Download elc 310 day 3

ELC 310
DAY 3
Agenda
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Progress on assignments?
Questions?
Finish Discussion on e-Business Models
and Performance Metrics
Begin Discussion on the Marketing Plan
eMarketing Plans due October 22 (6
weeks from now)
Overview
Strategic Planning
SWOT Analysis
Strategic Objectives
Strategy
Strategy to Electronic Strategy
Business Models to E-Business Models
E-Business Models
Value and Revenue
Strategic E-Business Models
Performance Metrics
The Balanced Scorecard
From Business Models to E-Business
Models
• Business model: a method by which the
organization sustains itself in the long term, and
includes its value proposition for partners and
customers as well as its revenue streams.
• A firm will select one or more business models
as strategies to accomplish enterprise goals.
How does a firm select
the best business models?
Critical components:
• Customer value. Does the model create value through its
product offerings that is differentiated in some way from
that of competitors?
• Scope. Which markets do the firm serve, and are they
growing? Are these markets currently served by the firm, or
will they be higher risk new markets?
• Price. Are the firm’s products priced to appeal to markets
and also achieve company share and profit objectives?
How does a firm select
the best business models?
• Revenue sources. Where is the money coming from? Is it plentiful
enough to sustain growth and profit objectives over time?
• Connected activities. What activities will the firm need to perform to
create the value described in the model? Does the firm have these
capabilities?
• Implementation. The company must have the ability to actually make
it happen.
• Capabilities. Does the firm have the resources (financial, core
competencies, and so on) to make the selected models work?
• Sustainability. The e-business model is particularly appropriate if it
will create a competitive advantage over time.
Overview
Strategic Planning
SWOT Analysis
Strategic Objectives
Strategy
Strategy to Electronic Strategy
Business Models to E-Business Models
E-Business Models
Value and Revenue
Strategic E-Business Models
Performance Metrics
The Balanced Scorecard
E-Business Models
• The direct connection with information technology makes a
business model an e-business model:
E-Business Model = Business Model
+ Information Technology
• E-business model: method by which the organization sustains
itself in the long term using information technology, which
includes its value proposition for partners and customers as
well as its revenue streams.
E-Business Models
• E-business models can capitalize on digital data collection
and distribution techniques without using the Internet.
• Remember that e-marketing and e-business models may
operate outside the Internet.
The term e-business models to include both Internet and
offline digital models throughout the rest of our discussion.
Overview
Strategic Planning
SWOT Analysis
Strategic Objectives
Strategy
Strategy to Electronic Strategy
Business Models to E-Business Models
E-Business Models
Value and Revenue
Strategic E-Business Models
Performance Metrics
The Balanced Scorecard
Value and Revenue
– Whether online or offline, the value proposition involves
knowing what is important to the customer or partner and
delivering it better than other firms.
– Value encompasses the customer's perceptions of the
product’s benefits, specifically its attributes, brand name,
and support services.
– Subtracted from benefits are the costs involved in
acquiring the product, such as monetary, time, energy, and
psychic.
Value = Benefits - Costs
E-Marketing Contributes to the E-Business
Model
E-Marketing Increases Benefits
Online mass customization Personalization
24/7 convenience
Self-service ordering and tracking
One-stop shopping
E-Marketing Decreases Costs
Low cost distribution of communication messages
Low cost distribution channel for digital products
Lowers costs for transaction processing
Lowers costs for knowledge acquisition
Creates efficiencies in supply chain
Decreases the cost of customer service
E-Marketing Increases Revenues
Online transaction revenues such as product, information, advertising, and subscriptions
sales; or commission/fee on a transaction or referral
Add value to products/services and increase prices
Increase customer base by reaching new markets
Build customer relationships and thus increase current customer spending
Overview
Strategic Planning
SWOT Analysis
Strategic Objectives
Strategy
Strategy to Electronic Strategy
Business Models to E-Business Models
E-Business Models
Value and Revenue
Strategic E-Business Models
Performance Metrics
The Balanced Scorecard
Menu of Strategic EBusiness Models
• A key element in setting strategic objectives is to take stock of
the company's current situation and decide the level of
commitment to e-business in general and e-marketing in particular.
• Questions prior to embarking on any e-business strategies:
Are the business models likely to change in my industry?
What does the answer to question 1 mean to my company?
When do I need to be ready?
How do I get there from here?
Level of business impact
Business transformation
(competit ive advantage,
industry redefinition)
Pure
Play
Pure dot-com
(Amazon)
Enterprise
Effectiveness
(customer
retention)
Business Process
Efficiency
Activity
(cost
reduction)
Exhibit 2 - 1 Level of Commitment to E-business
Source: Adapted from www.mohansawhney.com
Click and Mortar
(eSchwab, most retailers)
Customer
Relationship
Management
Brochureware
E-mail
E-Business Models at Various
Levels of Commitment
• Each level of the pyramid indicates a number of opportunities for
the firm to provide stakeholder value and generate revenue streams
using information technology.
• Because there is no single, comprehensive, ideal taxonomy of ebusiness models, we categorize the most commonly used models
based on the firm's level of commitment.
Level of business impact
Business transformation
(competit ive advantage,
industry redefinition)
Pure
Play
Pure dot-com
(Amazon)
Enterprise
Effectiveness
(customer
retention)
Business Process
Efficiency
Activity
(cost
reduction)
Exhibit 2 - 1 Level of Commitment to E-business
Source: Adapted from www.mohansawhney.com
Click and Mortar
(eSchwab, most retailers)
Customer
Relationship
Management
Brochureware
E-mail
Activity Level
1. Order processing
2. Online purchasing
3. E-mail
4. Content publisher
5. Business intelligence
(BI)
6. Online advertising
7. Online sales
promotions
8. Dynamic pricing
strategies online
Business Process Level
1. Customer relationship
management (CRM)
2. Knowledge
management (KM)
3. Supply chain
management (SCM)
4. Community building
online
5. Database marketing
6. Enterprise Resource
Planning (ERP)
