America Online: so Successful Than Compuserve and Prodigy

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Prior to 1995, why was America Online (AOL) so successful in the commercial online industry relative to its competitors CompuServe and Prodigy?

The reasons for the success of AOL were manifold. Not only was it a pioneer in many new offerings to the customers, it also pursued aggressive marketing to retain and capture customers. The following are a few reasons for the 4 million users it had by the end of October 1995. •AOL’s rate structure was the easiest for the customers to understand and anticipate. Thus customers did not feel confused when dealing with AOL in an environment when the other service providers had complex rate structures. •AOL invested in specialized retention programs including regularly scheduled online events and conferences, online promotion of upcoming events and new features and the addition of new content, services and software programs. Thus AOL was very aggressive in its marketing strategy. •AOL ventured into various Direct Marketing and Co-Marketing efforts to attract and retain customers. The co-marketing companies bundled the AOL software with their computer products, facilitating easy trial use by the customers. •AOL had some major competitive advantages like its graphical user interface, high speed browser and the marketing genius of Mr Case. •AOL had entered into a number of joint ventures. They made sure that the newest stars of cyberspace entered into contracts with them. AOL paid the entrepreneurs 20% of the revenue but in return demanded exclusive contracts with them. Thus the content available on AOL was not available anywhere else. This attracted new as well as existing customers to AOL. •For implementing an aggressive expansion strategy, AOL implemented a host of unique initiatives like maintaining technological flexibility, investment in existing service, exploiting new business opportunities and providing a full range of interactive services. Various deals and acquisitions along with AOL’s growing membership base,...
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