Using what it calls "invitation prices," the venerable 155-year-old Bennett, Coleman & Co. began slashing the price of The Times' New Delhi edition last March from 8 cents on weekdays and 6 cents on weekends to 5 cents Monday through Friday and raised to 9 cents for weekend issues. Currently only Friday's paper costs 9 cents; the price for the rest of the week is 6 cents.
Before March, the New Delhi edition circulation hovered between 171,000 and 188,000 copies daily, three fourths more than Indian Express's 109,000 to 112,000 daily for New Delhi, but far less than The Hindustan Times' impressive 344,000 to 349,000 for its New Delhi edition.
For three months after The Times' price drop, The Hindustan Times refused to be dragged into a price war. Then, as news of The Times' growing circulation trickled in, the eight-year-old Birla-owned Hindustan Times panicked and put into place price cuts identical to those of The Times.
But it was too late. From 171,000 in March, The Times' New Delhi edititon circulation soared to 201,000 by June, according to the Audit Bureau of Circulations. And for August, The Times New Delhi edition claims an unaudited 247,000. The Hindustan Times New Delhi edition stagnated at 343,000 copies in June while the Indian Express' New Delhi edition remained at 109,000.
"We always say that when the price is a dream, the response is a nightmare," said a spokesman for The Hindustan Times.
The Economic Times' success could belie that assertion. The price-slashing strategy began two years ago when Bennett saw a rise in sales on Wednesdays after it cut prices that day from 16 to 6 for the business daily. It followed by dropping the price each weekday to 6 while maintaining higher 31 weekend prices (today, 29).
The gamble paid off. National circulation, prior to the cuts, was 212,000 in December 1993, a figure that rose to 290,000 in March and 320,000 in August.
Today, The Economic Times dwarfs all business dailies in India with a 77% share of the mainline financial daily sales, towering above The's 15% and the Calcutta-based Business Standard's 8%. It ranks fifth among all English-language dailies, with a 7% share.
Interestingly, both Bennett papers not only expanded their respective markets, but the Delhi edition also roped in readers of Hindi papers who wanted a second paper, preferably English-language, for snob value.
"The Economic Times' growth strategy was to get the upmarket readership in India to read a second paper, which is a financial paper," said Pradeep Guha, Bennett's director of advertising.
Nationwide, English daily sales have seemingly plateaued at a total 4.4 million circulation while local language papers are 10 million and rising.
Though The Times has yet to show any appreciable increase in advertising due to the price cuts, Bennett claims ad revenues for The Economic Times are up 17%, but won't disclose figures.
Bennett is extending the strategy to other local language newspapers like Maharashtra Times.