the internal and external factors

Part 1:


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To determine the internal and external factors that must be considered in the development of a marketing strategy, evaluate their likely impact on the firm and generate possible competitive advantages for the development of a sound strategic and tactical direction.

Expectations: bjective:

To determine the internal and external factors that must be considered in the development of a marketing strategy, evaluate their likely impact on the firm and generate possible competitive advantages for the development of a sound strategic and tactical direction.


Complete a full SWOT Analysis for the textbook Case – “USA Today” and use it to analyze and determine 3 Competitive Advantages that USA Today could build upon.

Begin with a complete SWOT matrix grid that specifies both Internal and External factors. It is expected that you research and provide meaningful data/information as it relates to external factors.

Analyze the SWOT, matching strengths to opportunities and provide 3 Competitive Advantages that you feel are available for the company to build upon. Support your analysis. Tell the reader why these are the best options and be sure to have facts to support it. At this point, there is no need to “solve” the case or provide further recommendations.


The document should be in APA format, including properly formatted title page, and reference page.

A minimum of 3 external sources beyond the textbook are required.

Part 2

Case Analysis “ USA Today”.

You have been hired by the company to develop the strategy that will turn this situation around.

Using your SWOT analysis as the foundation for detailed analysis, prepare the following portions of your recommendation to the firm.

· Identify the key/root problem. While there may be several problems and a multitude of symptoms, identify the problem you feel is central to this case. Be sure to describe this in marketing terms and support it with specific data from the case.

· Alternative Solutions. Develop two alternative solutions to the defined problem. This should not be a laundry list of actions one could take to address every symptom, but alternative actions that could correct the problem at hand.

· Identify the pros and cons of implementing each alternative. Clearly articulate the advantages and disadvantage to each of your proposed solutions.

· Proposed Solution to the Problem: Select one of the alternatives and explain why it would be best. Include data from your research (beyond the data in the text) that supports your choice of solutions.

· Recommendations for Implementation: Identify how you propose to implement the selected solution. Include the key factors of marketing, target market, environment, or marketing mix elements (product, price, promotion, or distribution) and what the expected results (positive and negative) might be.

Keep your responses complete and concise.

3 References required. Be sure to cite your sources within the text and include your APA Reference list.


Synopsis: As the entire newspaper industry sits on the brink of collapse, Gannett and USA Today are working to avoid disaster and transform the nation’s most read newspaper into tomorrow’s best resource for news and information. This case reviews the history of USA Today, including its continued use of innovation to stay on top of the technological and sociocultural shifts that are rapidly changing the newspaper industry. In the face of continual competition across a variety of media sources, the future of USA Today depends on its ability to continually push the envelope of innovation and offer value-added, proprietary content to ensure continued differentiation and the future of the USA Today brand.

Themes: Product strategy, innovation, target marketing, distribution strategy, changing technology, changing sociocultural patterns, customer relationships, competi- tion, differentiation, strategic focus, SWOT analysis

USA Today, subtitled “The Nations Newspaper,” debuted in 1982 as America’s first national general-interest daily newspaper. The paper was the brainchild of Allen H. Neuharth, who until 1989 was Chairman of Gannett Co., Inc., a diversified international $6.8 billion news, information, and communications company. Gannett is a global information juggernaut that publishes 85 daily and 1,000 nondaily newspapers, operates 23 broadcast television stations reaching 20 percent of the U.S. population, and is engaged in marketing, commercial printing, newswire services, data services, and news programming. Gannett is currently the largest U.S. newspaper group in terms of circulation. Its daily newspapers, including USA Today, have a combined circulation of 14 million readers every weekday and 12.6 million readers every Sunday. Gannett’s total online audience in the United States is roughly 27.1 million unique visitors per month—an astounding 16.1 percent of the total U.S. Internet audience.

When USA Today debuted in 1982, it achieved rapid success due to its innovative format. No other media source had considered a national newspaper written in shorter pieces than a traditional paper and sprinkled with eye-catching, colorful photos, graphs, and charts. Designed to address the needs of a sound-byte generation, readers found USA Today’s content refreshing and more engaging than other papers. Circu- lation grew rapidly from roughly 350,000 in 1982 to approximately 2.1 million today (Monday through Friday). This compares to approximately 2 million for second-place The Wall Street Journal and 1 million for The New York Times. USA Today’s website,, is one of the Internet’s top sites for news and information.

The History and Growth of USA Today

In February 1980, Allen Neuharth met with ‘‘Project NN’’ task force members to discuss his vision for producing and marketing a unique nationally distributed daily newspaper. Satellite technology had recently solved the problem of limited geo- graphical distribution, so Neuharth was ready to take advantage of two trends in the reading public: (1) an increasingly short attention span among a generation nurtured on television, and (2) a growing hunger for more information. Neuharth believed that readers faced a time crunch in a world where so much information is available, but there is so little time to absorb it. His vision for USA Today positioned the paper as an information source that would provide more news about more subjects in less time.

