Case Analysis: Capital Magazine

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Case Analysis: Capital Magazine

Problem Identification:

Should Prisma Presse release the new magazine Capital in September, or postpone until the economic situation improves? If they go ahead with the launch, should they go with a subscription or a newsstand strategy?

Alternatives:
1)Pospone the launch until the economy recovers and advertising rates start growing again. If the economic situation doesn’t get better withdraw the new magazine.

+Inexperience in business magazines.
+It’s safer to launch in a promising economy.
-Waste of resources: costs of research and development of the magazine.

2)Launch the magazine under the subscription strategy

+No clear market leader.
+Differs from other business magazines in content.
+Positive feedback of the focus groups.
-Risk under the poor economic situation.
-Investments in massive direct mail to obtain subscriptions.

3)Launch the magazine under the newsstand strategy

+No clear market leader.
+New approach for this kind of magazine.
+Differs from other business magazines in content.
+Positive feedback of the focus groups.
-Risk under the poor economic situation.

Recommendation:

They should launch the magazine with the newsstand strategy. It is possible that the decline in advertisement revenues is not due to lack of demand, maybe it’s just because the offering is unsatisfactory. Also, the case mentions that Prisma Presse was more focused on circulation numbers than advertising. Their priority is the reader, and they are aware that advertising depends on factors beyond their control. They use circulation to measure success, putting enormous pressure when this objectives are not met. The market research shows that consumers want a different kind of business magazine, and they should seize that opportunity.
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