Managerial Economics Final Draft

CHANAKYA NATIONAL LAW UNIVERSITY
Demand Estimation of Paper for next annual year

Submitted to Dr. Manoj Mishra
Faculty Managerial Economics
C. Monica
Roll- 1617
2016-2021
3rd Semester
0
DEMAND ESTIMATION OF PAPER FOR NEXT ANNUAL YEAR
ACKNOWLEDGMENT
I am feeling highly elated to work on under the guidance of my Managerial Economics
faculty. I am very grateful to him for the exemplary guidance. I would like to enlighten my
readers regarding this topic and I hope I have tried my best to bring more luminosity to this
topic.
I also want to thank all of my friends, without whose cooperation this project was not
possible. Apart from all these, I want to give special thanks to the librarian of my university
who made every relevant materials regarding to my topic available to me at the time of my
busy research work and gave me assistance.
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RESEARCH METHODOLOGY
The method used for research is the doctrinal method and involves research in the library and on
the internet.
Areas of limitations- data of the research study will have it’s limitations due to the lack of
sufficient financial resources and limited time allotted for the research
Sources of data- this will include sources like books on managerial economics, Demand
estimation , articles, websites, encyclopedias etc.
AIMS AND OBJECTIVES
 To study Demand estimation and it’svarious methods and techniques

