NA0052

Trome-News for the Base of the Pyramid

Guillermo D'Andrea, IAE Business School Austral University
Javier J O. Silva, IAE Business School Austral University
Marcruz Prado, IAE Business School Austral University

On a hor morning in late

Dcccmbcr 2001, thc El
Comercio Publishing
Company's Managcmcnl
Commim:c hcld a meeting
in Lima, Pcru. Thc rnmos-
phcrc :u the meeting was
quite difl-Crcnt than it had
becn six months bcfon~,
whcn El Comercio had
launchcd li"ome, a nclvsp<l-
pcr for low-incomc fami-
lics. Scc Exhibit 1 fOr El
Comcrcio's organization
chart.

Average Daily lssue

Sal!!;s (in 000 s copies)
Jun- Dec 2001

General Manager Csar Pardo Figucroa 'li.1rncr opcncd
thc meeting with an announccmcnr, "Dcspitc our cxrcn-
sivc rescarch on n.wlcrs' bchavior and our marketing
plan, sales ovcr thc past six months havc increasingly
f.1ilcd ro mcct our cxpcctations. 1don'r know what wc are
going ro do. 'Xle just can't lct our readers, adverriscrs and
sharcholders down. \Y/e musr remember our actions can
jeop<1rdize El Comercio's reputation and leadership."
Bernardo Roca Rey Mir Quesada,
Publications and Multimedia
Director, venmred, "\Y/e shou!d refor-
mulare our comem srylc, bccausc 1
bdieve we're not reaching readcrs as
we hopcd we would. Pcrhaps our
vocabulary and dcsign are not the
righr oncs."
Ral Hcrnndt't, 'liome's Director,
demandcd, "Why don't we stick to a
style that wc know worlcs~ 1' m surc
our rcaders want comem rhat is simi-
lar ro those oflCrcd by our compcti-
tors, with a focus on scx ami violcnce."

Copyright 2009 by rhe Cflse Research ]ouma/1 Guillermo D' Andrea, Javier Silva, and Maricruz Prado.
The aurhors wish ro rhank Pedro Jos de Zavala, E! Comercio's senior marketing manager, fr his coopcr-
ation and considcration in preparing this case. The aurhors <1lso wish to thank d1c anonymous rcvicwcrs
who provided vcy uscful comments and suggcstions, and Lew Brown for his insightful commcnts and rcc-
ommcndations that mengrhcncd rhe case. An earlier version of rhis case was prescnrcd at rhe North
American Case Research Associarion annual meeting, Octobcr 30-Novcmbcr 1, 2008, Durham, Ncw
Hampshirc. This case was prcparcd by thc authors for rhe sole purposc of providing material for classroom
discussion. Ir is not intended to illusuarc eirhcr cffcctive or ineffecrive handling of a managcrial siruation.

11mne-News for the Base of the Pyrarnid 1

 r\vcwg~ D>1i
Sab(nOO
J1U1'" Dct: 2

Howcver, Alberto Cendra Astiz, New Business Senior
Manager, disagreed, "I rhink we can't change our con~
renr. Anyway, 1 fed our cudery promotion is not catch-
ing readers' attention as expected. Besidcs, strcet salcs-
men's initial refusal to sell our papcr hampcred our
launching. Whi!e most of our ads werc on tbe air, thc
newspaper was not avai!able on thc streetsl We should
relaunch ,?ur paper with more advcrtising and new pro-
motions
Pedro Jos de Zavala, El Comercio's "Cicarly, we necd to take steps to reme~
Marketing Senior Manager warned dy sales drops. !'m surewe'll figure it out
thc othcr membcrs of thc committec, and makc ir work," assertcd Csar Pardo
"Look, with no circulation, 1 can't sdl Pigucroa.
any advenising! Wc havc to consider
whcrhcr this papcr is rcally viable. As
saks drop, so docs our appeal for
advcrtisers. What if we misundcr~
srood our rcader segmems and endcd
up launching the wrong paper?"

EMPRESA EDITORA EL COMERCIO (EEEC)

Founded in May 1839, El Comercio, the oldest newspaper in Latin America, served as
the backbone for Empresa Editora El Comercio (EEEC). For most of its life, rhe news-
paper had belonged ro the Mir Quesada family. Since inception, ir was committed ro
independent journalism, with no polirical affiliation-a rather uncommon nait in Latin
America, where most newspapers usually conveyed rheir polirical preferences. El
Comercio's hist01y merged with that of the owners' family, who were always involved in
the newspaper's management, ensuring that its track record and rigorous style turned it
into Peru's most reliable newspaper and one of its most influential media.
EEEC's scope focused on El Comercio's printing, publication and disnibution. The
newspaper was an undisputed leader among top (A and B) socio-economic strata
(SES),' as measured by unaided recall and most frequently read newspapers. Exhibir 2
shows Peru's demographic data and describes its capital city's socio-economic composi-
tion.
Since 1999, the company had invested in severa! media-press, cable TV, Internet
and radio-businesses, becoming rhe nation's largest multimedia corporation and offer-
ing advertisers multimedia contracts to exploit its synergies. In 2001, the company had
introduced a new newspaper, Trome, for lower (C, D and E) SES. Company revenues
carne from rlll'ee majar sources: newspaper sales, advertising and optional products.
In late 2001, El Comercio and 7ivme copy sales accounted for 23.6 percent of the
company's revenues. Both newspapers were distributed indirecdy-by 1,200 canilla? in
Lima, the nation's capital-and directly. The indirect channel sold 86.8 percent of the
newspaper's circulation, while direct sales ro stores like supermarkets, gas stations, con-
venience stores and subscriptions accounted for the rest. El Comercio, with its unique
format-it was rhe only standard-sized, broadsheet (600mm by 380mm or 23.2" by

2 Case Research Journa1 Vo1ume 28 lssue 3 and 4 Summer/Fal1 2008

15") newspaper-and its S/2.00 price (S/0.50-S/1.50 above all other newspapers in
Lima), largely attracted upscale readers:' However, on Sundays, its circulation and read-
ership doubled as lower socio-economic segments (C, D and even E) scouted its pages
looking for job and business opportunities listed in its classified ad section. 'Home was
a popular newspaper, designed ro reach lower-income leve! households, printed in
tabloid formar;' and selling for S/0.50 from Mondays through Saturdays.
Advertising sales accounted for 57.5 percent of B Comercio's revenues, but the coun-
try's overall advertising market that neared US$189 million in 200 1 had fallen by 6.4
percent as compared to the year befo re. More notably, 200 1 advertising investments
were 44.6 percent below their 1997 total, US$341 million, as a result of a severc eco-
nomic downturn. 5 In an attempt to maintain its market share, most media had lowered
their rates, cutting clown on their revenues. Peru's major advertising media included
national tclevision (capturing 43 percent of overall domestic advertising spending),
newspapers (33 percent), magazines (2 percent), radio (12 percent), and others, such as
street ads (lO percent).
EEEC offered severa! additional cultural and entertainment content products,
including books, magazines, brochures, CDs, printed materials, multimedia and video
products, which accounted for 19 percent of its sales in December 2001, up from their
5.1 percent share in December 1999. These additional products added value to its core
products and contributed to boost the company's revenues.

