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Case 4: to Pay or Not to Pay: Zagat’s Dilemma

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Case 4: To Pay or Not to Pay: Zagat’s Dilemma 1. Substitute Products and Services: There are several substitute services to that of Zagat including Groupon, Google Places and Yelp. Yelp proved to be the most popular substitute of Zagat with growing popularity with 26 million users as opposed to Zagat with 269,000 visitors in January 2011.
Customers: Zagat’s brand is recognized and used by food-lovers, travelers and restaurateurs.
New Market Entrants: Zagat is a new market entrant into the online and mobile platform industry. Zagat is trying to enter the market as more consumers take advantage of online and mobile technologies. As they transition into the online and mobile platforms Zagat is facing opposition from current companies who offer free reviews content to consumers.
Zagat implemented certain primary and secondary activities as they continued to expand their consumer base and move forward to online and mobile platforms. Some of those primary activities include establishing a pay wall to place their content relying on consumers to purchase the service for full online access, the fact that Zagat provides clear and concise impressions of restaurants as opposed to their Yelp competitor, re-launching their website in February 2011 with more free content to compete with other free online providers and developing smartphone applications for several mobile platforms. Some secondary activities include establishing integration with other social media outlets in their latest version of their mobile platform, being acquired by Google to strengthen their high-volume searches and developing a business model that sells their content to consumers and corporations rather than selling advertising to local business.

2. Upon Zagat’s transition to online and mobile platforms, the company decided they need to set up a system that charges for various types of

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