Research suggested that USA Today should target achievement-oriented men in professional and managerial positions who were heavy newspaper readers and frequent travelers. Where The New York Times targeted the nation’s intellectual elite, thinkers and policy makers, and The Wall Street Journal targeted business leaders, USA Today was to be targeted at Middle America—young, well-educated Americans who were on the move and cared about current events.

By early 1982, a team of news, advertising, and production personnel from the staffs of Gannett’s daily newspapers developed, edited, published, and tested several different prototypes. Gannett sent three different 40-page prototype versions of USA Today to almost 5,000 professional people. Along with each prototype, they sent readers a response card that asked what they liked best and least about the proposed paper, and whether they would buy it. Although the content of each prototype was similar, the layout and graphics presentations differed. For example, one prototype included a section called ‘‘Agenda’’ that included comics and a calendar of meetings to be held by various professional organizations. According to marketplace feedback, readers liked the prototypes. The Gannett Board of Directors unanimously approved the paper’s launch. On April 20, 1982, Gannett announced that the first copies of USA Today would be available in the Washington and Baltimore areas.

USA Today Launches

On September 15, 1982, 155,000 copies of the newspaper’s first edition hit the newsstands. On page one, founder Neuharth wrote a short summary of USA Today’s mission statement, explaining that he wanted to make USA Today enlightening and enjoyable to the public, informative to national leaders, and attractive to advertisers.

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The first issue sold out. A little over a month following its debut, USA Today’s circulation hit 362,879—double the original year-end projection. In April 1983, just seven months after its introduction, the newspaper’s circulation topped the 1 million mark. Case Exhibit 11.1 illustrates USA Today’s growth in circulation over time. The typical reader turned out to be a professional, usually a manager, about 40 years old, well educated, with an income of about $60,000 a year. The typical reader was also a news or sports junkie.

For a newspaper, USA Today was truly unique. Designed for the TV generation, the paper was laid out for easy access and quick comprehension by time-pressed readers. Examples of this formatting included extensive use of briefs, columns, sec- ondary headlines, subheads, breakouts, at-a-glance boxes, and informational graphics. These techniques captured the most salient points of a story and presented them in a format that readers appreciated. Gannett’s research had shown that readers got most of their information from such snippets and that they were just as interested in sports, movie reviews, and health information as they were in traditional news. Each issue presented four sections: News, Money, Life, and Sports. The paper’s motto fit its design: ‘‘An economy of words. A wealth of information.’’

The History and Growth of USA Today 503

Because USA Today was nontraditional, the critics were numerous and fierce. In their view, the paper was loaded with gimmicks—tight, short stories; no jumps from page to page, except for the cover story (stories that jump to another page are one of newspaper readers’ major complaints); splashy, colorful graphics everywhere; a distinctive, casual writing style; a colorful national weather map; a roundup of news items from each state, one paragraph each; summary boxes; little charts and statistics- laden sports coverage; and a focus on celebrities and sports, with more detailed sports stories than almost any other paper in the nation. There was no foreign staff and little interest in the world outside the United States. It was quickly derided for its shallowness by journalists and labeled ‘‘McPaper’’—junk-food journalism or the fast food of the newspaper business—due to its terse, brash writing style and its short coverage of complex issues. Even within Gannett, Neuharth met with bitter resistance from some senior executives. Nevertheless, readers admired the paper for its focus on brevity and clarity, short sentences, and short words.

Clearly, the paper filled a gap in the market, satisfying several unmet needs and wants. USA Today’s success has come from listening to its readers and giving them what they want. The paper communicates with readers on a personal level very quickly (many of the short, fact-filled stories are under 250 words), clearly, and directly, in an upbeat and positive way. The color is riveting and gives the paper a contemporary look, and so is the space-defying number of stories, factoids, larger than usual pictures, bar graphs, and charts, all squeezed onto each page without seeming too crowded. Instead of confusion, readers get neatness and order. The paper’s dependably consistent or- ganization enables readers to go directly to any one of USA Today’s major sections. As a result, it takes an average of only 25 minutes for a reader to peruse the paper.

Marketing Program Innovation

In spite of its critics, USA Today’s circulation surpassed 1.4 million by late 1985 as the paper expanded to 56 pages in length. The cover price had also increased to 50 cents, double its original price of 25 cents per issue. By this time, USA Today had become the second-largest paper in the country, with a circulation topped only by The Wall Street Journal. Although Neuharth had predicted that USA Today would quickly turn a profit, it took about five years to move into profitability, with USA Today losing an estimated $600 million during its first decade. By 1993, however, profits were approximately $5 million. One year later profits doubled to about $10 million.