LIMA's NEWSPAPER MARKET

Peru's capital city, Lima, accounted for 68 percent of the domes tic newspaper copy mar-
ket. Less than 41 percent of Lima's population read at least one papcr every day,
although the nation's capital boasted nearly 22 different newspapers. While there were
no official data on printed media copies, advertisers and advertising agencies rclied on
the information collected by newspaper and magazine readership studies conducted by
market research firms like CPI-Compaa Peruana de Investigacin-for their print
advertising decisions.
Lima's market featured three prominent press groups: Empresa Periodstica Nacional
(EPENSA), which published the Ojo, Aj, Como, andEl Bocn newspapers and boast-
ed a 41 percent share of overall copies; EEEC, owner of El Comercio and livme news-
papers and holding a 24 percent share of market copies; and, final! y, Impresora Peruana,
owner of La Repblica, B Popu/a; and Lbero, with a 15 percent copy share.
Among its Lima-based competitors, El Comercio's leading rival was EPENSA. Active
in journalism for over four decades, this company's sttategy zeroed in on B, C, D and
E strata. Unlike EEEC, it boasted a large readership in other provinces outside Lima. Its
first paper was Conw, initially published in Tacna and later expanded to Peru's major
cities, including Lima, where it was launched in 2000. As noted by Pedro Jos de Zavala,
"When EPENSA found out that we were about to launch a popular paper, it decided
to introduce this newspaper in arder to compete with El Comercio in Lima."
In the 1990s, EPENSA embarked on an intensely dynamic phase. lt launched Aj,
which soon became the most successful newspaper on show business, and El Bocn,
which quickly turned into the best-selling sports newspaper. EPENSA also launched
Ojo, soon to become its flagship publication. Ojo was an easy-to-read tabloid that relied
on simple language andan emphasis on images, although it lacked the extreme sensa-
tionalism of popular newspapers and its price-S/1.50-exceeded regular tabloid
pnces.

1i'01ne-News for the Base of the Pyramid 3

 In order ro boost Ojo sales, rhe company srarred ro give away collecrible booklers as
part of its promorion efforrs. However, rhis strategy later backfired, as, from then on,
the company had ro support sales wirh promotional activities requiring significant
investments that undermined product profitability.
While both companies competed for copy sales, EPENSA barely held a 1Opercent
share of the newspaper adverrising market, as large advertisers used newspapers ro reach
higher-income readers in rhe A and B segmenrs, who preferred El Comercio. Thus, 60
percenr of EPENSA's revenues carne from Correo, Ojo, Aj, and El Bocn copy sales,
while adverrising sales accounted for 26 percenr of irs revenues and oprional producrs
(books, magazines and eOs), for 14 percent.
In rurn, newspaper segmenration hinged on conrent, pricing, and rarget audience.
Exhibir 3 shows category and brand shares of overall readership, as well as prices, while
Exhibir 4 presenrs a categorization of readers based on expected benefits.
"Serious, rraditional" newspapers included El Comercio, La Repblica, and Ojo. El
Comercio led this group, capturing 19 percenr of overall newspaper readership in 200 l.
These newspapers covered several issues-current events, politics, sports, entertain-
ment-with an objective, rigorous approach. Their readers largely belonged to high-
and middle-income segments, with an intermediare or higher educarion. Most were
businessmen, execurives or employees. Wirhin rhis segmenr, El Comercio srood in a cat-
egOly of irs own, as ir fearured al! rhe information on currenr events, polirics, sporrs and
enrerrainment, coupled wirh an oursranding classified ad secrion.
In a lower price range, a large group of newspapers, including inexpensive serious
newspapers, sports newspapers as well as enrerrainmenr papers and rabloids-borh col-
lectively referred to as "popular"-were soldar around S/0.50 a copy for easy access by
al! socio-economic sttara (SES).
The "inexpensive, serious" newspaper segmenr emerged in 2000, when Lima wit-
nessed rhe launch of Con~o. This newspaper had a significant circulation in other
Peruvian ciries. Ar thar rime, rhe market was reeming wirh sensarionalisric rabloids like
To, Men, El Chino, and orhers, locally known as chichd newspapers. They focused on
show-business and police news, and their widespread publication had been partly fund-
ed by Alberto Fujimori's government from 1990 through 2000. Selling at S/0.50 and
printing mostly poltica! contents in a tabloid formar, Correo grew rapidly, introducing
a new segment in Lima. During its first year, it managed to secure a 4 percent share,
increasing ir ro 9 percent over its second year. Its readers belonged ro B ande popula-
tion segments and were characterized as progressive, con cerned about their environment
and keen on enhancing thcir families' living conditions.
Another group that commanded 10 percent of the market included sports newspa-
pers, a segment that had shown no variations in 1998-200 l. EPENSA's El Bocn and
Impresora Peruanas Lbero were rhe leading players in rhis segmenr, where EEEe was
not involved.
A category of newspapers wirhin rhe popular segment focused on "entertainment"
news and had experienced fast growth in recent years. While rhey targered e, O, and E
segments, rhey appealed mostly to youngsters and women with their common-language
coverage of show business, entertainment and police news. eompeting newspapers in
this segment included El Popular, Ajd, and Trome, launched in 1984, 1994, and 2001,
respective! y.
Newspapers were primarily sold by 3,700 existing canillas (95 percent of copies)
and, ro a lesser extent, in supermarkets, grocery, and convenience stores (4 percent) or

4 Case Research Journal Volume 28 lssue 3 and 4 Summer/Fall 2008

through subscriptions (l percenr). Evey day, canillas (street salesmen) would pick up
newspaper copies from EEEC's 24 distribution centers around Lima. A lag recorded
copy deliveries, including the number of copies handed out ro and sold by each salcs-
man on a daily basis. eomperirors would park rheir rrucks near EEEC's disrriburion
cenrers ro deliver rheir papers ro rhe very same salesmen.

TROMES LAUNCH

The crisis rhar swepr across Peru in 1997, eroding rhe population's purchasing power
and driving overall sales clown, eventually hit E1 Comercio, causing, for instance, irs share
in Lima ro drop from 25 percent ro 19 percent. Ir was precisely rhen rhar EPENSA
launched its Como in rhe capital city, where ir quicldy grew after its launching. See
Exhibir 5 for macroeconomic indicators.
Pedro Jos de Zavala recalled
Back then, we knew rhere were rwo distinctive business models-products rhat priori-
rized advertising revenues designed for higher-income sectors, and low-priced products
for lower-income segrnents, whose business primarily hinged on circu!ation. EL Comercio
belonged to the first group, and, therefore, rhe only way ro expand coverage was to
develop a product rhat enabled us ro reach new population segments and ro avoid rhe
risk of focusing on a single product.

To assess rhe opporrunity ro oHcr a product for segments e and D and ro idenrifY
readers' needs unsatisfied by other newspapers, a research study was commissioned to
Apoyo Opinin y Mercado-' The purpose of this study was ro determine the majar bcn-
efits expected from 50-cent newspapers, as well as ro outline leading popular newspa-
pcrs' image and posirioning. In November 2000, severa] focus group srudies included
25- ro 55-year-old men and women from Limas e and D socio-economic srrata, who
read and/or boughrAj, El Chino, El To, or El Popular newspapers, ro unearrh rheir pur-
chasing and reading habirs, rheir behavior in newsstands as well as readers' met and
unmet needs.
Study findings revealed rhat:

