Training program for publishers from the Arab world Strategic Planning in Publishing

GOETHE-INSTITUT AGYPTEN aEIGLa-JIi-yar Training program for publishers from the Arab world Strategic Planning in Publishing Cairo, July 12th, 2008

! 1 Training program for publishers from the Arab world Strategic Planning in Publishing Cairo, July 12th, 2008

The German Book market is the third largest in the world 9.3 Billion Euro turnover from retail prices per year 900.0000 titles available 80,000 new titles per year 4.700 booksellers 1.800 publishers Source: German borsenverein statistics 2004

! 2 The German Book market is the third largest in the world 9.3 Billion Euro turnover from retail prices per year 900,0000 titles available 80,000 new titles per year 4,700 booksellers 1.800 publishers Source: German Börsenverein statistics 2004

Key aspects of the German market for publishing Number of customers The book trade continues to be the most important channel for books in germany sales at retail price totalling 5. 1 billion e have a share of 55.8% of the total book sales direct sales to end customers follow at 17.7%(1.6 billion e Mail order companies achieve 0. 9 billion E(9.9%), department stores 4.4%(0, 4 billion EUR) and clubs 3.3%(0, 3 billion. e. Other point of sales(e.g. gas stations, drug stores, toy shops etc. gain 9.0 %(0, 81 billion e Most of total book sales were done by members of the borsenverein (the dominant association of the industry)with appr. 6. 400 members The membership consists of 1800 publishers and 4700 booksellers

! 3 Key aspects of the German market for publishing Number of customers The book trade continues to be the most important channel for books in Germany. Sales at retail price totalling 5.1 billion € have a share of 55.8% of the total book sales. Direct sales to end customers follow at 17.7% (1.6 billion €) Mail order companies achieve 0.9 billion € (9.9%), department stores 4.4 % (0,4 billion EUR) and clubs 3.3% (0,3 billion.€). Other point of sales (e.g. gas stations, drug stores, toy shops etc.) gain 9.0 % (0,81 billion €). Most of total book sales were done by members of the Börsenverein (the dominant association of the industry) with appr. 6.400 members. The membership consists of 1800 publishers and 4700 booksellers

Key aspects of the German market for publishing Fixed price agreement, wholesalers, logistics Germany and austria have a fixed price agreement: the publisher decides upon the retail price of the book and all retailers have to charge the same price to the customer. The reason for this fixed price agreement is to 1. enable publishers to realize a wide variety of cultural and political aspects and 2. protect smaller booksellers from competition

! 4 Key aspects of the German market for publishing Fixed price agreement, wholesalers, logistics Germany and Austria have a fixed price agreement: The publisher decides upon the retail price of the book and all retailers have to charge the same price to the customer. The reason for this fixed price agreement is to 1. enable publishers to realize a wide variety of cultural and political aspects and 2. protect smaller booksellers from competition

Key aspects of the German market for publishing Fixed price agreement, wholesalers, logistics Wholesalers keep a huge number of titles in their warehouses and fleets of cars to ensure overnight dispatch of orders in almost 100%of the cases. In addition the bookseller may order books from publishers themsel ves and will be served with one individual shipment Wholesalers get higher discounts from the publishers and will of course grant only smaller discounts to the booksellers Only very few publishers have their own logistics department Specialised companies offer a full service. As the market is mature and highly competitive the synergy effects especially in IT systems and logistics are the more economical solution

! 5 Key aspects of the German market for publishing Fixed price agreement, wholesalers, logistics Wholesalers keep a huge number of titles in their warehouses and fleets of cars to ensure overnight dispatch of orders in almost 100% of the cases. In addition the bookseller may order books from publishers themselves and will be served with one individual shipment. Wholesalers get higher discounts from the publishers and will of course grant only smaller discounts to the booksellers. Only very few publishers have their own logistics department. Specialised companies offer a full service. As the market is mature and highly competitive the synergy effects especially in IT systems and logistics are the more economical solution

Key aspects of the German market for publishing Numer of customers Germar appr. 7200 bookselling outlets Luxembourg Hamt 4700 organized appr. 24 booksellers Booksellers Austria Heidelberg Forth . Erlangen appr. 1000 booksellers Switzerland asbury appr. 240 Booksellers German speaking Northern Italy appr 20 Booksellers

! 6 Key aspects of the German market for publishing Numer of customers Germany appr. 7200 bookselling outlets 4700 organized booksellers Austria appr. 1000 booksellers Switzerland appr. 240 Booksellers German speaking Northern Italy appr. 20 Booksellers Luxembourg appr. 24 Booksellers

But: No matter how special the market looks the fundamentals of strategic planning are applied the same way all over the world, and not only in publishing

! 7 But: No matter how special the market looks, the fundamentals of strategic planning are applied the same way all over the world, and not only in publishing

The day today 1. Strategic Planning -overview 2. Vision /Mission 3. Company Values /Company Goals 4. SWOT Analysis 5. Environmental Analysis 6. Market Analysis 7. Customer Target Groups 8. Competitor Analysis 9. Potential Analysis 10.Action Plans

! 8 The day today 1. Strategic Planning – overview 2. Vision /Mission 3. Company Values / Company Goals 4. SWOT Analysis 5. Environmental Analysis 6. Market Analysis 7. Customer Target Groups 8. Competitor Analysis 9. Potential Analysis 10.Action Plans

Situation of the book market in the segment of non-trade publishing The national market has already undergone and will continue to undergo drastic changes in the coming years More competition by national and international- mostly well capitalized companies Further development of distribution channels and technologⅰes National cons olidation forced by the national economic situation Ensuring the financing of publishers becomes more and more difficult

! 9 Situation of the book market in the segment of non-trade publishing ▪ More competition by national and international – mostly well capitalized companies. ▪ Further development of distribution channels and technologies ▪ National consolidation forced by the national economic situation. ▪ Ensuring the financing of publishers becomes more and more difficult. The national market has already undergone and will continue to undergo drastic changes in the coming years: :

Requirements In order to be ready for the challenges, publishers must adapt the new situation. KPMG sees especially the following items as critical Ensuring the content quality and thereby reaching or keeping the market leadership in subsegments or topics(reach the must have-status") Also connected to possibly necessary and consequent reassessment of the portfolio Enhance existing technologies to create new distribution channels in order to provide contents in a timely and up to date manner(e. g online) Improve equity base to become more independent of outside financing Source: KPMG corporate finance

! 10 Requirements ▪ Ensuring the content quality and thereby reaching or keeping the market leadership in subsegments or topics (reach the „must￾have-status“) ▪ Also connected to possibly necessary and consequent reassessment of the portfolio. ▪ Enhance existing technologies to create new distribution channels in order to provide contents in a timely and up to date manner (e.g. online) ▪ Improve equity base to become more independent of outside financing. Source: KPMG corporate finance In order to be ready for the challenges, publishers must adapt to the new situation. KPMG sees especially the following items as critical: