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Supply Chain Management of IPC Magazines Limited

Supply Chain Management of IPC Magazines Limited

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Supply Chain Management of IPC Magazines Limited
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Netra Shetty
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netrashetty
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Supply Chain Management of IPC Magazines Limited - January 10th, 2011

A division of Reed Elsevier, the world's second largest publisher (created in 1993 when Reed International merged with the Dutch company Elsevior), IPC Magazines Limited is the largest consumer magazine publisher in Europe. It has more than 50 magazines in circulation, with its market leaders in the notoriously competitive women's magazine category. While the company continues to explore new readerships, introducing new titles in the science and youth segments in the late 1980s, many of its most popular titles, such as Country Life, Horse and Hound, and Melody Maker, have a long and respected tenure. Sales of IPC magazines comprised just over one-third of the 700 million the U.K. spent on consumer titles in 1991.

Many of the magazines IPC produces were created through the efforts of three English companies, the George Newnes Company, William Odhams Ltd., and Amalgamated Press (later renamed Fleetway), which merged during the late 1950s to form what is known as IPC Magazines Ltd. The George Newnes Company was founded in 1881, when Newnes, inspired after reading a story about a runaway train in a Manchester newspaper, put together the magazine Tit-bits comprised of similar dramatic stories. The endeavor was a great success, and, in order to continue publishing, Newnes opened a restaurant for further financing. Tit-bits circulation rose to 200,000 in two years, the rise fueled by new marketing techniques.

Newnes went on to publish Review of Reviews and Strand, which featured the cases of Sherlock Holmes. Country Life, established in 1897 by Newnes and Edward Hudson, covered culture in rural England and remained a British favorite throughout the twentieth century. Two other Newnes magazines published by IPC are Woman's Life and Woman's Own. Founded in 1932, Woman's Own was given significant media coverage for its role, as described in Reed International's Chapters from Our History, in "campaigning to improve the role of women in the community." The magazine remained popular, selling a remarkable average of 1.5 million copies a year in 1991.

Another IPC predecessor originated with William Odhams, who first published the Guardian--a paper whose primary audience was high church officials--in 1890. Odhams's sons took over in 1896, and renamed the business William Odhams Ltd. Ten years later the well-known financier and publisher Horatio Bottomley suggested the idea for a magazine called John Bull, which became quite popular. In 1920, John Bull Ltd. merged to form Odhams Press Ltd. The company produced several popular titles that were still being published by IPC more than seventy years later.

Odhams' most notable titles were Woman, Ideal Home, and Horse and Hound. Founded in 1937, Woman was launched soon after Britain's women had gained the right to vote and discussed "any and every subject for the domestic and career woman." Furthermore, Woman was Britain's first full color weekly printed by Odhams's high speed printworks. Ideal Home was founded in 1920 by poet and artist William Morris and Captain G.C. Clark, who served as its first editor. In Clark's words, the magazine's mission was to reach "the wide circle of the middle class" and "to strive against the erection of hideous houses." Ideal Home continued providing decorating ideas for each successive generation; the magazine sold nearly half a million copies in 1991. Horse and Hound was founded in 1884, for a true niche market. The magazine strove to use a contemporary approach to a traditional topic, and has maintained the largest circulation of any equestrian weekly, selling an annual average of 160,000 copies in the early 1990s.

Another IPC predecessor was the Amalgamated Press, founded by Alfred Harmsworth in 1888. The publisher initially produced Answers to Correspondents, the first magazine of its kind dedicated to answering readers' questions on any possible subject. Other Amalgamated publications included London Magazine, Woman and Home, Woman's Weekly, and several children's magazines. Created in 1911, Woman's Weekly is the oldest women's magazine produced in the U.K. and sold an average of 1.8 million copies in 1991.

Amalgamated Press, George Newnes, and Odhams Press Ltd. were all acquired by the United Kingdom's largest newspaper publisher, the Mirror Group, during the period from 1958 to 1961. In 1963, the International Publishing Corporation Ltd. was formed as a holding company for the Mirror Group. In addition to owning and operating 29 printing companies, IPC Ltd. produced hundreds of magazines, three London daily newspapers, and several journals.

During the 1950s, several new publications were introduced. The weekly New Musical Express (NME), founded by Morris Kinn in 1952, was the first to print the first top-selling record charts. Following music trends over the decades, NME sold an average of over 200,000 copies a year forty years after its launch. New Scientist was founded in 1956 with Percy Cudlipp as editor. IPC sales of the weekly title in 1991 averaged 200,000 copies a year. In 1958 Women's Realm was introduced with the aim to provide more practical information and advice than any other women's weekly. The goal was met; by 1991 the title sold nearly a million copies a year.

