Reader's Digest Case Study

authors are taking up a huge portion of the market and therefore more beneficial for

The threat that substitute products pose to an industry's profitability depends on the relative price-to-performance ratios of the different types of products or services to which customers can turn to satisfy the same basic need. The threat of

The Intensity of Rivalry among Competitors in an Industry (High): Equally balanced competitors exist within the industry such as BCF and KMD; these firms also face competition from retailers and wholesalers. The growth of the industry is relatively agile in both financial and technological aspects. The intensity or rivalry is further accentuated by relatively high storage and fixed rental costs, extensive product differentiation and minimal switching costs.

Bargaining Power of Buyers: The bargaining power of buyers is high in the department store retail industry. The volume of buyers is high, and buyers are very price sensitive in this industry. The products are not highly differentiated, and there are numerous stores that offer the same, or similar, products, giving buyers the opportunity to search for the lowest prices and information. The industry has substitutes available in the form of specialty, differentiated products and stores. This increases the power of buyers,

has much to offer as well. Twitter allows people to chat or "tweet" about what is going

Wilks 4 “homogenous readership whose members were likely to purchase similar products” (Schrum, 110). Schrum also goes deeper into how the magazine 's

Threat of Substitutes: Few substitutes such as bars for hard liquor, restaurant for food, etc. The threat is low because product sold depends upon customers taste and preference and there is minimal product differentiation.

The bargaining power of suppliers is medium. Since corporates conditions vary, whether the power of suppliers is strong should be determined accordingly. But to survive in the online retailing industry, keeping a close relationship with the suppliers is imperative. Many of the multi-national companies in the industry is depending on limited numbers of suppliers that are concentrated in production, differentiated in products, and not heavily relied on a single industry, which give them great bargaining power and can better facilitate the corporations’ success. Small companies may not have established such strong alliance with its vendors.

Existing Competitors. Rivalry among competitors within an industry use price discounting, new products, marketing, and other techniques to be competitive. Profitability of an industry suffers from high rivalry. The intensity with which companies compete and the basis on which they compete determine to which degree rivalry brings down an industry’s profitability (Porter, 2008). Pure competition is considered by economists as a competition with a high

The market greatly depends on how powerful buyers are in terms of their willingness to pay certain prices. The following determines the bargaining power of buyers

Bargaining power of buyers -Buyers are not in concentrated groups and do not buy in large amounts. However, within the entertainment industry, customers have a lot of alternatives and have no switching cost. However the introduction of DVDs, influenced customers to purchase DVDs since the cost is almost the same cost of rentals. This makes buyer power moderate (Xie & Lin, 2008).

The level of threat to the industry is relatively high with competition from the Internet changing the face of merchandising the most. Big names like Wal-Mart and

D. How companies in the publishing industry are adjusting their strategies to cope with today’s challenges

The threat of new entrants: According to our text, the threat of new entrants is the possibility that the profits they make in an area may be eroded by new competition. The McDonald’s by me competes with Burger King, Wendy’s, Dairy Queen, and other smaller places like Zel’s. Each time a new place opens the less business they will have. For the other company, there will be a barrier to entry. They will have to use product differentiation to bring in the customers…to make them overcome their loyalty to McDonald’s (Dess, p. 53).

New media has emerged from the print media. But its target audience is different from that of print media. Today, we have young readers getting attracted towards new media. This is because they feel that they really don’t need to waste their time reading when they