7. Mass-customization
Exhibit 2 - 1 E-Business Model Classification
Enterprise Level
1. E-Commerce, direct
selling, content
sponsorship
2. Portal
3. Broker models
Online exchange, hub
Online auction
4. Agent models
Manufacturer’s agent
Catalog aggregator
Metamediary
Shopping agent
Reverse auction
Buyer’s cooperative
Virtual mall
Activity Level E-Business Models
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Online purchasing. Firms can use the Web to place orders with
suppliers, thus automating the activity.
Order processing. This occurs when online retailers automate
Internet transactions created by customers.
E-mail. When organizations send e-mail communications to
stakeholders, they save printing and mailing costs.
Content publisher. Companies create valuable content or
services on their Web sites, draw lots of traffic, and sell
advertising. Another type of content publishing, the firm posts
information about its offerings on a Web site, thus saving printing
costs = brochureware.
Activity Level E-Business Models
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Business intelligence (BI). This refers to the gathering
of secondary and primary information about competitors,
markets, customers, and more.
Online advertising. As an activity, the firm buys
advertising on someone else’s e-mail or Web site.
Online sales promotions. Companies use the Internet to
send samples of digital products (e.g., music or software),
or electronic coupons, among other tactics.
Pricing strategies. With dynamic pricing, a firm presents
different prices to various groups of customers, even at the
individual level.
Business Process Level E-Business Models
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Customer relationship management (CRM) = retaining +
growing business / individual customers through strategies that
ensure their satisfaction with the firm and its products = keep
customers for the long term + increase the number and frequency
of their transactions.
Knowledge management (KM) = combination of a firm’s
database contents + the technology used to create the system + the
transformation of data into useful information and knowledge.
Supply chain management (SCM) = coordination of the
distribution channel to deliver products more effectively and
efficiently to customers.
With community building, firms build Web sites to draw groups of
special-interest users. Firms invite users to chat / post e-mail on
their Web sites to attract potential customers to the site.
Business Process Level E-Business Models
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Affiliate programs = when firms put a link to
someone else’s retail Web site and earn a commission
on all purchases by referred customers.
Database marketing = collecting, analyzing, and
disseminating electronic information about customers,
prospects, and products to increase profits.
Enterprise resource planning (ERP) = a back-office
system for order entry, purchasing, invoicing, and
inventory control.
Mass customization = Internet’s unique ability to
customize
marketing
mixes
electronically
and
automatically to the individual level.
Enterprise Level E-Business Models
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E-commerce refers to online transactions: selling goods
and services on the Internet, either in one transaction or
over time with an ongoing subscription.
Direct selling refers to a type of e-commerce in which
manufacturers sell directly to consumers, eliminating
intermediaries such as retailers.
Content sponsorship online is a form of e-commerce in
which companies sell advertising either on their Web sites
or in their e-mail.
A portal is point of entry to the Internet, such as the
Yahoo! and AOL Web sites. They are portals because they
provide many services in addition to search capabilities.
Enterprise Level E-Business Models
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A portal is point of entry to the Internet, such as the
Yahoo! and AOL Web sites. They are portals because
they provide many services in addition to search
capabilities.
Online brokers are intermediaries that assist in the
purchase negotiations without actually representing
either buyers or sellers. The revenue stream in these
models is commission or fee-based:
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The brokerage model are E*Trade (online exchange), and eBay
(online auction),
A B2B exchange is a special place because it allows buyers and
sellers in a specific industry to quickly connect.
Enterprise Level E-Business Models
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Online agents represent either the buyer or the seller and earn
a commission for their work.
Selling agents help a seller move product.
Manufacturer’s agents represent manufacturing firms that sell
complementary products to avoid conflicts of interest.
The catalog aggregator, brings together many catalog
companies to create a new searchable database of products for
buyers.
A special type of agent = the metamediary, it represents a
cluster of manufacturers, online retailers, and content providers
organized around a life event or major asset purchase
Enterprise Level E-Business Models
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Purchasing agents represent buyers.
Shopping agents help individual consumers find specific products
and the best prices online (e.g., www.mysimon.com).
The reverse auction, allows individual buyers to enter the price
they will pay for particular items at the purchasing agent’s Web site,
and sellers can agree or not.
An online purchasing agent is called a buyer cooperative or a
buyer aggregator.
A virtual mall is similar to a shopping mall in which multiple online
merchants are hosted at a Web site.
Pure Play
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Pure plays = businesses that began on the
Internet, even if they subsequently added a brickand-mortar presence.
E.g. E*Trade is a pure play, beginning with only
online trading
Pure plays face significant challenges: They must
compete as new brands and take customers away
from established brick-and-mortar businesses.
One way to change the rules is to invent a new ebusiness model, as Yahoo! and eBay did.
An Optimized System of E-Business Models
E-business is the continuous optimization of a firm’s business activities
through digital technology.
Firms usually combine traditional business and e-business models. E.g.
Schwab = combined its online and offline brokerages in a unified
system.
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The challenge: customers expect a high degree of coordination
between online and offline operations.
The danger: the established corporate culture might squash ecommerce initiatives or slow them down with the best of intentions.