Popular newspapers' readers sought media that offered cntertaining informarion in

an assorted, ingenious, non-vulgar fashion to read in their free time. For rhese pop-
ulation segments, a newspaper's enrerrainment quality was crucial, especially for
leisure reading.
Readers in low-income segments also expected newspapers ro support pracrical
improvements for rhcir families' living conditions. They valucd an adcquate cover-
age of hcalth, food, education, and work-related news. Their customay saving of
articles and engagement in promotions proved this disposirion.
Among currenr newspapers, Aj rankcd ar rhe rop, while B Chino garnered critiques
for irs crime-relared arricles. Both matched readers' expectations wirh rheir light,
simple, concise and slighdy roguish style. However, these media did not sarisfY a
growing demand for a newspaper wirh a closer connecrion ro families and living
condirions. El To triedro mcet that demand with its sexual cducation brochures but
failed ro get rid of its huid tabloid reputation, with explicit contents rhat madc ir
"difficult to take home," as one reader put ir. lnstead, these segments primarily
bought Ojo for its collectibles, alrhough rhey viewed ir as too long, too serious and
too expcnsive (Sil above rhe others). El Popular, in turn, enjoyed strong appeal on

Ii-ome-News for the Base of the Pyramid 5

 account ofits colorful and contrasting presentation, but it had only managed topen-
etrare older segments that agreed with its open opposition to the former govern-
ment.
A significant fact was that a large share of low-income segments decided what news-
paper to buy at the point-of-sale. As revealed by focus groups, people seemed to have
two or three options in mind and finally preferred one over the others as a result of
issue specifics, such as a headline, the picture of the day, promotions or collectibles.
"We choose among the papers we can buy with 50 cents," explained a reader.
Promotions seemed instrumental to boosting newspaper sales and to their position-
ing as sensitive to their readers' needs. Yet, the most popular newspapers in this seg-
ment, Ajd and El Chino, offered fewer promotions than other papers, like El To,
with fewer readers. A sound promotion had ro amount ro an excellent invesrment,
an opportunity ro acquire essential household, children or school-related goods.
Nonetheless, the most distinctive finding revealed that al! focus groups-regardless
of their gender, age, or SES-agreed that 50-cent newspapers were unsuirable for
home reading. Among other reasons, their explicit pictures of semi-naked women in
sensual poses threatened children's morality and offended mothers' and wives' sensi-
tiviry. Despite this fact, sorne male focus groups claimed to read the paper at home,
after cautiously removing any pornographic sections.
In turn, male interviewees of al! ages and income segments revealed that they read
S/0.50 newspapers at newsstands and places allowing for a quick browse of head-
lines, such as workplaces-especially, at lunch break-or on public transportation
to and from work. For most male interviewees, reading the newspaper at work pro-
vided a little distraction befo re returning to their jobs; it also afforded them the quiet
required to focus on the news-something they felt they could not do at home, with
their children around, particularly when the paper included pictures of nearly naked
women.
Sorne female interviewees claimed that they often read two and even three newspa-
pers a day, as severa! family members purchased different newspapers in their house-
holds. One no red, "My husband is a driver, and he buys Ajd and brings it home. M y
fifteen-year-old son brings home El Chino or whatever paper featuring Azucena, his
favorite model. So, 1 get to read two newspapers at home almost every day."

Exhibir 6 presents other conclusions drawn from this market research study. Based
on these conclusions and considering its own experience and track record, the compa-
ny designed a new popular newspaper with superior contents and appealing promotions
ro reach low-income households. lt would focus on these segments' interests-enter-
tainment as well as quick and concise infonnation. Exhibir 7 shows severa! pictures that
illustrate these segments' life and customs.
Once it had designed the new paper, the company retained Apoyo, Opinin y
Mercado's services for two additional studies. lntended to test the paper's design, the
first study consisted of eight focus groups with 25- to 50-year-old men and women
from Lima's C and D socio-economic segments, who bought Ajd, El Chino, El To, or
El Popular newspapers. These groups met during the last week in November and the
first week of December. Most interviewees liked the new newspaper, but sorne adjust-
ments were necessary as ir had met more enthusiastic approval from older respondents,
while younger focus group participants argued that it seemed a bit dull, lacking a little
"spark'' and color. This perception grew stronger as the new paper was compared to
more serious popular newspapers, like Con~o, and led ro a new positioning-midway

6 Case Research Journal Volume 28 lssue 3 and 4 Summer/Fall 2008

between serious papers and tabloids, trying to avoid a more vulgar sryle, but closing in
on the most entcrtaining newspapers.
After adjusting the new design, a second study in May 2001 testee! newspaper accept-
ance, launch campaign impact and the promotion planned for frequent readers. This
study encompassed nine focus groups, made up of 25- to 50-ycar-old men and women
from metropolitan Lima's e andO SES, who boughtAj, El Chino, E! To, orE! Popular
newspapers. A participant stated, "It is a good paper; it doesn't have too much slang or
dirty language. Forme, it is un usual to fi11d so many different tapies 011 one page. Articles
are straight to the point. This paper is going ro succeed. Ir is just as cheap as a tabloid,
but it gives you more value. People have already grown tired oflying, pornographic news-
papers."
In Ju11e 2001, the company lau11ched Ti-orne to catcr toe andO SES, in a11 effort
to expand media coverage to reach new populario11 sectors. 11e of its new readers
poi11ted out, "I think its 11amc is very suitable for this 11ewspaper. Tvrne mea11s ace,
champion, someone who's the best at what he does. Telli11g someone that he is a trame
is a complime11t; it is like saying he's the coolest. And the same goes for this paper-it
is the bcst paper among the 50-cent newspapers."
To serve this 11ew audience, the company built a new editorial infrastructure wirh its
own writing team. This editorial structure was very small, with little impact on compa-
ny overhead. As a result, this new product hada positive issue co11tribution margi11. B
Comercio streamlined the new paper's printing, distribution and marketing processes.
Figure 2 shows the resulting scheme. A former Ojo 11ewspaper editor, Ral Hern11dez,
was hired to manage Trorne. A middle-agcd, middle-class, well-educated man with vast
experience in popular tabloids, Hern11dez seemed to fully support 7ivrne's goal to
become an entertaining, popular newspaper that kept ~------~~~~--------~
rhe population informed. He was ro focus 011 newspa- Figure 2 Organizational Structure
per contents, seeking to use a clear, straightforward sryle
based 011 everyday language-informal, yet not vul-
gar-and reader-friendly writing. Hern11dez actually
matched the readership profile associated with Ojo, a EDITORIAL EDITORIAL
newspaper widely patronized by middle and low-
income segments that srruck a balance between serious t
PRINTING
journalism and popular appeal. Still, he was a formal
ma11, but he often used an old-fashioned jargon-typi-
cal of Lima's middle-class neighborhoods in the past-
t
DISTRIBUTION
that did not match 7ivme's intended readership. For
instance, he referred to housc maids as Natachas, a term
t
MARKETING
that was drawn from a very popular soap opera in the L _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

1970s.
In addition to newspaper content and layout, front-page design was extremely
important, as many paper purchases derived from its impact. For illustrative purposes,
see a sample of an Aj newspaper issue in Exhibir 8 anda 11-ome issue in Exhibir 9. An
editorial followed the front page, and, next, carne thc articles on current events, politics
and police-related news. A spotts section, followed by informatio11 for homemakers,
completed a typical Tiorne issue.
The front page always featured a promotion-initially involving a cutlery ser-in
addition to headlines on outstanding sports, police, politics and entertainment news
written in colloquial language. The newspaper's second page included editorials and

