Differences and similarities between economics of traditional media industries
Ques1: What are the similarities and differences between the economics of traditional media industries? Illustrate your answer with examples from at least three different industries.
Answer1: Traditional media is the source of mass communication from the years and enabled the marketers to communicate their message to audience in efficient and cost effective manner. Traditional media constitutes of mainly two kinds of media’s which are broadcast media and print media. Broadcast media refers to the mediums which are enabled through broadcasting the signal in air e.g. Television media and radio media. While print media constitutes of newspaper, magazines and yellow pages etc which are sources of mass communication at the cost effective way. TV and radio are also the cost effective methods for communication but per exposure fee paid for the TV and radio are high as compared to the print media while reach is high for the broadcast media. The high charges of broadcast media contribute to the fact they deal with the scarce resource of frequency.
The Print media is from very ancient time and reaches to the masses and proved to be a good media for marketers from long time. Radio came after the print media as the mass media resource while television came after Second World War with the advent of its sibling called radio.
Based economic factors difference and similarities between economics of traditional media are as follows:
Economic differences among traditional media:
1. Market forces
· Capital availability and rent: The amount of capital required for broadcast media whether it’s the television or radio is huge but the amount of capital required for print media are comparatively lower then broadcast media. Due to high cost and scarcity of the resources of broadcast media they are usually taken on rent or lease like the distribution of bandwidth on which particular Television and radio channel works are also taken on lease for which ownership lies with the government.
· Audience consumer demand: The demand side of economics is high in case of the broadcast media while demand is comparatively less for the print media.
· Advertiser demand: The demand from the advertiser side is also on high scale due to increasing competition in the advertising industry. This demand is inelastic in nature i.e. the demand does not vary with the percentage of the GDP of any country.
2. Cost forces
· Economies of scale: The economies of scale for print media is higher than the broadcast media since for every exposure broadcast media have to incur high cost while per exposure cost incurred by print media is little less. Due to high coverage of broadcast media it is proved as an efficient source of mass media. The number of people covered by the broadcast media is more than the number of people covered by the print media.
· Fixed and variable cost: The fixed amount of cost incurred by the broadcast media is huge as compared to the print media. Also the variable cost also forms a considerable part of the cost while variable part for the print media is very nominal.
3. Regulations: The regulations faced by the broadcast industry are very much in comparison to the print media. As the print media enjoys the more freedom from any kind of regulations. These regulations from the government and other regulatory bodies make it little less effective.
4. Cost structure: There is huge difference between the cost structure of the broadcast media and print media. The cost factors of the two media i.e. economic force, content cost, production cost, marketing and advertisement cost, transaction cost and non monetary cost. Broadcast media has to incur more cost in every cost centre starting from the content production where cost involved and efforts involved are very high in comparison to print media which is easier to do away with.
Economic similarities between traditional media based on economic factors:
1. Market Force:
· Competition: The competition is increasing very rapidly in both the broadcast as well as print media with the advent of new technology which makes the advertisement more responsive from the consumer side.
· Sustainability: For sustaining in the long term with the advent of Internet as a big threat for both the broadcast as well as print media sustainability is the key issue and if they have to sustain these media’s would have to innovate and become more interactive with the customers.
2. Cost forces:
· Economics of scope: Scopes of the broadcast media as well print media are degrading with the advent of internet. The readership of the print media and broadcast is facing big threat from the internet as people are reading newspaper from the online websites and watching TV content online.
Mass media value chain model:
The Value chain model given by Porter also applies to the mass media. The value chain model applied to mass media starts with infrastructure (Technology which enables the mass media to reach to its audience) and passing through production (content development or the message to be communicated to the audience), marketing, distribution (how that message reaches to the audience), retail (where that communication is consumed by its ultimate users i.e. consumers) it reaches finally to consumer in form of their attention (the simulation or feedback or any other kind of reaction given by the customer in response to the communication).
Infrastructure à Production à Marketing à Distribution à Retail à Attention
The Economic differences and similarity between traditional media based on the media value chain are as follows:
1. Infrastructure: The infrastructure for media generation refers to the technology for producing the media content. Though the similar kind of message is sent to customer but through different style. In case of broadcast media the infrastructure required is very high as invention of new technology supporting the broadcast media has made revolution in media world. So with the advent of new technology cost also come hand in hand thereby making the broadcast media expensive than the print media which is not so expensive due to simple infrastructure required for the print media generation.
2. Production: Production refers to the content of media which is the main message to be reach to the audience hence is very important. The content of the broadcast and print media is same since companies has the similar communication through every medium. Broadcast media is very interactive so involve huge cost in production due to expensive tools, celebrity endorsement than its other counterpart i.e. print media which does not involve so much of cost. Also this attractive content generation by broadcast media provides it more demand than the print media.
3. Marketing: Both broadcast as well as print media passes through companies to intermediary to consumers. For broadcast media Television and radio are the main source of marketing it which is free of cost for the consumer as the broadcast signals are free of cost while consumer has to incur cost for getting the print media.
4. Distribution: Distribution of broadcast media is enabled through TV and radio channel which operates at a particular frequency hence are the scarce resource for the people and costly too. But for print media distribution happens with help of the newspaper and magazines which are little less costly for the advertiser.
5. Retail: Retail refers to the place where media will be consumed by the consumers. In case of the broadcast media it can be consumed at the places only where the broadcast media enablers are available but print media can be carried at any place.
6. Attention: Both broadcast and print media create simulation among the consumers. It refers to the response of the consumer for that media. The impact of broadcast media is more than its counterpart i.e. prints media. Also the time simulation time is very less for the broadcast media than print media.
Examples of the industries employing different economics for traditional media
1. Beverage Industry: Beverage industry is one such industry in which role of marketing communication is very crucial. This industry uses a mix of several media mix among them broadcast media is very crucial. The main focus of the companies is to build a positive brand so the cost incurred by the companies for creating the TV advertisements is very high. And the demand for the advertisement is more from both consumer and advertiser side and these advertisements stimulates the consumption of beverage products instantly. Also print advertisement is also prevalent in beverage industry but the frequency is not as high as broadcast media due to low reach and low impact.
2. Detergent Industry: In detergent industry regulation in broadcast media can be seen as various companies tries to degrade each other by promoting themselves as the best and have to face strict regulation then.
3. Automobile industry: Automobile industry takes into consideration both the print as well as broadcast media equally. As at every new launch of any vehicle by the companies they try to stimulate the demand among customers by doing so and there are several researches which show the success stories of these media.
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