 To study the trend of use of newspaper in India over the years.
 To find out the estimated demand of newspaper in India for the next annual year.
 To critically examine the differences between demand estimation and forecasting.
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Table of Contents
INTRODUCTION .......................................................................................................................... 4
METHODS ..................................................................................................................................... 4
STATISTICAL MODELLING IN REGRESSION................................................................ 8
LEAST SQUARE METHOD ....................................................................................................... 12
BREAKING DOWN ................................................................................................................ 12
EXAMPLE ................................................................................................................................ 13
LINE OF BEST FIT.................................................................................................................. 13
BREAKING DOWN LINE OF BEST FIT .............................................................................. 13
WORTH OF INDIAN NESPAPER INDUSTRY ........................................................................ 14
DECLINE IN PRINT READERS ................................................................................................ 17
DEMAND ESTIMATION OF NEWSPAPER IN INDIA ........................................................... 20
CONCLUSION ............................................................................................................................. 22
BIBLIOGRAPHY ......................................................................................................................... 24
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INTRODUCTION
Good business decisions are almost always based on fact. Factual data provides a measure of
objectivity, even when a decision ultimately comes down to your best educated guess. Although
demand estimation is really an educated guess, it can include the use of fact, up to and including a
set of complex statistical calculations that can be difficult to understand and to complete. While
other available methods may be less scientific, they are also easier to use. Because demand
estimation provides crucial information, every business owner should be familiar with the concept
and know how to apply estimation results.
Every decision-maker has to plan for the future and some reliable prediction concerning the future
is required. This helps reduce the uncertainty of the environment in which managerial decisions
are made. Various forecasting techniques are used and familiarity with these it essential. In any
production set-up, the reader would know that the input cannot be converted into output
instantaneously. There is a lag ranging from a few hours, as in the case of cigarettes, to a few days,
as in the case of computers, to a few years, as in the case of aircraft or ship manufacturing. Given
this lag, the shop floor production manager needs to fix the target, which has to be realized in
future, and for this, the manager requires the forecast made by the sales department. While
planning huge capital investments or expansion, some predictions about future economic activity
are an essential input. This brings the need for forecasting to the forefront.
THE BASICS
Demand estimation is a prediction focusing on future consumer behavior. It predicts demand for a
business’s products or services by applying a set of variables that show how, for example, price
changes, a competitor's pricing strategy or changes in consumer income levels will affect product
demand. Once armed with this information, management can then begin to make strategic business
decisions ranging from reviewing pricing strategies to setting product inventory levels to deciding
whether to make fixed asset investments and whether to introduce a new product or enter a new
market.
METHODS
 SURVEY METHOD
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Consumer interviews, surveys and focus group meetings are a grass-roots method of
estimating demand. The method operates under the idea that consumers know themselves
best and that interacting with consumers directly is the best way to estimate future product
demand. Getting information directly from consumers, however, decreases objectivity and
increases the chance of errors. It can be difficult, for example, to get a truly random sample
of the target consumer population. Consumer responses may also be biased in that
responses may not reflect what a consumer will do, but rather what they would like to do,
or a consumer may be unable to provide a precise or accurate response.
To obtain information concerning the demand function for a particular product, firms
frequently interview consumers and administer questionnaires concerning their buying
habits, motives, and intentions. Firms may also run focus groups in an attempt to discern
consumers’ tastes. For example, a firm might ask a random sample of consumers how much
more gasoline they would purchase if its price were reduced by 5 percent. Or, a market
researcher might ask a sample of consumers whether they liked a new type of perfume