11-orne-News for the Base of the Pyramid 7

 useful information. The following sections focused on current political and poli ce news
-highly valued sections for targeted readers. Colorful pictures coupled with entenain-
ing, imaginative anides reponed news truthfully, avoiding lurid and ghoulish elabora-
tions. This approach served as a means to both educare as well as preserve readers and
their families. While front-page headlines used colloquiallanguage ro lure readers, news
contents featured a more formal, objcctive stylc. The spons section included anides on
Pcruvian athletes succeeding abroad and international socccr stars. Finally, the paper's
last pages focused on show business news, cooking tips and recipes, health-related arti-
cles, entenainment, and useful information for homemakers in general.
Ti'Ome's back page included a section called las malcriadas ("spoiled girls"), with pic-
tures of women taken from magazines published by other companies. This section was
the object of extensive debate befare the newspaper's launch, as Tiome was to be, first
and foremost, a family paper. These pictures of models actually responded to focus
group findings, and chosen photographs held an aesthetic appeal without bordering on
pornography. The idea was to please sorne men, avoiding any offense to women and
children.
The company planned a special promotion to support Ti'Ome's launch, in an effon
to retain readers and, at the same time, to gain access to households. Every day, the
newspaper's front-page contained a numbered coupon. Buyers could trade in five
coupons and pay S/2 to get top-quality cutlery sets at 15 points of sale scattered across
Lima. The complete silverware sct included soup and tcaspoons, dinnet and dessert
forks, as well as dinner and butter knives. Out of the 1.92 million utensils purchased,
Trome still had 660,000 left. Management needed ro determine whether rhe remaining
silverware was ro be used to extend this promotion, which had cost S/904,000. See
Exhibir 1Ofor a summary of promotion results.
Tiome's first-year editorial overhead amounted to S/l.l3 million, wbile its market-
ing (cxcluding promotion costs) and administrative expenses stood at an estimated
S/565,000 and S/678,000, respectively. The company expected physical distribution to
be 3 perccnt of sales, whilc calculations pegged variable manufacturing costs (papcr and
ink) at S/ 0.164 per copy. Peru's overall sales tax accounted for 19 percent of retail prices.
While advenising sales had been expected to total S/1.5 million, their current estimares
did not exceed S/916,000.

DISTRIBUTION STRATEGY

The choice of a distriburion srrategy caused some debate. Alberto Cendra Astiz, new
business manager, argued for the creation of a new channel, featuring a specialized sales
force for lower socio-economic segments, while Antonio Cabrera, Circulation Manager,
believed Tiome should be sold by the same salesmen who sold all other papers, ranging
from El Comercio, with its higher-income target, toMen, in tended for lower population
segments. lndeed, newspaper salesmcn naturally segmented their offerings based on
location rather than demographics. Thus, salesmen servicing arcas predominantly pop-
ulated by top A and B socio-economic segments mostly carried high-end newspapers,
including so me papers for low-income sectors, and vice versa. Cabrera argued that using
a new channel or some selected salesmen could cause rifts with rhe street salesmen
union. As a result, managemcnt dccided to use thc samc channel that distributed El
Comercio.
Print media companies had an arrangement with the local Newspaper Salesmen
Federation for fee payments: 25 percent on Mondays through Saturdays, and 30 percent

8 Case Research Journal Volume 28 lssue 3 and 4 Summer/Fal1 2008

on Sundays. However, a few years back, an agreement had been forged to ha ve new news-
papers pay 30 percent and 35 percent, respectively. Accordingly, the Fedcration expected
EEEC to pay a 30 percem and 35 percem fee for Ji-ome distribution and demanded a
written agreemem ro that effect. In April-May, the campany rejected both demands and
offered ro pay the standard fce applied to El Comercio and Con~o disrriburion-that is,
25 percent and 30 percent. lt also refused to sign an agreemem on the grounds that
Federation lcaders used those agreements to obtain other benefits and as the basis for
future claims.
Antonio Cabrera, the forty-year-old Circulation Manager, who had vast experience
in consumer disrriburion but had been in the company for a short time, could not per-
suade either EEEC's General Manager or its New Business Manager to agree to
Federation demands. The latter stated that rhe Board was already aware of rhis decision,
which made it unchangeable. Federation leaders were clearly unhappy wirh rhis rurn of
events, and ir became clear that reraliatory measures could hamper Timne's launch on
ruesday, June 20, 200 l. The newspaper's Circulation Department formulated a contin-
gency plan with free-lance salesmen hired to sell Ti-ome.
On its launch date, only 50 percent of l-ome's circulation was distributed among
regular and free-lance salesmen. As days wcnt by, regular newspaper salesmen increas-
ingly wanted to sell 71vme beca use they "were losing fees." They knew the new paper
featured a widespread advertising campaign anda silverware promotion that had awak-
ened people's interest. However, Impresora Peruana and EPENSA threatened to cancel
their 30 percent and 35 percent fee agreemem for new newspapers if the Federation
gave in to EEEC, further strengthening the union's position. This latest development
held great significance for Tivme's success, as its launch adverrising campaign continued
and poten tia! readers could not find the new newspaper at points of sale.

DECISION-MAKING TIME

Ata meeting held at company headquarters, EEEC's Board discussed severa! options to
salvage Tiome. Sales were clearly showing that something was amiss: of the 60,000
papers printed every day, only 36,000 were sold.
Csar Pardo, analytic and cost conscious anda f:on of chess and historie fiction, won-
dered out loud, "Perhaps we made a mistal<e when we ser our goals, and we need to
revise thcm. The question is, which ones?''
For Bernardo Roca, a possible solution lay in reformulating the paper's content style
based on readers' preferences. He made his point, "In my opinion, the paper we have
printed so far is too stuffjr for this segment. lt doesn't have nearly enough content on
entertainment and local news to appeal to these readers."
Ral Hernndez argued, "If we look at our competition and what readers are actu-
ally reading, it's quite clear that we need to focus more on sex and violence, as they do,
because that is what our readers want."
In turn, Pedro Jase de Zavala wondered if ir was really possible to maintain the
paper's originally intended positioning, or whether ir was time to give up on this idea
and withdraw the paper from the market. "But, if we pursue that approach, we are
going to lose our advertisers, because they will never advertise in a paper that is all about
sex and violence! Ir is true, though, that this idea doesn't exactly thrill El Comercio's
adverrisers. Perhaps we should look for a different type of advertiser-smaller compa-
nics that relate more to this market. Yet, how do we sell that kind of advertisement?"

li-ome-News for the Base of the Pyramid 9

 Nonethcless, Alberto Cendra bclieved the paper should be re-launched, entering
into an agreement with the Newspaper Sales Force Federation and changing promo-
tions. "Our cutlety promotion is not turning out as expected. lnstead of building read-
ers' loyalty, we are stocking cutlety in our warehouse. We need to find something that
our readers appreciate-an opportunity to meet their needs. We have to refonnulate
this strategy to reach out ro our readers.''
Bernardo Roca was getting upset: "We can't go on thinking about promotions! We
have no money for them, and they will not provide a long-term solution if we don't
adjust Tiome's contents."
The meeting seemed headed for a dead end. Csar Pardo motioned to put an end
to it.
Gentlemen, I know we are worried about rhis issue; we need ro rake steps immediarely.
1suggest we take the rest of the day to think about our next moves, bearing in mind your
individual input and the conclusions drawn from the studies conducred one anda half
months afrer launching. We'll meet again tomorrow morning, right here, to make our
decisions and plan our nexr sreps.

See Exhibir 11 for the most salient findings of the Market Research Unit's quantitative
study and Exhibit 12 for the insights revealed by a qualitative study commissioned to
!MASEN.

