Expanding your consumer franchise

Folio: The Magazine for Magazine Management, Annual, 1992 by Reed Phillips, Chris Fodor

* Can the product become an institution? A product extension with a lifespan of many year is usually preferable to a one-time success. An annual guide to colleges, for example, will probably be more profitable than a single edition book about how to get into college.

* How large can the business grow? The answer to this question could change the future direction of your publishing company.

What is exciting about product extensions is that they can transform a company from a simple magazine publisher into a multi-product information company. In Rodale's case, decisions are made differently now that its book division is the size of the magazine division. Potential magazine acquisitions, for example, are now evaluated for fit with both the magazine and book division.

Publishers have enormous leverage in starting product extensions from magazines with established names. In the decade ahead, those who begin strengthening their franchises now will retain their competitive edge, fend off challengers, and generate additional revenues and profits.

One idea and how it grew

Product extensions often beget their own product extensions. A single article in Rodale's Prevention sparked a chain reaction of new product lines. It all began when a readership survey showed that a story on the link between health and the emotions had struck a chord.

The products spun off from this single article have generated more than $30 million in revenue since 1986, according to Pat Corpora, president of the book division of Rodale Press. Here's how it went:

1984: Prevention publishes an article about how emotions affect physical health.

1986: Based on that topic, Rodale publishes a book, The Complete Guide to Your Emotions and Health. It sells 75,000 copies.

1988: Rodale publishes a follow-up book, Positive Living and Health. It sells 500,000 copies.

1989: Rodale starts a mind-body-oriented newsletter, "Your Personal Best," that quickly grows to a circulation of 75,000.

Rodale also introduces a 25-audio-tape continuity series, Prevention's Mind/Body/Healing, and achieves a membership of 75,000.

Reed Phillips and Chris Fodor are senior associate and international associate, respectively, of The Jordon Group, Inc., an investment banking and management consulting firm.