GMAT Essays (AWA)

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The following appeared in an announcement issued by the publisher of The Mercury, a weekly newspaper:

"Since a competing lower-priced newspaper, The Bugle, was started five years ago, The Mercury's circulation has declined by 10,000 readers. The best way to get more people to read The Mercury is to reduce its price below that of The Bugle, at least until circulation increases to former levels. The increased circulation of The Mercury will attract more businesses to buy advertising space in the paper."

The author claims that due to the low priced Bugle newspaper that started five years ago, the circulation of The Mercury reduced by 10,000 readers. A possible strategy to counter react this competition is by introducing a pricing strategy where The Mercury price is lower than that of The Bugle to increase circulation and to attract more businesses to buy advertising space.

These claims made by the author, that is the publisher of The Mercury, have some certain flaws that make the strategy unrealistic. First of all the author mentions the decline in reader's main reason being the low pricing of The Bugle. Low pricing indeed attracts more attention of people since everyone wants to save in this world where expenses are increasing day by day. However, relying on one main reason is not sufficient enough. Pricing has a large psychological effect on consumers. People usually consider a high priced product to be of high quality and would rather purchase that product with the perception in their minds that it is worth the price they are paying. However, this is not true in some cases. Sometimes low priced products also provide good or better quality that gives maximum satisfaction to consumers. It is possible that The Bugle despite being a low priced product provides the same quality or maybe even better than The Mercury which is why readers have switched their preferences. Moreover, if we talk about reduction in circulation one must not deny the fact that living in a technology dominated era most people have the alternative to read online news on their laptops, tablets and smart phones and perhaps they don't really need to buy The Mercury or The Bugle or any other newspaper in that case.

Secondly, the author claims that The Bugle started five years ago that was after The Mercury was still in the market. Being a market leader requires one to have a competitive advantage that makes the product or service stand out. Despite being low cost it is possible that The Bugle entered the market with a unique selling proposition which The Mercury lacked. This could be in the variety the newspaper has to offer. Maybe it has added sections or magazine that accompany or maybe coupons for various services. People will go for the product that gives them maximum benefits that they can receive in the price they pay. The Mercury being a market leader may have not devised a successful strategy that could have foreseen a possible competitor which led to a decline in their circulation. Moreover, it is possible that The Mercury did not improve their content to attract more readers.



Coming to the strategy of cutting the price of The Mercury to increase the circulation seems to be a risky decision. Since The Mercury has reduced circulation it can be assumed that revenues have declined as well hence, putting the newspaper in a vulnerable position. Using a price cut strategy could be damaging for the company. Here, we talk about the consumer psychology again. If a product or service lowers its price it is a common understanding that the product is faulty or the company has lowered its quality. It is possible that the strategy may backfire causing a sharp decline in their current readers and hence causing decline in profits as well. It would be advisable to probably re-launch the product with a new look or better content to attract more readers.

The conclusion made by the author is confusing. In the premise the target audience mentioned by the author is referred by readers only. Since newspaper is read by most of the population it can be assumed that the readers include the mass market. Plus the author says that using the strategy they will be able to attract more readers but in the conclusion he or she mentions business buying advertising space. The conclusion fails to support the premise made by the author since it does not mention that the main reason it wishes to increase its circulation is to attract business's to buy advertising space. If that is the primary reason then the author needs to revise its strategy and try to find reasons in which it can increase its reader circulation in the targeted segment. Maybe it can enhance its business section which will be an attractive segment for companies.

In sum the author fails to address the situation at large. In order to make the argument strong the author needs to provide certain statistics such as the decline in readers during the past five years and circulation in comparison with The Bugle etc. Moreover, the strategies to be used by the company needs to be realistic and should be beneficial for the company in ways that the profits and reputation is not affected negatively. Without proper structure and evidence it will be hard to convince people in the argument presented by the author.