THE OBSERVER*

It was the last Friday afternoon in August 1991. Four third-year Acadia University students, who had just returned for the fall semester, were meeting at the Studentís 50-50 lounge. Before classes started, Randy Ansems, Stephen Connor, Steve Robart and Greg Simpson had to decide whether to turn a course project, an inter-high school newspaper, into a business.

Background

Randy and Greg were "local boys" from Kings County, Nova Scotia, where Acadia University was located (Exhibit 1). Stephen and Steve came from Moncton, New Brunswick (Exhibit 2). All four lived on the same floor in Crowell Tower, a student residence, and had become friends during their first two years of Business Administration studies at Acadia.

The four students took an Introductory Marketing course in the 1991 winter semester. This course included a group project in which marketing theories and concepts were applied to a real world situation. The project requirement was well-received by students, in part because the winning group decided, through a competition, would be exempt from the final exam. The winners also had their names engraved on a trophy. another important reason for the projectís popularity was that certain projects from earlier ;years had involved local businesses, and had generated positive results that could still be seen in the marketplace.


This case was prepared by Professor (Joe) Nana Zhou of Acadia University for the Atlantic Entrepreneurial Institute as a basis for classroom discussion, and is not meant to illustrate either effective or ineffective management.

Copyright © 1992, the Atlantic Entrepreneurial Institute.  Reproduction of this case is allowed without permission for educational purposes, but all such reproduction must acknowledge the copyright.  This permission does not include publication.


During their Introductory Marketing course, Randy, Stephen, Steve and Greg were highly motivated. They had not only wanted to win the competition, but had also wanted to develop a project that had the potential to grow into a business for them to run.

Greg, who had heard about a high school student newspaper from a cousin living in Ontario, suggested to his friends that they create an inter-high school newspaper for Kings County. He reasoned that a newspaper would provide a unique vehicle for students from the six senior high schools to communicate among themselves. With their own recent high school experience, the other three students agreed that the newspaper was worth considering. But they were not sure if they could get it to work. First, they had no training in journalism. Second, the project would require funding. Furthermore, they were not sure if high school students would want the paper. After much deliberation, however, they decided to try it.

They got a "boost" from Jack Jones, Senior Counsellor at the Acadia Small Business Centre, who believed that the idea was original, interesting and viable. He also offered suggestions on how to get it started.

Needs Assessment

The four students decided that the first thing they should do was to find out whether or not area high school students were interested in an inter-high school paper. They would do this by conducting a survey as well as leading a focus group.

They contacted a County School Board official and school principals, all of whom were interested in the project. they were given permission to run a focus group and distribute their questionnaires at the schools. some principals even helped distribute the questionnaires.

The focus group, composed of ten students from different schools, found that high school students were not interested in another "regular" newspaper, but were interested in a paper with their own names and pictures and "fun stuff" in it. some indicated that they would like to see a "career corner;" some also said they preferred to write articles themselves rather than having them written by students form Acadia University.

Two hundred and fifty students approximately equal numbers of males and females) in Grades 10 to 12 from all six high schools, responded to questionnaires in their classrooms. Their responses confirmed the basic findings of the focus group. Ninety-five percent of those surveyed liked the idea of a Kings County inter-high School newspaper, 88 % would read it, and 67% were interested in events taking place at other schools in the county. Their preferences for types of articles, publication frequency, and price of the paper, are show in Exhibit 3. Some respondents also named the local businesses they frequented, and 44% said they would consider contributing articles to the paper. Some even left their names so they could be contacted.

Although Greg and his friends could not find specific data on the economic status of Kings Countyís high school students, they found certain information on teenage markets in recent business magazine and newspaper articles:

a. the average Canadian teenager lived in a dual-income household, had a part-time job, did some shopping alone, and had more influence on family purchases than teenagers had in the past;

b. although many teenagers spent hours watching TV or listening to radio daily, few read newspapers: and,

c. many teenagers did not pay much attention to ads in the mass media.

Greg and his friends were convinced that they could use this information to persuade local businesses to advertise in their paper. According to Randy, "Since there are still no other advertising media effectively reaching local high school kids, advertising messages in our paper could reach virtually all the 2500 senior high students in the county. There would be little wastage in the advertising dollar."

Approaching Advertisers

With their information in hand, they set out to visit businesses most often patronized by local high school students. because they had to use a car borrowed from Randyís father, they limited their efforts to nearby Kentville, New Minas and Wolfville, where three of the six high schools were located. "We had to approach potential advertisers carefully, to avoid seeming like greedy business students out to make a quick buck. We wanted the business people to know that their money would be well spent, that they would be helping their communities, and that we wanted enough money to cover only the costs of the trial issue of the paper," Stephen recalled later. "Although some firms didnít exactly receive us with open arms, we stirred up enough interest to fund the project."