During its early growth, the paper unearthed a class of newspaper reader few others had stumbled upon: the business traveler. Airline deregulation had led to a large general price decline for airline tickets, inducing a swell in business travel. On-the- road business travelers wished to keep abreast of both world and national news as well as what was going on in their home state and how their local sports teams were doing. USA Today rushed in to fill the void; but in doing so quickly entered direct competition with The Wall Street Journal. By this time, hard-line newspapers, including The New York Times, began adding color; shorter, more tightly written stories; and beefed-up circulation campaigns to compete with ‘‘The Nation’s Newspaper.’’ The Wall Street Journal followed suit by introducing two new sections—Money & Investing and

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Marketplace—to broaden the paper’s coverage of media, marketing, technology, and personal investing. In the face of this competition, as well as an awareness of changing reader needs, USA Today responded through innovation of its own.

Product Innovation To stay ahead of the imitative competition, USA Today decided to become a more serious newspaper with improved journalism. The shift from primarily soft news to hard news began with the space shuttle Challenger disaster in 1986. By 1991, editors began focusing much more sharply on hard news rather than soft features, and by 1994 under president and publisher Tom Curley, there was a massive drive to upgrade the paper to be a more serious, more responsible news- oriented product.

Gannett also incorporated less traditional value-added features to keep readers interested. The paper added 1-800 and 1-900 ‘‘hot-line’’ numbers that readers could call for expert information on financial planning, college admissions, minority busi- ness development, taxes, and other subjects. Thousands of readers responded to reader-opinion polls and write-in surveys on political and current event issues. Editorial pages were also redesigned to provide more room for guest columnists and to encourage debate. Gannett also initiated a high school ‘‘Academic All Star’’ program that was later expanded to include colleges and universities. The increasing ubiquity of the Internet in the late 1990s also resulted in some changes in content. For instance, the Money section began to focus more on technology issues and to look at business through an ecommerce perspective.

The first major redesign in USA Today’s history occurred in 2000 as the paper moved from a 54-inch to a 50-inch width. The goal of the redesign was to make the paper easier to read and cleaner in design. The pages were slimmer and hence easier to handle, especially in tight spaces like airplanes, trains, buses, and subways, and the paper fit more readily into briefcases as Gannett had learned from focus groups.

Promotional Innovation USA Today also innovated in its promotional activities. His- torically, the paper had limited its promotion to outdoor advertising and television. However, in the late 1980s Neuharth undertook a ‘‘BusCapade’’ promotion tour, trav- eling to all 50 states to talk with people about USA Today. Neuharth succeeded in raising public awareness of his paper, which was credited for USA Today’s move into profit- ability. Encouraged by his success, Neuharth forged ahead with a ‘‘JetCapade’’ campaign where he and a small news team traveled to 30 countries in seven months, stimulating global demand for the paper. During a visit to the troops of Operation Desert Storm in the Persian Gulf in 1991, General Norman Schwarzkopf expressed a need for news from home. USA Today arranged for delivery of 18,000 copies per day. The overseas success of USA Today led to the publication of USA Today International, which is now available in more than 60 countries in Western Europe, the Middle East, North Africa, and Asia.

Early on, USA Today faced a challenge in selling ad space to advertisers because they were not convinced that it would pay to advertise in the paper. Gannett’s first strategy for enlisting advertisers was the Partnership Plan, which provided six months of free space to those who purchased six months of paid advertising. USA Today also began to accept regional advertising across a wide variety of categories such as travel,

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retail, tourism, and economic development. Color advertisements could arrive as late as 6:00 PM the day before publication, giving local advertisers increased flexibility. The paper also moved aggressively into ‘‘blue-chip circulation,’’ where bulk quantities of USA Today are sold at discounted prices to hotels, airlines, and restaurants, and are provided free of charge to customers. Today, over 500,000 copies of USA Today are distributed through blue-chip circulation every day.

USA Today pulled off another promotional first in 1999 when it broke one of the most sacred practices of daily newspapers and began offering advertising space on the front page (one-inch strips across the entire width of the bottom of the page). This highly sought after front-page position was sold through one-year contracts for $1 to $1.2 million each, with each advertiser taking one day a week. As USA Today continued to prosper, advertisers became quite attracted to the paper’s large volume of readers. To help cope with advertiser demand, the paper implemented the necessary technology to allow advertisers to transmit copy electronically 24 hours per day.

