eHarlequinLove Bytes

CASE ONE

eHarlequin—Love Bytes “He kissed her with a passion that left her melting inside even while her breath steamed on the icy air.” Merline Lovelace, Seduced by the Season

Similar words fill the pages of thousands of Harlequin romance novels. Avid readers follow the Harlequin brand with the same sort of passion emitting from the quoted words above.Harlequin was founded by a Winnipeg man, Richard Bonnycastle, in 1949. Early on, it published a wide variety of paperbacks, from mysteries to westerns to cookbooks. Romance became part of its product line only in 1957, but by 1964 it was publishing romance novels exclusively.Harlequin Enterprises Limited holds the Harlequin brand today. The company identifies itself as a world leader in publishing fiction geared toward women. Indeed, it is one of the few that does. Now based in Toronto, the company publishes over 100 titles each month in more than 20 languages and has entered over 100 international markets on six continents. It has a stable of more than 1300 authors worldwide, including the above-quoted Merline Lovelace. Revenue reached $493.3 million in 2009, placing Harlequin in the upper echelons of the publishing sales market. Harlequin’s strategy has been to build on its mission statement: “To be relevant to women’s lives, and foster a sense of community amongst its readers.” To remain relevant, Harlequin has had to adjust with the ever-changing times.Slower book sales, a decline in direct marketing revenue, and inconsistent reactions in overseas markets have together resulted in to a mixed bag of success and failure for Harlequin over the past few years. Higher product and distribution costs have hurt the business; so has the bankruptcy of its mailing house. The Canadian dollar’s rise in recent years has not helped international sales, including in its most lucrative market—the United States.Direct-to-consumer sales have been falling steadily for all book publishers over the past few years. People are buying more items online, with books being a very popular choice among most consumer groups. As well, the reduced availability of mailing lists owing to privacy issues has become a problem when the company tries to market directly to consumers’ homes. Robert Pritchard, the president of Torstar (Harlequin’s parent company), has stated in the past that the North American paperback market is a very challenging one.(Contemporary Marketing, 4th Canadian Edition, 4e Louis Boone, David Kurtz, MacKenzie, Kim Snow ) (Solution Manual, For Complete File, Download link at the end of this File) 1 / 4

To combat the instability of that market, the company launched eHarlequin (http://www.eharlequin.com) on Valentine's Day in 2000 as an online romantic escape, with features, quizzes, daily and weekly stories, discussion boards, and author spotlights, in addition to an online store for its members.eHarlequin enables customers to read excerpts from its product lines, including the popular Harlequin and Silhouette books, as well as the racier Spice novels. Books can be purchased in various formats: paperback, audio, and e-books. The same site has a place for aspiring writers to submit and discuss their work, as Harlequin is constantly on the lookout to add to its stable of writers.The Internet world was once largely a male domain, but that gender gap is closing. The Interactive Advertising Bureau of Canada noted in early 2009 that time spent on the Internet by women had increased 89% since 2001, compared to 61% by men.Online marketing firms report that women when online tend to seek hobby and lifestyle sites, health information, and chat sessions. In contrast, men gravitate toward technology, sports, automotive, and auction sites. Women still are not as comfortable as men buying online, but that is changing. Studies have found that 87% of men complete their purchases online, compared with 81% of women.So, who are the women who are flipping the online pages at eHarlequin? Many observers suggest that this group is slightly younger than the “average” Harlequin reader, average here meaning middle-aged, married, and educated. Harlequin readers are said to be loyal to the brand: in countless surveys, a significant majority of readers have said they would continue to buy Harlequin books in the future. Harlequin often receives letters from readers expressing how much the books mean to them, in providing them with an escape from the ordinary.Back in 2001, Pam Laycock, the former executive vice president of Harlequin, was hopeful that eHarlequin would attract a wider audience and thereby provide “huge” revenue opportunities. “It’s an extension of the intimate relationship Harlequin tries to achieve with its off-line and direct-mail business, which can be taken to a greater level through an online presence.” “It’s really a way of taking that intimacy we have with the customer to a level that you could not get off-line," she says. “We [can] understand more about the customer and her preferences, be able to communicate directly, and be able to take all that information and develop a really rich profile with the customer and then target offers to her that are specific to what her needs and desires and wants are.” 2 / 4

