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ACCT820 AOL Case Summary[1]

ACCT820 AOL Case Summary[1] - Company Background AOL was a...

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Company Background AOL was a leader in the development of a new mass medium that encompassed online services, the Internet, multimedia, & other interactive technologies o Through its America Online service the company offered members a broad range of features including real-time talk, electronic mail, electronic magazines & newspapers, online classes & shopping, & Internet access o AOL’s business expanded during 1995 to include access software for the Internet, production & distribution of original content, interactive marketing & transactions capabilities, & networks to support the transmission of data AOL generated revenues principally from consumers through membership fees, as well as from content providers & merchandisers through advertising, commissions on merchandise sales & other transactions, & from other businesses through the sale of network & production services Through continued investment in the growth of its existing online service, the pursuit of related business opportunities, its ability to provide a full range of interactive services, & its technological flexibility, the company positioned itself to lead the development of the evolving mass medium for interactive services AOL’ S P RODUCTS The range of features offered by AOL to meet the varied needs of its 4 million members included: o Online Community: conferences & discussions on specific topics; offered interactive areas for members to participate in lively interactive discussions w/other members; provided public bulletin boards o Computing: provided access to tens of thousands of public domain & “shareware” software programs o Education & References: contracted w/professional instructors to teach real time interactive classes in subjects of both general & academic interest & adult education; regular tutoring sessions were offered o News & Personal Finance: offered a broad range of information services, including domestic & international news, weather, sports, stock market prices, & personalized portfolio tracking o Travel & Shopping: provided access to travel & shopping reference materials & transaction services o Entertainment & Children’s Programming: provided various clubs & forums for games & sports, multi-player games, & other related content for adults & children C USTOMER A CQUISITION & R ETENTION Biggest expenditure was the cost of attracting new subscribers o Aggressively marketed online service using both independent marketing efforts & co- marketing efforts w/computer magazine publishers & PC hardware & software producers These companies bundled the AOL software w/their computer products, facilitating easy trial use by their customers Accompanying each program disk was a unique registration number & password that could be used to generate a new AOL account
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o These types of promotions were expensive (cost >$40 per new subscriber in 1994); thus, to retain these new subscribers & increase customer loyalty & satisfaction, AOL invested in specialized retention programs o AOL’s goal was to maximize customer subscription life
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