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The Crisis At Encyclopedia
Britannica

Group 07
Akash Rajendra Singh PGP13-004
Luv Rustagi PGP13-031
Rashi Jindal PGP13-051
Rohit Singh PGP13-056
Roopanjali Jasrotia PGP13-057
Yogesh Mantri PGP13-080



WHAT HAPPENED AND WHY

Before conversion to multimedia
The company was reluctant in shifting to the digital segment (CD ROMs) since it
did not want to cannibalize its print sales
Refusal of Microsofts Offer : A Missed Opportunity
o Underestimated Market Potential for PCs
o Feared hurting their most valuable asset salespeople by negative effect on
their traditional sales through print
o Viewed CD ROMs as a childish concept and conflicting with Britannicas
intellectual image
o Apprehension of Executive team regarding changing their existing strong
business model

After conversion to multimedia
Positioned CD ROM as less expensive than the print product and less prestigious
since it feared cannibalization of existing print product - hence there was a
compromise on the content quality and thus a mismatch between price point and
reputation
Sales force not competent enough to operate discs
Took a hasty decision of selling the New Media Unit as it was unable to capitalize
on it being the first multimedia encyclopedia on CD ROM
Technological Challenge : Issues related to conversion of large volume of text,
finding the right search technology, finding appropriate structure for text and
Graphics

Competitive advantages of Encarta
Text , graphics and sound were far superior with more structured content
Chose to sell and distribute through third party retailers
Extensive marketing through in-store promotions, magazine reviews etc.
Entries presented in plain and easy to use format
Multimedia parts of Encarta appealed to users as did the lower price
Freedom to editors to fit the text & updating content dynamically

The late launch of Encarta CD-ROM was further adversely affected by
reluctance of sales force to sell this low product owing to low
commissions

Drastic drop in prices could also not compensate for Encarta's early
mover's advantage
Even Britannica's online web portal could not help the parent
organization deal with the bigger financial crisis owing to drop in
revenue from printed product
Organizational Issues
Goal of the company was to support a full time sales workforce which aimed to
be better at sales and distribution than other firms. This support sometimes
bordered on appeasement.
Increasing tension between the sales and credit department
Environmental factors
The firm could not tap the explosive growth in home computer penetration
which remained largely underestimated
Inability to implement ambitious technical plans due to increasing financial crisis
RECOMMENDATIONS

The company should have gradually transformed its business model first from
print to multimedia (CD ROM) and then focusing on the world wide web.
Therefore while they could have existed in all three categories the focus should
have been shifted in accordance with change in demand conditions
They should have capitalized on their early mover advantage in the digital market
by persisting with Compton and making a long term investment in it which could
have offered a smooth transition to the sales force in training and convincing
them
They could have offered different versions of CDROM for the experts and novices
and giving them the liberty to price the product at different points for the two
segments
Their product and promotions should have engaged customers better by
organizing online quizzes , engaging in marketing gimmicks etc.