The solution: Many businesses have spun off their e-commerce
operations as wholly owned subsidiaries or pure plays so they can
compete without the weight of the parent business.
An Optimized System of E-Business Models
A fully optimized e-business that uses the
Internet to sell is the sum of multiple ebusiness activities and processes: E-commerce,
business intelligence, customer relationship
management, supply chain management, and
enterprise resource planning as represented in
the following equation:
EB = EC + BI + CRM + SCM + ERP
Overview
Strategic Planning
SWOT Analysis
Strategic Objectives
Strategy
Strategy to Electronic Strategy
Business Models to E-Business Models
E-Business Models
Value and Revenue
Strategic E-Business Models
Performance Metrics
The Balanced Scorecard
Performance Metrics
• The only way to know whether a company has reached its objectives is
to measure results.
• Performance metrics = specific measures designed to evaluate the
effectiveness and efficiency of an organization’s operations.
• Armed with this information, the company can make corrections to be
sure it accomplishes the goal.
• Performance metrics should be defined along with the strategy
formulation so the entire organization will know what results constitute
successful.
Performance Metrics
Performance metrics used to measure strategy effectiveness:
- Translate the vision, strategy, or e-business model into
components that have measurable outcomes that various
departments can use to create action plans,
- Communicate to employees what results the firm
values.
When employee evaluations are tied to the metrics,
people will be motivated to make decisions that lead to
the desired outcomes.
Overview
Strategic Planning
SWOT Analysis
Strategic Objectives
Strategy
Strategy to Electronic Strategy
Business Models to E-Business Models
E-Business Models
Value and Revenue
Strategic E-Business Models
Performance Metrics
The Balanced Scorecard
The Balanced Scorecard
BEFORE to measure success, firms used:
- Financial performance,
- Market share,
- The bottom line (profits).
BUT these approaches are narrowly focused and place
more weight on short-term results rather than
addressing the firm's long-term sustainability.
The Balanced Scorecard
NOW, they use:
The Balanced Scorecard = enterprise performance management
systems that measure many aspects of a firm’s achievements.
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50% of organizations worldwide have adopted the Balanced
Scorecard with excellent results.
The scorecard approach links strategy to measurement by asking
firms to consider their vision, critical success factors for
accomplishing it, and subsequent performance metrics in four
areas: Customer, internal, innovation and learning, and financial.
Customer
Perspective
Internal Business
Perspective
Goals
Goals
Measures
Measures
Innovation and
Learning
Perspective
Goals
Measures
Exhibit 2 - 1 The Balanced Scorecard Has Four Perspectives
Financial
Perspective
Goals
Measures
Four Perspectives
The customer perspective:
Uses measures of the value delivered to customers.
These metrics tend to fall into four areas: time,
quality, performance and service, and cost.
E.g. Time from order to delivery, customer satisfaction levels
with product performance, amount of sales from new
products, and industry-specific metrics such as equipment
up-time percentage or number of service calls.
Four Perspectives
The internal perspective:
Evaluates company success at meeting
customer expectations through its internal
processes.
E.g.: cycle time (how long to make the product),
manufacturing quality, and employee skills and
productivity. Information systems are a critical
component of the internal perspective for ebusiness firms.
Four Perspectives
The innovation and learning perspective
= the growth perspective:
Companies place value on continuous improvement
to existing products and services as well as on
innovation in new products.
E.g. Number of new products and the percentage of sales
attributable to each; penetration of new markets; and the
improvement of processes such as CRM or SCM initiatives.
Four Perspectives
The financial perspective:
= Income and expense metrics as well as return on
investment, sales, and market share growth.
The point is to understand what the company wants to
accomplish and devise performance metrics to monitor
the progress and see that the goals are reached.
Scorecard Benefits
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Obtain timely information to update its strategy.
Balance long-term and short-term measures and evaluate every
part of the firm and how each contributes toward accomplishing
selected goals.
It helps firms leverage their relationships with partners and
supply chain members.
Go beyond financial metrics in measuring many different aspects
that lead to effective and efficient performance.
Creates a long-term perspective for company sustainability.
Scorecard Benefits
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Forces companies to decide what is important and translate those
decisions into measurable outcomes that all employees can
understand.
A great communication tool because employees can use the
scorecard as a guide to coordinate their efforts.
Support employee evaluation in that individual performance can
be tied to successful outcomes on the metrics.
A way to measure intangible as well as tangible assets.
The are flexible and allow firms to select appropriate metrics for
their goals, strategies, industry, and specific vision.
Applying the Balanced Scorecard
to E-Business and E-Marketing
Metrics for the Customer Perspective
Customer Perspective
Example Goals
Build awareness of a new Web site service
Position firm as high tech
Increase number of software downloads from
the Web site
High customer satisfaction with Web site
High customer satisfaction with value of
online purchasing
Possible Measures
Survey target awareness of service
Number of visitors to the site
Survey target attitudes
Number from Web site log
Survey of target at Web site
Number of visits and activity at site
Number of complaints (e-mail, phone)
Number of abandoned shopping carts
Sales of online versus offline for same
products
Customer Perspective Scorecard for E-Business Firm
Applying the Balanced Scorecard
to E-Business and E-Marketing
Metrics for the Internal Perspective
Internal Perspective
Example Goals
Improve the quality of online service
Quality online technical help
Quick product cycle time
High product quality for online service
Possible Measures
Target market survey
Number of customers who use the service
Time to run the service software from Web
site
Amount of time to answer customer e-mail
Number of contacts to solve a problem
Number of problems covered by Web site
FAQ
Customer follow-up survey
