Case Study: Metro Newspaper

Modern Times Group, a subsidiary of Kinnevik group In 1995, they set out to change the newspaper business by offering a free morning paper called the Metro. Metro started in Sweden targeting urban transit riders. Their sole means of dispersal was through the metro system; both on the trains as well as the platforms. Their main target markets were two-fold: employed readers with high income, as well as younger readers with disposable income. These are the two groups advertisers were eager to reach. The results were staggering. One analyst of the media, Alan Wilson, felt that Metro had single handedly changed the reading pattern of Swedes. He also felt it was the only paper any of the young people read. Metro achieved growth in several different markets that, at one point, was thought to continue indefinitely. However, with their increases in popularity, they also increased their awareness to competitors.

Metro's niche strategy was based on developing each newspaper into the leading newspaper within their market. They wanted to take their original Stockholm model, and replicate it in other untapped markets. Metro received an initial competitive advantage because competitors didn't take them seriously; mainly because they were a free newspaper. Their competition didn't believe that a paper without subscriptions, nor single copy fees could, compete, let alone be sustainable. It simply wasn't taken seriously. These competitors felt ad revenue on its own couldn't result in enough revenues to achieve profitability. However, once competitors understood the legitimacy of Metro's model, they started to implement free newspapers of their own.

Metro quickly felt increased competition in several of the newer markets they explored. In a few markets, they even lost their rights to the Metro name. No longer could Metro expect to enter untapped markets without competition. To attempt to compete, Metro was forced to slash the price they charged for advertisements. At one point