Much like the war being fought in the metro, two leading Hindi newspapers have slashed their cover price drastically. Will the cover price wars now spill over?
Confirming this development, RC Tanwar, Director Marketing, Aj, says, "From 1st of May we have reduced the price of Aj from Rs 2 to Rs 1". Competitor Amar Ujala has also dropped the prices. "We had launched Amar Ujala last year in Varanasi with a price tag of Rs 3.50. On 5th May 2002, we slashed the price to Rs.2 from Rs.3.50 and on May 15th, we further slashed it to Rs.1.50", says Atul Maheshwari, MD, Amar Ujala. He adds, "Amar Ujala dropped the prices to counter the move by Aj. This move is largely geared to maintain circulation."
While the war is on between Aj and Amar Ujala, the other two large players Dainik Jagaran and Hindustan are watching the market dynamics evolve. "We see no threat to Dainik Jagaran''''s circulation by the price slashes. We are selling at Rs 3 with the same number", says Virendra Gupta, Director, Dainik Jagaran, Allahabad & Varanasi edition.
The move by Amar Ujala and Aj is aimed at increasing the circulation by offering a lower cost option and thereby encouraging people to buy multiple papers. Alok Sanwal, Manager-Brand Development, Dainik Jagaran, holds a different view "The calculation at Aj and Amar Ujala is that by reducing the price, they can capture a higher share of market. Which, I think, is not an easy task."
To put things in perspective, aggressive pricing of a media product is a deep pocket strategy attempting to annihilate competition. While it leads to short-term success for the leader, it can virtually wipe out smaller publications that can''t afford the price war. Indian Newspaper Society (INS) has been concerned about this growing trend to under price publications that has negative impact on the over all sector.
But perhaps, quick gains in market shares are too much to resist. Will this trend now move to other centers?