Number of days to make the product
Product test statistics on specific
performance measures
Internal Perspective Scorecard for E-Business Firm
Applying the Balanced Scorecard
to E-Business and E-Marketing
Metrics for the Innovation and Learning Perspectives
Innovation and Learning Perspective
Example Goals
Possible Measures
Online service innovation
Number of new service products to market in
a year
Number of new service features not offered
by competitive offerings
Percent of sales from new services
Continuous improvement in CRM system
Number of employee suggestions
Number/type of improvements over time
High Internet lead to sales conversion
Revenue per sales employee from Internet
leads
Number of conversions from online leads
Increased value in knowledge management
Number of accesses by employees
system
Number of knowledge contributions by
employees
Innovation and Learning Scorecard for E-Business Firm
Applying the Balanced Scorecard
to E-Business and E-Marketing
Metrics for the Financial Perspective
Financial Perspective
Example Goals
Increase market share for online products
Double digit sales growth
Target 10% ROI within one year for each
new product
Lower customer acquisition costs (CAC) in
online channel
Possible Measures
Market share percentage (firm’s sales as
percentage of industry sales)
Dollar volume of sales from one time period
to the next
ROI
CAC (costs for advertising, etc. divided by
number of customers)
Financial Perspective Scorecard for E-Business Firm
E-Marketing, 3rd edition
Judy Strauss, Adel I. El-Ansary, and Raymond Frost
Chapter 3: The E-Marketing Plan
© Prentice Hall 2003
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
Overview of the E-Marketing
Planning Process
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How can information technologies assist
marketers in building revenues and market
share or lowering costs?
How can firms identify a sustainable
competitive advantage with the Internet
when so little is understood about how to
succeed?
Overview of the E-Marketing
Planning Process
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The best firms have clear visions that they translate,
through the marketing process, from e-business objectives
and strategies into e-marketing goals and well-executed
strategies and tactics for achieving those goals.
This marketing process entails three steps:
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Marketing plan creation
Plan implementation
Evaluation/corrective action.
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
Creating an E-Marketing
Plan
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E-marketing plan: It is a guiding, dynamic document
that links the firm’s e-business strategy (e-business
model) with technology-driven marketing strategies
and lays out details for plan implementation through
marketing management.
The e-marketing plan serves as a roadmap to guide
the direction of the firm, allocate resources, and make
tough decisions at critical junctures.
There are two common types of e-marketing plans:
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The napkin plan,
The venture capital plan.
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
The Napkin Plan
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Dot-com entrepreneurs were known to simply jot their ideas on
a napkin over lunch and then run off to find financing.
The big company version of this is the just-do-it. An employee
has an idea, and convinces management to just do it.
These plans sometimes work and are sometimes even
necessary but they are not recommended when substantial
resources are involved. Sound planning and thoughtful
implementation are needed for long-term success in business.
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
The Venture Capital E-Marketing Plan
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Small to mid-sized firms and entrepreneurs with start-up ideas
usually begin with a napkin plan without going through the entire
traditional marketing planning process.
BUT as the company grows and needs capital, it has to put
together a comprehensive e-marketing plan.
Where does an entrepreneur go for capital?
- Sometimes bank loans,
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Debt financed (20% down)
Most of the time, it is equity financed,
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Private funds (friends and family),
Angel investors,
Venture capitalists.
The Venture Capital E-Marketing Plan
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Investors are looking for a well-composed business plan,
and more importantly, a good team to implement it.
The business plan should contain enough data and logic to
prove that:
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The e-business idea is solid,
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The entrepreneur has some idea of how to run the business.
The Venture Capital E-Marketing Plan
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9 questions that every business plan should
answer:
1.
2.
3.
4.
Who is the new venture’s customer?
How does the customer make decisions about
buying this product or service?
To what degree is the product or service a
compelling purchase for the customer?
How will the product or service be priced?
The Venture Capital E-Marketing Plan
9 questions that every business plan should
answer:
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5.
6.
7.
8.
9.
How will the venture reach all the identified
customer segments?
How much does it cost (in time and resources)
to acquire a customer?
How much does it cost to produce and deliver
the product or service?
How much does it cost to support a customer?
How easy is it to retain a customer?
The Venture Capital E-Marketing Plan
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VCs look for a way to get their money and profits
out of the venture within a few years:
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The golden exit plan is to go public and issue stock in an
initial public offering (IPO),
As soon as the stock price rises sufficiently, the VC
cashes out and moves on to another investment.
All VCs’ investments are not successful. But if even
one out of 20 is an Amazon.com, the risk was well
worth the reward.
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
A Six-Step E-Marketing Plan
Step
Situation analysis
Link e-business with
e-marketing strategy
Objectives
Implementation plan
Budget
Evaluation plan
Tasks
Review the firm’s environmental and SWOT analyses.
Review the existing marketing plan and any other information
that can be obtained about the company and its brands.
Review the firm’s e-business objectives, strategies, and
performance metrics.
Identify revenue streams suggested by e-business models
Tier 1

