The primary issue facing Harlequin is the "steady loss of share in a growing women's fiction market", due to the growing popularity of single-title novels. With the volume sales dependence that is inherent in series publishing, the unit sales stalling that occurred in the late 80’s and early 90’s acted as a warning signal to Harlequin. A change in pricing strategies enabled revenues to continue to rise, but this was a short-term solution and Mira has the potential to become a long-term solution. However, there are a number of issues surrounding the launch of Mira.
As the world’s largest publisher of romance fiction, Harlequin has a strong global foothold in series publishing with a presence in more than 100 international markets and 23 languages. Indeed, Harlequin has been able to create high barriers to entry in the series market through the development of brand loyalty and excellence in product quality and supply chain management.
Brand loyalty comprises a strong readership base, which has been cultivated through brand recognition, trust, and long-term relationships. This is evidenced by the direct-to-reader Book Club, which currently provides 3/8 of US Sales at significantly higher margins than indirect sales. The low-price, consistent, high-quality product is well packaged and positioned ideally to take advantage of customer expectations, supported by a large and capable author/editor base.
Standardization has enabled Harlequin to take advantage of significant economies of scale in printing, distribution and advertising; and simplifies retailers’ positioning and marketing strategies. While standing order distribution enables Harlequin to more accurately predict sales and returns, and therefore benefit from predictable cost-based accounting practices to achieve better margins.
However, with limited diversification, Harlequin has little expertise in the broader realm of women’s fiction outside of the romance genre, which may limit their abilities...
References: Richard Ivey School of Business Case Harlequin Enterprises: The MIRA Decision #9B03M007
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