In 1970, the Reed Group--a publisher in the business, commercial, and consumer sectors--and Reed International acquired IPC, retaining the name IPC Magazines Ltd. for their consumer magazines division. According to the Reed International publication Chapters from our History, the group was "a potent force with important leverage over advertisers and sales outlets alike."

Reed's goal for the newly formed IPC was to dominate the consumer magazine market. The firm achieved its aim, especially in the women's weekly magazine sector, receiving little serious competition for twenty years. Competitors generally viewed the costs of financing an entry into IPC territory as too high and the risks as far too great. Some challengers did eventually emerge, however; by the 1980s the publishers National Magazine Company and EMAP created some successful monthly magazines in the women's and youth markets.

Some effects of the IPC virtual monopoly began to surface in the late 1980s. As columnist Harold Lind commented in Marketing, June 21, 1990, "the major drawback of a monopoly is that it tends to be painfully inefficient and slow moving, hurting the public less by its extortionate demands than by the use of its dominant position to keep out desirable innovation."

Whether or not IPC was deliberately keeping out desirable innovation was debatable. One measurable outcome following the company's twenty-year dominance, however, was the decline in women's weekly magazine sales. According to Lind, consumer sales fell by just over 50 percent, while advertising decreased by an even greater amount. Ironically, although many of IPC's women's magazines had been founded in the early 1900s to meet the changing values and needs of its readership, the overall cultural upheaval of the late 1960s and 1970s, and the changing roles of women in particular, probably played a part in the women's magazine market drop. Some U.K. observers and consumers began to think that the entire sector of the industry was in a terminal descent.

Publishing began to change rapidly in the mid-1980s as various European magazine publishers moved into the U.K. to test their marketing skills in a different venue. Though it took large scale financing, publishers successfully moved into IPC territory and by the late 1980s effects were apparent. After a brief overall sales increase in all consumer magazines, the high profile titles soon gained buyers while the lesser known magazines suffered losses. IPC, like other publishers, began scrambling to find more niche markets to control.

IPC's biggest threat was the German company Gruner + Jahr (G & J), a heavy hitting publishing concern with a great deal of capital. In 1986 Gruner and Jahr successfully introduced Prima into the British market, a magazine already successful in a number of European countries. The entrance of German companies into the British market was a preview of future conditions under the then developing European common market. IPC entered a challenging phase in it history, undergoing a series of changes some of which the company initiated, others of which were necessary defensive reactions to stiff competition.

The company introduced a number of new titles testing out a variety of market niches. IPC hoped that its new Essentials publication would rival Gruner & Jahr's Prima magazine for an extended European readership. When IPC scheduled the magazine's introduction for the end of January 1988, G & J responded by changing the sale date of Prima to compete directly with IPC's entry. IPC then moved up its new magazine's launch date to the second week of January.

IPC moved aggressively to purchase Thompson Magazines in March of 1988 for 28 million. While the British publisher National Magazines Company was invited to bid, Germany's G & J was not. The Thompson acquisition gave IPC two mass market magazines, Family Circle and Living, with a combined circulation of close to one million. More importantly, however, as reported by David Reed in Marketing, "The acquisition of Family Circle and Living by IPC is almost certain to change the way magazines are sold, and therefore read."

Reed referred to two changes. First, he noted, the two new acquisitions were the only magazines in the U.K. to have an exclusive contract for sale in supermarkets. If IPC chose to make its other magazines available to supermarket buyers, a potentially huge consumer audience, company sales could rise well beyond those of its competitors. Second, the move of acquiring two mass market titles hinted that IPC intended to enter the larger European market. The earlier a publisher gained a foothold in European markets, the more prepared that company would be for the common market.

IPC's next move was to give Family Circle and Living a trial period of marketing via news agents in addition to supermarket distribution. The magazines had been offered exclusively through supermarkets since 1965, and although IPC's move was intended to achieve a larger market, it also allowed for the possibility that supermarkets would react by selling competing mass market magazines.

As competition in the women's magazine market heated up, IPC made several decisions. The company acquired Carlton Magazine's Look Now and merged it with IPC publication 19 in July 1988, displaying both magazine names on the cover for the first several issues. IPC and Carlton were both owned by Reed International, a relationship IPC considered incidental to the merger.

The IPC/Carlton magazine Riva was introduced in late spring 1988 and promptly cancelled in mid-October. The budget for Riva's launch was the largest ever, and the magazine was cut before half of the funds were used. IPC publishing director Nigel Davidson had spoken accurately when quoted in the July 28, 1988, Marketing: "The market in the past 18 months has changed dramatically and everything we do has to be reassessed." The year 1989 posed more changes and once again IPC brought out a new title. Me was designed to compete with the German weeklies Best and Bella, which were aimed at women of an average age of 29.

