The future of VG’s business model
October 3, 2008 by marek.miller
Rune Danielsen, the commercial director of Norwegian VG, tells about the company’s strategy concerning it business model and revenue channels.
Rune Danielsen
VG is one of the most important advertising tools for advertisers in Norway. It is the biggest newspaper off- and online. Readership exceeds the level of 30% of the total population in Norway every day (2 million readers).
Some statistics:
- in 1994 – the circulation of the printed VG was 386,137 copies, and readership reached 1,3 million readers
- in 2002 – circulation 390 510 copies, and 1,5 million readers
- in 2007 – circulation 309, 610, and 2,0 million readers
What can be seen in these statistics is that the main concern of VG are the circulation numbers (decreasing since 2002). The other problem VG is facing is how to reach the younger audience as the majority of the readers are the oldest.
The perspective for the future of VG is that it should be considered the leading provider of news, entertainment and sport. Ambition of the company is to reach between 50-60% of the total population in Norway till 2012.
In order to sustain a profit in the shrinking market, the company has two plans:
- Innovation of the product (to give more to readers),
- Improvement of production efficiency (cost-cut plan).
VG believes in the trditional marketing theory and believe in Philip Kotler’s 4P’s (price, product, promotion, and place) as 4 filars of the company. It concentrates however on price and products. This is why new profittable products are introduced (like VG7 on Sundays), focusing on what is interesting in different seasons. VG also addresses its products also to advertisers. The magazines go with the newspapers, but the plan is to seperate the mags from the paper, so they could live longer.
The price of the newspapers is increased by 40% on the days with the new magazines.
Effect of price and innovation resulted for VG in the profit rise by 28%.
Marketing and promotion helped VG become the strongest brand in Norway and keep this position for the past 20 yrs. The campaign slogan has consequently been: “The day will not be the same (without VG)”.
VG is one of the top 10 products among all categories. VG has the best place in the shops, right at the cash desk.
BG is ditributed in 12,000 places. During the summer time or on special occasions it increases to 15,000 (door sale, boat sale). At the moment a new model of subscription for the oldest readers of VG is being prepared.
The company is quite optimistic about its future. VG hopes to keep the revenues on approximately same level till 2012. With ‘approximately’ as the key word, as Rune Danielsen stressed.
The sollution on how to keep the position with the growing online audiences for VG is new online intiatives. 46% of Norwegians between 15-29 years of age prefer VG online. The company wants to launch a new niche product each year:
- in 2005 the vektklubb.no was launched, a social service for overweight people to control their weight
- in 2006 the e24 – a service for business news was launched
- in 2007 the nettby.no, a social service for teeneagers ( more than 750,000 Norwegian teenagers since the launch last year – it means it covers 70% of all Norwegian teenagers)
- in 2 months a new product will be launched.
[...] insight of the Norwegian VG’s strategy concerning it business model and revenue channels was brought by Rune Danielsen, the company’s commercial director. Read here about the most [...]