AOL -- Service Marketing -- Case study

Essay by schadenfreudeUniversity, Master'sA+, May 2008

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Despite its humble beginnings as an unsuccessful online gaming service, America Online (AOL) has blossomed to serve more than 10 million international members by providing e-mail, news, sports, online conferencing, Internet access, weather, and more. A simple, yet ingenious marketing plan helped AOL reach its current level of success: wide distribution of free CD-ROMs containing AOL software. Users were able to sample AOL's wares from the comfort of their home, at their leisure.

Now boasting over 109 million monthly visitors (, AOL hopes to continue to enjoy rising profits by expanding and upgrading its advertising platforms, as well as continue to expand into international markets. Additionally, AOL is attempting to branch out into the business-to-business realm, by offering network systems to businesses and industries.

AOL's wares straddle the line between the product and service categories, but lean towards the latter. Obviously, AOL's software is a product, but it requires AOL services for use.

Service marketing differs from product marketing in that the marketing mix differs between the two. Services rely on availability to customers, thus stressing the importance of distribution, for example. Also, gauging the success of marketing for services can also be problematic, as quality is more subjective than with a product. Additionally, of course, a customer cannot return a service if dissatisfied!America Online appeals to customers via its relationship marketing techniques in the form of retention programs. Examples of such customer retention efforts include promotions, superior technical support, online events, and the steady introduction of upgraded content, services, and programs. Loyal customers prefer AOL due to its child protection option of parental controls, as well as specialized chat rooms aimed to subpopulations of customers, including children, women, and Christians.

Paradoxically, America Online's success created trouble for the firm. After introducing its flat rate fee in 1996,