Exhibit 1 EEEC Organization Chart

Gebera! Mnger Pb!i~hirJg Director

El-Comercio Director EJCmercloPru.c_orri
Csar Pardo_ Figeroa Tuiner I~niardo RQGa Rey Mir Quesada
1
New Businesses Trome Director'
El Cmercip Editor
Alb:;ito_-cendra'ASUi Raul Hernn'dez

Marketing
Pedro Jose de za:vaia
L Trome Editor

DiWibullon
Aritonlo_Ca!;lrera

Adin. &'Finan~

Operatlons_

Hm8n_Resources

Source: Company documents

1O Case Research Jo urna! Volume 28 lssue 3 and 4 Summer/Fall 2008

Exhibit 2 Demographic Data on Peru and Lima's Socio-Economic Composition

1. MAP OF PERU
General lnformation
Total area: 1,285,216 km' (496,225 sq. miles)
Lima's area: 35,892 km (13,858 sq. miles)-i.e., 3 per-
cent of Peru's overall area.
Total population: 26.1 mili ion
Uma's population: 7.2 miHion
Per-capita weighted average income: US$305.45
8RAZlL
Urban population accounted for 72.3 percent, and rural
L.\!iCA9)VE
O mOJ METRES population accounted for 27.7 percent of the total national
population .

t>ESA(WACERO

Source: www.peru.info.com

2. l!MA'S POPULATION SOCIO~ECONOMIC COMPOSITION

Estimated Size
SES Description Households People
In 'OOOs % In 'OOOs %
A 64.4 4.1 250.5 3.5
A1 High 15.7 1.0 68.0 0.9
A2 Middle-High 48.7 3.1 182.1 2.6
B 260.7 16.6 1,118.1 15.6
81 Typical Middle 100.5 6.4 445.3 6.2
82 Lower-Middle 160.2 10.2 674.5 9.4
e 502.6 32.0 2,312.1 32.3
C1 Rising Low 207.3 13.2 914.3 12.8
C2 Typical Low 295.3 18.8 1,399.7 19.5
D Very low 551.3 35.1 2,596.7 36.3
E Extreme Poverty 191.6 12.2 879.6 12.3
Total 1,570.7 100.0 7,162.3 100.0
Source: Apoyo, Opinin y Mercado, July 2001.

Ii-ome-News for the Base of the Pyramid 11

 Exhibit 2 (cont'd)
3. TRANSPORTAT!ON MEANS IN EACH SES IN LIMA*
.... . ..
Total. .. T0ta.1. ... .. . .. .. SES ..... .

f!s]lon~es i .. . . . . . .;
.. ...

/ 2000% 2001.% Ao/o B% C.% o.% 1 E%

FOR PERSONAUFAMILY USE

Bicycle for sports/leisure 25 19 55 28 22 12 8

Car 13 16 96 47 11 2 o
Truck 3 3 29 3 2 1 o
Motorcycle 2 2 6 2 2 1 2
FORWORK
Car 4 3 14 2 4 2 o
Tricycle 2 2 o 1 2 2 4
Bicycle 3 2 o 1 2 2 o
Ligh1 truck 2 2 5 2 3 o o
Heavy truck 1 o 2 1 o o o
NONE 58 62 2 34 58 77 87
Sample size 880 833 48 143 259 284 99
Weighted distribution 100% 100% 4.1% 16.6% 32%1 35.1% 12.2%

4. APPLIANCE WNERSHIP IN EACH SES IN liMA*

> .. . . . ............. Totill Total ..... ...... . se$ ........................... .....

Responses < 2000.% 2001% A%.. B o/. C% O._% E%
Stove 99 99 100 99 99 99 97
Gas stove 77 77 71 90 92 67 47
Kerosene stove 41 41 3 10 34 58 64
Electric stove 8 8 56 17 7 1 1
Television 96 95 100 100 98 94 83
Cable TV with remole control 55 59 100 94 73 40 18
Black & white TV 48 43 21 27 31 56 67
Color TV withotu remole control 24 21 25 31 25 17 3
Cable TV 23 23 96 59 22 5 1
Radio 90 89 98 92 92 85 81
Radio with cassette player 63 53 77 60 52 51 43
Stereo system with CD player 27 31 98 71 31 15 2
Radio without cassette player 26 27 51 36 22 22 32
Stereo system without CD player 24 19 52 25 24 13 5
Walkman 19 14 67 32 14 4 2
Electric iron 84 81 98 97 90 76 46
Blender 70 70 100 97 83 55 32
Refrigerator 60 61 10 95 82 40 8
land line telephone 46 44 98 85 50 24 3
Calculator 46 40 90 66 47 26 12
Camera 38 35 90 69 45 14 4
Fan 35 33 74 62 42 16 9
Sewing Machine 31 29 45 53 34 19 4
VHS recorder 28 28 91 64 31 10 1
Electric mixer 22 24 93 63 24 5 1
Typewriter 30 23 44 42 31 9 6
Mobile telephone 22 22 88 45 23 6 2
Prepaid (card-operated) mobile phone 16 16 51 33 17 6 2

12 Case Research Journal Volume 28 lssue 3 and 4 Summer/Fall 2008

Exhibit 2 (cont'd)
4. APPUANCE OwNERSH!P IN EAcH SES IN LIMA* (coNr'o}

Total Total SES

Responses 2000% 2001% A% 8% C% D% E%
Subscription-based mobile telephone 8 8 60 16 5 o o
Washing machine 20 20 98 64 15 1 o
Electrical !loor cleaner 20 19 92 61 13 1 o
Etectric rice poi 20 18 84 47 17 4 o
Hot water boiler 15 17 100 51 13 o o
Electrical hot water boiler 14 15 87 47 11 o o
Gas hot water boiler 2 2 20 4 2 o o
Vacuum cleaner 16 17 100 58 8 o o
Musical instrument 17 15 50 34 13 9 5
Microwave oven 15 15 93 47 8 2 1
Computer (PC} 13 14 88 44 8 1 o
Toaster 12 12 81 39 7 1 o
Food processor 10 10 43 25 7 5 4
Electric shower 9 9 17 36 7 1 o
Video games/Nintendo/Play Station 11 8 49 15 10 2 o
Otyer 7 8 69 25 3 1 o
Heater 4 7 52 20 4 1 1
Electric heater 4 5 47 16 2 o 1
Gas or kerosene heater 4 2 11 6 2 1 o
Internet connection 5 7 71 19 1 o o
Video camera 4 4 46 8 2 1 o
Discman 3 4 32 10 2 o o
Cassette player without radio 4 3 8 9 2 1 1
Knitting machine 1 2 4 3 2 1 o
Sample size 880 833 48 143 259 284 99
Weighted distribution 100 100 4.1 16.6 32 35.1 12.2
Source: Apoyo, Opinin y Mercado.
Method: Quantitative.
Technique: Personal doortodoor and telephone interviews.
Sample: 804 cases and 29 additionar interviews to confirm sample validity.
Date: June 22-July 13, 2001.

nome-News for the Base of the Pyramid 13

 Exhibit 3 Brand Shares of Overall Readership, Copy Sales and Advertising
1nvestments

1. CATEGORY ANO BRAND SHARES OF VERALL AEADERSHIP ANO PRICES

'e,< .. ... ........ . 1998 .. 1999 2000 2Q01 <

Monc!ays~
>. Prices. .
Sundays
Traitional Serious Newspapers 44% 46% 42% 33% Saturdavs
El Comercio 28% 28% 25% 19% 2 3.5
OJO 9% 11% 9% 8% 1.5 2
La Republica 7% 7% 8% 6% 1.5 2
lnexpensive, Serious Newspapers 4% 9%
Correo N/A N/A 4% 9% 0.5 0.5
Popular Newspapers
ENTERTAINMENT 19% 17% 19% 22%
AJA 16% 13% 14% 12% 0.5 0.5
Trame N/A N/A N/A 5%
El Popular 3% 4% 5% 5/o 0.5 0.5
TABLO!DS 15% 15% 14% 11%
El Chino 7% 7% 6% 5% 0.5 0.5
El Tio 4% 4% 4% 4% 0.5 0.5
Extra 4% 3% 3% 2% 0.5 0.5
El Men 1% 1% 2% 0.5 0.5
Sports Newspapers 9% 10% 10% 10%
El Bacon 5% 5% 5% 5% 0.5 0.5
Libero 4% 5% 5% 5% 0.5 0.5
Averaged Annual Readership
1,877.7 1,853.6 1,732.3 1,951.9
(in mi!lions of people)

