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