Aol Goes Far East

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Aol Goes Far East

  1. 1. AOL Goes Far East Case Study INTERNATIONAL MARKETING AND STRATEGIC ALLIANCES
  2. 2. AMERICA ONLINE INC. <ul><li>Founded in 1985 as Quantum computers </li></ul><ul><li>In the starting offering online services for commodore business machines </li></ul><ul><li>WWW came along almost 12 years later </li></ul><ul><li>Company grew at a steady pace </li></ul><ul><li>Acquired mapquest in 2000 </li></ul><ul><li>Acquisition of a large portion of the assets of time Warner in 2001 </li></ul>
  3. 3. INTERNATIONAL EXPANSION <ul><li>Started its international expansion with Germany in 1994 </li></ul><ul><li>Company expanded to Australia, Brazil, Canada, France, Japan, UK, Sweden and Hong Kong </li></ul><ul><li>All the joint ventures have been undertaken with a partner in local market </li></ul><ul><li>AOL chose Bertelsmann AG (multimedia company) in Germany and in Latin America , they joined with cisneros (media, entertainment and telecommunication company </li></ul><ul><li>In Japan, AOL chose Mitsui & company (largest and oldest trading company) </li></ul>
  4. 4. Internet in JAPAN <ul><li>46 M households in Japan </li></ul><ul><li>Only 33 % of households have PC, and only 18 % of households connected online </li></ul><ul><li>The number of online households is expected to grow significantly </li></ul><ul><li>AS PC growth in double digit in last year </li></ul><ul><li>The high connecting cost has been recognized as primary barrier </li></ul><ul><li>Lower access charge are expected to reduce this barrier </li></ul>
  5. 5. PRIMARY ISP
  6. 6. MITSUI & Company <ul><li>MITSUI & Company was founded in 1941 </li></ul><ul><li>Mitsui has more than 60000 employees in 60 countries </li></ul><ul><li>Known as the most traditional trading company </li></ul><ul><li>Mitsui’s strength was in Facilitating large transactions for commodity type products </li></ul><ul><li>Core competency in import, export and financing </li></ul><ul><li>Mitsui had all the connection and money required </li></ul><ul><li>It had very little experience in internet </li></ul>
  7. 7. MARKETING AT AOL JAPAN <ul><li>Mitsui hired all the local employees in marketing department </li></ul><ul><li>The marketing strategy initially employed was based on the strategy that was successful in US </li></ul><ul><li>The marketing strategies were </li></ul><ul><li>Bundling </li></ul><ul><li>Magazine inserts </li></ul><ul><li>Direct mail </li></ul><ul><li>Take-one </li></ul>
  8. 8. BUNDLING <ul><li>PC maker installed AOL software preinstalled on each PC </li></ul><ul><li>An offer of X free hours of free trial of internet </li></ul><ul><li>Successful in US (resulted in 30% of the users) </li></ul><ul><li>AOL tried same strategy in JAPAN and tied up with 15 manufacturers </li></ul><ul><li>Unlike US, PC manufactrers in JAPAN also owns ISP </li></ul><ul><li>Partnership with DoCoMo, Planned to to use internet vie I mode mobile phone </li></ul>
  9. 9. DIRECT MAIL <ul><li>Very much successful in US </li></ul><ul><li>Not successful in JAPAN </li></ul><ul><li>Because lack of available mailing list </li></ul><ul><li>Mailing cost is much more in Japan as compared to US </li></ul>MAGAZINE INSERTS <ul><li>Successful in US (resulted in 30% of the users) </li></ul><ul><li>To shrink wrap each magazine with a CD </li></ul><ul><li>In Japan, magazine companies are tough to do business with </li></ul><ul><li>AOL issued its own magazine, when there is major software upgrade </li></ul>
  10. 10. TAKE-ONES <ul><li>Software CD prepackaged in a small, thin package , put on display in places, where potential customers might congregate </li></ul><ul><li>One natural place was computer store SOFTMAP </li></ul><ul><li>Successful in Japan </li></ul><ul><li>Hit rate for take one’s is much higher than direct mail or magazine inserts </li></ul><ul><li>AOL combined take ones with other promotion like pokemon and tarzen movie </li></ul>
  11. 11. MOVING FORWARD <ul><li>In 3 years AOL japan grown over 0 to 3 percent </li></ul><ul><li>Annual growth of 10 to 15% over two years </li></ul><ul><li>AOL japan looking at 3 different ways to increase their market share </li></ul><ul><li>Lower access charge to capture a new subscriber </li></ul><ul><li>Take advantage of technology changes and new emerging markets (NTT DoCoMo) </li></ul><ul><li>Buy other ISPs </li></ul>

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