Source: CPI, Newspaper Readership Study, Lima 1998-2001

EEEC's circulation area

2. BRAND SHARES OF 0VERALL COPY SALES

1999 2000 2001

Traitional, Serious Newspapers
El Comercio i3.3i% 12.96% 11.30%
OJO 8.87% 8.38% 5.90%
La Republica 3.89% 4.66% 3.40%
Serious, lnexpensive Newspapers
Correo N/A N/A 14.40%
Popular Newspapers
ENTERTAINMENT
AJA 14.60% 12.63% 14."10%
Trame N/A N/A 5.80%
El Popular 6.08% 8.80% 5.70%
TABLO!DS
El Chino 9.35% 7.31% 4.70%
El Tia 4.80% 7.43%
Extra 4.91% 4.70% 2.00%
El Men N/A 3.06% 4.20%
Sports Newspapers
El Bacon 5.84% 5.49% 5.20%
Libero 7.20% 5.45% 5.70%
Source: CCR, Auditing Study of Newspaper Sales at Points of Sale, Lma 1999-2000
Apoyo, Opinion & Mercado, "Estudio de Auditora de Venta de Diarios en Puntos de Venta, Lima 2001."
Note: In 2001, an average of 4,590,432 copies were sold every week.

14 Case Research Journal Volume 28 lssue 3 and 4 Summer/Fall 2008

Exhib! 3 (cont'd)
3. BRAND SHARE OF ADVERTISING INVESTMENT IN NEWSPAPERS

1999 2000 2001

Traitional, Serious Newspapers 70.6% 71.1% 73.7%
El Comercio 59.2% 58.9% 61.7%
OJO 4.8% 5.2% 4.5%
La Republica 6.6% 7.1% 7.5%
Serious, lnexpensive Newspapers 0% 0% 1.0%
Correo N/A N/A 1.0%
Popular Newspapers
ENTERTAINMENT 4.6% 4.7% 3.4%
AJA 3.3'% 3.6% 2.6%
Trome N/A N/A 1.7%
El Popular 1.3% 1.1% 0.8%
TABLOIDS 1.8% 2.5% 1.9%
El Chino 0.6% 0.7% 0.5%
El11o 0.0% 0.2% 0.1%
Extra 1.2% 1.6% 1.3%
El Men N/A 0.0% 0.0%
Sports Newspapers 3.1% 4.2% 3.4%
El Bacon 2.7% 3.5% 1.9%
Libero 0.4% 0.7% 1.5%
Source: Media Check, Lima
Note: In 2001, overalt media investments totaled US$192 mi!tion, with 32 percent devoted to newspapers.

71-ome-News for the Base of the Pyramid 15

Exhibit 4 Reader Segmentation by Expected Benefits Preferences
lnformed Cosmopolitan Traditional, Accountable Aspirational Utilitarian lndifferent Entertained
67% of these readers belong toA and B Nearly hall belong to the B SES (47%) 53% belong to the C SES; 62'% belong to !he C SES; this group 56% belong to the C SES;
this group includes the largest share while 42% belong to the C SES; Equal shares of men and women; holds the largest share of lowincome significan! shares of women and
SOCIAL ANO of A-SES people (27%); 65% are 57% are women; 68/o have a They reside in the suburbs, people; equa! shares of men and young people; poor education
OEMOGRAPH!C men; 66% goes to or went to higher education degree; 60% do not especially north of Lima women; significan! share of young
FEATURES college; 56% work; Large share work-they are housewives or people (31%); 82% have no higher
business executives and owners- students; 33% are middle educaton
more than in other segments; 40% management employees
live in residentlal areas in Lima
Demanding; friend!y and self- Conservative and male chauvnist, They are insecure and prefer to Lacking in character and self- lnsecure but demanding; loya! to brands;
confident; they !ike to make but reasonable; se!f-confident and follow others; rather unfriend!y, !oners; confidence; they like to conforrn to interested in fashion; frequent fast-food
decisions; they want to be informed; demanding with their purchases; they prefer to stay at home; impulsive and follow others; very sensitive lo restaurant patrons; not interested in
PSYCHOGRAPHIC innovating in their product choices; they are not impulsive buyers; not buyers, but price-sensitive; interested price; not interested in fashion and culture and curren! affairs
PEOPLE low price sensitlvity; this is the interested in fashion; they like in fashion; they like to be dstinctive brands; they practice sports-soccer;
segment that spends the most on outings and cultural events; they indifferent to curren! affairs
entertainment away from heme; are concemed about their
they enjoy the theater, books, as community
well as classical music and rack
16% ot overall newspaper readership; 14% of overall newspaper readership; 21% of overall readership; they read A third (33%) of overall newspaper 16"/., of overall newspaper readership;
they read the paper five times a week; they read the paper four times a week; the paper five times a week; readership; they read the paper they read papers four times a week;
NEWSPAPER a large share of readers have their interested in culture, educational and interested in business information, four times a week; interested in interested in entertainment, amenities,
READING paper delivered at heme by canillas; tourism news, as wel! as information economic and business news, sports, job and economic ads; and female topics; the ideal newspaper
HABITS greater subscription penetration; on other provinces; they value serious, economic and job ads; the ideal they value amenities, colors and should be entertaining, dynamic, hip and
interested in economic and business reliable information newspaper should be entertaining, raffles easy toread
news; they value unbiased reporting, dynamic, hip, and easy to read
variety, and entertainment
NEWSPAPER Frequent readers of El Comercio; El Comercio, though not as El Comercio, followed by Ojo They prefer popular newspapers like They prefer popular newspapers like
PREFERENCES they also read Gestin frequently as lnformed Cosmopolitans Aja, El Chno, or El Popular, as well as Aja, El Chno, or El Popular, as well as
Ojo and sports papers lke El Bacon Ojo

Sample: Men and women, aged 18 or more, in socio-economic strata A, B and C, who read a newspaper al leas! once a week.
Sample size: 1,1 00 interviews.
Source: Apoyo, Opinon & Mercado1998.
~~----
Exhibit 5 Macro-Economic lndicators
1' VERALL ANO SES MONTHLY INCOME (IN US$)* 2. HOUSEHOLD INCOME IN METROPOLITAN LIMA AREA

TOTAL SEL A SEL B SEL C SEL D SEL E

3. L!TERACY ANO AEADERSHIP RATES IN METROPOLITAN LIMA (IN MILLIONS OF PEOPLE)*

1Jorne-News for the Base of the Pyramid 17

 Exhibit 5 (cont'd)
4. HOUSEHOLD MONTHLY EXPENSES*

250 US$
190
200 176167
150 .
o 19981
100 . ,. 1999
50- 23 19 18 12 10 9 o 2000
o
Food Educatlon Transportatlon Telephone Electrlclty Water

5. AVERAGE HOUSEHOLO EXPENSES (IN US$, EXCHANGE RATE: US$ 1 ~ S/3.50)

rotal
2000
US$
Food 167 155 603 223 138 108 68
Education 43 73 522 193 67 23 14
Transportation 40 46 172 75 41 28 23
Telephone 19 38 120 43 25 21 15
Electricity 18 20 83 32 19 11 9
Water 9 10 44 16 9 6 6
Sample Size 880 833 48 143 259 284 99
Weighted distribution 100% 100% 4.1% 15.5% 32% 35% 12.3%
Source: Apoyo, Opinin & Mercado, Socio-Economic Segmentation Study, July 2001.

