Harlequin

CASE 9 - Harlequin

1. Why has it been so difficult for competitors to enter Harlequin’s market segment?

What aspect of the value chain create Harlequin’s advantage?  

Traditional book industry:

• Well-known authors, innovative stories
• Risky because success on a book is not guaranteed.
• Marketing costs for each book (focus on the author)
• Percentage of returns is high on average
• Each book is different
• Publishing rights
• Book stores

Value chain of Harlequin:

International success

They have a lot of cash

[pic 1]

Authors:

>100

Know how to write Hq story

Not well-known

Editing:

Editors check that the content matches with what Hq novel should be

Production:

Same format

Always 192 pages

Cost efficiencies

Large volume, production is cheap

Fixed amount of novels/month

Marketing:

Concentrated to the target consumer

Marketing on a “brand” and not every novel

Distribution & Sales:

Supermarket and drug stores (occupied self-space)

Book club

Price is low

Higher predictability of sales, lower return rate.

Standardization all the way: content, length, size, basic formats.

• Consistency (quality)
• Price /cost (same size, high volume)

Brand (Sell the brand instead of writers) Consistent product.

First mover advantage for shelf-space.

The ones that are important are the ones difficult to imitate.

Authors and editors have the knowledge. Why hard to imitate?

Tacit knowledge: you know how to do sth but not able to explain it to therefore copy. Learnt though experience.

Same target market: females over 15 -> they know their target very well

Mass market focus

Distribution: in supermarkets, standard packaging, monthly standing order system through Pocket Book Distribution

Hard to copy because of self-space in supermarket (entry barrier)

Harlequin model advantage – key drivers

• Lower risk
• Low cost and higher margin
• Faster (in time) to get to the market
• Know well the customers as they are well defined → adaptation to the segment is easier
• Send a consistent signal about the brand → you know as a woman that you are going to enjoy it, you know what you are buying.
• Supermarket distribution: very unusual way of buying book but very successful → one key driver

What could they do:

Diversify:

-         Product (movies, magazines, medical novels)