FREE ESSAY ON CASE ABOUT YAHOO

CASE ABOUT YAHOO

1. Success as a Web Search Engine
a. Why was Yahoo! such an early success on the Web?
Yahoo was an early success due to a combination of factors such as timing, hard work, and
a good understanding of Web surfer's tastes and needs.. In early 1995, Net mania was just
flowering. It was a great time to be a young entrepreneur with an Internet idea. Dave
Faldo and Jerry Yang saw a consumer need for classifying and differentiating web sights.
Resting the urge to automate this process, Yahoo's founders instead chose to manually
perform this search, reviewing and classifying roughly 1000 sights a day. This approach
combined with their decision to offer a free service lead to early success. 
b. Why was Yahoo! more successful as a search engine than other, more technically
superior search engines?
Yahoo!'s search engine was designed to be both reliable and streamlined. The design was
simple so it would pop up quickly. Its focus was on quality, not quantity. Yang's comment
that "if you have 13 Madonna sights, you probably don't need a 14th" rings true. Surfers
choosing Yahoo! not only were provided reliable information, but they were not bombarded
with 1000 sights to review. Additionally, Yahoo! provided a product that was appealing
and fun to use.
c. Why is the fact that "Yahoo! spends money on people, not computers,' one of the keys
to their success?
Yahoo!'s founders business plan was to manually categorize existing web sights and
provide a succinct list of quality sights to choose from. This human-created directory
was all that distinguished Yahoo! from its competitors as Net euphoria swept the stock
market in early 1996. Other search engines were throwing any sight that met the search
requirements at the user. Yahoo!'s concept saved the browser the time they would
otherwise spend filtering out the garbage to find these quality sights.
2. Building a Web Sight and the Brand
a. Do you agree with Jerry Yang's two fundamental strategies for the success of Yahoo! as
a Web site and business brand? Why or why not?
However, Yahoo! founders realized that without a strong brand name, they would have
difficulty attracting both advertisers and users. In order to get people to use your
sight the first time, having a recognizable brand name in essential. New users have been
bombarded with creative ads that may well lead them to try Yahoo! before a competitor. It
is well know that creating brand equity is the surest way to find long-term success in
the business world. One has to go no further than Coca-Cola to see the lasting effects of
building a recognizable brand name. Once users came in droves, advertisers weren't far
behind seeking to capitalize on this captive audience.
b. Do you approve of how Karen Edwards has promoted the Yahoo! brand? Why or why not? How
would you improve Yahoo! marketing? Explain why.
Edwards used an excellent approach in her initial marketing campaign. The majority of web
surfers are young. Targeting events and media that are frequently attended/subscribed to
by the "Gen X" target market proved quick and efficient way to attract interest. 
The next step was to find a way to hold on to current users. This was accomplished with
the consistent offering of new services and distributing "freebies" that kept the Yahoo!
brand name in the forefront of the minds of its users. As the text stated "The freebies,
the branding, and the human touch combined to create a site that was more attractive than
any other."
Yahoo! could improve its marketing campaign in two ways. The purchase of a
telecommunications company or other media outlet would provide new/less expensive avenues
to reach Yahoo!'s target market. AOL has had great success in doing this with Time
Warner. Additionally, Yahoo! could specifically target independent investors. Yahoo!
Finance provides a wealth of historical and up-to-the-minute information about virtually
any public company. To date, advertisements that specifically target the group that can
best make use of this information are not prevalent.
c. Visit Yahoo!'s Web site. Do you like how Yahoo! has built up their site? Why or why
not? How would you improve their Web sight? Explain why.
Yahoo! is set up to be friendly to the user. It loads quickly, has a wealth of useful
links, and the search engine is more streamlined than its competitors. The only
improvement that can be suggested is to allow the home page to be customized rather than
offering a personal Yahoo! page. If the content of this home page could be altered to
cater to the tastes of the individual user, it would save time and offer a more personal
touch the competition cannot match. 
3. Valuing the Business and the Brand
a. Why do you think Yahoo!'s stock price rose and fell so sharply in 1996?
Curiosity and expectations are the root cause of Yahoo!'s success the first day of
trading. However, once investors took a look at the relative lack of advertisers and
listened "Industry Insiders" who were adamant in pointing out the Yahoo!'s technology was
not as advanced as their competitors, this initial success did not last. Now that
advertisers have jumped on the Yahoo! bandwagon in droves, stock prices are back up and
investors are less concerned with technology and paying attention to Yahoo!'s
popularity.
b. Is Yahoo! worth its present multi-billion-dollar market capitalization? Why or why
not?
Yahoo! is worth in present market capitalization. It's unique combination of offering its
services for free and building its product with ease-of-use as the primary goal, it has
left its initial competitors in the rear view mirror. Yahoo! is now considered a chief
competitor of AOL and Microsoft's MSN. Additionally, its 1997 P/E ratio of 171 was an
indicator of strong future earnings. The following financial data confirms this:
For the first half of the year 2000, revenues totaled $498.5 million, up from232.4
million in 1999. Net income totaled $143.3 million, up from $1.5 million. Results reflect
an increased number of advertisers purchasing space on the company's media properties,
increasing number of event broadcasted, and increased investment income
(http://biz.yahoo.com/p/y/yhoo.html)
c. What key business developments is driving Yahoo!'s stock price?
Yahoo! has continued to enlist more and more advertisers that are driving its value
consistently upwards. From Amazon.com to Eloan, Yahoo! has shown consistent earnings
growth through not only increased advertisement, but also creative promotions that
provide additional revenue when Yahoo! users make purchases or even provide marketing
information to advertisers. Yahoo! has continued to add to its online services and is
beginning to be viewed as a key part of the computing establishment. Now Compaq is
attempting to have Yahoo! news and weather on all its PC's. This will only strengthen
Yahoo!'s position.
4. The future of Yahoo!
a. Why have AOL and MSN become Yahoo!'s new Internet competition?
AOL and MSN are the only other comprehensive branded networks available to consumers.
Yahoo!'s previous competitors cannot make this claim. Yahoo! has diversified its product
to the point it can now compete head to head with the "big boys".
b. Do you think Yahoo! will succeed in this new competitive arena? Why or why not?
Yahoo! has a tremendous opportunity to succeed in this new arena. They are the only
comprehensive branded network that does not charge a subscription fee. While AOL and MSN
may have a few "perks" that Yahoo! cannot provide at this point, there will always exist
a limited number of essential services users require. That being true, Yahoo! can only
fall so far behind the competition and consumers may forgo such amenities to take
advantage of Yahoo!'s free service. 
Additionally, Yahoo! is far ahead of the competition with regard to the global community.
In places such as India, AOL cannot be accessed without making an international call.
Yahoo! also caters to foreign nationals with a variety of Yahoo! home sites from China,
France, India, and many more. Given the global nature of today's economy, Yahoo! has done
its part to reach out to new markets.
c. What can Yahoo! do to improve their chances for business success? Explain your
recommendation.
Yahoo!'s chances for future success would be greatly aided by diversifying their business
plan. Currently, Yahoo!'s chief source of revenue comes in the form of selling
advertising. Two areas can be improved here. First, Yahoo! should look to attract more
traditional companies and not rely solely on ".com" firms. Secondly, Yahoo! would benefit
from another, more stable source of income. One suggestion would be to alter their
present format and offer a business suite that provides the simplicity and speed of
Yahoo!'s traditional service as well as a professional appearance. Such products as
business email, videoconferencing, and other telecommunication tools could be packaged
and sold for a flat rate that would provide additional income.