Chapter One Introduction
The main research question of this thesis is how a media company can innovate in thisdigital revolution. The main innovation of this paper is the creation of a digital networkplatform transforming itself into the digital ecosystem.MEDIA INDUSTRYTraditional media companies are in a constant battle as they confront a new onlineconsumer with new behaviors and news perspectives. The big picture puts the mediaindustry as an industry having tremendous changes because of the information andcommunications technological revolution initiated since 1970.Media companies are reinventing themselves online to adapt to all the digital changes.The media sector is categorized as the top ranked sectors that digital is affecting. With a5.49 digital maturity, it lays only behind IT and Technology and Telecommunication sector.Media companies can see this as a threat or opportunity, the ones that see it as anopportunity must first address numerous digital challenges like the device and socialgateway challenge.The device challenge: Consumers are increasingly integrating smartphones in theirlives, in some cases seen as an addiction. Media companies need to understand the rapidshift from traditional online access to mobile devices. This is affecting the way consumersobtain information and generating content is what this sector does. Mobile devicescontinue to capture a larger consumption time comparing to the TV and computerplatforms that are starting to decrease. More consumption time means more people readingdigital content than traditional physical content Digital consumers don’t use this devices to“just talk”, the options for social networking, internet browsing, music, and gaming havedrastically increase. Potential for increase digital content revenues are linked with the rightgo to market approach.
1.2 Current status
The media sector grew from $38.4 Billion Mexican pesos to $78.3 billion Mexicanpesos from 2010-2015.In the year 2015, the consumption of media by a smartphone was 17.49 hours/weekout of 57.38 total hours representing a 30%. Although still in Mexico using the TV istrendy and represents 35% of total consumption, smartphone increased 14 hours since2012 while TV only by 30 minutes. This makes sense as for Mexico is a developingcountry, although smartphone is increasing more than TV, is still has less mediaconsumption compared to a developed country like USA.Year after year, the number of people connected to the internet increases. From theyear 2009 to 2015, there was an increase of 112.4% totalling 65 million Mexicans.E-commerce joins the growth stats, represenitng a $162.1 Billion mexican pesos in theyear 2014, a growth from $3.8 Billion mexican pesos back in the year 2005.
Chapter Two Literature Review
2.1 Literature Review
Global innovation is being driven by forces such as the global war for talent, the riseof innovation as a currency of global competition, innovation as a national agenda and thepower of networks. Innovation as a national agenda: Many nations embrace innovation as a nationalpriority in which they develop innovation strategies and give support to this kind ofinitiatives. The power of network: As globalization arises, networks become increasinglyimportant. Networks have an important role to individuals and companies that are able tolink talents and assets to achieve and generate value.Companies should focus to get to know more their end customer and develop andoperate in a digital ecosystem. Digital ecosystem is a communicated and coordinated,adaptive, open system with properties of self-organization, scalability and sustainability.No more focus on competitors, ecosystems through digitalization can involve to partnerstrategically with a different company that complements their own or it can even be acompetitor.Companies that had 50% or more of their revenues from digital ecosystems andunderstood their end customer better than their competitor had 32% higher revenue growthand 27% higher profit margins. Companies that operate strictly as a supplier will undergoextreme and growing pressure.
The use of Porter five forces will serve PRO Magazine as a powerful tool tounderstand the competitiveness of the business environment and to identify the strategiespotential portability. In a fast and complex industry like magazines it’s a good idea forcompanies to keep close watch on the rivals and see how they can impact the businessenvironment., understanding with certainty the forces the can affect your company andprofitability will make you step ahead of the game and adjust if necessary.
Chapter Three The opportunity and innovations ........... 31
3.2 Industry analysis ......... 34
3.2.1 Current competitive situation ..........35
3.2.2 Projected strategic moves by current players ....36
3.2.3 Changes brought to the competitiveness of the industry by the new venture .........36
3.3 Innovations brought to the industry by the new venture .......... 36
3.4 Strategy ..... 39
3.4.1 Source of differentiation and competitive advantage ..........45
3.4.2 Ethics and sustainability.........45
Chapter Four The company and team .......... 47
4.1 Legal structure ........... 47
4.2 Ownership......... 47
4.3 The advisory board .... 48
4.4 The management team ........ 50
Chapter Five Marketing plan ..... 53
5.1 Identification of customers ........... 53
5.2 Number of potential customers and potential sales revenues .... 54
5.3 Requirements of various customer segments........... 56
5.4 Appropriate sales and promotion approaches .......... 58
5.5 Analysis of how purchase decisions are made...........59
5.6 Customer price sensitivity.... 59
5.7 Cost of acquiring and retaining customers...... 59
5.8 Strengths and weaknesses of competitors and ways that competitors ........... 59
Chapter Five Marketing plan
5.1 Identification of customers
Before starting the marketing plan, it’s important to emphasis once again the truepurpose and mission of PRO Magazine Mexico City and brother business PLATAFORMAPRO. Both have the conviction on helping entrepreneurs and business owners of micro andsmall companies. Customers owning a micro or small company In Mexico represent 99.6%of the companies. In Mexico, 75% of entrepreneurs fail mainly because of administrationand financial issues. In conclusion, entrepreneurs are in need and both PRO and Plataformahelp in their own different way. Although PRO Magazine currently depends onadvertisement, it is this entrepreneurial community that will attract more advertisement. Itis the reason PRO will focus in this customer segment and not companies marketing needsand strategies.This digital platforms revolves around entrepreneurs and small/micro business owners,seeking ways to satisfying their needs. Not only are they the only customer segment, thisplatform objective is to connect. Business providers such as banks and co-works (basicneed for entrepreneurs and young leaders starting their company) and investors (anotherbasic need for entrepreneurs) are a part of the customer segment as well.
At the beginning of the business plan, with a complete thorough research about themedia sector and specifically magazine sector the following conclusion arise. Magazine aswe know are slowly dying. Innovate or die is the clear message in this conclusions. It iswhy this business plan not only focuses in the business expansion but the creation of aDIGITAL platform separate from PRO magazine. Although, they are brother companiesand complement each other, the strategy to manage this new business with a new name isto give a clear message it’s a complete digital platform and not related to a magazine. Inrelation with PRO Magazine Mexico City, digital first is the mindset. From day 1, a newservice will be offered to clients regarding a package of the creation of content inside PROMagazine Mexico City with the addition of a campaign in Google ad words. PRO istransforming itself into not only a media content business but analysts that use outsidetools to implement and make your advertisement or campaign in PRO more effective in anall-digital way.The second research conclusion is regarding the huge need to give support toentrepreneurs in Mexico, especially when the majority of the companies are small andmicro business. Many companies are starting to look at them as a business opportunity.This puts PRO Magazine Mexico City and Plataforma PRO as platforms business wouldlike to participate via advertisement and or sponsorships in our events. This concludes thatPRO is in the right path. Below an example of a news article from October 2017 in Elnortenewspaper that states how CitiBanamex will focus more in entrepreneurs and smallbusiness to allocate more credit, a 13.8% increment.