Alloy

Topics: Revenue, Cost of goods sold, Marketing Pages: 3 (561 words) Published: November 1, 2014
STATEMENT OF THE PROBLEM

Matt, James and Sam must decide whether or not to partner with AOL or persist with the current combination of methods to attract customers and generate an increase in sales.

BUSINESS MODEL
(Business model with AOL partnership written in grey)

Revenue from Merchandise

Revenue from Advertising
and Sponsorship

Marketing Effectiveness

QUALITATIVE ANALYSIS – Advantages and disadvantages of each alternative

Reject the AOL Partnership
Pros
Would save $2million that would otherwise be spent on the deal with AOL •Avoids having to pay for cost of exposures on AOL
Is able to retain full control of the company
Can invest the money somewhere else
oPrint and mail more catalogs
oBuy exposure on television

Cons
Miss out on a chance of generating more sales
oMore and more people are using the internet and shopping online •Faces increasing competition from competitors who are more focused on moving sales efforts online •Could lose the deal to iTurf who is partnered with their biggest competitor, dELiAs Inc.

Partner with AOL
Pros
Create a more stable environment in a rapidly changing environment •AOL could bump up Alloy’s IPO stock price by 10%and help generate $55.5 million •AOL is a good medium to hit their target market and in general can help increase site visits, registrations, online orders and customer database oMore than a third of visitors to the Alloy site used AOL as their internet service provider oMore people are going online and using the internet, especially Generation Y oWill help Alloy increase sales as more and more competitors continue to enter the marketplace •Will help Alloy continue to build the 3Cs: Community, Content, and Commerce

Cons
Would have to spend $2million
oMoney could be invested somewhere else that would help the company make more profit than they would partnering with AOL •Risks giving up a lot of control to AOL...
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