better than a leading existing brand, and if so, how much more they would be willing to
pay for it (than for the existing brand). Unfortunately, consumer surveys of this sort have
many well-known limitations. The direct approach of simply asking people how much they
would buy of a particular commodity at particular prices often does not seem to work very
well. Frequently, the answers provided by consumers to such a hypothetical question are
not very accurate. However, more subtle approaches can be useful. Interviews indicated
that most buyers of a particular baby food selected it on their doctor’s recommendation and
that most of them knew very little about prices of substitutes. This information, together
with other data, suggested that the price elasticity of demand was quite low in absolute
value. 1
Despite the limitations of consumer interviews and questionnaires, many managers believe
that such surveys can reveal a great deal about how their firms can serve the market better.
For example, the Campbell Soup Company’s researchers contacted close to 110,000 people
to talk about the taste, preparation, and nutritional value of food. On the basis of these
1
Garrison B (1996) Successful strategies for computer-assisted reporting. Mahwah, NJ: L. Erlbaum.
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interviews, Campbell changed the seasonings in five Le Menu dinners and introduced a
line of lowsalt soups (called Special Request). Some of the factors influencing the quality
of survey results can be quite subtle. For example, according to research findings, there are
sometimes advantages in respondents’ keypunching answers, rather than verbalizing them,
because the respondents tend to answer emotional questions more honestly this way
 MARKET STUDY METHOD
Market studies are a direct demand estimation method that combines consumer interaction
with science. The process starts by setting a constant, such as price, and variables such as
size and/or color. Market studies then display products at, for example, the same price, but
in a variety of sizes and locations or settings over a period of time. Once the study is
complete, analyzing the results reveals how demand for the product at that price changes
according to, in this case, size or color.
 MARKET EXPERIMENTATION METHOD
Another method of estimating the demand curve for a particular commodity is to carry out
direct market experiments. The idea is to vary the price of the product while attempting to
keep other market conditions fairly stable (or to take changes in other market conditions
into account). For example, a manufacturer of ink conducted an experiment some years
ago to determine the price elasticity of demand for its product. It raised the price from 15
cents to 25 cents in four cities and found that demand was quite inelastic. Attempts were
made to estimate the cross elasticity of demand with other brands as well. Controlled
laboratory experiments can sometimes be carried out. Consumers are given money and told
to shop in a simulated store. The experimenter can vary the prices, packaging, and location
of particular products, and see the effects on the consumers’ purchasing decisions. While
this technique is useful, it suffers from the fact that consumers participating in such an
experiment know that their actions are being monitored. For that reason, their behavior
may depart from what it normally would be. 2
Before carrying out a market experiment, weigh the costs against the benefits. Direct
experimentation can be expensive or risky because customers may be lost and profits cut
by the experiment. For example, if the price of a product is raised as part of an experiment,
2
W. B. Allen, , 2009. Managerial Economics Theory, Applications, and Cases, 7th Edition. Norton
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potential buyers may be driven away. Also, since they are seldom really controlled
experiments and since they are often of relatively brief duration and the number of
observations is small, experiments often cannot produce all the information that is needed.
Nonetheless, market experiments can be of considerable value.
 REGRESSION ANALYSIS METHOD
Demand estimation can also rely on regression analysis, a statistical way to find the best
relationship between a dependent variable – in this case, product demand – and one or more
independent variables, such as price or location. Although fully understanding demand
estimation calculations requires a background in statistics, the process is not difficult to
understand. Setup starts by identifying and obtaining data, such as cross-sectional market
data or results of a time study or consumer survey on the independent variable or variables
to be used in the calculation. Next comes choosing between using a simple or multiple
regression model, depending on whether the calculation includes one or multiple variables.
Both models display demand as an unknown. Parameters such as a specific price or average
annual income are set. Statistical calculations can then begin, and management can move
on to interpreting results.3
Although consumer interviews and direct market experiments are important sources of
information concerning demand functions, they are not used as often as regression analysis.
3
James O. Berger (2008)."statistical decision theory," The New Palgrave Dictionary of Economics, 2nd Edition.
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STATISTICAL MODELLING IN REGRESSION

