E-Marketing 4/EJudy Strauss, Adel I. El-Ansary, and Raymond FrostChapter 2: Strategic E-Marketing

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Chapter 2 ObjectivesAfter 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.comUtilizes several business modelsFounded as online retailing business model.Established co-branding partnerships with Office Depot, Circuit City, Target, and ExpediaCo-branding is more profitable than retailingAmazon is now a hybrid companyCreated the first affiliate program.Customers can auction items.Which of the models do you think will drive Amazons strategy in the future?

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Strategic PlanningA managerial process to develop and maintain a viable fit between the organization and its changing market opportunitiesProcess identifies firms goals forGrowthCompetitive positionGeographic scopeOther objectives, such as industry, products, etc.

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StrategyStrategy is the means to achieve a goal.E-business strategyStrategy that deploys enterprise resources to reach performance objectives, competitive advantages.E-marketing strategyStrategy that capitalizes on information technology to reach objectives.

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Business ModelsA business model is a method for long term survival and a value proposition for partners, customers and revenueE-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

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Activity-level modelsOnline purchasingOrder processingE-mailContent publisher (brochureware)Business intelligenceOnline advertisingOnline sales promotionPricing strategies

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Business Process-Level ModelsCustomer relationship management (CRM)Knowledge managementSupply chain managementCommunity buildingAffiliate programsDatabase marketingEnterprise resource planning (ERP)Mass customization

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Enterprise-Level ModelsE-commerceDirect sellingContent sponsorshipPortalOnline brokerExchangeAuctionMetamediaryPurchasing agentVirtual mall

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Pure Play ModelA 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 MetricsPerformance 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

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The Balanced Scorecard

Customer Perspective

Internal Business Perspective

Innovation and Learning Perspective

Financial Perspective

Goals

Measures

Goals

Measures

Goals

Measures

Goals

Measures

Exhibit 2 - 4 The Balanced Scorecard Has Four Perspectives

The Balanced ScorecardCustomer perspectiveTimeQualityPerformance and serviceCostInternal perspectiveCycle timeManufacturing qualityEmployee skills and productivity

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The Balanced ScorecardInnovation and learning (growth) perspectiveNumber of new productsPenetration of new marketsImprovement of processes such as CRMFinancial perspectiveIncome and expense metricsROISalesMarket share growth

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Applying the Balanced Scorecard to E-Business and E-MarketingMetrics for the Customer Perspective (Exhibit 2.6)Customer perceptions of product valueCustomer buying patternsMetrics for the Internal Perspective (Exhibit 2.7)Customer serviceInformation technologySupply chain

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Applying the Balanced Scorecard to E-Business and E-MarketingMetrics for the Innovation and Learning Perspective (Exhibit 2.8)CRMSales conversionsMetrics for the Financial Perspective (Exhibit 2.10)ProfitsROI

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Applying the Balanced Scorecard to E-Business and E-MarketingCustomer Perspective Scorecard for E-Business FirmMetrics for the Customer Perspective

Customer Perspective

Example Goals

Possible Measures

Build awareness of a new Web site service

Survey target awareness of service

Number of visitors to the site

Position firm as high tech

Survey target attitudes

Increase number of software downloads from the Web site

Number from Web site log

High customer satisfaction with Web site

Survey of target at Web site

Number of visits and activity at site

High customer satisfaction with value of online purchasing

Number of complaints (e-mail, phone)

Number of abandoned shopping carts

Sales of online versus offline for same products

Applying the Balanced Scorecard to E-Business and E-MarketingInternal Perspective Scorecard for E-Business FirmMetrics for the Internal Perspective

Internal Perspective

Example Goals

Possible Measures

Improve the quality of online service

Target market survey

Number of customers who use the service

Time to run the service software from Web site

Quality online technical help

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

Quick product cycle time

Number of days to make the product

High product quality for online service

Product test statistics on specific performance measures

Applying the Balanced Scorecard to E-Business and E-MarketingInnovation and Learning Scorecard for E-Business FirmMetrics 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 system

Number of accesses by employees

Number of knowledge contributions by employees

Applying the Balanced Scorecard to E-Business and E-MarketingFinancial Perspective Scorecard for E-Business FirmMetrics for the Financial Perspective

Financial Perspective

Example Goals

Possible Measures

Increase market share for online products

Market share percentage (firms sales as percentage of industry sales)

Double digit sales growth

Dollar volume of sales from one time period to the next

Target 10% ROI within one year for each new product

ROI

Lower customer acquisition costs (CAC) in online channel

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