Distribution Innovation Fast delivery has always been important to USA Today. By the late-1990s, the paper was earning kudos for its ability to deliver timely news, thanks to its late deadlines. For instance, in many parts of the country USA Today could print later sports scores than local or regional papers. In hard news, USA Today was able to offer more up-to-date coverage by rolling the presses over four hours earlier than The Wall Street Journal and almost three hours later than The New York Times. The paper added print sites around the world in a move to further speed up distribution. An innovative readership program was also added that brought USA Today to more than 160 college campuses around the nation. Likewise, technological advances allowed the paper’s production to become totally digital. A new computer- to-plate technology was implemented to give newsrooms later deadlines and readers earlier delivery times.

USA Today Moves Online

A decade after USA Today’s launch, Gannett found itself in the enviable position of owning one of America’s most successful newspapers. USA Today was the most widely read newspaper in the country, with daily readership of over 3.7 million (readership numbers are higher than paid circulation numbers due to the passing of copies to other readers). In an era when nearly all major national media were suffering declines in readership or viewing audience, USA Today continued to grow. Rising distribution and promotion costs, however, were beginning to make the newspaper slightly un- profitable. To reverse this trend, USA Today created several spin-offs, including its first special interest publication, Baseball Weekly. During its first month of operation, Baseball Weekly’s circulation reached 250,000 copies. Baseball Weekly was eventually expanded to include a variety of sports coverage and was renamed Sports Weekly. At the end of 2007, Sports Weekly was ranked the highest sports magazine in newsstand sales. Due to the success of the Sports Weekly format, USA Today launched a similar magazine in March 2009. USA Today’s Open Air magazine was geared toward the ‘‘busy, well-informed, affluent customer’’ and designed to inspire ‘‘millions of readers

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to find adventure and its rewards in their everyday lives.’’ According to USA Today, ‘‘Open Air offers a compelling new look at the possibilities for adventure that surround us each day—from regular activities like improving your golf game with a stretch the pros use, or finding the best gear for your next softball tournament, to once-in-a- lifetime opportunities like a six-day hike into the spectacular Rio Grande Gorge in New Mexico.’’ However, rather than marketing the publication as a stand-alone product, Open Air was used to increase demand in the print sector and made available four times a year in Friday editions of USA Today. Also, venturing into news media, USA Today joined with CNN to produce a football TV program and launched Sky- Radio to provide live radio on commercial airline flights.

The major spin-off, in terms of current success and future potential, was USA Today Online, which the company introduced on April 17, 1995. The online version was seen as a natural companion to the print version of USA Today, given the paper’s worldwide distribution. The first version was available through CompuServe’s Mosaic browser and required special software, a CompuServe Network connection, and a monthly subscription of $14.95 plus $3.95 per hour. By June of 1995, USA Today Online converted to a free service that worked with any web browser and Internet service provider. The ‘‘online’’ was later dropped in favor of

Like its print sister, is bright, upbeat, and full of nugget-sized news stories. The online version allows readers to receive up-to-the-moment news that incorporates colorful visuals and crisp audio. It provides one of the most extensive sites on the Internet, featuring thousands of pages of up-to-the-minute news, sports, business and technology news, four-day weather forecasts, and travel information available 24 hours a day, seven days a week.

Another revenue generator, launched in 1998 in response to frequent reader requests for archived material, was the pay-per-view archives service (http://archives. The USA Today Archives section allows readers to do a free, unlimited search of the paper’s articles that have appeared since April 1987. Articles may be downloaded for $3.95 per story or as a part of the site’s monthly and yearly service plans.

Because USA Today is not an operation that rests on its laurels, the website has been updated several times. A number of partnerships have been added to the site in the areas of online classifieds and a marketplace where users can purchase a variety of goods and services. The company added a companion travel site in 2002.

USA Today Moves to On-Demand News and Information

As part of the Internet explosion that began in the early 2000s, has evolved from an online news media source to an on-demand, information-rich com- munity. This movement toward online media was a result of rising newsprint costs, which, in fact, forced virtually all newspaper firms to add online news as a means to increase readership and cut distribution expenses. In addition, to align with the advancing pace of communication and technology, new CEO Craig Dubow announced his commitment to ‘‘getting news and information into the hands of consumers faster than ever before.’’ To aid the company in this initiative, added blogs,

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RSS (really simple syndication), and podcasting to ensure that its news stayed relevant to busy and mobile readers. Gannett also purchased interest in a company with unique technology that aggregated news on the Internet and categorized the information into 300,000 topics. This technology also had the ability to sort information by zip code. Other acquisitions included PointRoll, a service that allowed Internet advertisers to expand their online space. One innovative way Gannett leveraged this service was to provide local advertisers with a means to direct consumers to local merchants. As a web user rolled the cursor over an ad, the ad expanded, revealing information about the closest retailer.