18 Case Research Journal Volume 28 lssue 3 and 4 Summer!Fall 2008

Exhibit 6 Major Conclusions Drawn from Apoyo, Opinin y Mercado's Market
Research

SUGGESTIONS
Number of pages . 24 pages accepted.
For sorne, additional pages should be separated from the newspaper's
main body and should feature useful heme or education information.

.
Front page Direct, easy-to-understand language, no vulgar slang used.
Lively colors .
. Adequate layout (no clutter) .
Headlines on curren! issues driving purchase decisions at POS .
Pictures of girls Latn models in bikinis, thongs or veils-more sophisticated than curren!
offerings.
Sports information Soccer primarily---only older individuals mentioned horseracing as more
interesting.
. lnterest in learning about Peruvian soccer stars playing abroad .
Police news Sample individuals liked this topic, with color photographs-avoiding gory
information images.
Credible, objective news reported in an entertaining fashion .
Useful services Food prices;
. Utility service interruptlon announcements;
. Courses at universities or institutes;
Missing persons .
Amenities Highly appreciated .
Crossword puzzle .
Other games .
Sunday attractions . Emp!oyment c!assified ads, cooking recipes, schoo! news, tradltional medi-
cine articles.
Promotions . Credibilty risk, raffles viewed as unreliable.
Coupons, vouchers to exchange for something practica! viewed as most
appealing.
Method: Oualitative.
Technique: Focus Groups.
Sample: Men and women, aged 25 through 55 years, in socio-economic segments C and D, who
read and buy Aj, El Popular, El Chino, and El To.
Focus Group Dates: Second and third week in November, 2000
Source: Apoyo, Opinin y Mercado, Lima, November 2000.

liome-News for the Base of the Pyramid 19

 Exhib! 7 Lima's Lile and Customs
Outside wall of Lima's Engineering Schooi-
Disp!ays of this kind are very common on Uma's
walls. Many socia! and cultura! events-primarily
concerts and popular festiva!s-are informa!!y
advertised in chaotic disp!ays with bright colors-
typical in Pre-Columbian art-to catch the eye of
passersby. This has become the standard aesthetics
for !ower-income segment communications, differing
radically from the style appealing lo higher SES.

Mercado Ceres-A typical scene in Lima: lots of

people, lots of colors, anda kind of fear of vodthat
characterizes most popular settings. This picture
provides another examp!e of communications
addressing lower income segments, while it also
shows Peruvians' ethnic characteristics.

Source: Lima Capital, Estilos de la Gran Urbe, EEEC, 2007.

Note: To view these photographs in their original colors and to gain a better understanding of Peru's culture and typi-
cal colors, tog into http://www.iae.edu.ar/SiteCollectionDocuments/lnvestigacion/Trome-AnexosFotos-Eng.pdf

20 Case Research Journal Volume 28 lssue 3 and 4 Summer/Fall 2008

Exhibit 7 (cont'd)
Slums and squatters-Peru's extreme poverty
ref!ects on its capital city, where a !arge share
of the population !ives in alarmingly precarious
conditlons. Their lives are plagued by poverty,
no utilities, no sanitation. The color contras!
between houses in these slums and the signs
shown in the pictures above is very eloquent.

Canilfa-Newspaper street salesmen work non

stop from five in the morning through six in the
afternoon, when they have completed their
collections. In this case, El Correo holds a pre-
eminent position in this cani/Ja's display.

Source: Lima Capital, Estilos de la Gran Urbe, EEEC, 2007.

'Home-News for the Base of the Pyramid 21

 2. SHOW BUSINESS

"He spent 700k bucks a month!"

3. CURRENT EVENTS 4. PROMOTION

"Japan won't let go of Fuji that easy'' "Aj gives 2,500 dollars to deadbeaat fan"

Source: Company documents.

22 Case Research Journal Volume 28 Issue 3 and 4 Summer/Fall 2008

Exhibit 9 Trame lssue Layout and Contents (June 28, 2001-Launch Date)
1. FRONT PAGE 2. SHOW BUSINESS

Pucho quema colchn

humo enfra a chifero ....,___,.
,._,_"
__,,_._,_.,___ .,._,.~,'(

1~'~'*' ~~ , ';
"tn: t /k ~-.,~

ATt SALlO
CON n n:
fN At10 .\
PURI\Gt.4\

;L>I ~ML;

"~"-'/! 1

"Magaly sticks up for Missy Gisela"

3. CURRENT EVENTS 4. MALCRIADA

Banco de M~1tcnales t1ene a ,.

miles col;ados ele deudotas

th ;j[' -~ , 1);!:-.\ iilt'''"

c)h!t'"S P"::h .: )! d:t<:(,

"Construction Materials' Bank traps thousands in humongous debts"

Source: Company documents.

Tiome-News for the Base of the Pyramid 23

Exhibit 1O Trame Evolution
1. CUTLEAY PROMOTlON IN JUNE 20, 2001 ISSUE

ij'
Mtale cuchara y llvese
gratis 24 finos cubiertos

.~

,_.,..,,,
"~"'~""'""--~ '

"Dig in and get a 24-piece silverware set for free" "Straight from Europe lo your table-for free, no raffles"

2. PROMOTION RESULTS

Silveiware Purcllased Traded in Balance

Spoon 274,286 271,246 3,040
Butter knife 274,286 200,742 73,544
Knife 274,286 201,246 73,040
Fork 274,286 104,262 170,024
Tea spoon 274,286 104,061 170,225
Dessert fork 274,286 104,365 169,921
Total 1,920,002 1,260,208 659,792

Source: Company documents

24 Case Research Journal Volume 28 Issue 3 and 4 Summer/Fall 2008

Exhibit 11 Quantitative Study Findings
1. TROME BUYER PROFILE*

Gender SES Age

TOTAL
Male Female e 1 DIE 15-25 26-37 35-50 1 51+
Buys Trome at home 33% 52% 48% 45% 1 55% 30% 26% 27% 1 17%
Sample: All 1788 interviewees.

2. PuRCHASE FReaueNcv*

Gender SES Age

Segment Frequency % Male Female e DIE 15-25 25-37 38-50 51+
% % % % % % % %
Low Once 10.00
57 43 43 57 28 29 27 16
2-6 times 40.40
Moderate 7-20 times 27.00
50 50 47 53 36 25 23 16
20-30 times 9.10
High more !han
13.50 44 56 45 55 21 20 32 27
31 times
Total 100.00 52 48 45 55 30 26 27 17

Sample: All 582 interviewees who bought Trame.

3. REASONS TO BUY TROME FOR EACH 8UYEA SEGMENT*

CuriosityiNoveltyl lnformation
News/Contents CutleryiCoupons Low Price
New Paper Quality
Low 34% 22% 3"1% 11% 9%
Moderate 34% 32% 13% 20% 12%
High 17% 62% 6% 21% 7%
Total 32% 30% 21% 16% 10%

Sample: All 582 interviewees who bought Trome.

