Zagats 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 Zagats and Yelps 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 Zagats major issue in generating more
subscribers and increasing traffic on its website.
3. Why was Zagats 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 Zagats 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 Zagats acquisition by Google make it more competitive? Explain your answer.
Yes I believe Zagats acquisition by Google helped generate more profit for Zagat. Google was
the big player in the web world. Googles 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
Zagats on their first search engine list which would result in many people visiting Zagats
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.