Also, in an effort to become the one-stop shop for all types of information, began providing readers and site visitors with the opportunity to search for their unique interests and connect with other like-minded individuals. For instance, in the first quarter of 2008, introduced ‘‘Network Journalism,’’ a site that combines professionally created content from USA Today writers with consumer- generated content, comments, and recommendations, as well as instant message news alerts and advanced search functions. In addition, the website launched nearly 200,000 unique online topics pages available via links threaded in the story pages or through a stand-alone topics section. According to Jeff Webber, publisher of, ‘‘USA Today has always focused on what America is talking about and provides the content that fuels the nation’s conversation. Our new topics pages go in-depth into subjects ranging from Sarah Palin to Starbucks; Barack Obama to Bono; and American Idol to the iPhone, all the things that make America tick.’’ The topics page categories include Brands; Culture; Events and Awards; Health and Wellness; Legislation and Acts; Natural and Physical Sciences; Organizations; People; Places, Geography; and Religion and beliefs.

To literally execute Dubow’s vision of ‘‘getting news and information into the hands of consumers faster than ever before,’’ capitalized on the emerging trend of portable technology and information by launching multiple applications through Apple’s App Store. Available via a free download from Apple’s iTunes Store, the USA Today for iPhone application provides readers access to the latest news stories, weather, photos and interactive polls. News, Money, Sports, Life, Tech, and Travel articles can be shared via e-mail, text message, Facebook, or Twitter, and are automatically saved for later reading. In addition, USA Today also partnered with Hampton Hotels to offer the AutoPilot application, targeting its business and travel consumer groups. The AutoPilot app offers users the ability to easily track trip and flight itineraries, utilize GPS capabilities in real time, get ‘‘up to the minute delay information for more that 16,000 airports, 1,400 airlines and 100,000 daily flights,’’ monitor departing and arriving flight information, access a comprehensive directory and obtain current and future weather conditions. For the business traveler com- munity, an online community was also made available with discussion forums, polls, and other interactive content. Even now,’s online community groups are continuously expanding, with forums targeting individuals interested in MMA (Mixed Martial Arts), automotives (‘‘Open Road’’), and video gaming. Other strategies to expand its image as an all-encompassing portable information source included

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expansion into downloadable media via the Amazon Kindle. The Kindle is a portable e-reader that wirelessly downloads books, blogs, magazines, and newspapers to a crisp, high-resolution electronic paper display that looks and reads like real paper. For a monthly subscription cost of $11.99, Kindle users can have USA Today content delivered each weekday.

Brand Extensions

In 2008, USA Today began to look beyond the scope of daily news media and ventured into brand extensions by way of retail locations and television. As an attempt to capture more share of customer (rather than market share), USA Today opened three USA Today Travel Zone retail locations in airport terminals in late 2008. These retail shops carry all products travelers expect to find, including reading materials, sundries, travel accessories, and other convenience items.To align with the current look and feel of the paper its customers recognize, sections of the store are clearly identified and utilize colors representing USA Today’s signature sections: News (blue), Money (green), Sports (red), and Life (purple).

Also in 2008, the company launched USA Today Live—a television service designed to extend the company’s reach beyond current concentrated efforts and target business professionals and travelers. By partnering with Fuse, the national music television network, Versus, and MOJO HD on a variety of series-based pro- gramming, USA Today Live has introduced new audiences to the USA Today brand. The programming partnerships included: ‘‘City Limits Fishing,’’ a six-part weekly series on Versus that highlighted places where anglers regularly catch limits of fish in not so far-off, exotic destinations; ‘‘10 Great Reasons,’’ an eight-part weekly series on Fuse designed to ‘‘pay tribute to acts, genres, rumors and stories about our musical guilty pleasures and why we love them so, but may be just a tad embarrassed to admit;’’ as well as ‘‘Gotta Get Gold,’’ a 10-part series on MOJO HD that focused on what it takes to train and to compete at the highest levels in athletics.

USA Today—Today and Tomorrow

In looking at the total national newspaper market, USA Today has been quite suc- cessful. It has seen more than 25 years of continuous growth and is the most widely read newspaper in the United States. The paper’s total network audience, comprised of USA Today print readers and visitors to USA, is nearly 10 million adults. According to David Hunke, president and publisher of USA Today, ‘‘The most recent numbers . . . show that more people are choosing to read USA Today more than any other newspaper in the country, with 414,000 more print readers per day than our nearest competitor The Wall Street Journal, and 817,000 more print readers than The New York Times.’’ On the online front, USA reported more than 11.9 million unique visitors in April 2009, a 12 percent year-over-year increase. According to USA Today, internal data reveal page view increases to USA were driven by an increase in users sharing and consuming content via social media tools like Twitter, Facebook, MySpace, and Yahoo Buzz.

