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Aol Latin America David T.A. Wesley; Henry W. Lane; Nicholas Athanassiou

2198 words - 9 pages

AOL Latin America1. Business model USThe success of AOL-US business model comprises the following factors: The easy to use proprietary portal software, the flat fee pricing structure, high brand awareness, a large user community, good content and immense marketing efforts.The proprietary dial-in software enables users with little or no computer knowledge to install and use AOL's online services easily. Therefore AOL managed to expand its user group and now primarily targets families, households and users with little technical expertise for their service.Their software bundles email, chat, messaging and entertainment sections by directing the user directly to their portal page where information on a variety of topics from weather information to stock prices can be accessed. The function of setting up multiple screen names and linked access control for different users under a single account was especially appealing to families. This was one of the main competitive advantages which most of their competitors could not handle as well as AOL.The immense marketing effort helped AOL USA to enlarge their market share and to build a high brand-awareness. The strategy of giving out masses of CDs with their dial-in software bundled with a free trial period, and their policies of giving cash-back rebates of up to $400 to people who sign up for a 24 month subscription with the purchase of a new PC led to a steady growing number of users every month. Their large customer base enabled AOL to build up a huge online community which helped AOL to grow even more through word-of-mouth. Especially among young people the Instant Messaging service was of high demand because no extra program was required.AOL-US' pricing structure is easy to understand and is disjointed from time or volume based usage criteria. The fact that it is not common in the US to charge per minute usage fees for local phone calls helped to create a dial-in "flat rate" access for modem users at only $28 a month.Besides the usage fee for AOL users, the company also drew its revenues from directing traffic to content distributors, advertisers and e-businesses.2. In the U.S. against whom is AOL competing and on what basis?As pointed out in the previous question, AOL is more a media company rather than a pure Internet Service Provider. Therefore AOL faces competition from companies active in various sectors of the online market.First, and most importantly, competition arises from other ISPs. Multiple companies like DSLi, EarthLink, MSN, Quantum or Verizon Online are competing for customers looking for pure internet access . The key features to differentiate companies' offerings include price and the pricing framework (volume vs. time), speed and the used transfer technology (xDSL vs. Cable). Most people who consider those factors in great detail upon choosing their online provider have a more sound technical expertise and are therefore not AOL's main target group, which rather focuses on the usability...

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