Aol Business Strategies Essay, Research Paper
A. Business Strategies
1. Strategic Objectives
Brand Name Recognition
Alliances with Suppliers to provide Customers with “one-stop shopping”
Develop massive customer base
Create an easy internet/email service
Create non-financial costs to customers to dissuade them from moving to competitors
2. Cost Strategy
Profits mater more than growth
Make cost to switch not financially practically
Make it financially difficult for competitors to contend with AOL
3. Differentiation Strategy
Provide on-line features with special offers to AOL subscribers
Attract suppliers by intangible benefit of association with AOL’s brand name
Offer premium services
Provide user-friendly access
4. Innovation Strategy
AOL Direct
New AOL software
AOL TV
B. Successes
Forty percent of online traffic is from AOL
Users are watching less TV therefore advertisers are spending more on internet advertising
Reduced costs by eliminating inefficient units
Reduced costs by lowering AOL’s cost of connect time
Reduced costs to acquire new subscribers
Leverage AOL’s massive subscriber base for all it is worth
Generated guaranteed future revenues
C. Uses of Technology
New AOL software could save up to $40 million in customer service costs
Creating a personalized digital newspaper
Creating competition for WebTV
D. Problems to Overcome
Not customer service friendly
Internet service occasionally has outages and email glitches
The telcos and cable companies are targeting AOL’s customers
Analysts predict AOL will lose market share
Lead companies would rather invest in their own websites than AOL advertising
E. Recommendations
The key strategy is leveraging the brand name of AOL. AOL adds more than 10,000 users a day . Once consumers associate Internet service with AOL, then competitors will not be able to enter the market. AOL needs to form more alliances with suppliers to ensure guaranteed financial revenues for many years. AOL needs to strategize with the cash surplus and focus on new technology to eliminate system outages and email glitches. If AOL users experience to many difficulties, then they will surrender the financial and nonfinancial costs to mover to a more sophisticated Internet provider.
F. Time Warner Merger
20 million families rely on AOL to be their Internet provider. This is a powerful market of consumers who are influenced by convenience. This merger is an attempt to lock in customers to AOL with the convenience of ?one-stop shopping?. Customers will be able to watch TV and email their friends about a particular program at the same time. Customers will also be able to surf the Internet during commercials of their favorite TV show. This merger is another step towards AOL?s strategic goal of creating non-financial costs to deter customers from switching to another Internet provider and simultaneously, AOL will be able to create new marketing arenas in order to attract suppliers to form alliances with AOL.
Strategies and Technology
Customers Suppliers Competitors
Strategic Objective
Offer many online- * Leverage subscribers *Lock out competitors
services for ease base for maximum by locking in customers
of customers advertising & suppliers with AOL
Cost Strategy
Make cost to switch Offers suppliers access Make it financially difficult
not practical to have customers pay on-line for competitors to
rather than sending out a bill contend with AOL
Differentiation
Strategy Provide more on-line *Suppliers benefit by *Offer exclusive rights to contracts
features with special association with AOL’s so competitors are not able to
offers to subscribers brand name add equal value to their services
Innovation
Strategy Introduce AOL Direct #Offer many new ideas #Provide unmatched products
so members who have of marketing and and services
web pages can be grouped advertising forums
by common interests
Strategies and Successes
Strategic Objective
*Brand name recognition *Offer alliances to provide *Develop massive customer base
their services in a secure and make it difficult to switch
format internet providers
Cost Strategy
#Increase monthly access fee #Charge premium rates for Cash surplus secures position
privilege to advertise on any new delivery platform
on AOL
Differentiation
Strategy #Provide user-friendly access *AOL brand name creates Lower costs of acquiring new
immediate value to suppliers subscribers make it difficult
for others to compete without
suffering a financial hardship
* is Strength of AOL
# is Weakness of AOL