USA Today—Today and Tomorrow 509

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Despite positive reports on the online front, this success has occurred during a time when overall newspaper sales, advertising revenue, and readership are declining. USA Today has recently faced a reported 14.3 percent decline in publishing adver- tising revenues, a 20 percent drop in classified advertising revenues, and, even more damaging, an 18.4 percent decrease in paid ad pages. Operationally, combining these declines with sharp increases in newsprint costs, which caused USA Today to increase its single-copy price to $1.00 from 75 cents, results in a slippery slope for ‘‘The Nation’s Newspaper.’’ In fact, in late 2009, the Audit Bureau of Circulations reported declines in circulation for 24 of the top 25 newspapers in the United States. The Wall Street Journal, which managed a 0.6 percent gain, was the only exception. USA Today reported a 17 percent drop in circulation, partly due to the slump in tourism during the economic recession, and cutbacks by several hotels no longer offering free newspapers to guests. Consequently, when the final circulation figures were released in late 2009, The Wall Street Journal had eclipsed USA Today as the country’s largest newspaper by weekday circulation.

In addition to declines in print media, USA Today also faces fierce competition in online information distribution through television and magazine sites, blogs, and podcasts. And, Internet-based companies, like Yahoo! and Google, have now moved into the advertising market. The multitude of choices for both consumers and advertisers means that USA Today will have to work harder at innovation, finding a way to differentiate its products from the sea of competition. This will be a challenging task given the continuing decline in newspaper readership and the growing consumer demand for free online news.

As USA Today looks ahead, a number of issues must be considered. The following sections describe some of the key issues that the company must face as it plans for its future.

USA Today’s Customers

The overwhelming majority of USA Today’s circulation is within the United States. The readers of the print version are 70 percent male and 30 percent female, with an average age of 47 and an average income of $76,073. The readers of the online site are 54 percent male and 46 percent female, and are more educated than its print readers. Most USA Today readers work in middle-to upper-management positions and are often purchasing decision makers for their offices and households, as well as tech- nological junkies and sports fans. They also participate in a wide range of leisure activities. Eighty-six percent of print and online readers combined own a computer, and most of those have Internet access. Seventy-five percent of readers participate in sports and are active sports fans. Three-fourths of USA Today readers have active lives that include attending movies and domestic and foreign travel.

Important players in the purchase process are subscribers, single-copy buyers, and third-party sponsors, often referred to as blue-chip buyers. Eighty percent of USA Today’s purchasers are also users and they bear the financial responsibility for the product. These consumers also share their papers with family and friends, which increases readership. Twenty percent of paid copies are purchased by third parties,

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which distribute complimentary copies to the end user to add value to their own goods or services. For example, hotels, restaurants, banks, and other service organ- izations offer customers the opportunity to enjoy a copy of USA Today during breakfast or while waiting in the lobby. Newspapers purchased at coin-operated vending machines do not always have associated complementary products.

Paid editions of USA Today are currently distributed via newsstand retailers, large grocery store chains, bookstores, coin-operated vending machines, and directly to the consumer through home delivery. Home delivery customers are the newspaper’s most loyal customers and are most likely to buy daily delivery at 13- to 52-week intervals. Single copy buyers tend to purchase the paper out of daily routine (heavy users) or on occasion based on specific newsworthy events (light users). Complimentary distri- bution of USA Today occurs primarily in hotels, airport terminals, restaurants, and at college campuses across the U.S. USA Today content is also available in electronic formats from, mobile phone access, and e-mail updates. The avail- ability of USA Today via electronic distribution is a deterrent for some consumers to purchasing the print product. Currently, however, customers are unable to receive updated news in real time unless they have access to an RSS-enabled mobile device.


Gannett has competitors from several fields, including other national newspapers, such as The Wall Street Journal and The New York Times, cable networks, nationally syndicated terrestrial and satellite radio, such as Sirius/XM, and Internet sites such as Yahoo!, Google, and AOL.

The Wall Street Journal One of USA Today’s biggest newspaper competitors is The Wall Street Journal, owned by Dow Jones & Co. Inc. The company’s product lines include newspapers, newswires, magazines, websites, indexes, television, and radio. The Journal’s website,, adds over 1,000 news stories per day and includes price information on over 30,000 stocks and funds worldwide. The Wall Street Journal has strategic alliances with other information companies, including CNBC, Reuters, and SmartMoney.

