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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 Student�s 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 project�s 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 County�s
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 Randy�s 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 didn�t 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 "Ray�s 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 University�s
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 School�s 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 Teachers� 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 �real world
business� 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 friends� 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

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
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