No matter what statistical model you’re running, you need to go through the same 13 steps. The
order and the specifics of how you do each step will differ depending on the data and the type of
model you use.4
These 13 steps are in 3 major parts. Most people think of only Part 3 as modelling. However, if
you do all 3 parts, and think of them all as part of the analysis, the modelling process will be faster,
easier, and make more sense.
Part 1: Define and Design
In the first 4 steps, the object is clarity. You want to make everything as clear as possible to
yourself. The more clear things are at this point, the smoother everything will be.
1. Write out research questions in theoretical and operational terms
A lot of times, when researchers are confused about the right statistical method to use, the real
problem is they haven’t defined their research questions. They have a general idea of the
relationship they want to test, but it’s a bit vague. You need to be very specific.
4
Chiang, C.L, (2003) Statistical methods of analysis, World Scientific. ISBN 981-238-310-7- page 274
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For each research question, write it down in both theoretical and operational terms.
2. Design the study or define the design
Depending on whether you are collecting your own data or doing secondary data analysis, you
need a clear idea of the design. Design issues are about randomization and sampling:
 Nested and crossed factors.

 Potential confounders and control variables.
 Longitudinal or repeated measurements on a study unit.
 Sampling: simple random sample or stratification or clustering.
3. Choose the variables for answering research questions and determine their level of
measurement
Every model has to take into account both the design and the level of measurement of the variables.
Level of measurement, remember, is whether a variable is nominal, ordinal, or interval. Within

interval, you also need to know if variables are discrete counts or continuous.
It’s absolutely vital that you know the level of measurement of each response and predictor
variable, because they determine both the type of information you can get from your model and
the family of models that is appropriate.
4. Write an analysis plan
Write your best guess for the statistical method that will answer the research question, taking into
account the design and the type of data.
It does not have to be final at this point—it just needs to be a reasonable approximation.
5. Calculate sample size estimations
This is the point at which you should calculate your sample sizes–before you collect data and after
you have an analysis plan. You need to know which statistical tests you will use as a basis for the
estimates.
And there really is no point in running post-hoc power analyses–it doesn’t tell you anything.
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Part 2: Prepare and explore
6. Collect, code, enter, and clean data
The parts that are most directly applicable to modeling are entering data and creating new
variables.
For data entry, the analysis plan you wrote will determine how to enter variables. For example, if
you will be doing a linear mixed model, you will want the data in long format.
7. Create new variables
This step may take longer than you think–it can be quite time consuming. It’s pretty rare for every
variable you’ll need for analysis to be collected in exactly the right form. Create indices,
categorize, reverse code, whatever you need to do to get variables in their final form, including
running principal components or factor analysis.
8. Run Univariate and Bivariate Statistics
You need to know what you’re working with. Check the distributions of the variables you intend
to use, as well as bivariate relationships among all variables that might go into the model.
You may find something here that leads you back to step 7 or even step 4. You might have to do
some data manipulation or deal with missing data.
More commonly, it will alert you to issues that will become clear in later steps. The earlier you
are aware of issues, the better you can deal with them. But even if you don’t discover the issue
until later, it won’t throw you for a loop if you have a good understanding of your variables.
9. Run an initial model
Once you know what you’re working with, run the model listed in your analysis plan. In all
likelihood, this will not be the final model.
But it should be in the right family of models for the types of variables, the design, and to answer
the research questions. You need to have this model to have something to explore and refine.
Part 3: Refine the model
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10. Refine predictors and check model fit
If you are doing a truly exploratory analysis, or if the point of the model is pure prediction, you
can use some sort of stepwise approach to determine the best predictors.
If the analysis is to test hypothesis or answer theoretical research questions, this part will be more
about retirement . You can:
 Test and possibly drop, interactions and quadratic or explore other types of non- linearity
 Drop nonsignificant control variables.
 Do hierarchical modelling to see the effects of predictors added alone or in blocks.
 Check for overdispersion.
 Test the best specification of random effects.
11. Test assumptions
Because you already investigated the right family of models in Part 1, thoroughly investigated
your variables in Step 8, and correctly specified your model in Step 10, you should not have big
surprises here. Rather, this step will be about confirming, checking, and refining. But what you
learn here can send you back to any of those steps for further refinement.
12. Check for and resolve data issues
Steps 11 and 12 are often done together, or perhaps back and forth. This is where you check for
data issues that can affect the model, but are not exactly assumptions. These include:
Data issues are about the data and not the model, but occur within the context of the model:
 Multicollinearity
 Outliners and influential points
 Missing data
 Truncations and censoring
Once again, data issues don’t appear until you have chosen variables and put them in a model.
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13. Interpret Results
Now, finally, interpret the results.
You may not notice data issues or misspecified predictors until you interpret the coefficients. Then
you find something like a super high standard error or a coefficient with a sign opposite what you
expected, sending you back to previous steps.
LEAST SQUARE METHOD