In 2009, to help celebrate Harlequin’s 60th birthday, the company offered 16 books for digital download on eHarlequin. In doing so, Harlequin was providing a distraction for its readers, many of whom were facing a far too real world of job uncertainty and economic upheaval.eHarlequin offers discounts for avid readers, including free online books with regular online book purchases as well as deep discounts for backlist books. It also offers a secure shopping portal that enables readers to track their online purchases with greater ease. It seems that Harlequin has handled efficiently the transition from the written page to the Internet. Meanwhile, the company behind the titles is always looking for new opportunities.In an interview with the Financial Post in late 2009, current Harlequin Enterprises CEO Donna Hayes observed: “Innovation in markets, distribution channels and products will continue to be a part of the Harlequin story.” With innovative deals like the one just announced with Nintendo, which calls for Harlequin to create novels for the handheld video game device Nintendo DS, it is clear that Harlequin sees a future in digital love stories.Clearly, the worrying downward trends in traditional book publishing were the catalyst for launching eHarlequin.com. Harlequin Enterprises has embraced the online world for its products but also knows it must continue to evolve and innovate.Your task in this case is to analyze eHarlequin and provide some clear direction for Harlequin Enterprises. Those awaiting your keen analysis are breathless in anticipation.

Sources

Merline Lovelace Quote:

http://www.eharlequin.com/articlepage.html;jsessionid=80CAE8CF89F68815EBC4DEE324487 DF5?articleId=1396&chapter=4

IAB Canada Presentation – Internet Usage Stats and Trends:

http://www.google.ca/url?sa=t&source=web&cd=2&ved=0CBoQFjAB&url=http%3A%2F%2Fw ww.iabcanada.com%2Fresources%2FCanMedUsageTrends_IABTotalCanada_ExecSumFINAL.ppt&rct=j&q=iabcanada%20media%20usage%20trends&ei=uZUzTIqsPNeLnAet7- SPBA&usg=AFQjCNE3c5VQ3RZtqhI1OuRlPxDOCbiwvg

Recent Harlequin news:

http://www.theglobeandmail.com/report-on-business/harlequin-acquires-

stake-from-german-partner/article1532441

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Pam Laycock quote: http://v1.theglobeandma il.com/reports/ebusiness/20010525/web.html

Financial Post article:

http://www.financialpost.com/story.html?id=2220435

eHarlequin Website, with company background:

http://www.eharlequin.com/articlepage.html?articleId=36&chapter=0

Research on Harlequin readers (PhD thesis):

http://domapp01.shu.edu/depts/uc/apps/libraryrepository.nsf/resourceid/317D2019573E5D1A852 56E230052458A/$File/Dungee-Pamela-M_Master.pdf?Open

TEACHER’S NOTES—EHARLEQUIN CASE

This is a great case for students, notably because of the subject matter. Most students, male and female, will be familiar with the Harlequin brand but probably not with the website or the books specifically.The case mentions a current market segment (female, educated, middle-aged), but there is still much to do in this case in terms of demographics and psychographics.There is plenty of scope in this case for an analysis of strengths and weaknesses. Students can examine the company internally for the challenges it faces, as well as its brand image for weaknesses and strengths. Opportunities are plenty, especially when it comes to the data about online access for women. Threats to Harlequin include digital books such as Kindle and the iPad.The current market segment is clearly female, educated, and in early middle age. I ask my students for age ranges, not medians, so it’s a good chance to see whether they can capture a middle-aged market by means of the age range.Finding new market segments for Harlequin will be a challenge. Most students will resort to women in the age ranges above and below early middle age. But men should not be ignored: husbands and boyfriends could visit the site to buy presents for their significant others. B2B segments might include hotels and resorts providing access to guests, and companies offering books as perks to employees.This case does allow for many different alternatives. Market penetration and market development focus on the existing product—eHarlequin. In this case, much could be customized for a particular market segment—you are looking for things that come from the segments they created previously.

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