AOL Business Strategies Essay

This essay has a total of 624 words and 6 pages.

AOL Business Strategies



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
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