The least squares method is a form of mathematical regression analysis that finds the line of best
fit for a dataset, providing a visual demonstration of the relationship between the data points. Each
point of data is representative of the relationship between a known independent variable and an
unknown dependent variable.5
BREAKING DOWN
The least squares method provides the overall rationale for the placement of the line of best fit
among the data points being studied. The most common application of the least squares method,
referred to as linear or ordinary, aims to create a straight line that minimizes the sum of the squares
of the errors generated by the results of the associated equations, such as the squared residuals
resulting from differences in the observed value and the value anticipated based on the model.
This method of regression analysis begins with a set of data points to be graphed. An analyst using
the least squares method will be seeking a line of best fit that explains the potential relationship
between an independent variable and a dependent variable. In regression analysis, dependent
variables are designated on the vertical Y axis and independent variables are designated on the
horizontal X axis. These designations will form the equation for the line of best fit, which is
determined from the least squares method.
5
James O. Berger (2008)."statistical decision theory," The New Palgrave Dictionary of Economics, 2nd Edition.
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EXAMPLE
For example, an analyst may want to test the relationship between a company’s stock returns and
the index returns for which the stock is a component. In this example, the analyst seeks to test the
dependence of the stock returns on the index returns. To do this, all of the returns are plotted on a
chart. The index returns are then designated as the independent variable, and the stock returns are
the dependent variable. The line of best fit provides the analyst, with coefficients explaining the
level of dependence.
LINE OF BEST FIT

The line of best fit determined from the least squares method has an equation that tells the story of
the relationship between the data points. Computer software models are used to determine the line
of best fit equation, and these software models include a summary of outputs for analysis. The
least squares method can be used for determining the line of best fit in any regression analysis.
The coefficients and summary outputs explain the dependence of the variables being tested. In
contrast to a linear problem, a non-linear least squares problem has no closed solution and is
generally solved by iteration. The earliest description of the least squares method was by Carl
Friedrich Gauss in 1795.
A line of best fit is a straight line drawn through the center of a group of data points plotted on a
scatter plot. Scatter plots depict the results of gathering data on two variables. The line of best fit
shows whether these two variables appear to be correlated and can be used to help identify trends
occurring within the dataset.
BREAKING DOWN LINE OF BEST FIT

Analysts may use the line of best fit when determining a relationship between two variables where
one variable is independent and one variable is being examined for dependency. The proposed
dependent variable is listed on the vertical Y axis while the independent variable is shown on the
horizontal X axis. An example of an independent variable commonly used in financial analysis is
time with each interval representing a specific number of minutes, hours, days, months, or years.
Dependent variables can include, but are not limited to, the price of an investment or asset,
production rates or corporate profit levels.
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WORTH OF INDIAN NESPAPER INDUSTRY6

