E-Marketing 4/E

Judy Strauss, Adel I. El-Ansary, and Raymond Frost

Chapter 2: Strategic E-Marketing

2-1

Chapter 2 Objectives
After

reading Chapter 2 you will be able to:

Explain

the importance of strategic planning,

strategy, e-business strategy, and e-marketing
strategy.
Identify the main e-business models at the
activity, business process, and enterprise levels.
Discuss the use of metrics and the Balanced
Scorecard to measure e-business and emarketing performance.
2-2

Amazon.com
Utilizes

several business models

Founded

as online retailing business model.

Established co-branding partnerships with Office
Depot, Circuit City, Target, and Expedia
Co-branding

is more profitable than retailing

Amazon is now a hybrid company
Created

the first affiliate program.

Customers can auction items.
Which

of the models do you think will drive

Amazons strategy in the future?
2-3

Strategic Planning
A managerial

process to develop and

maintain a viable fit between the organization
and its changing market opportunities
Process identifies firms goals for
Growth
Competitive

position
Geographic scope
Other objectives, such as industry, products, etc.

2-4

Strategy
Strategy

is the means to achieve a goal.

E-business strategy
Strategy

that deploys enterprise resources to

reach performance objectives, competitive
advantages.

E-marketing

strategy

Strategy

that capitalizes on information

technology to reach objectives.
2-5

Business Models
A business

model is a method for long

term survival and a value proposition for
partners, customers and revenue
E-business models include the use of
information technology to achieve long
term goals.
Firm selects one or more models as
strategies to accomplish enterprise goals.
2-6

Level of business Impact

Level of Commitment to E-Business

Business Transformation
(competitive advantage,
industry redefinition)

Pure
Play

Pure Dot-Com
(Amazon)

Enterprise
Effectiveness
(customer
retention)
Efficiency
(cost
reduction)

Click and Mortar

(eSchwab, most retailers)
Customer
Relationship
Management

Business Process
Activity

Brochureware
E-Mail

2-7

Activity-level models
Online

purchasing
Order processing
E-mail
Content publisher (brochureware)
Business intelligence
Online advertising
Online sales promotion
Pricing strategies
2-8

Business Process-Level Models

Customer

relationship management (CRM)

Knowledge management
Supply chain management
Community building
Affiliate programs
Database marketing
Enterprise resource planning (ERP)
Mass customization
2-9

Enterprise-Level Models
E-commerce

Direct selling
Content sponsorship

Portal
Online

broker

Exchange
Auction

Metamediary
Purchasing
Virtual

agent

mall
2-10

Pure Play Model

A Pure

Play is a business that began on

the Internet.
Top level of the E-Business pyramid.
Examples: E*Trade, eBay, Yahoo!
Most dot-com crash failures were pure
plays.

2-11

Performance Metrics
Performance

metrics are specific

measures designed to evaluate the
effectiveness and efficiency of operations.
The Balanced Scorecard provides a
framework for understanding e-marketing
metrics.
Four

perspectives: customer, internal,

innovation and learning (growth), and financial
2-12

The Balanced Scorecard

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

The Balanced Scorecard

Customer

perspective

Time
Quality
Performance

and service

Cost

Internal

perspective

Cycle

time
Manufacturing quality
Employee skills and productivity
2-13

The Balanced Scorecard

Innovation

and learning (growth) perspective

Number

of new products
Penetration of new markets
Improvement of processes such as CRM
Financial
Income

perspective

and expense metrics

ROI
Sales
Market

share growth
2-14

Applying the Balanced Scorecard to EBusiness and E-Marketing

Metrics

for the Customer Perspective (Exhibit

2.6)
Customer

perceptions of product value

Customer buying patterns
Metrics

for the Internal Perspective (Exhibit

2.7)
Customer

service
Information technology
Supply chain
2-15

Applying the Balanced Scorecard to EBusiness and E-Marketing

Metrics

for the Innovation and Learning

Perspective (Exhibit 2.8)
CRM
Sales

conversions

Metrics

for the Financial Perspective

(Exhibit 2.10)
Profits
ROI
2-16

Applying the Balanced Scorecard to EBusiness 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 EBusiness 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 EBusiness 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 EBusiness 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 (firms 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