Circulation for The Wall Street Journal print version is 2 million, whereas receives 175,000 unique visitors per day and has 768,000 paid subscriptions. It is interesting to note that The Wall Street Journal is the only newspaper to require a subscription to view its online content. The Wall Street Journal targets influential business readers as its primary audience. Sixty percent of the print newspaper’s readers and 54 percent of its online readers are employed as top management. The average household income is $191,000 and net worth is $2.1 million. Net worth for online readers is $1.6 million. The company charges a subscription fee of $119 per year for the print version and $103 per year for its online content. This paper also offers a bundled package with both print and online content for $140 per year. Single copies of the weekday print version cost $1 and the weekend print version costs $1.50.

Dow Jones has made several improvements to the Journal in an attempt to make it more competitive. It added a Weekend Edition in 2005, designed to help advertisers

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reach the paper’s audience at home on the weekends. Some new plans for improve- ment include reformatting the paper to a 48-inch width and changing the navigational format and content of the print version. The change is expected to reduce operating expenses by $18 million per year. The Wall Street Journal has already launched changes in their international version. The international print edition has become more compact and includes stronger links to the website. They expect these changes to improve profits by $17 million per year. The Wall Street Journal is also planning to add advertisements to its front page. USA Today was criticized for doing this in the past, but this practice is becoming more common as newspapers look for ways to increase revenue. As stated previously, The Wall Street Journal was the only top-25 newspaper to see a positive gain in circulation for 2009.

The New York Times In addition to The New York Times, the New York Times Co. owns other newspapers and related websites, two New York City radio stations, nine television stations serving seven states, and search engine, which they acquired in 2005 for $410 million. The New York Times is available at 60,000 news- stands and retailers and 4,000 Starbucks coffee shops.

Circulation for The New York Times is 1 million, while the website, www.nytimes. com, enjoys 1.3 million unique visitors per day and 10.8 million registered users. The newspaper’s target market is the intellectual elite. As explained in their press kit, ‘‘The New York Times—Influential people read it because influential people read it.’’ The average household income is $88,523. For circulation within New York, The New York Times costs $304.20 per year for the seven-day paper, $161.20 per year for the weekday paper, or $197.60 the weekend paper. Outside of New York, the paper costs $384.80 per year for the seven-day paper, $192.40 per year for the weekday paper, or $270.40 per year for the weekend paper. The New York Times’ online content is free although it requires a registration. Online users can also acquire extra content, including access to the archives, through its electronic version, which is $87.95 per year Monday through Friday, or $174.95 per year for seven-day access. The price of a single copy of the print version is $1.

The company has recently made changes in an attempt to be more profitable. The New York Times raised its home-delivery rates by 4 percent and reduced the number of pages in its stock section, a combination that is expected to boost the bottom line by roughly $10 million per year. Additionally, the paper has also begun to implement cost-saving policies, including staff reductions, which is expected to reduce costs by $45 million per year. And, they have decided to follow the examples of other news- papers by making plans to reduce the width of its print version.

Other Media Competitors USA Today also faces competition for audience attention and advertising dollars from companies outside its industry, including television, radio, and Internet providers. As shown in Case Exhibit 11.2, newspapers fare poorly in terms of daily media consumption when compared to other media options.

Internet information providers are another source of competition for USA Today. A billion people globally have access to the Internet either at home or at work. Most Internet information providers make their money through subscriptions, advertising,

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USA Today—Today and Tomorrow 513



Watch local broadcast news

Watch network broadcast or cable news

Read a local daily newspaper

Go online to get news

Listen to radio news broadcasts

Listen to talk radio stations

Read a national newspaper (The Wall Street Journal, USA Today, The New York Times, etc.)

52 51 43 53 26 24 15

Echo Boomers (ages 18–27)

Gen X (ages 28–39)

69 57 49 68 49 35 23

Baby Boomers (ages 40–58)

83 74 66 70 64 40 19

Matures (ages 59+)

88 88 80 57 58 41 17

Listen to satellite radio programming Numbers reflect the percentage of adults saying that they


23 use a particular medium ‘‘daily’’ or ‘‘several times a week.’’



Source: ‘‘Seven in 10 U.S. Adults Say They Watch Broadcast News at Least Several Times a Week,’’ Harris Interactive, February 24, 2006 (, accessed October 18, 2009.

or both. It is important to note that the Internet as a communications and advertising medium is no longer tied to desktop computers. Virtually all major Internet providers and content developers now make their content available via handheld devices, including USA Today.

Economic Woes

Higher newsprint costs, a shaky advertising environment, and declining circulation have been plaguing the newspaper industry. The high cost of newsprint is a constant problem for newspapers; however, the industry has been able to cut costs through the increased use of recycled fiber. With respect to advertising, newspapers have been struggling in the midst of an economic recession that has triggered a soft ad market, particularly in the automotive, retail, and employment sectors. In fact, 2008 was the worst year ever for the U.S. newspaper industry. Total ad revenues were down 16.6 percent or $7.5 billion. Classified advertising, down 29.7 percent, took the brunt of the decline. Print advertising was down 17.7 percent, while online advertising was down 1.8 percent. To make matters worse, the pace of the decline in newspaper advertising is accelerating: from a decline of 7.4 percent in late 2007 to a decline of 19.7 percent by late 2009. In response, many newspapers have been forced to close, while others have cut staff.