Perform Marketing Opportunity Analysis to identify
target stakeholders.
Specify brand differentiation variables.
Select positioning strategy.
Tier 2
Design the offer, value, distribution, communication, and
market/partner relationship management strategies.
Identify general goals.
Select target specific goals.
Design e-marketing mix tactics.
 product/service offering
 pricing/valuation
 distribution/supply chain
 integrated communication mix
Design relationship management tactics.
Design information gathering tactics.
Design organizational structures for implementing the plan.
Forecast revenues.
Evaluate costs to reach goals.
Identify appropriate performance metrics.
Exhibit 3 - 1 Marketing Plan Process
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
Step 1—Situation Analysis
Planning for e-marketing does not mean starting from scratch but working
with existing business, e-business, and marketing plans is an excellent
place to start.
Opportunities
Threats
Pending security law means costly software
 Hispanic markets growing and
upgrades.
untapped in our industry.
Competitor X is aggressively using e Save postage costs through e-mail
commerce.
marketing.
Strengths
Weaknesses
1. Strong customer service department.
1. Low tech corporate culture
2. Excellent Web site and database
2. Seasonal business: peak is summer
system.
months.
E-business Goal: Initiate e-commerce in within one year.
Metric: Generate $500,000 in revenues from e-commerce during the first year.
Exhibit 3 - 1 SWOT, Objective, and Metric Example from E-Business Plan
Step 1—Situation Analysis
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The organizational e-business plan: SWOT analysis => e-business
strategy.
The marketing plan: gathers information about the firm’s products, the
markets currently served, and so forth.
The distribution plan: identifies areas where the products are currently
sold and suggests geographic gaps that might be receptive to ecommerce.
Promotion plan information: gives clues about how the Internet fits
with the firm’s current advertising, sales promotion, and other
marketing communications.
The firm and brand positioning in the marketplace: Internet planners
must decide how closely Web site content and promotion will follow
current positioning strategies.
The marketer moves to strategy formulation.
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing
Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
Step 2—Link E-Business with
E-Marketing Strategy

