AOL Business Strategies

 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

 Profits mater more than growth

 Make cost to switch not financially practically

 Make it financially difficult for competitors to contend with AOL

 Provide on-line features with special offers to AOL subscribers

 Attract suppliers by intangible benefit of association with AOL’s brand name

 Provide user-friendly access

 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

 New AOL software could save up to $40 million in customer service costs

 Creating a personalized digital newspaper

 Creating competition for WebTV

 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

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.

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.

CustomersSuppliersCompetitors

Offer many online-* Leverage subscribers*Lock out competitors

services for ease base for maximumby locking in customers

of customersadvertising& suppliers with AOL

Make cost to switchOffers suppliers accessMake it financially difficult

not practicalto have customers pay on-linefor competitors to

rather than sending out a billcontend with AOL

StrategyProvide more on-line*Suppliers benefit by*Offer exclusive rights to contracts

features with specialassociation with AOL’s so competitors are not able to

offers to subscribersbrand nameadd equal value to their services

StrategyIntroduce AOL Direct#Offer many new ideas#Provide unmatched products

so members who haveof marketing andand services

web pages can be groupedadvertising forums

*Brand name recognition*Offer alliances to provide*Develop massive customer base

their services in a secure and make it difficult to switch

#Increase monthly access fee#Charge premium rates forCash surplus secures position

privilege to advertiseon any new delivery platform

Strategy#Provide user-friendly access*AOL brand name createsLower costs of acquiring new

immediate value to supplierssubscribers make it difficult

for others to compete without

suffering a financial hardship