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Creating a Centralized R&d Department

Essay by   •  April 8, 2018  •  Case Study  •  1,693 Words (7 Pages)  •  282 Views

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Creating a Centralized R&D Department

It might come as a surprise to some employees and others, but I think it became clearer, the shortcomings Bonnier faced in the business and operations. The management began to see the need for innovation due to the recommendations previously given by Ohrvall to restructure its Research and Development department (R&D) to align with the digital age. Ohrvall’s recommendation for change was met with little optimism and major resistance which usually is the case. I speculate Jonas Bonier to be one of the few people that was optimistic of Ohrvall’s recommendation.

In the early 2000’s, when the internet gained momentum and more so with the prominence of social media (Facebook, Twitter and the likes) caused major disruptions in the media industry. As more people moved to the internet for sources, information and content, there was an increasing decline in circulation number, subscription and sales. This was a major concern for the organization and something had to be done to address the issue before it went out of hand.

Nevertheless, when Jonas Bonnier became CEO, he exerted his decision rights to create a centralized R&D department. Bonnier had the objective to innovate by improving the traditional ways the organization handled its business operations. The centralized R&D department was the vehicle in which ideas and opportunities were explored and developed into innovative projects.

There never really existed a central and organized R&D department. Each department was responsible for its own innovation thus projects within departments were sometimes inefficiently coordinated. The ineffective communication and lack of collaboration between departments often caused competition for resources within the organization.

In response to the disruption in the digital world, the R&D team launched a news commentary and debate site, www.newsmill.se, in September 2008, which was eventually nominated for “The Swedish Grand Journalism Prize”. This site differed from traditional practices because earlier on most publishers, asides from useful contact information, only had redundant content from the printed media on their website. However, the news commentary and debate site employed a user created content model very similar to open source where content is sourced from a diverse array of readers and users across as opposed to content emanating from the editors alone. It created a platform for the public to voice their opinions, interact and become more involved with the publisher.

In 2009, the team furthered their work on a digital magazine in response to the magazine not meeting expectations and unsatisfactory digital delivery. The goal was to develop a digital product that customers would readily pay for. This led to the launch of Mag+ in 2011, Mag+ differed from the traditional practices in the sense that it was a move from print magazine to a digital platform. The strategy for launching the digital magazine was in slight contrast with the traditional means of paper advertising. An explainer video was used to illustrate the prototype.

Developing New Products and Services

Bonnier leveraged on the new technologies developed to be the platform for gathering new information. They used the same concept involved with using focus groups and market surveys but took it a step further by illustrating the Mag+ prototype with a video. This made a lot of sense especially because digital media started gaining traction and there was a decline in the utilization of traditional print media. This appealed to a new target audience.

More so because the prototype was a first of its kind and to be launched on a new digital device, the iPad. The video better explained more complex interactions, therefore the users were able to give a more comprehensive feedback. The comprehensive feedback gotten was in turn used to further develop the concept faster, making it more user friendly, accessible, compatible and appealing to customers. This in turn fireproofs the idea and concept from failure like other unattractive digital magazines that was released in the past.

It is more complex and time consuming to obtain this depth of information from feedback by administering surveys. In addition, marketing surveys are generally expensive to carry out because a budget for marketing and hiring people to promote the video would have to be put in place. Again, this approach leveraging on the internet by uploading the video on Vimeo and sending out email invitation to influential media and technology bloggers was very cost effective.

Bonnier's pricing strategy for its digital products

Bonnier’s pricing strategy for its digital products borders around premium and a little on Freemium pricing strategies.

Premium pricing entails keeping the price of a product or service artificially high to encourage favorable perceptions among buyers, based solely on price. It is used to maximize profit in situations where customers are happy to pay more or where there are no substitutes for the product although sometimes its use is intended to exploit buyers based on the assumption that expensive items appear to have an exceptional reputation of quality and luxury Additionally, it is used where there are barriers to entering the market or when the seller cannot save on costs by producing at a high volume.

Bonnier tried to maintain the balance by remaining competitive and not overpricing themselves out of the market. For instance, Mag+ was based on a monthly subscription payment of five hundred dollars per issue. The choice or preferences of data storage falls on the customer. The can decide to store the data on a device with the required capabilities or for a premium, pay an additional fee for Mag+ to host the data. Alongside with data hosting, Mag+ hosted the content via Amazon’s servers, and 250 GB worth of customer downloads are included. Mag+ charged the customer $0.17 per GB of customer downloads. The cost varies based on the kind and size of content included on an issue. This is what the basic subscription package entails but a plan to offer more services was set in motion. The organization was likely to introduce other services that transcends data hosting capabilities.

Freemium, on the other hand is a pricing strategy that entails a product or service being offered for free but money, a premium as it is often called, is charged for extended features, functionality, or virtual goods. Bonnier fits in this pricing strategy in the sense that access to the virtual goods requires a certain amount of money to be paid. For instance, the premium service of fully digitized capabilities in tandem with the unlimited downloads in capacity of two-hundred fifty gigabytes monthly, classifies the product as freemium.

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