- “Premium players” can refine what they offer that merits higher prices and target a smaller market segment that wants that. They might focus on selling solutions rather than physical products, as IBM famously did when it underscored that consultative help came standard with its business computers.
- The incumbent can take on the low-cost crowd directly with a pared-down, cheaper product line — as Nokia did with rudimentary “entry-level” cell phones and a regional marketing effort when local players challenged it in the Chinese market.
Strategic cost controls and re-engineering have a role, too. However, cuts that chip away at basic quality are self-defeating if the company still wants to dominate in the top end of the market.
Cost control has loomed large at newspapers — and with mixed success. The industry has been ingenious in finding ways to save money, but as revenues crashed in 2008 and 2009, papers made cuts that obviously harmed editorial quality. (Not to mention that a print paper with hardly any ads is even less appealing.) This year’s vogue of decimating or consolidating copy desks will further test whether readers think it’s worth their money and attention to pick up an assemblage of lightly edited articles.
More broadly, the industry’s stubborn resistance to uniting around any commercial opportunity stands in the way of their ability to exploit the huge audience that newspaper digital ventures collectively have assembled. Antitrust laws further inhibit that kind of industry-wide collaboration.
Have newspaper organizations found strategies to remain a premium product?
Several come to mind. The development of niche publications, print and digital, has been a quiet success over the last several years. That helps ad salespeople tailor packages to advertisers’ objectives, analogous to IBM’s consultative selling.
Some might argue that I’m over-complicating the strategic questions for newspapers, or that the McKinsey framework is the wrong one for an industry facing not just low-cost rivals, but broad disruption. Maybe the game is simply finding many ways to substitute digital audience and revenues as print gradually wanes.