CASE 1 USA TODAY: INNOVATION IN AN

EVOLVING INDUSTRY
1. THE CASES SITUATION ANALYSIS
1.1 Case Summary
USA Today was first launched in 1982 as Americas first national general interest daily
newspaper by Allen H. Neuharth, former Chairman of Gannett Co. Inc., back to 1989,
As of today, Gannett is a global information conglomerate that publishes 82 daily and
700 non daily newspapers and affiliated websites, together with 23 broadcast television
stations in operations reaching 18.2% of the U.S population. Gannett is currently the
largest U.S. newspaper group in terms of circulation with its combined circulation
(including USA Today) is 11.6 million readers every weekday and 12 million readers
every Sunday. Apart from that, Gannetts has taken a quarter of the total U.S. Internet
audience, which roughly 52 million unique visitors per month.
In early years when USA Today was first debuted back to 1982, it achieved
instant success due to its innovative format where it is written in shorter pieces and
sprinkled with eye catching colorful photos, graph and charts, specifically designed for
the needs of sound-byte generation / TV generation, and also the Middle America
young, well-educated Americans who were on the move and cared about current
events. Its first daily issue was 155,000 copies and after a month its circulation hit
362,879 copies and after seven month, it reached 1,000,000 marks. Its readers are
mostly professionals, usually managers, about 40 years old, well educated, with an
income of about $60,000 a year, together with news or sports junkie.
USA Todays mission statement was to make its news enlightening and enjoyable
to the public, informative to the national leaders, and attractive to the advertisers. Each
issues is presented in four sections that cover News, Money, Life and Sports. Its mottos
An economy of words, A wealth of information suits best for its focus on brevity and
clarity, short sentences and short words in its reporting despite critics that labeled USA
Today as junk food journalism for its terse, brash writing style and short coverage of
complex issues.
In spite of the growing trend in newspaper circulation and revenue, USA Today is
faced with challenges to turn into profitability. By late 1985, circulation surpassed 1.4

million but cost also double its original price per issue. For the first ten years, USA
Today incurred a loss of $600 million. Profit was only achieved by 1993 of $5 million and
doubled to $10 million the following year.
Apart from growing cost, USA Today was also faced with direct competition from
other national newspaper such as the Wall Street Journal, the New York Times, cable
networks, nationally syndicated terrestrial and satellite radio providers such as
Sirius/XM, internet sites such as Yahoo! and Google, and blogs such as Huffington
Post. The competitors such as the Wall Street Journal are also targeting business
readers and their product lines include newspapers, newswires, magazines, websites,
indexes, television and radio. They also have strategic alliances with other information
companies such as CNBC, Reuters and Smart Money.
Global economic woes had also affected newspapers revenue including USA
Today as companies are cutting down their advertisement budget particularly in the
automotive, retail and employment sectors. Technology advancement has also changed
the way people access information. They now have variety of ways to get latest news
i.e. through print media, 24 hours television networks, news websites, mobile devices,
search engines, blogs and social media sites that provide up-to-minutes news.
As a print media, USA Today has to think hard how to sustain itself in the
mainstream of media industry. Larry Kramer as the new CEO of USA Today is
responsible to chart and implement a corporate strategy to focus on digital media,
starting with re-launch of USA Todays online, mobile and tablet product. USA Today
must continue to use various value-added services to further enhance distribution of its
proprietary content and continued product differentiation to remain successful. In the
face of competition in both print and digital markets, the future of USA Today depends
on its ability to continue to innovate and adapt its marketing strategies to changing
needs of the market.

1.2 Strength-Weakness-Opportunities-Threats (SWOT) Analysis

1.2.1 Strengths
Number one print newspaper in the United States, with over 1.8 million daily
papers in circulation.
USAToday.com is Internets top sites for on-demand news and information. It
allows readers to receive up-to the moments news with colorful visuals a crisp
audio, weather forecasts, travel information and access to the paper archive from
the 80s to today information.
Increased online audience almost 24 million unique visitors per month, with a
double-digit growth in unique visitors, visits, and page views per month.
Unique, innovative format: written in shorter pieces, using colorful photos chart
and graphs, practical columns and at-a-glance boxes. The paper communicates
with readers clearly and directly and it also faster to read and easy to handle
thanks to its slimmer pages.
A more serious, more responsible news-oriented product by focusing more
sharply on hard news rather than soft features.
Value added features - 1-800 and 1-900 hot-line numbers are incorporated in
the paper so that readers can call for expert information on financial planning,
college admissions, minority business development, taxes and other subjects.
A 50-inch width design makes the paper easier to read and clear in design, the
pages were slimmer and easier to handle, especially for travellers in tight spaces
like airplanes, trains, buses, and also more readily fit into briefcases.
Innovative promotional activities such as the BusCapade & JetCapade
promotion tour and readerships programs for college students, which help raising
public awareness of the paper
The paper offers USA Today International, which is available in more than
ninety countries in Western Europe, the Middle East, North Africa, and Asia.
Advertising-friendly accept regional advertising, giving local advertisers
increased flexibility, offering front page advertising space, allow advertisers to
transmit copy electronically 24 hours per day etc.
USA Today is widely distributed via newsstand retailers, large grocery store
chains, bookstores, coin-operated vending machines, and directly to the
consumer through home delivery. Complementary distribution occurs primarily in
hotels, airport terminals, and restaurants and at the college campuses and its
also available in e-formats from the web page, mobile phone access and e-mails
updates.
Brand Extensions three USA Today Travel Zone retail locations in airport
terminals in late 2008 and launching of USA Today Live.
1.2.2 Weaknesses

Digital subscriptions lagging behind from two main competitors 116,000 as

compared to Wall Street Journals 552,000 and the New York Times 807,000.
High cost of newsprint has aggravated USA Todays falling revenues and
increased cost to a greater extent as it is the number one print newspaper.
Rely heavily on the money that came from newspaper print sales & advertising
revenue.
USA Today has always been battling the fact that many people thought it was
cheap journalism, although they invested a lot in improving the quality of the
content.