1. India has been one of the markets where newspapers have registered growth.
The newspaper industry in India is performing much better in contrast to the scathing
economic slowdown in the European. In USA, newspapers have almost vanished from the
market. Europe too hasn’t been clocking encouraging growth numbers. Contrary to this,
South Asia or South East Asia, the condition is entirely opposite. Print has been growing;
and this growth is not just in terms of revenue but extends to the numbers of titles, editions,
pages, advertisements and even circulation.
2. Many top brands companies have slashed their advertising budgets.
Advertisers are lesser in numbers in most of the developing economies. And most of them
split their advertising budgets between print and television media.After that, it has been
significantly down then. Therefore, those media houses which do not have an electronic
media property have been facing tribulations. Since the last two years, the slowdown is
there but it is purely a consequence of the economic downturn.
3. The possible reasons for the continuous growth of the newspapers in India and China.
Not just in India and China but most part of the Asia has registered growth. Countries like
Indonesia and Thailand are also growing well. In context of India, newspapers’ penetration
in the country is very low as compared to other parts of the world. In India, it is around
14%, while in Europe it is more than 85%. This leaves a big headroom for growth in our
economy. Secondly, the cover price of newspapers in India is very economical. Indian
newspapers are priced lowest in the world at the moment. A newspaper cover price in UK
is around Rs 90. Even newspaper prices in countries like Pakistan and Bangladesh are much
higher as compare to India. Newspaper publishers have found it impossible to increase it
because of the market pressure. On the other hand, our raw material cost is more since we
import materials from USA, New Zealand, Canada, Russia and other countries.
The main thing is, the masses can afford a newspaper in India. It is the USP of Indian
market. Free home delivery is another important reason, when you are getting a 20 or more
of colour pages in your newspaper delivered at your doorstep without any additional
6
www.printweek.in
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charges. Therefore why wouldn't you opt for at least one or many more than one newspaper.
Taking a cue from the decline of the newspaper industry in Europe, Indian newspaper
publishers have already taken stakes in electronic, mobile and new media.
4. Expectation to see the growth story continuing in the advertising revenues?
The current economic scenario in the country will impede the growth. In India, around 70-
80% of the revenue of regional language newspapers is obtained from advertisements. In
English, the dependence on advertising goes to as high as 85%. Earlier, the newspaper
industry was growing at 15-16% but now it has plummeted to 4-5%. Nonetheless, I feel
this is a temporary phenomenon, and growth will be back on track. The Indian newspaper
industry is around Rs 18,000-crore.
5. One of the directors of a regional newspaper publication claimed that after every 17
kilometres they have a separate edition.
All the newspaper publication houses are becoming local and hyper-local. Hyper-
localisation is directly proportional to the increasing rate of literacy in the country. Most
of the metros and mini metros are nearing their saturation points. Thus, the most logical
step forward is to focus on villages and be more local. Newspapers have district and town
level editions. About 15 years ago, this was not the norm. Anandabazar Patrika, the Bangla
daily already has 15 editions
..
6. How effective is hyper-localisation of newspapers?
This is a win-win situation for advertiser, reader and newspaper publisher. Earlier
advertisers who wanted to advertise in one of the districts had no option but to advertise in
the main edition that was circulated across the state. With hyper-local editions, he can
advertise in local edition with low cost and investment.
7. How much has the Rupee devaluation affected the newspaper industry?
Devaluation of the Indian Rupee has hurt the newspaper industry. The major cost of
newspaper production is newsprint and more than 70% of our newsprint consumption is
imported. There are two major reasons for importing newsprint: there is a huge gap
between demand and supply of newsprint in India and quality of Indian newsprint is not
up to the mark.
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8. At US $ 18 billion, the entire media and entertainment industry in India is just half
of the largest entertainment company, with US $ 38 billion Walt Disney, Zee and
Times Group only recently hit the billion dollar mark. The question is, are the
numbers adding up ?
The future of newspaper is digital. In future, English language newspaper reading will go
down. There would be a conscious bent towards digital medium of news dissemination.
Big cities are saturated. And I feel this saturation will create growth for regional
newspapers.
9. With the advent of TV news channels, it was expected that they will hamper
newspaper circulation. But the things happened other way around.
Everything will co-exist and nothing will cease. This myth announcing the death of print
has been circulating from a very long time. The infrastructure and penetration of internet
in the country is hardly 5%. So print is quite safe for the next 15 years in our country.
Advertisement spends will be less because digital media will take a share of the pie. Only
those who diversify their portfolio and include digital media will reap the benefits. After
this 15 years’ period of insulated growth, no one knows what will happen after 15 years.
10. What happens to market leaders?
Market leaders and very specific players will be stable in the market. In most certainty,
small players will vanish— either they will go out of business or they will merge with the
big players. My view is, the big players as well as those who will diversify at the most
opportune moment will sustain in the market.
11. What are the new trends and developments in Indian newspaper industry?
On the technical front, we are trying to integrate digital and print using QR code.
Innovations are in demand. Recently, we published a scented newspaper to promote a
fragrance company’s campaign. On the business side, we are going from space selling to
solution selling.
12. Does choosing the size and design of a newspaper fluctuate with different target
groups?
The research informed us that youth do not prefer big sized newspapers. They want more
visuals and less text and politics, more information on fashion, sports and career, gadgets
and gizmos, entertainment etc. .
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13. Will newspaper printing ever utilise the water-based flexo and digital inkjet
technology?
Digital printing is in a nascent stage. It is not commercially viable and is very expensive.
Once the technology matures, it will be the best model since newspapers are aiming for
hyper-local editions. India will be one of the biggest markets for the technology. I believe
present time is for more distributed printing as compared to centralised printing. Our targets
are districts, towns, streets and villages and short-run printing presses will cater that growth
instead of high-speed machines.
14. What precautions should ink, newsprint and web offset printing presses
manufacturers should take for flawless and smooth production?
Indian printing ink quality must be improved. Indian inks’ quality is far inferior when we
compare it with overseas manufacturers. More than 70% newsprint is imported in our
newspaper production so newsprint manufacturers have to improve the quality.
Unfortunately, it is not happening because of issues with the quality of pulp. Some of the
web offset printing presses’ manufacturers are making excellent machines and exporting
them. Yet there’s a long way to go to meet world class parameters. Indian presses are
economical but not long-lasting.
DECLINE IN PRINT READERS