One advantage IPC had over its competitors was loyal advertisers who had been with the women's titles for years. Such a relationship was subject to change, however, as IPC's weeklies had been experiencing a twenty-year decline in sales. Circulation of Woman and Woman's Own was still strong in February of 1989 at just under one million for each title, but the competitive pressure was not lifting.

IPC reacted to competition in 1989 by redesigning all of its "big four" titles. Woman was given a practical emphasis to distinguish it from Woman's Own. Both magazines appealed to a younger woman consumer. At the same time IPC restyled Woman's Realm to attract a segment other than the more mature reader of IPC's Woman's Weekly. The Women's Journal logo, design, and typeface were changed to capture the older, more glamorous market.

At this time IPC Magazines took a step noted industry wide. The company, which rarely hired outside advertisers, chose one for Women's Journal. The once dominant magazine had dropped in circulation by nearly 25 percent over the previous five-year period. As Liz Levy wrote in Marketing, "the magazine environment is changing fast. A blitz of new titles has knocked that company's big four out of the comfortable knowledge that they are habit purchases."

A front page story in the February 15, 1990, Marketing featured the headline "Sales Plummet for IPC Titles." The decline in circulation came from titles across the board, including the women's big four, Essentials, and Chat, a popular gossip magazine acquired in 1989. Even the old standbys Country Life and Country Homes felt the hit. IPC quickly decided to revamp Chat as well as Ideal Home, the market leader in its segment. By May 1990 the company cancelled its monthly title Women's World, launched in 1978, due to declining ad revenues. Once again IPC turned some energies toward new titles, creating Vox to appeal to the 20- to 30-year old male, and by mid-1991 it was redesigning Women's Realm, which had become the company's lowest circulation women's weekly.

In its extensive efforts to sell magazines, IPC's group incentive department tried an innovative promotion which was a great success. Commissioning a company to develop an attractive and practical packaging solution, IPC enclosed imitation pearl earrings as a free gift in a special issue of Women's Weekly, which sold out quickly.

With the appointment of John Mellon as chief executive officer in 1987, IPC hoped to address some of its marketing problems. By 1991 the company was regarded as having kept in step with--or even a step ahead of--the industry changes. A revamped classified advertising department increased revenue, and new accounting technology helped boost company profits as well.

IPC continued its drive through the 1990s to control carefully defined markets in the U.K. and internationally. In the United Kingdom, IPC's Puzzle Weekly was a good example of exploiting a niche market. The company also entered in a joint venture with German publisher Burda to produce Practical Parenting and other magazines as well. IPC's Essentials was the first U.K. magazine to be licensed in overseas markets. By the early 1990s, TV Times sold an average of 2.5 million copies a year. As Mellon summed up in the July 4, 1991, Marketing, "It's difficult for us to expand in the U.K., but with Europe we've only scratched the surface."

IPC maintains two subsidiaries. IPC Telemarketing is a leading U.K. provider of Audiotex services in the categories of Information, Entertainment, Direct Marketing, and Transactions. Through joint venture agreements with print and broadcast media, marketing, and advertising clients, IPC Telemarketing works weekly to update its portfolio of Audiotex services. IPC Marketforce is the U.K.'s largest distributor of consumer magazines, delivering 54 IPC magazines as well as 121 titles for 20 other publishers. IPC Marketforce pioneered the use of Electronic Data Interchange (EDI) with its suppliers and customers and aims to be the best circulation management firm in the business.

The IPC Classifieds division, a recent addition to the IPC fold, has, according to a June 1992 company publication, "developed the most sophisticated operation of its kind in European consumer publishing." Using state-of-the-art telephone and advertising systems, IPC Classifieds sells 33 titles, and has opened up new marketplaces for its parent publisher.

Magazine divisions at IPC are divided into four categories. The IPC Weeklies Group produces six leading women's weeklies, two television guides, and a coupon insert published seven times a year. The division sells seven million copies weekly, reaching an audience of 22 million, and employs approximately 500 people. SouthBank Publishing Group, with a staff of 400, produces ten monthly magazines and one bimonthly title in the women's and home sectors. The Holborn Group publishes 19 titles, evenly split between weeklies and monthlies, as well as one bimonthly title for the youth, music, and various niche markets. The Specialist and Leisure Group, with over 200 on staff, produces twelve highly regarded magazines in the weekly and monthly sectors.

Principal Subsidiaries: IPC Telemarketing; IPC Marketforce.
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