Marketers need to:
1
Review the marketing and e-business plans,
2 Conduct a strategic planning to help achieve the firm’s ebusiness goals + define potential revenue streams,
3 Create supporting e-marketing strategy for the e-business goals:
A Tier one strategy: marketers design segmentation, targeting,
differentiation, and positioning strategies,
B Tier two strategy deals with the 4P’s and relationship management
by creating strategies around the offer (product), value (pricing),
distribution (place), and communication (promotion),
4
Further, marketers design customer and partner relationship
strategies (CRM/PRM).
Differentiation
Tier 1
tasks
Tier 2
tasks
Segmentation
Positioning
Targeting
E-Marketing
Strategy
Offer
CRM/PRM
Communication
Value
Distribution
Exhibit 3 - 1 Formulating E-Marketing Strategy in Two Tiers
Tier One E-Marketing Strategic
Planning: Segmenting & targeting
-



Market opportunity analysis (MOA):
The demand analysis = market segmentation analyses to
describe and evaluate the potential profitability, sustainability,
accessibility, and size of various potential segments.
The segment analysis in the B2C market with demographic
characteristics, geographic location, selected psychographic,
and past behavior toward the descriptors help firms identify
potentially attractive markets.
Allows the company to select its target market and understand
its characteristics, behavior, and desires in the firm’s product
category.
Tier One E-Marketing Strategic
Planning: Segmenting & targeting
Tools:
- Traditional segmentation analyses.
Analyzes of customer bases using cookies, database
analyses, and other techniques,
Supply analysis: forecasts segment profitability + finds
competitive advantages,
Study of competition to find the company own
performance advantages.: strengths and weaknesses, emarketing initiatives, …
Identify future industry changes.
Tier One E-Marketing Strategic Planning:
Identifying brand differentiation variables
and positioning strategies



