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E-Marketing 4/EJudy Strauss, Adel I. El-Ansary, and Raymond Frost

Chapter 2: Strategic E-Marketing

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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 e-marketing performance.

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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 Amazon’s strategy in the future?

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Strategic Planning

A managerial process to develop and maintain a viable fit between the organization and its changing market opportunities

Process identifies firm’s goals for Growth Competitive position Geographic scope Other objectives, such as industry, products, etc.

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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.

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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.

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Level of Commitment to E-Business

Pure Play

Enterprise

Business Process

Activity

Pure Dot-Com (Amazon) Click and Mortar (eSchwab, most retailers) Customer Relationship Management Brochureware E-Mail

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Business Transformation (competit ive advantage, industry redefinition) Effectiveness (customer retention) Efficiency (cost reduction)

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Activity-level models

Online purchasingOrder processingE-mailContent publisher (brochureware)Business intelligenceOnline advertisingOnline sales promotionPricing strategies

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Business Process-Level Models

Customer relationship management (CRM)Knowledge managementSupply chain managementCommunity buildingAffiliate programsDatabase marketingEnterprise resource planning (ERP)Mass customization

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Enterprise-Level Models

E-commerce Direct selling Content sponsorship

Portal Online broker

Exchange Auction

Metamediary Purchasing agent Virtual mall

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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.

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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

CustomerPerspective

Internal BusinessPerspective

Innovation andLearningPerspective

FinancialPerspective

Goals Measures Goals Measures Goals Measures Goals Measures

Exhibit 2 - 1 The Balanced Scorecard Has Four Perspectives

The Balanced Scorecard

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The Balanced Scorecard

Customer perspective Time Quality Performance and service Cost

Internal perspective Cycle time Manufacturing quality Employee skills and productivity

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The Balanced Scorecard

Innovation and learning (growth) perspective Number of new products Penetration of new markets Improvement of processes such as CRM

Financial perspective Income and expense metrics ROI Sales Market share growth

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Applying the Balanced Scorecard to E-Business 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

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Applying the Balanced Scorecard to E-Business 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

Applying the Balanced Scorecard to E-Business and E-Marketing

Customer PerspectiveExample Goals Possible Measures

Build awareness of a new Web site service Survey target awareness of serviceNumber of visitors to the site

Position firm as high tech Survey target attitudesIncrease number of software downloads from

the Web siteNumber from Web site log

High customer satisfaction with Web site Survey of target at Web siteNumber of visits and activity at site

High customer satisfaction with value ofonline purchasing

Number of complaints (e-mail, phone)Number of abandoned shopping cartsSales of online versus offline for same

products

Customer Perspective Scorecard for E-Business Firm

Metrics for the Customer Perspective

Applying the Balanced Scorecard to E-Business and E-Marketing

Internal Perspective Scorecard for E-Business Firm

Metrics for the Internal Perspective

Internal PerspectiveExample Goals Possible Measures

Improve the quality of online service Target market surveyNumber of customers who use the serviceTime to run the service software from Web

siteQuality online technical help Amount of time to answer customer e-mail

Number of contacts to solve a problemNumber of problems covered by Web site

FAQCustomer follow-up survey

Quick product cycle time Number of days to make the productHigh product quality for online service Product test statistics on specific

performance measures

Applying the Balanced Scorecard to E-Business and E-Marketing

Innovation and Learning Scorecard for E-Business Firm

Metrics for the Innovation and Learning Perspectives

Innovation and Learning PerspectiveExample Goals Possible Measures

Online service innovation Number of new service products to market ina year

Number of new service features not offeredby competitive offerings

Percent of sales from new servicesContinuous improvement in CRM system Number of employee suggestions

Number/type of improvements over timeHigh Internet lead to sales conversion Revenue per sales employee from Internet

leadsNumber of conversions from online leads

Increased value in knowledge managementsystem

Number of accesses by employeesNumber of knowledge contributions by

employees

Applying the Balanced Scorecard to E-Business and E-Marketing

Financial Perspective Scorecard for E-Business Firm

Metrics for the Financial Perspective

Financial PerspectiveExample Goals Possible Measures

Increase market share for online products Market share percentage (firm’s sales aspercentage of industry sales)

Double digit sales growth Dollar volume of sales from one time periodto the next

Target 10% ROI within one year for eachnew product

ROI

Lower customer acquisition costs (CAC) inonline channel

CAC (costs for advertising, etc. divided bynumber of customers)