Changing Technology

Technology is central to the future of the newspaper industry because of the changes it has brought in the way consumers are able to seek out timely and relevant news and information. Technological advancements offer interested consumers more options than ever to access news and news coverage, and this has led to a marked decline in newspaper circulation as people use the Internet and other means to get timely news and information. Not only has technology given consumers more options, but it has

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514 C A S E 1 1 USA Today: Innovation and Evolution in a Troubled Industry

also provided consumers the ability to customize the news they receive at a level they were never able to do before.

Delivering news via the latest wireless devices is perhaps the most threatening alternative to newsprint. However, these devices are also an opportunity for USA Today to maintain its readership. Wireless handheld devices, such as the Blackberry, iPhone, and a growing list of smartphones, are increasingly being used to deliver news coverage in specific content areas, such as stock reports and sports scores. For example, USA Today and Gannett have developed partnerships with such companies as MobileVoiceControl, Inc., to allow those who have Blackberries to enjoy natural voice access to USA Today’s news content. The partnership allows USA Today to give Blackberry users the ability to search and receive continuously updated and cus- tomizable coverage in news, finances, sports, and even weather by merely pressing a button and speaking a command. The company’s iPhone apps—USA Today and AutoPilot—are other ways that USA Today has reached out to mobile consumers. USA Today clearly recognizes the need to transition from print to wireless, and Gannett has begun to do just that in partnering with companies on the leading edge of wireless technology.

Other information distribution technologies are on the horizon. One of the most promising is electronic paper or e-paper. E-papers are flexible digital screens that are similar to newsprint with respect to thickness, rolling/curling ability, and portability. Unlike newspapers, however, e-papers are reusable in that users can download up-to- date information to them via wireless technology. The technology is already being used for electronic poster advertisements in stores. One example of this type of technology is the Amazon Kindle, which USA Today has already recognized. Smaller, lighter and more portable devices with advances in readability and reduced costs are expected to evolve from this innovation.

Overall, advancing technology may have initiated the decline of the newspaper industry. However, technology is also likely to be the industry’s savior. Technology allows USA Today and other newspapers to deliver news in more cost-efficient, cus- tomizable, and useful ways than will ever be possible using newsprint.

Cultural Shifts

As many in the industry are aware, newspaper readership stands to lose a great deal due to changing demographics. The Newspaper Association of America notes that newspaper readership is strongest among adults ages 59 and older as 70 percent of this group reads a newspaper daily. Within other mature age groups, specifically those constituting Baby Boomers such as adults ages 40 to 58, only 50 to 60 percent read a newspaper daily. These figures support the contention that newspapers will lose readers at an alarming rate as this segment of the population ages over the next 10 to 30 years. To offset this trend, newspapers are attempting to attract and cater to new and younger readers. The transition is a difficult one, however, as there is a significant difference between the interests of current newspaper readers and the younger de- mographic newspapers hope to gain. Baby Boomers are most interested in major news

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stories and local news coverage. Younger readers, however, are more interested in sports (mainly males) and entertainment coverage along with comics.

Addressing this concern and hoping to boost readership among younger gen- erations, USA Today now includes in its online version a blog entitled ‘‘Pop Candy’’ where readers can exchange information and opinions about aspects of pop culture such as music and celebrities. Also, USA Today plans to include excerpts from its ‘‘On Deadline’’ blog in the print edition. One part of the blog, ‘‘Looking Ahead,’’ will serve in print as a guide to upcoming events, while another will round up other outlets’ news coverage in true blog fashion.

Evolving to Meet the Future

Although increasing digital options for news and information have some industry observers bemoaning the death of newspapers, some feel that newspapers do have a bright future and will thrive if they develop a healthy online presence and adapt to evolving media consumption patterns. On the other side, rising costs and declining readership have caused several newspapers to adapt to an online-only news format and forego the printed edition completely. In fact, an article in the print edition of USA Today titled ‘‘Newspaper closings raise fears about industry’’ states that during 2009, numerous newspapers have closed shop or reduced publication days, cut thousands of employee positions, and reduced salaries of those who remained. In the face of con- tinual competition in both offline and online markets, the future of USA Today depends on its ability to continually push the envelope of innovation and marketing strategy. To remain successful, USA Today must continue to use a value-added strategy that can further enhance distribution of its proprietary content and ensure continued differen- tiation with respect to the competition.

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