The understanding of the competition + the target(s)
Differentiation of the products to provide benefits
perceived as important by the target.
The positioning statement: the desired image for the
brand relative to the competition.
Tier Two E-Marketing Strategic
Planning
The two Tiers are elaborated in an interative process:
It is difficult to know what the brand position should be
without understanding the offer that comprises the brand
promise.
The Offer: Product Strategies

The organization can:
-

Sell merchandise, services, or advertising on the Web site,
Adopt a e-business model such as online auctions,
Create new brands for the online market,
Simply sell selected current or enhanced products in that
channel.
A firm must decide how online product prices will compare
with offline equivalents considering the differing costs of
sorting and delivering products to individuals through the
online channel as well as competitive and market concerns.
The Offer: Product Strategies

There are two online pricing trends are:
 Dynamic pricing—this strategy applies different price
levels for different customers or situations. The Internet
allows firms to price items automatically and “on the fly”
while users view pages,


Online bidding—this presents a way to optimize
inventory management.
E.g. Priceline.com, eBay.com
Distribution Strategies

Many firms use the Internet to distribute products or
create efficiencies among supply chain members in the
distribution channel.


Direct marketing—Many firms sell directly to
customers, by-passing intermediaries in the traditional
channel for some sales.
Agent e-business models—Firms such as eBay and
E*Trade bring buyers and sellers together and earn a
fee for the transaction.
Marketing Communication
Strategies


The Internet spawned a multitude of new marketing
communication strategies, both to draw customers to a Web
site and to interact with brick-and-mortar customers.
Firms use Web pages and e-mail to:
- Communicate with their target markets and business
partners,
- Build brand images,
- Create awareness of new products,
- Position products using the Web and e-mail.
Relationship Management
Strategies

E-marketing communication strategies help build relationships
with a firm’s partners, supply chain members, or customers
using:
-
-
-
Customer relationship management (CRM) software to retain
customers and increase average order values and lifetime value,
Partner relationship management (PRM) software to integrate
customer communication and purchase behavior into a
comprehensive database,
Extranets—two or more proprietary networks linked for better
communication and more efficient transactions among firms (PRM).
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
Step 3— Formulate Objectives

In general, an objective in an e-marketing plan takes the
form:

Task (what is to be accomplished),

Measurable quantity (how much),

Time frame (by when).
Typical E-Marketing Objectives

Most e-marketing plans aim to accomplish multiple
objectives such as:

Increase market share,

Increase sales revenue,

Reduce costs,

Achieve branding goals,

Improve databases,

Achieve customer relationship management goals,

Improve supply chain management.
E-Marketing Objective-Strategy Matrix
Objective-strategy matrix presents the firm’s e-marketing
strategies and accompanying goals.
Online Goals
Online
Advertising
Find
affiliates
Gather
customer
information
Improve
customer
service
Increase
brand name
awareness
Sell goods or
services
Database
Marketing
Online Strategies
Direct
Online Sales
E-mail
Viral
Marketing
No
No
No
No
Yes
No
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Exhibit 3 - 1 E-Marketing Objective-Strategy Matrix
Source: Adapted from Embellix eMarketing Suite
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
Step 4 — Design Implementation
Plan to Meet the Objectives



Select:
-
The marketing mix (4 Ps),
-
Relationship management tactics,
-
Other tactics to achieve the plan objectives.
Devise detailed plans for implementation.
Check the right marketing organization is in place for
implementation.
Step 4 — Design Implementation
Plan to Meet the Objectives

Information technologies are especially adept at
automating these processes, this is why the
information gathering tactics are important:
-
-
-
Web site forms, feedback e-mail, and online surveys,
Web site log analysis software helps firms review
user behavior at the site and make changes to better
meet the needs of users,
Business intelligence uses the Internet for secondary
research,
assisting
firms
in
understanding
competitors and other market forces.
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
Step 5 — Budgeting


