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Parenting Magazine Case

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Submitted By davekidd14
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Parenting Magazine case

-Mothr jones magazine was promoted to publisher and oversaw all the business aspects of the magazine. Cicuculation, financing, advertising etc
-leading magazine parents was too lowbrown, the writing was pedestrian and the apparent target audience was not one that would include her friends
-targeted for an upscale audience and would be characterized by great writing

INTITIAL THOUGHT FOR RAISING MONEY- 100,000 FOR R/D AND 5 MILLION FOR CAPTAIL LAUNCH

-raised the initial budget to 175,000 for direct mail test
-raised 125,000 but no salary and no contingency funding

MODIFIED AGREEMENT WITH INVESTORS:
-Originally, it was 25,000 for 3.5% in the company.
- The new deal was 25,000 for at least 5% depending on how much total capital was raised
-if 150,000 were raised b4 oct 31, it would be 5.5% if no other capital would be raised it would be 6%
-If full amount was raised then she would be entitled to a 27,000 salary
- full raising b4 direct mail test was 162,500 which was enough for a small salary

-hoped to receive a 5% response rate from her mailing, actually received a 5.7%
-moderate price sensitivity

Raising Additional capitial
-no one was able to invest the amount of money needed
-the options were between:
- venture capital firms
-wealthy investors
-investment bank
-publishing companies
** her concern was to raise from non corperate because of control

-advertising was key and charged 5000 for 4 colour page of advertising
- offered advertising incentives 2 for 1 etc

-Projections were by 1991 total revenues were expected to exceed 23 million with pre tax income of over 6 million and break even by 3rd year of operation
-to accomplish plans she needed a safety margin from a 4 million estimate to equal 5 million
- venture capitlists were not successful because they failed to offer experience

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