An online study was conducted among 3,183 online newspaper readers of India. The study reveals
that majority of the online news consumers (90 percent) were still reading printed newspapers. It
was found that online newspapers have not much affected the print newspaper circulation. But
print has started losing young readers. The displacement effect of online media is very low. The
older generation above 50 years read both the media equally, while 3 percent readers of 40-50 age
groups have reduced use of print newspaper. While gender wise young male (15-20) readers have
reduced interest on print media more than women readers, 21 percent by male and 14 percent by
women readers. Popup ads are the most irritating thing on the online newspapers.7
7
Franklin B (2008) The future of newspapers. Journalism Studies 9(5): 630-641.
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Media research shows the decline in print newspaper readership in America and Europe. Media
publication shifted to online editions because of a decline in advertising revenues.
Mass media was affected by new technologies much before the emergence of Internet technology,
like TV and radio have changed the readership habits.8
Information and Communication Technologies have grown rapidly around the world and advance
Internet technology have given mass media a new shape, growth of online media have been noticed
in the last 10 years. According to the OECD, around 5% of all internet visits are related to reading
news online. Now the digital media has become the inherent part of modern society and become a
challenge to the print media. Many people nowadays are accessing Internet for updated news in
any place and at any time.
Internet is used for several purposes to get information, entertainment, official work, to connect
with friends and relatives around the world and to do every day routine work. Online newspapers
differ significantly from the print media: Online readers read from a digital format on computer
screen or on smartphone, they and move around by clicking on links and menu buttons.
They navigate through a virtual space and may run into problems orienting themselves in the
complex net structure.9 Internet users throughout the world are now able to read the news within
the minute of the happening. Advances in the mobile technologies, Internet technologies, and
introduction of Smartphones and wireless networks are the main factor to give boost to online
media. Online media allow the reader to access the news constantly in real time.10
The Chicago Tribune was the first newspaper, which started online newspaper after publishing its
content in 1992. Whereas Palo Alto Weekly was the first regularly published online newspaper of
the world, which started in January 1994, provided its full content free of cost. In 1998 USA today
8
Lazarsfeld P (1940) Radio and the printed page: Dell, Sloan, & PearceNew York, USA.
9
De Leon D, Holsanova J (1997) Revealing user behaviour on the world-wide web. Lund University Cognitive
Studies, 60, Lund.
10
Witmer DF, Colman RW, Katzman SL (1999) From paper-and-pencil to screen-and-keyboard: Toward a
methodology for survey research on the Internet.
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has started paid access to its online archives; El País has also started charging for articles access
in 2002. However, it was discarded due to the unwillingness of users to pay online reading.11
The beginning of new communication technology (NCT) gave opportunities and challenges for
conventional media. People use Internet for two purposes, first it is used as mediated interpersonal
technologies, which are for social bonding, relationship maintenance, problem solving, and
persuasion.12 Second the Internet is used as mass communication, which is for informational and
leisure purposes. The previous studies proved that the use of Internet and computer mediated
communication is increasing.
Following the growth in the communication technology, news portals have played an important
role as 24 hours news outlets. The growth of online newspapers between 2007-09 have resulted
decline of print newspaper circulation 30% in the US, 25% in the UK, and slightly less in Greece,
Italy and Canada. Studies also demonstrated that main reason for the displacement of media is
functional exchangeability.
Most of the traditional media television, radio, and newspapers start converting their news content
digitally and started their websites. All the major newspapers of India have started their e-papers
and online newspapers. As per Internet Live Stats, Internet users around the world are rapidly
growing and 40 percent of the world population has an internet connection.
The study reveals that young people have reduced the usage of traditional media. As per the study
younger 15-20 and 20-30 year age bracket readers read less print media, they read more online
news. But young women news readers are using both the media more than male, 86 percent and
79 percent respectively. Whereas the displacement effect is very low (3 percent) among 40-50 age
group readers and above 50 age all are reading both the media.
As per the survey, most of the (90 percent) online readers are also using traditional media along
with digital media for the news. Online news readers are growing around the world, because
11
Carlson D (2001) The Online Timeline A capsule history of online news and information systems.
12
Flanagin A, Metzger M (2001) Internet use in the contemporary media environment. Human Communication
Research, 27: 153-181.
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readers can access all kind of media from the Internet. Earlier readers were totally dependent on a
single daily newspaper, radio or TV channel. Now all the traditional media have started their online
newspapers (e-papers) and updating their website regularly with latest news.
DEMAND ESTIMATION OF NEWSPAPER IN INDIA

