Innovation and Stack (Independent Magazines)

In a fast-pasted media environment, organisations have to adopt or develop new business approaches in order to stay current, competitive and retain advertisers and consumers. The recent technology developments and change in the economic climate has caused consumer behaviour to transform and thus created a ripple effect in how advertisers are engaging with them. 

Figure 1. Stack business model

In the case of Stack, they have successfully created and implemented a new business model which eliminates the need for third party advertisers as well as meeting the needs of their target consumers. Through a two-sided business model they rely only on independent magazines who wish to attract a wider readership and consumers who wish to read a different publication each month. This model is cost effective and appealing to small independent publications as they are only have to produce the required number of magazines pre-paid for by Stack subscribers and do not need to consider marketing or distribution as this is also fulfilled by Stack.

The subscription method has been traditionally used by newspapers and magazines for decades. However, while other publications (who adopt the traditional business model) usually offer consumers the choice of single-sale or subscription, Stack only provides the latter. This means while Stack reap the advantages of the traditional model, including; a predictable and constant revenue stream, reduced uncertainty and also higher levels of brand loyalty, it also makes a more financially viable business model as publications are only sourced and purchased from independent publishers based on a predetermined quantity.

The traditional subscription service has also been replaced by in-direct subscriptions, where consumers subscribe to Stack rather than the publication itself. This is the main revenue for the company and also develops brand loyalty.

Stack magazine also have added ‘value’ and innovation to the product through applying expertise in sourcing independent publications as well as their own in-house marketing and distribution process. This process has created an emotive response as the publications change monthly, making it a surprise to readers. The publications are also described as thought provoking and engaging (Stack, 2012) providing the reader with new information and ideas.

References
Aris, A. and Bughin, J. (2009). Rebalancing the Media Value Chain. 2nd ed. Chichester: Wiley pp. 13-81
Blythe, J. (2009). Principles and Practice of Marketing. 2nd ed. South Western: Cengage Learning pp. 629-35
Kolter, P. (2008). Marketing Management: International Version. 13th ed. Pearson. pp. 63
Kolter, P. (2008). Principles of Marketing. 3rd ed.
Kung, L. (2008). Strategic Management in the Media: theory and practice. London: Stage pp. 47

Marketing

Marketing can be seen differently by different people; on the one hand it can be simply selling a product once it has been created. On the other hand it can be seen as communicating a product’s worth or value proposition, so that a customer is aware and hopefully feels in need of its existence. This latter way of seeing marketing has become more important in the development of the internet, where thanks to social media, marketing has become more of a conversation with the consumer. This can be taken a step further since, as was said in the lecture, thanks to the internet we are now ‘co-creating the market place’ with the consumer since, for example, a review of a book by a customer on Amazon can market a book just as well, if not better than the publisher’s product description above it.

Marketing is more than just selling a product once is has been created because often the foresight as to how one will market a product can often determine its development and even its creation or type of innovation. We discussed whether publishers should be looking to sell products to existing markets or to new markets. Depending on the decision taken by a publisher, this could determine the type of product created and in what medium for example the now common concept of developing new markets creating books for purchasers of the ipad who may not tend to carry a book on the train but may be willing to read on their device.

Business models and disruption

This week we talked about business models and particularly how these are developed within an existing market. It’s important to question why you are developing or innovating in a certain direction. Sometimes people don’t want more, sometimes they want something different. You may exceed their expectations when actually if can disrupt the current market place with something new, the fact that it is different will make it ‘good enough’ to win you custom without it necessarily being ‘the best’. We also talked about how collaboration can be key in this disruption for example the open source models being used by companies such as Facebook to link with companies such as The Guardian Group. Our communication is evolving to be more social, with social networking, so it is perhaps natural that this becomes a viable business model too, or as Michael Skoler calls it: “Connection as a strategy.” (Skoler, 2011)