Page 192 - Electronic Commerce

Selling on the Web

2. Prepare a report in which you analyze the marketing channel conflicts and cannibalization
issues that Lonely Planet faces as it is currently operating. Suggest solutions that might
reduce the revenue losses or operational frictions that result from these issues.
3. Many loyal Lonely Planet customers carry their travel guides (which can be several hun- 167
dred pages thick) with them as they travel around the world. In many cases, these custom-
ers do not use large portions of the travel guides. Also, Internet access can be a problem
for many of these customers while they are traveling. Describe digital products that Lonely
Planet could offer that would address this customer concern and also yield additional reve-
nue. Your answer here could build on ideas that you developed in your solution to
Requirement 1.
Note: Your instructor might assign you to a group to complete this case and might ask you to
prepare a formal presentation of your results to your class.

C2. Association for the Study of International Business
The Association for the Study of International Business (ASIB) is an organization of researchers,
professors, and business executives interested in the study, analysis, and promotion of busi-
ness activities beyond domestic borders. Mario DiPonetti, ASIB’s executive director, has hired
you as a consultant to help him map out a future Web revenue strategy for the association.
The ASIB has about 3000 members located in countries throughout the world; however, about
half of its members are in the United States. Each member pays an annual membership fee of
$100, so ASIB’s dues revenue totals about $300,000 per year. ASIB sponsors two conferences
each year; it also publishes a monthly newsletter and two journals. The conferences generate
about $50,000 per year; that is, conference and exhibitor fees exceed the costs of running the con-
ferences by that amount. This $50,000 is used to cover general ASIB operating costs.
One of the journals, Annals of International Business, has an academic focus and is read by
researchers interested in international business topics. All ASIB members receive a copy of this
journal and ASIB sells about 300 subscriptions to the journal at $500 (a total of $150,000 per year).
Most of the subscribers are university libraries. This journal is published four times each year.
The second journal, International Business Today, is written for business executives. It
includes articles and features that report on current trends in international business and is
published monthly. All ASIB members receive a copy of this journal and ASIB sells about 1000
subscriptions to the journal at $50 (a total of $50,000 per year).
The total subscription revenue from the two journals is $200,000 per year. International Busi-
ness Today sells advertising that yields about $60,000 per year. ASIB uses that total revenue of
$260,000 to cover the costs of producing and mailing both journals. The cost of producing one
issue of either journal, which includes proofreading, editing, and typesetting costs, is about $2000.
The printing and mailing costs, which have been increasing rapidly over the past several years,
average about $3 per journal (the mailing costs to some members are much higher than others
because they are located in distant countries). Each year, ASIB produces 16 issues (four of the
academic journal and 12 of the business journal) and mails 61,200 journals (13,200 of the aca-
demic journal and 48,000 of the business journal) to members and subscribers at a total cost of
$215,600 (16 × $2000 plus 61,200 × $3). Thus, ASIB’s current journal operations yield a net profit
of $44,400 ($260,000 – $215,600) that can help support other ASIB activities.
ASIB has a Web site that it constructed at a cost of $30,000 three years ago. One of ASIB’s
staff members spends approximately half of her time managing the site. One-half of this staff

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