Preference Towards “Mint” can easily switch
over from any newspaper to “Mint”. But when DNA was launched,
people were switching over from other English newspaper to DNA.

b) Exit Barrier: There is a free exit in this industry.

c) Customer Loyalty: Every company wants to make loyal customer

to their
company.

3. THREAT OF SUBSTITUTES

a) Substitutes Performances: Substitutes of the newspaper industry

are
magazines, local area newspapers, T.V., Radio, internet because of
improvement in technology. People like to give advertisements on
internet,
T.V., radio etc. All “new media” or “electronic media” formats deliver
the
 news faster than printed newspapers. So they are the main threats
of
newspaper industry.

b) Price Performance Alternatives: Getting news from internet, T.V.

radio at
free of cost or low cost.

c) Buyers Behavior toward the Product: Certain buyers may think

like- I do
not have time to read newspapers, I can get the same news on at
internet,
Why do I purchase a Newspaper?
4. BARGAINING POWER OF SUPPLIER
a) Size of Supplier: Main supplier of this industry is the paper
manufacture
company. Most newspaper companies of India are customers of USA
paper companies. There are limited companies that make paper for
newspaper company, so the rates are not competitive.

b) Importance of Buyer to Supplier: Every supplier company wants

to make
close relationship with buyers who are regular customers of their
product. If
Newspaper Company is giving large order regularly they will make
good
relationship with them and will do less bargaining. Like in case of “ET”
same paper manufacturing company will do less bargaining with “ET”
than The Hindu newspaper because “ET” has more circulation than The
Hindu newspaper.

c) Extension Of substitute Of Product: As technology increases day

by day
and this becomes a main threat for newspaper industry. Internet and
mobile are
biggest substitute of newspaper. They are giving tough competition to
newspaper industry by giving information to reader at no cost and
faster.

5. THREATS OF NEW ENTRY

a) Economics Of Scale: If any new firm wants to enter in this market

then they
need high investment or more capital and maximum support from
advertisers.
To achieve economies of scale they need maximum no. of readers.
Domestic
player cannot achieve scale of economies very easily because there is
not only
tough competition among companies but also a lot of substitutes
available in
market like radio, T.V etc.
 SWOT ANALYSIS OF MINT

STRENGTHS

1) Big Brand, good reputation in the minds of customers.

2) Reasonable Price i.e Rs 2 as compared to competitors.
3) Format ( mention the award also)

WEAKNESSES
1) Lack of awareness and marketing.
2) Poor after sale services.
3) Promotion of product is rare.
4) Poor distribution channels which results at times that the
business newspaper not reaching the market.
5) Inter / Intra departmental communication not effective which leads to
delay?
(Orders booked by hotels or delivery of the subscription booklet)

OPPORTUNITY
1) Literacy rate increases day by day.
2) People focus more on career, education etc.
3) Can increase its market shares by advertisements and
aggressive marketing.

THREATS
1) People are getting information from Internet.
2) Consumers are becoming more brand loyal rather.
3) Attractive schemes are provided i.e. TOI + ET at Rs 4.50.
4) Less brand awareness in the Market as compared to its competitors.
The policies of the competitors are flexible as compared to Mint