1.2.3 Opportunities

Changing Technology allows USA Today to deliver news in more costefficient, customizable, direct and useful ways than will ever be possible using
newsprint. People are increasingly getting their news from the Internet as shown
by expanded demand for update-to-the-minute news and information and also
rise of social media sites, and even stronger among younger people. USA
Today must attempt to attract the new and younger readers, offering more
interactive and social components to take advantage of this trend, hence
maintain and even expand its readership.

1.2.4 Threats
Declines in print media the continuing decline in newspaper readership and
growing consumer demand for free online news is hurting the massive print ad
revenue of USA Today newspaper.
Low rates of newspapers digital subscription USA Today is lag behind
from two main competitors in its newspapers digital subscription, 116,000 as
compared to Wall Street Journals 552,000 and the New York Times 807,000,
which leads to its losing as the most widely read newspaper.
Fierce competition in online information distribution thorough television and
magazines sites, blogs, and podcasts, and also advertising market entry of
Internet-based companies like Yahoo! and Google.
Multitude of choices for both consumers and advertisers.
High cost of newsprint average cost per ton of newsprint consumed
increased by 13% in 2011.
The environmental movement and recycling culture have discouraged
readers to subscribe to the newsprint editions.
2. STATEMENT OF THE PROBLEM (S)

The list of problems that arises from the case study are as follows:
1. Face stiff competition with direct and indirect competitors in the market
USA Today has been in the market for 32 years and labelled themselves as The
Nations Newspaper, aside facing competition with other national newspapers, their
direct competitor, mainly Wall Street Journal and New York Times, they also had to
compete with cable networks, nationally syndicated terrestrial and satellite radio
providers such as Sirius/XM, Internet sites such as Yahoo! And Google as well as blogs
such as the Huffington Post.
2. Increasing Cost and Decreasing in Revenue
Being proud of their achievement of being one of the most circulated newspaper in the
U.S., they actually been struggling with declining revenues and increasing cost even
before the recession in 2008. Both in print and online advertising had been falling
steadily, declining by over 51% since 2005. The general price of all goods increases
over time and with the economic conditions, printing cost and its expenses increases.
Which in turn made the company to do major changes to the circulation, finance, news
divisions, as well as staffs.
3. Advancement of technology
USA Today being the innovators in their news and information delivery to the readers,
tackled the baby boomers generation. Now with the advancement in technology, news
are readily available in a lot of ways. Consumers now have a variety of ways to get the
latest news such as the print media, 24hours television networks, news websites,
mobile devices, search engines, blogs and social media sites. Internet posed the most
impact on USA Today as it can be beneficial and threatening at the same time as they
face yet more competition. Most of the sites on the internet offer free and up to date
news to the masses.
4. Cultural changes and new trend
There are increasing cultural trend whereby people opt to get information through the
internet rather than from books or newspapers. This trend is even stronger among the
younger people. This force as a challenge to the newspaper industry in competing to
gain new readers for their publications.
From the list of problems, we can conclude that the main problem is the struggle
of USA Today to sustain in the ever-changing technologically advanced market.
3. DEVELOPMENT & EVALUATION OF ALTERNATIVES

There are a number of alternatives that can be considered to address the problem faced
by USA Today:
NO.
1

ALTERNATIVES
Shifting The Bulk Of Focus on
The Digital Division
(USAToday.com)

EVALUATION
Digital evolution is inevitable and it is forcing the
advertiser to adjust and become used to a
different format.
Print will not be around forever and focusing
heavily on digital is risky but it is a needed
move.

Incorporation of More ValueAdded Services in Newsprint

Since newsprint is by far the biggest profit

maker, USA Today may incorporate more valueadded services in their newsprint by inserting
coupons, giveaways, such as CDs, posters,
puzzles or anything that could possibly enhance
the buying experience of newsprint.
There is an opportunity for developing the niche
markets, including customized magazines which
readers can creative what they want by
selecting kind of content.

Looking
for
the
New USA Today may merge with competitors to
Partnership & Possible merger achieve synergy. Synergy is the magic force
that allows for enhanced cost efficiency of the
new business. Synergy takes the form of
revenue enhancement and cost savings.
By merging, USA Today may benefit from the
staff reductions, achieve economies of scales,
acquiring new technology, and improved market
reach and industry visibility.

4. RECOMMENDATIONS
The best alternative recommended for USA Today is shifting the bulk of focus on the
digital division and looking for the new partnership and merge with competitors

to synergy. Things started to change in the late 1990s, Network Strategy was initiated
as online reporting becoming more popular, as more and more people were going from
the daily newspaper to the Internet for their daily news. They were losing their market
share in the daily newspaper sales. By working with new partners and achieve synergy,
USA Today not only can reduce the operating cost but can also help the company to
find the new ideas on their network strategy. Managers can combine all the new ideas
and to produce the best one which is the most suitable for the company and its
shareholders.