The chart below shows the statstics of circulation of newspaper dailies in India13:
Year CIRCULATION OF NEWSPAPER DAILIES
2003- 04 735,37,182
2004- 05 786,89,266
2005- 06 888,63,048
2006- 07 988,37,248
2007- 08 1057,91,199
2008- 09 1358.05315
2009- 10 1623,12,686
2010- 11 1756,65,243
2011- 12 1969,65,139
2012- 13 2243,37,652
2013- 14 2642,89,811
2014- 15 3245,79,514
2015- 16 3863,29,056
13
www.auditbureau.org
20 | P a g e
Demand Estimation of newspaper dailies in India

4,500 y = 242.12x + 86.687
Newspaper circulation(in Lakhs)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Years
Series1 Series2 Linear (Series1)
The equation generated from the trendline is y = 242.12x + 86.687
With the help of this equation the demand estimated for the year 2016- 17 as follows:
Y = 242.12*13 + 86.687= 3234 Lakhs (approx..)
Hence , the demand is estimated to fall from earlier 3863 lakhs circulation of newspaper in India.
Now the demand for the year 2017-18 can also be estimated on the basis of the same equation as
follows:
Y = 242.12*14 + 86.687= 3476.35 Lakhs (approx..)
Hence it can be inferred that after a fall in the newspaper circulation in India in 2016-17, it might
grow in the next annual year.
21 | P a g e
CONCLUSION
Internet users are growing very fast in India, as per the latest report of Internet and Mobile
Association of India, India will overtake the US (as the second largest base) it will touch 402
million users by December 2015. As per the research by US based research firm e- Marketer
(2014), India will overtake the US as the second largest market for Smartphone in the world by
2016. With the help of Internet on mobile phones (Smartphone), online news can be read anytime
and anywhere.
We can say despite the growth of Internet users in India displacement effect of online media is
very low. In the Western world, newspaper circulation is drastically going down, many news
organisations have stopped printing the newspapers, and they only provide the news on their
websites. But in India print media has maintained its place. They have started their on-line portals
or websites that provide news as well.
Young generation is among the first to adopt new technologies, similarly in the media, they are
keen to read news from online newspapers. As per this study 21 percent younger (15-20 age group)
generation has reduced the use of traditional media (newspapers), this gap will increase in coming
years in India as younger generation is using Internet from early schooling. They want news on
demand, for latest news most of the people heavily rely on search engines. Whereas print
newspapers provide news on next day. This is a significant disadvantage of printed newspapers in
relation to news sites with respect to the fact that these present yesterday’s news and charge for it.
The decline of younger reader interest on the printed newspaper in India is also a big threat to
Indian media industry. As Internet (online newspapers) may have destroyed the western countries
newspaper's. But in India the print media is in safe position, they have started cross media
production of news in both print and digital format.
They should publish maximum news related to the youth, and writing style also be used as per the
younger generation need. Reporter should make stories shorter and pay attention to what is hot on
social media, according to the need of the day, they should generate the news content.
22 | P a g e
Newspaper has faced similar threat when radio and television media was introduced, but despite
the growth of TV and Radio media newspapers is still popular in India. Similarly online media has
not much affected the print newspaper circulation. People are using online newspapers as
complimentary to the newspapers. In India both the newspaper, online and print are growing.
Whereas is Western world print media is dying and online is flourishing.
23 | P a g e
BIBLIOGRAPHY
BOOKS
 Pal, Managerial Economics, 2004

 Pal, Sumitra, Managerial Economics cases and concepts, 2014, 2nd edition
 Trivedi , M,, Managerial Economics Theory and Application, 2002.
 Kumar R. , Managerial Economics: Analysis, Policies and Cases, 2013
 Weight Keith, Managerial Economics: Theory, Applications, and Cases, 2011.
WEBSITES
 https://www.edushareonline.in
 https://www.swlearning.com
 https://en.wikiversity.org
 https://www. https://www.saylor.org
 https://www.law.cornell.edu
 https://www.nap.edu
 https://www.jstor.org
24 | P a g e

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CHANAKYA NATIONAL LAW UNIVERSITY

Demand Estimation of Paper for next annual year

AIMS AND OBJECTIVES

 To study Demand estimation and it’svarious methods and techniques

STATISTICAL MODELLING IN REGRESSION

Part 1: Define and Design

1. Write out research questions in theoretical and operational terms

2. Design the study or define the design

 Nested and crossed factors.

Level of measurement, remember, is whether a variable is nominal, ordinal, or interval. Within

4. Write an analysis plan

5. Calculate sample size estimations

Part 2: Prepare and explore

6. Collect, code, enter, and clean data

7. Create new variables

8. Run Univariate and Bivariate Statistics

9. Run an initial model

Part 3: Refine the model

10. Refine predictors and check model fit

11. Test assumptions

12. Check for and resolve data issues

13. Interpret Results

Now, finally, interpret the results.

LEAST SQUARE METHOD

LINE OF BEST FIT

BREAKING DOWN LINE OF BEST FIT

WORTH OF INDIAN NESPAPER INDUSTRY6

DECLINE IN PRINT READERS

DEMAND ESTIMATION OF NEWSPAPER IN INDIA

Year CIRCULATION OF NEWSPAPER DAILIES

Demand Estimation of newspaper dailies in India

Series1 Series2 Linear (Series1)

The equation generated from the trendline is y = 242.12x + 86.687

Y = 242.12*13 + 86.687= 3234 Lakhs (approx..)

Y = 242.12*14 + 86.687= 3476.35 Lakhs (approx..)

 Pal, Managerial Economics, 2004

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