Zagat’s Dilemma Case Study Analysis

Vihar Patel

California Miramar University

Professor. Charles Smith

October 15, 2015

1) Evaluate Zagat using the competitive forces and value chain models.

In order to evaluate Zagats competitive forces we can say that they were the first to come up

with new idea of providing reviews to their customers. We can say that they were the first

entrants in the business. Even though they were first entrants in the market they had threats

from new entrants such as Yelp. Yelp had advantage over Zagat because they used advanced

technology such as internet to fight the existing competition. Zagat failed to keep up with the

internet trend. Zagat another drawback was that they were paid reviews hence it was easy for

their competitors Yelp to get online market. Hence bargaining power of customers was high

due to payment issue. Zagat wanted their customers to pay according to the location. In such

situation Zagat needed strong competitive strategy and they decided to use information

technology. Later Zagat opt for user generated data which helped them get back on their feet

in the market.

2. Compare Zagat’s and Yelp’s e-commerce business models. How have those models

affected each company's Web strategy?

Yelp and Zagat both are e-commerce Company providing and publishing online

information of local businesses. Yelp major strength do advertisement of businesses in local

area. Yelp publishes individual reviews without any filtration. Yelp allows its reviews to send

and received invitations.

Zagat is another e-commerce company that publishes reviews however their reviews

are more genuine and provides accurate information about local business. Zagat can create a

clear picture about local business in customers mind. Zagat sells its data to customers and

business owners. Yelp was publishing their content for free whereas Zagat was publishing the

content through pay wall. Perhaps paid content was Zagat’s major issue in generating more

subscribers and increasing traffic on its website.

3. Why was Zagat’s content well suited for the Web and for the mobile digital

platform?

Zagat already had their market well established before the web and mobile digital platform

came into to market. Another advantage was they already had user generated content and they

also provided with detailed information of companies and quotations. Their data and

information was precise and concise which had an unbiased views and comments of the

viewers. Since they were not generating money through advertising their data seemed more

trustworthy and genuine to customers than their competitors such as Yelp. Zagats website was

designed and developed by professional by the major hub cities.The homepage of Zagat was

streamlined with less search boxes and links. The more details were available to customers by

just scrolling down.

4. Do you think Zagat’s decision to use a pay wall for its Web site was a mistake? Why

or why not?

Yes I do believe their decision to use pay wall for its Web site was a mistake initially, their

decision created a huge impact on their market position. Even though they were first in the

market their competitors were providing all the information to their customers for free and

generating money through advertising. However many valued customers would prefer to get

genuine and accurate information as oppose to yelp. There are several reasons for that, some

of them could be

a) On yelp any random people can post their reviews based on their experiences with that

company hence many companies can write fake reviews in order to get more

customers.

b) When competition became fierce and there are many companies in the market to get

those customers the reviews can be biased.

c) There are few people who believed in unbiased opinions would not be attracted to such

websites.

I believe merging with Google definitely helped Zagat to fight the competition. Google was

the biggest entity in the market and their customer base was huge to bring up the Zagats

market. Another aspect help Zagat was they tried using social features for their online app

in order to make their feature attractive. If Zagat would have started off as free app and

then once they have enough customers to generate revenue they could have start charging

their customers for advanced option might have helped them to sustain in the market.

Zagat brand was recognized by its customers such as foodies, restaurant owners and

travelers.

5. Will Zagat’s acquisition by Google make it more competitive? Explain your answer.

Yes I believe Zagat’s acquisition by Google helped generate more profit for Zagat. Google was

the big player in the web world. Google’s association with Zagat helped Zagat to expand their

market. Zagat already had their customers in the market and Google just have to use attractive

strategy to bring back those customers that are gone due to heavy competition in the market.

Google was the major player in the web search engine and Google can surely put Zagat’s on

their first search engine list which would result in many people visiting Zagat’s website.

Google was also planning to buy ITA which would help Google to acquire all travelers and

hotel markets. When Google decided to buy Zagat, Zagat was already a failure in the market.

Zagat had lost all their customers due to Yelp and many other websites that were providing

reviews and data to their customers for free. Google wanted to capture entire market and their

move to acquire Zagat was win win situation for Zagat to expand from local to National

market and even international market as their customers were mostly travelers and hoteliers.

References

Laudon, K., & Laudon, J. (2013). Foundation of business intelligence: database and

information

management. In Management Information Systems Student Value Edition (13th ed.).

Prentice Hall/Pearson Education.