Shoptalk/Commentary: Developing Product Strategies in Difficult Markets
Posted: 12/20/2012  |  By: Gary Randazzo
San Francisco is one of the most competitive media markets in the U.S., and in 2002, I was named executive vice president and general manager of the San Francisco Chronicle. My job was to try to rebuild ad revenue and put the organization on a solid market footing.

The city of San Francisco is located at the end of a peninsula and is restricted topographically from expanding. Thus, population growth has mainly been concentrated in outlying communities, some of which grew rapidly and developed quality media outlets of their own. At the time, competing newspapers included the San Jose Mercury News, Oakland Tribune, and Contra Costa Times. All were quality newspapers, respected and read by the residents of their communities.

As the population grew in surrounding communities, so did retail outlets. Retailers in these outlying communities found it necessary to move part and sometimes the majority of their ad budget to media serving those communities.

Clearly, the task at hand was not an easy one. Our strategy at the Chronicle was to introduce new products and improve coverage of outlying communities. The Chronicle had a strong franchise and a positive reputation, and our efforts were rewarded to a great degree. However, retailers were not willing to completely abandon those newspapers that helped grow their business and served the local communities. By the same token, we could not expect residents of those communities to reduce their use of local media in favor of the Chronicle.

We began considering other options, including partnerships with other media. We soon realized that, for the most part, partnerships that actually moved business our way would be short lived, because they would deteriorate the partners’ market share and, over time, become one-sided and therefore come to an end.

I visited with folks at competing websites, newspapers, cable operators, and TV and radio stations to develop partnerships, and we were able to put together a few programs that produced a modicum of success but didn’t change market share.

The programs that did change market share recognized the competition and targeted the audience that we intended to serve. These included a marriage mail concept, a new wine section (we were, after all, in wine country), revamping the entertainment section of the Sunday Chronicle, and introducing new Internet revenue programs.

I left the Chronicle several years ago but often think about what I would do differently in today’s digital environment.

I know I would lead my organization to act unilaterally but also to recognize the importance that residents and businesses place on the media they use. I might, for example, offer consumers lower classifieds rates if they had already placed the same listing in competing outlets. This tactic has the danger of moving existing customers to the competition unless the pricing and marketing were clearly thought out, but it would almost certainly provide better results for consumers and businesses.

The positive side is that I would have ads on my website and directional ads in my newspaper that I would not have otherwise. I would also have a new beachhead from which to drive new marketing initiatives.

For retail advertisers spending a large amount of ad budget in competing newspapers, I might let them count the dollars spent with the competition toward my offered ad volume contract pricing.

In this case, retailers getting volume contract discounts for advertising placed with competing media would expand their reach at discounted ad rates. I would be in danger of having my current customers move more dollars to competing media to get the lower rate with my newspaper, so the rate discounts would have to require growth in ad spending in my newspaper.

While these approaches are uncommon, they do recognize the new market realities and offer an approach to shift market share if well thought out.

Clearly, the competitors could also employ this approach, so to be successful the strategy would have to play off the strengths. A regional newspaper offers broader exposure than a newspaper that only serves one community, while a community newspaper offers local coverage and promotions. In turn, the Internet offers immediacy and search capabilities that newspapers, radio, and television cannot.

In today’s hypercompetitive and constantly shifting media landscape, the solutions that will move market share and win stable relationships with consumers and businesses will be based on the realities of why competing media exist in the first place.  


Gary Randazzo is founder of GWR Research, a media marketing and management consulting firm. He served as senior vice president at the Houston Chronicle and executive vice president and general manager of the San Francisco Chronicle. He can be reached at gary@gwrresearch.com.