Reader's Digest - The Story of a Magazine

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Case Details:

Case Code : MKTG041
Case Length : 12 Pages
Period : 1996 - 2003
Pub Date : 2003
Teaching Note : Available
Organization : Readers Digest Association (RDA, US)
Industry : Publishing
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Reader's Digest became what the Wall Street Journal was to call 'the greatest publishing success since the Bible.'"

"The Digest simply is not what it used to be. There are still occasional flashes of the old excellence, but now these increasingly rare moments double as disturbing reminders of how much has been lost."

- An Article in the National Review, February 2002.

The Downfall of a Leader

For many avid readers of the largest selling magazine in the history of the world, Reader's Digest (RD), the early 21st century brought in rude shocks. Not only had the flagship product of Readers Digest Association (RDA, US) changed drastically in terms of looks and styling, more importantly, its content just was not the same anymore.

The changes were even being viewed by hardcore loyalists of the earlier format as signs of a dear friend wasting away due to some mystery ailment. Not surprisingly, the global subscriber base of RD came down to 23 million in 2002 from the 1996 level of 28 million.

In US, the subscriber base reduced to 12 million in 2002 from the peak level of 18 million in the 1970s. RDA's profits declined steeply between 1996 and 1998. In 1998, RDA reported a net profit of $ 100 million as against $ 392 million in 1995. The company's revenues decreased by 8% in 1997, coming down to $2.8 billion.

Though RD remained the market-leader in terms of readership and reach in 2002, analysts were quick to point out that the magazine was certainly on a downward slope. Analysts attributed RD's woes to various issues such as the increased use of advanced targeting software by RD's competitors (that helped them easily identify and reach their target customers through mail orders) and the government restrictions imposed on sweepstakes1 (which had been RD's major source of attracting new subscribers). Apart from these, analysts felt that RD's inability to appeal to the younger generations or change with the market trends also contributed to its downfall during the mid-1990s (the average age of RD's reader base was 47 years).

Reader's Digest - The Story of a Magazine - Next Page>>

1] Sweepstakes is a promotional technique through which items of value (prizes) are awarded to participating customers by chance. No purchase or entry fee is required to win a sweepstakes prize. Direct mail sweepstakes promotions provide the customers with a chance to win prizes in return for opening an envelope and returning the entry form to the company.


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