Alloy on Aol

Alloy.com on AOL Deal

From the careful SWOT, 4Cs, 4Ps, and situational analysis, I suggest Alloy to reject the AOL offer and put the $2 million to better use by distributing extra 4 million catalogs to targeted customers. This action plan will expand our customer base by achieving a lower customer acquisition cost. At the same time, the higher customer retention rate will allow us to grow revenue more aggressively by breaking even faster. A larger customer base and a higher retention rate will strengthen our two main revenue sources while aligning Alloy’s 3C’s corporate strategy. Further comparisons with the alternative in Appendix 3 & 4 reinforce the recommendation with qualitative evidence.

Given the effectiveness of catalog have on Alloy’s site traffic and actual orders, Alloy must reject the AOL offer and instead use the money to distribute more catalogs.

Currently, only 5% of Alloy’s sales come from web orders. Therefore, we should concentrate on the more effective means of our revenue source, the catalogs. Given the uncertain actions of internet users, focusing on our marketing effort online is ineffective. Online clothing industry is already oversaturated, and there are so many other advertisements on the web that internet users’ attentions are easily diverted. Instead, by focusing on the existing customers who are on our mailing list, and who are known to be interested in Alloy’s merchandise, response rate can be improved. More extensive use of catalogs to narrowly target the customers will facilitate the first C, commerce, by increasing transaction exchanges.

The catalogs are extremely popular among our target customer groups, and word of mouth advertisement is essential among Generation Y members, who tend to trust and be influenced by their friends’ opinions. Getting the catalog receivers to discuss our merchandise through catalogs at school lunch rooms will help spread Alloy’s reputation and generates free publicity to broader potential...