Case Study: Encyclopedia Britannica Judith Molka-Danielsen Lo205 E-handel April 01.03

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Britannica's Online Transitions 1994: Britannica debuts on the Web with Britannica Online, a subscription service for colleges and universities. 1995: Britannica extends the service to consumers, offering an annual subscription for $150 and eventually reducing the price to $50. October 1999: Britannica launches Britannica.com, offering the full text of the encyclopedia for free and relying on advertising for revenues. 2000: Britannica.com repositions itself as a portal, offering general information on a wide variety of topics designed to bring in as much traffic as possible. March 2001: Britannica.com goes back to its roots, focusing on education, learning and reference, and plans to charge for its services again. July 2001: Britannica.com begins charging for the full text of the encyclopedia. September 2001: Britannica launches BritannicaSchool.com, a subscription site aimed at elementary and secondary schools. March 2002: Britannica introduces Britannica Online School Edition, a subscription site for school libraries and classrooms.

1. In 1999, Britannica put the entire text of its encyclopedia on its new Britannica.com website — and made it available free of charge. Was Britannica's online strategy congruent with its other product offerings (including hardbound encyclopedia volumes, CD-ROM/DVDs and subscriptions for academic and research institutions)? No, because…

2. Britannica.com considers the strong association between its brand name and high-quality information as a differentiating factor from other information-based websites. What consumer perceptions about Britannica or aspects of its business may not be advantageous for turning Britannica.com into a leading Web portal? They offer more than just research oriented information. But, may not provide all the services of top portals. Discuss.

3. Who are Britannica's direct and indirect competitors? Do customer needs fulfilled by Britannica differ from the customer needs fulfilled by these competitors, and what implications does this have on their business models? Besides MSN's Encarta, Grolier and other electronic encyclopedias that compete directly with the various forms of Encyclopædia Britannica as a research tool, Web portals such as Yahoo, Excite, Alta Vista and Ask Jeeves compete with Britannica.com as a means to find information online. Internet has many substitute information products. They must redefine who is their customer segment.

4. What are some actionable, meaningful ways to segment Britannica.com's market? Which segments would find the most value in Britannica's site? Segment by types of information that a user might try to find online. This includes research-type information, current (news) information, pricing information and local information.

5. Britannica.com has not shown a profit since it was introduced in October In its latest effort to offset poor ad sales and achieve profitability, Britannica.com began charging users for its online content in July Will people pay for Britannica's services they used to get for free? Indeed, will students pay for online access to references, when they can find much of the same information on the Internet or in the library free of charge? Analysts warn that this strategy usually works only if the offered content is highly specialized and difficult to find elsewhere. Encyclopædia Britannica has long been a respected fixture in homes and libraries. The subscription service is free of banner and pop-up advertising, and for some, an ad-free environment alone might justify the reasonable subscription price. Finally, the willingness of online users to pay for content is rising. Studies show students are most willing to pay for educational content. Educational, financial and business-related content are the most likely to attract paying customers because their audiences have a need for high-quality information in a realm of limited free alternatives. Britannica.com – signed 25,000 paying members within three months of moving from free to fee – showed that users are willing to pay for high- quality content. “Our initial thought was we would really attract families with kids,” said Patti Ginnis, VP of sales and marketing at Britannica.com. But half of new subscribers do not have children, she found. They are information workers, teachers and researchers who, like students, have a need for reliable content. “What we’re finding is that people are starting to realize that information is everyplace on the Internet, but information that is good and vetted is a different story all together,” said Ginnis.

6. Would you invest in Britannica as it stands today? Yes – –Quality information. –Good as a general research tool. –Uses a subscription-based model. –Signed up 25,000 paying subscribers. No – –Online databases of journals can be substitutes. –Online readers are reluctant to pay for content. –In March 2001: Britannica.com lays off 68 of its 220 US employees as part of a continued strategy to bring the company to profitability. The website has not shown a profit since it was introduced in October 1999.