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Business World has doubled its cover price and the competition is watching

Have price wars to gain circulation drawn to a close in India's business magazine market?

Last fortnight, the Kolkata-based ABP group's Business World hit the stands with a new cover price: Rs 10, double the cover price it had been selling at for the last five years. That could suggest that business magazines are getting back to the basics of business.

"Now that the market has matured, we believe it's time to increase the cover price to one that reflects the magazine value slightly better," says Sandip Ghose, the ABP vice president who oversees Business World and The Telegraph. "So with the August 9 issue we've `value corrected' the price to Rs 10," he states, adding that the weekly magazine won't become a fortnightly again.

Rivals Business Today and Business India are fortnightly magazines, priced at Rs 10 and Rs 15, respectively. Business Today, a Living Media publication, cut its price to Rs 10 from Rs 15 roughly two years ago. In the late 1990s, Business World cut its price to Rs 5 when it became a weekly.

Both have been watching Business World's move closely but say that they are unllikely to respond. "We are not going to have any knee jerk reaction," says Pheroza Bilimoria, managing director of Business India.

Though executives at Living Media did not respond to Ice World's questions, insiders claim that Business World's price increase will go in Business Today's favour. "At Rs 10, which magazine are you likely to pick up "� a 140-page, high-quality product or a 60-odd-page magazine?" asks a company source.

It's easy to see why Business World has jacked up its price. Media industry sources say that at Rs 5, the magazine would have made losses on its circulation.

Back-of-the-envelope calculations suggest that with an approximate production cost of Rs 11 to Rs 12 per copy, the magazine would be losing Rs 8-9 per issue. This translates into a loss of Rs 36 lakh a month and over Rs 3 crore a year on printing and distribution. With the recent price increase, it is expected to cut its losses by half.

Not everyone agrees with these figures, but a higher circulation can exact a toll on the bottomline in some cases. "Beyond a point, a higher circulation makes a print product unviable. Obviously, Business World's growing circulation must have added to its cost and the cover price needed a revision," says Sandeep Vij, president of Optimum Media Solutions. Besides, Vij thinks that "fighting on the price plank may have been hurting the brand as it came across as a price warrior rather than a business publication."

Business World, however, maintains that its Rs 5 strategy paid off and at 1.46 lakh copies today it is the country's largest circulated business weekly.

According to the Audit Bureau of Circulation (ABC) report for July-December 2003, Business World ranks number one, its circulation having grown by 22 per cent from its January-June 2003 level circulation.

Incidentally, Business Today withdrew from ABC (Business World too withdrew from ABC in the 1990s) and Business India's circulation during the same period is said to be 79,000 copies.

So with the price hike, which is likely to improve its circulation revenue, and with its numero uno position in the ABC pecking order, will Business World make a killing in terms of advertising?

"No way," says a Business Today insider. "It is readership that advertisers look at and we are far ahead of Business World on that count," says the source. Both National Readership Survey (NRS) and Indian Readership Survey (IRS) figures support the contention.

In the IRS round II 2003, Business Today led the business magazine pack with a readership of 7.09 lakh, followed by Business India with 5.73 lakh and Business World with 3.04 lakh.

Business Today's leadership was more pronounced in the NRS where it boasted of a readership of 9.49 lakh; Busienss World was a distant number three with 3.25 lakh. Points out Optimum Media Directions CEO Sandip Tarkas: "For media planning for print, the primary data that's used is readership, though the circulation figures are not discounted. Readership helps break down the target audience."

Adds TBWA's media head Gopinath Menon: "Being a fortnightly, Business Today offers a longer shelf life to advertisers."

Business Today maintains that it is not worried about Business World's circulation. "Thanks to our large readership, our advertising revenue is not only protected but has grown by over 40 per cent over the last year," says the Business Today insider.

According to media industry estimates, Business Today makes nearly Rs 20 crore in advertising revenue a year; Business World's share is estimated at Rs 12 to Rs 15 crore.

The price hike, some media observers think, could eat into the magazine's circulation as well, at least initially. Says Manish Porwal, general manager, investments and new initiatives, Starcom India: "There could be a drop in stand sales and subscription initially but the price rise is enough to recoup that loss."

Punitha Arumugham, head of Madison Media, however, says that the price hike reflects a well-thought-out strategy. Business magazines cater to a well-defined readership and tend to develop a loyal base. So the higher price may not affect its circulation, she adds.

Concludes Business India's Bilimoria: "Though the magazine may lose its price advantage, much will depend on Business World's marketing drive to maintain its readership."