4. TROME PURCHASES VS. THER NEWSPAPERS*

TOTAL Newspaper helshe stopped buying

Aj El Chino Ojo Correo El Popular El To El Comercio
Helshe stopped buying
49% 29% 15% 15% 11% 7% 7% 6%
another newspaper

Sample: All 582 interviewees who bought Trome.

Methodology: Telephone interviews with structured questionnaire.

Sample: Men and women, aged 15 or more, in Lima's socio-economlc segments C and D/E.
Date: First fortnight in August2001
*Source: Market Research Unit.

'.ome-News for the Base of the Pyramid 25

Exhibit 11 (cont'd)
5. REASONS TO 8UY TROME. FOR EACH SEGMENT*

Gender SES Age

TOTAL
Mate Female e D/E 15-25 25-37 36-50 51+
Cutlery/coupons 30% 23% 38% 27% 33% 30% 32% 28% 31%
Curiosity/novelty/new paper 21% 25% 16% 28% 15% 21% 21% 23% 18%
Low price '10% 8% 12% 10% 10% 11% 9% 12% 8%
To check out its contents 10% 12% 8% 8% 11% 7% 14% 8% 11%
News 9% 8% 10% 7% 11% 7% 7% 9% 14%
Front-page headline 5% T'/o 3% 5% 5% 2% 2% 8% i%
Superior information/sound reporting 5% 5% 5% 4% 6% 6% 3% 5% 6%
Advertising 4% 6% 3% 5% 4% 5% 6% 5% 2%
Variety 4% 4% 4% 6% 2% 4% 4% 5% 4%
For information 4% 2% 6% 3% 5% 5% 5% 3% 3%
For sports news 3% 6% 1% 3% 3% 6% 5% 1% 1%
For a relative 3% 3% 4% 3% 4% 5% 5% 2% 2%
Serious news reporting 3% 2% 3% 3% 2% 2% i% 5% 3%
More information than other papers 2% 3% 2% 3% 2% 2% 1% 5% 2%
News on politics 2% 4% 0% 3% 1% 2% 2% 1% 4%
Short articles 2% 3% 0% 3% 1% 1% 2% 2% 4%
Tips 1% 1% 1% 2% 1% 2% 1% 1% 2%
To look for a job 1% 0% 3% 1% 1% 2% 1% 1% 0%
Entertainment 1% 1% 1% 1% 1% 2% 1% 1% 0%

Sample: All 582 interviewees who bought Trome.

6. REPEATEO PURCHASE INTENTION AMONG TROME 8UYERS*

SES
Do you plan to continue buying Trome? Total
e D/E
Yes 85%. 83% 87%
No 8% 11% 6%
Unknown 7% 6% 7%

Sample: All 582 interviewees who bought Trome.

7, PURCHASE INTENTION AMONG NON- TROME BUYERS*

SES
Do you planto buy Trame? Total
e D/E
Yes 50% 46% 54%
No 38% 42% 35%
Unknown 12% 13% 11%

Sample: All 1,206 interviewees who did not buy li"Ome.

Methodology: Telephone interviews with structured questionnaire.

Sample: Men and women, aged 15 or more, in Lima's socio-economic segments C and D/E.
Date: First lortnight in August 2001.
*Source: Market Research Unit.

26 Case Research Jtunal Volume 28 lssue 3 and 4 Summer/Fall 2008

Exhibit 12 Majar Conclusions Drawn from Qualitative Study
Trame was viewed as a newspaper in an intermediate category between formal, traditional news-
papers and entertainment, or sensationalistic tabloids. This intermedia! e positioning resulted from
its objective news reporting, avoiding slang in headHnes and gory pictures, and less police-related
information, coupled with an accessible price.
When asked lo indicate Trome's differentiating factor, study participants mentioned ils variety,
referring to the diversity of tapies covered. lnformation diversity, however, did not drive partici-
pants to view it as a family newspaper, as it was perceived as a newspaper for adu!ts.
Participants did not spontaneously characterize Trame as a useful newspaper, which denoted that
either this characlerislic was not viewed as especia!ly valuable or it was not clearly associated
wilh it.
To analyze Trome's offering, study participanls were asked to imagine it as a person. In general,
Trame was described as a person who wanted lo talk about everything, rather formal and grave,
but friendly. In sorne cases, il was viewed as a male, while other participants associated it with a
woman-specifica!ly, a homemaker. This associalion was reinforced by the newspaper's initial
promotion.
Trome's language choice was viewed as an attempt to stress its popular nature, but this was not
a trait closely associated with other newspaper characteristics.
According to participants, newspaper sections seemed to lack "zest," an additional "flavor" offered
by other newspapers.
One of the most criticized features was Trome's front page. 11 was viewed as not attractive
enough to drive impulsive purchases. Participants indicated that it provided too much information
on tapies, and, therefore, did not trigger readers' curiosily. In addition, its graphic features were
considered unappealing. A newspaper could catch people's attention through pictures or head-
lines, and, in most cases, Trame was failing lo do so on either front.
In spite of a policy to respect sections, study partic'1pants felt that each Trome's section arder was
not adequate.
Methodology: Focus Groups.
Sample: Men and women, aged 25 or more, from low-income sectors.
Dates: July 31 through Augusl13, 2001.

Source: IMASEN SA.

Trome-News for the Base of the Pyramid 27

 NOTES

l. Socio-Economic Sttara (SES) were used as a key variable for information screening.
SES referred ro a significant number of people sharing economic and social traits
that distinguished them from other groups. A specific SES was assigned to each
household by adding rhe scores from five measurements rhat preved ro provide reli-
able and valid information ro characterize household socio-economic features. These
variables induded household head education, household head occupation, washing
machine ownership, deaning help, house fas:ade, and number ofbarhrooms. Results
dassified local popularions in ro five segments-A, B, C, D, andE.
2. Street newspaper salesmen. The first time a street newspaper salesman in Peru was
heard shouting the name of the paper he was selling was in 1867. This sale method
was so successfi.!l that it was quickly adopted by other newspapers, leading ro a new
source of employment.
3. SI stands for soles, Peru's currency. In 2001, the exchange rate was US$1 = S/3.50.
4. Typically, tabloids were printed on 380mm x 300mm (15" x 12") sheets. This news-
paper formar was widely used because ir facilitated reading, as compared ro broad-
sheet formats (600mm by 380mm or 23.2" x 15"), preferred by more serious news-
papers, like Great Britain's Times, or the Berliner formar (470mm x 315mm or 18.5"
x 12.4") used by France's Le Monde. The term tabloid commonly referred ro news-
papers concentrating on sensational or lurid news, as the first newspapers of this
kind were printed on this smaller formar.
5. Peru's economic downturn since 1997, characterized by a public deficit nearing 2.5
percent of its GDP, was compounded by a political crisis that followed President
Alberto Fujimori's resignation after his controversia! second election. A video footage
was broadcasted showing the administration's lntelligence Service (SIN) head,
Vladimiro Montesinos, bribing severa] country officials and businessmen to support
the government that was already vested with extraordinary powers.
6. Chicha newspapers were known for thcir vulgar, lurid sensationalism. Starting in
Lima, rhis rype of press expanded to other provinces in tabloid formar. Ir fearured
colloquiallanguage, colorful front pages with large headlines and huge pictures of
barely-dad women.
7. Peru's largest and most renowned market research and polling agency, which also
opcrated in Bolivia ami Ecuador. lts arcas of expertise induded marketing, advertis-
ing, customer loyalry, media and public opinion studies. In turn, its marketing area
focused on consumer and buyer research.

28 Case Research Journal Volume 28 lssue 3 and 4 Summer/Fall 2008