Of the twenty-five companies the four students visited, twelve made verbal agreements to advertise in the paper and ten eventually bought advertising space.

Producing the Paper

Their next task was to product the trial issue of the paper. They made sure that it would contain only "light" content based on information gathered from the focus group and the survey. Each of the four students wrote on column, such as "Rayís Advice," and "Career Corner." The "Inside the School," "Student Spot Light" (featuring high school students:, and "sports" sections, were contributed by principals, coaches or students from the six high schools. Upcoming movie attractions for the "entertainment" section was prepared by the manager of a local cinema. To make the paper even more attractive, a "Horoscopes" section and a "Puzzle Page" were included. A front-page introduction explained how the eight-page paper was created. Staff from the athenaeum, Acadia Universityís student newspaper, helped give the paper a professional look. These staff were very supportive and contributed their time at no charge.

The four students had been so busy putting the paper together, that the night before the paper went to the printer, they realized that it still did not have a name. After much debate and discussion, they settled on The Observer, because "we were kind of observing what was going on at high schools as outsiders," explained Steve.

Payoff

The day the paper came off the press, Randy, Stephen, Steve and Greg distributed over 2,500 copies to the six high schools. The looked impressive(Exhibit 4), and every high school student who talked to Randy and his friends, said he or she liked the paper. Besides being pleased with these comments, the four students were glad to find that they had done better than break-even. The income statement showed that after paying all out-of-pocket expenses they made a $58 profit (Exhibit 5).

April 2, 1991, was a big day for Randy and his group. Before a crowd of nearly 200 students from the Introductory Marketing course, they presented The Observer to a panel of nine judges. The panel consisted of business executives and representatives from finalist groups of the previous year. "Turning the idea into a successful product was quite an experience. We have had great fun doing it and our customers have enjoyed reading it," said Greg, on behalf of the group. Much to their delight, The Observer was chosen from among the five finalists as the winner of the Business Schoolís Annual Marketing Competition. In addition to exemption from their final examination, each of the four students got a "surprise bonus;" a $100 dinner certificate from the Old Orchard Inn, an upscale local resort/restaurant which had sponsored the competition.

Randy, Stephen, Steve and Greg were very pleased with the feedback and the payoff on the project. Before leaving Acadia University for the summer, they got word that the School Board and the President of the Teachersí Association might consider providing financial assistance if the paper were published regularly. The four students resolved to make a decision in the Fall about turning the project into a business.

Conclusion

During the summer, each of the four students discussed the potential business with several friends. Some of their friends suggested that they should quit now instead of getting involved further. Their friends pointed out that the Athenaeum lost money almost every year, although it had a professional staff. It also received extensive funding from the Student Union and sold advertising space regularly. They felt that it would not be easy for four students with little experience in either Ďreal world businessí of journalism to develop the paper into a profitable business. These friends also felt that it would be difficult for the four students to find time to run a newspaper business when their main focus, like that of other students, was to keep their heads above water with their busy course work.

Randy and his friends believed they had expended too much effort getting their idea off the ground to quit now, but they also felt that some of their friendsí comments were valid.  The Fall semester was only a week away and they needed to make a decision before classes started.


Exhibit 1

Maritime Provinces

exh04.jpg (26326 bytes)

Exhibit 2

Respondent Preferences in the Questionnaire Survey

Type of article
Sports 82%
Social 62%
Gossip 57%
Classified ads 56%
Personal 54%
Academic 28%
Frequency of publication
Biweekly 40%
Weekly 33%
Price willing to pay
50 cents 36%
More than 50 cents 35%

Source: Company records

Exhibit 3

The Observer

exh05.jpg (58472 bytes)

Source: Company brochure

Exhibit 4

The Observer
Income Statement
March 27, 1991

Revenue
Chuckie's Casual Wear $50
Dairy Queen 50
Greco Pizza & Donair 50
Mahon's Stationary 50
McDonald's Restaurants 50
No. 12 Polo Ralph Lauren 100
Sandwich Tree Restaurants & Catering 50
Sears Canada 50
Subway 50
Zack's Famous Frozen Yogurt 50
Total Revenue from Advertisers $550
Expenses
Newspaper expenses
Layout $14
Photography 14
Telephone calls 7
Transportation (Gas) 35
Typesetting 5
Printing 360
Miscellaneous 14
Total Newspaper expenses $449
Survey Expenses
Printing 18
Telephone calls 5
Transportation (Gas) 20
Total Survey expenses 43
Total Expenses 492
Net Income $58
Source: Company records