Case Study Aol: Lost in Translation

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Fachbereich Wirtschaft

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Case Study
Lost in Translation: AOL’s Assault on Latin America Hits Snags in Brazil

Identify the controllable and uncontrollable elements that AOL encountered in entering the Brazilian Market!

When entering a foreign market, as AOL entered the Brazilian Market, certain rules and regulations have to be followed. In case of AOL the controllable and uncontrollable elements are playing a significant role. The main problem of AOL’s strategy in Brazil was the insufficient research about typical country terms and condition. Controllable elements, such as product, price, promotion and the channels of distribution have to be adapted to the target market.

AOL (America Online) is market leader in the American domestic market in providing fast and reliable Internet Services. The company implemented their product and services successfully in the US and wanted to use the same strategy to enter foreign markets. The management was hoping to achieve the same popularity, success, and revenues in the foreign market in this case Brazil, as they achieved in the domestic US market. The company ignored the differences in market structure; therefore they implemented the same strategy as AOL’s did in their domestic American market. The company has to adapt their product price to the country’s specific environment, so that the new consumers are willing to pay the price. Furthermore they have to think about a new marketing strategy to optimize the process of distribution. Based on these facts, AOL should choose a different strategy to encounter the foreign Brazilian market and adjust the controllable elements as described earlier to the consumer’s needs and wants. There are three product strategies that can be used to enter a foreign market: • Straight Extension: Market the same product as in their domestic American market. Same product means that there is no change or adaptation to the foreign market. •...
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