A key part of any strategic plan is to identify the
expected returns from an investment.
Returns are matched against costs to develop a
cost/benefit analysis, ROI calculation, or internal rate
of return (IRR)


Determine whether the effort is worthwhile.
During plan implementation, marketers will closely
monitor actual revenues and costs

To monitor of results are on track for accomplishing the
objectives.
Revenue Forecast



The firm uses an established sales forecasting method for
estimating the site revenues in the short, intermediate,
and long term.
Inputs: The firm’s historical data, industry reports, and
competitive actions.
An important part of forecasting is to estimate the level of
Web site traffic over time.


This number affects the amount of revenue a firm can
expect to generate from its site.
Revenue streams:
-
Web site direct sales,
Subscription fees,
Sales at partner sites,
fees.
- Advertising sales,
- Affiliate referrals,
- Commissions, and other
Budgeting
Intangible Benefits:
Putting a financial figure on such benefits is challenging but
essential for e-marketers.
What is the value of increased brand awareness from a Web
site?
Cost Savings:
Money saved through Internet efficiencies is considered soft
revenue for a firm.
E-Marketing Costs

Costs for employees, hardware, software, programming, and more.

Some traditional marketing costs may creep into the e-marketing
budget

The cost of a Web site can range from $5000 to $50 million.

Few of the costs site developers incur:
 Technology
costs: software, hardware, Internet access or
hosting services, educational materials and training, and other site
operation and maintenance costs.
 Site design. Web sites need graphic designers to create appealing
page layouts, graphics, and photos.
E-Marketing Costs

Other costs site developers incur:




Salaries. All personnel that work on Web site development and
maintenance are budget items.
Other site development expenses. If not included in the
technology or salary categories, any other expenses will be here
(registration of multiple domain names and hiring consultants).
Marketing communication. All advertising, public relations, and
promotions activities, both online and offline, to draw site traffic.
Search engine registration, online directory costs, e-mail list rental,
prizes for contests, and more.
Miscellaneous. Other typical project costs might fall here—
expenses such as travel, telephone, stationery printing to add the
new URL, and more.
Overview
Overview of the E-Marketing Planning Process
Creating an E-Marketing Plan
The Napkin Plan
The Venture Capital E-Marketing Plan
A Six-Step E-Marketing Plan
Step 1—Situation Analysis
Step 2—Link E-Business with E-Marketing Strategy
Step 3— Formulate Objectives
Step 4—Design Implementation Plan to Meet the
Objectives
Step 5—Budgeting
Step 6—Evaluation Plan
Step 6 — Evaluation Plan


Once the e-marketing plan is implemented, its
success depends on continuous evaluation. The
tracking systems should be in place before the
electronic doors open.
What should be measured? The plan objectives need
to be evaluated with:
- Balanced scorecard for e-business
- ROI …
Key Terms
•Angel investors
•Online bidding
•Demand analyses
•Partner Relationship
Management (PRM)
•Direct marketing
•Dynamic pricing
•E-marketing plan
•Market Opportunity Analysis
(MOA)
•Segment analysis
•Situation analysis
•Supply analyses
•Venture Capital (VC)
Review Questions
1.
2.
3.
4.
5.
6.
7.
What are the six steps in an e-marketing plan?
Why do entrepreneurs seeking funding need a venture
capital e-marketing plan rather than a napkin plan?
What is the purpose of the marketing opportunity analysis
and the segment analysis?
What four elements in tier one and five elements in tier
two are devised for e-marketing strategy?
What is the purpose of an e-marketing objective-strategy
matrix?
How do managers use budgeting within the e-marketing
planning process?
Why do e-marketing
component?
plans
need
an
evaluation
Discussion Questions
1.
2.
3.
4.
If you had money to invest, what would you look for
in a venture capital e-marketing plan?
What kinds of questions should a firm ask in
developing an e-marketing plan to serve customers in
current markets through an online channel?
Why is it important for e-marketers to specify not
only the task but also the measurable quantity and
time frame for accomplishing an objective?
Why would the management of American Airlines
expect its e-marketers to estimate the financial
impact of intangible benefits such as building brand
equity through e-mail messages to frequent flyers?