Moving Upmarket When Things Are Down
Consolidation, cost cutting and product pruning seem to be a way of life in publishing these days. Witness the recent decision by Condé Nast to discontinue Gourmet magazine. And thus it was refreshing to read about Bloomberg’s strategy for BusinessWeek, which Bloomberg acquired from McGraw-Hill recently. Instead of the expected bundling and special package pricing for advertisers, Bloomberg plans to beef up BusinessWeek’s editorial and possibly increase the price, which according to Advertising Age is $35 annually, compared to $106 for The Economist. I’ve long since switched over from BusinessWeek and Fortune to The Economist, despite the higher price, precisely because of the editorial. And I’ve made a decision to discontinue my Wall Street Journal subscription once it expires, as Financial Times offers me a global perspective and better-quality writing worth the premium price. Ironically, The Wall Street Journal (WSJ) just passed USA Today in circulation, reaching 2.2 million compared to USA Today’s 1.88 million. I don’t want to be a snob, for I enjoy USA Today once in a while, especially when I’m overseas and hungry for news from home. But the very fact that WSJ is being compared to USA Today speaks to the problem. As WSJ tries to appeal to a broader audience with the likes of scandals and lifestyle-related editorial, its management seems to have adopted the strategy of expanding its circulation by picking up higher-income households in general, possibly at the risk of losing some serious business readers.
I think there are lessons here for healthcare marketers, especially those of us who operate within the business-to-business model (e.g., clinical diagnostics, medical devices). Although price is part of the buying decision, businesspeople are more likely to look closely at value (e.g., productivity gains with a more reliable though more expensive product). So, first of all, lowering the price is not the only path to business in a down (though perhaps recovering?) economy. By the same token, packaging deals without true added value won’t do it either. Buyers see through that quickly and, if not, a more thorough business analysis by the bean counters will reveal where the true value is. Lastly, why not take a bold step and take advantage of lower costs to improve products, so you’ll end up with a better product to sell, perhaps at higher prices?