By: Vileta Pinkham & Kelley Hamrick
America Online’s Mission Statement “To lead the development of a new interactive medium that eliminates traditional boundaries between people and places to create a new kind of interactive global community that holds the potential to change the way peopleobtain information, communicate with one another, buy products and services, and learn.”
AOL’s Company Strategy To continue investment in the growth of its subscriber base, pursue related business opportunities often through joint ventures and acquisitions, provide a full range of interactive services, and maintain technological flexibility.
AOL’s Rapid Growth • December 1996, AOL was the easiest, most popular and most well known way to get online • AOL had 8.5 million member sessions a day • 7 million emails sent to 12 million recipients per day • $750,000 per day in merchandise sales
Problems With AOL • Too many resources offered that are not profitable • Hard to compete in current market • Needs a foundation that can support broadband • Bad billing practices • Flat rate fees • Poor customer service
Strengths • Persistence • Ambition • Attempting to control the media • Brand name recognition • Rapid growth • Customer care • Generation of revenue
Weaknesses • The opening up of their cable systems to rival internet providers • Stockholder premium • Local government
Opportunities • Music • Entertainment • Technology • broadband
Threats • The introduction of broadband • Highly competitive market
Company Profile AOL emerged from a firm founded in the early 1980’s as Control Video Corp., which aimed to create an online service that specialized in games.
AOL’s Massive Growth • AOL emphasized communication among members • Private rooms held up to 27 people and created by any user • Conference rooms held up to 48 people and created with AOL’s permission • Auditoriums unlimited amount of people had a stage and rows of 27 people created with AOL’s permission
Change in Pricing Originally AOL charged the consumer by the hour but in 1996, AOL changed to a flat rate of $19.99 and AOL’s customer base grew to 10 million. AOL’s connections were flooded with people trying to get on and many people cancelled their subscriptions due to busy signals.
Company Profile Cont’d Control video Corp failed to meet strong competition and Apple withdrew leaving Quantum holding software it had developed for Applelink Quantum bounced back by offering diskettes that contained America online software AOL has tried to position itself as the first digital media company
AOL Organization • AOL corporation • AOL networks • ANS access • AOL studios
AOL Marketing Increase the general visibility of AOL Make it easy for customers to subscribe to and experiment with its services AOL uses special retention packages
AOL has been expanding into business to business markets through customized network solutions provided to individual businesses and professional communities and industries
AOL User Reputation AOL has geared towards new users of the internet so their users have a reputation of not knowing much about the internet.
AOL User Reputation AOL also provided its user a way to get on the Usenet bulletin board and this was earmarked for more experienced and more sophisticated internet user. The bulletin board was inundated with requests for porn, bootlegged software and hacking information. AOL discontinued this practice in 2005 and directed users to log onto Google.com for news groups.
AOL User Reputation AOL email accounts do not show the person’s full name like other email accounts do so the recipient is less likely to know who the mail is from and also AOL offered free hours and internet trollers were making accounts and keeping themselves anonymous.
Billing Disputes • AOL faced a lot of law suits based on improper billing procedures after accounts had been cancelled. • Class Action suit was also brought concerning AOL’s procedure of billing minutes
Account Cancellation • New York Attorney General’s office received 300 complaints from AOL users about trying to cancel their accounts. AOL would reward their customer service reps to retain consumers and even when the consumer thought they had been cancelled, they would keep getting billed. • On August 25th, 2005, AOL agreed to pay $1.25 million to the State of NY and reformed its customer service procedures.
Possible Solutions • AOL now offers broadband so they can more effectively compete with other internet companies. • Change billing practices and give incentives to consumers to stay with AOL. • Make sure customer service actually cancels a consumer if that is what the consumer wants.
Possible Solutions Cont’d • Market to a more savvy internet user. • Upgrade equipment so that all consumers can get online when they want and need to. • Diversify their holdings and make sure that AOL has holdings in more technologically advanced companies such as wireless telephones an telephone companies that use broadband instead of conventional phone lines.