MRKG 2312: E-commerce

©2006 Prentice Hall

MRKG 2312: E-commerce


Agenda

• Questions?

• Begin discussion on the eMarketing Plan

• Assignment 1 Posted

• eMarketing plan guidelines posted

©2006 Prentice Hall 3-1

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

Chapter 3: The E-Marketing Plan


Chapter 3 Objectives

• After reading Chapter 3 you will be able to:• Discuss the nature and importance of an e-

marketing plan and outline its 7 steps.• Show the form of an e-marketing objective and

highlight the use of an objective-strategy matrix.• Describe the tasks that marketers complete as they

create e-marketing strategies.• List some key revenues and costs identified during

the budgeting step of the planning process.


The Playboy Story• CEO Christie Hefner revitalized the company in

the 1990s by adding multimedia content to the Playboy magazine format.

• Playboy.com came online in 1994 with a marketing plan to generate revenues from• Advertising• E-commerce• Online gaming• Online events

• They project online gaming will generate much of future revenue. Do you agree?


Overview of the E-Marketing Planning Process

• The e-marketing plan is a blueprint for e-marketing strategy formulation and implementation.

• The plan serves as a road map to guide the firm, allocate resources, and make decisions.


Two common types of plans• Napkin plan

• Dot-com entrepreneurs jotted down “strategic plan” on a napkin.

• Just-do-it, activity-based, bottom-up plan• A comprehensive plan is necessary when

entrepreneurs seek venture capital • Sources of funding

• Debt• Sometimes bank loans

• Debt financed (20% down)• Banks seek leverage

• Equity• Private funds• Angel investors• Venture capitalists (VCs)• Go Public


The Venture Capital E-Marketing Plan

• VCs look for a way to get their money and profits out of the venture within a few years: - 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.


Questions that business plans should cover

• Who is the new venture’s customers?• 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?• 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?


Seven-Step E-Marketing Plan

1. Situation analysis (ch.4, 5)

2. E-Marketing strategic planning –tier 1 (ch.8,9)

3. Plan objectives

4. E-Marketing strategy – tier 2 (ch.10 – 14)

5. Implementation plan

6. Budget

7. Evaluation plan


Step 1: Situation Analysis

• Environmental factors• Legal factors• Technological factors• Market-related factors

• SWOT analysis• Strengths• Weaknesses• Opportunities• Threats


SWOT Analysis Leading to E-Marketing Objective

Opportunities Threats

1. Hispanic markets growing and untapped in our industry.

2. Save postage costs through e-mail marketing.

1. Pending security law means costly software upgrades.

2. Competitor X is aggressively using e-commerce.

Strengths Weaknesses

1. Strong customer service department.

2. Excellent Web site and database system.

1. Low-tech corporate culture.2. Seasonal business: Peak is summer

months.

E-Marketing Objective: $500,000 in revenues from e-commerce in one year.


Step 2: E-Marketing Strategic Planning

• Market and product strategies, called Tier 1 tasks or strategies, are outcomes of strategic planning.• Segmentation• Targeting• Differentiation• Positioning

• Marketers conduct analyses to determine strategies.• Market opportunity analysis

• Demand analysis• Segment analysis• Supply analysis


Segmentation

Targeting

Value

Differentiation

CRM/PRM

Positioning

Communication

Distribution

Offer

E-MarketingStrategy

Tier 2tasks

Tier 1tasks

Exhibit 3 - 1 Formulating E-Marketing Strategy in Two Tiers


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.


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, e-marketing initiatives, …

- Identify future industry changes.


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.


Step 3: Objectives

• Objectives are typically related to task, measurable quantity and timeframe.

• Most e-marketing plans seek to:• Increase market share• Increase sales revenue• Reduce costs• Achieve branding goals• Improve databases• Achieve customer relationship management goals• Improve supply chain management


S.M.A.R.T.

1. Specific – Objectives should specify what they want to achieve.

2. Measurable – You should be able to measure whether you are meeting the objectives or not.

3. Achievable - Are the objectives you set achievable?4. Realistic – Can you realistically achieve the

objectives with the resources you have5. Time – When do you want to achieve the set

objectives?

• An objective maybe to increase sales 10% from 2007 – 2008.


Step 4: E-Marketing Strategies

• Marketers craft strategies for the 4 P’s and relationship management to achieve plan objectives.• Product strategies• Pricing strategies• Distribution strategies• Marketing communication strategies• Relationship management strategies

• These are referred to as Tier 2 tasks or strategies.


Steps 2, 3, and 4 of the E-Marketing Plan

Segmentation

Targeting

Value(Price)

Differentiation

CRM/PRM

Positioning

Communication(Promotion)

Distribution(Place)

Offer(Product)

Step 3 E-Marketing Objectives

Step 4Tier 2 Tasks

Step 2Tier 1 Tasks


The Offer: Product Strategies• The organization can:

- Sell merchandise, services, or advertising on the Web site, - Adopt an 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 by considering the differing costs of sorting and delivering products to individuals through the online channel as well as competitive and market concerns.


The Offer: Pricing 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).


Step 5: Implementation Plan

• Tactics are used to achieve plan objectives• Marketing mix (4 P’s) tactics• Relationship management tactics• Marketing organization tactics• Information-gathering tactics


E-Marketing Objective-Strategy Matrix

Objective-strategy matrix presents the firm’s e-marketing strategies and accompanying goals.

Online Goals Online StrategiesOnlineAdvertising

DatabaseMarketing

DirectE-mail

Online Sales ViralMarketing

Findaffiliates

No No No No Yes

Gathercustomerinformation

No Yes Yes Yes Yes

Improvecustomerservice

No Yes Yes Yes No

Increasebrand nameawareness

Yes Yes Yes Yes Yes

Sell goods orservices

Yes Yes Yes Yes Yes

Exhibit 3 - 1 E-Marketing Objective-Strategy MatrixSource: Adapted from Embellix eMarketing Suite


Step 5: 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.


Step 6: Budget

• The plan must identify the expected return from marketing investments.• Revenue forecast• Intangible benefits, such as brand equity• Cost savings• E-Marketing costs

• Technology• Site design• Salaries• Other site development expenses• Marketing communication


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, - Advertising sales, - Subscription fees, - Affiliate referrals, - Sales at partner sites, - Commissions, and other

fees.


Step 7: Evaluation Plan

• Marketing plan success depends on continuous evaluation.

• E-marketers must have tracking systems in place to measure results.

• Review the Balanced Scorecard for e-business in Chapter 2.

• Today’s firms are ROI driven.


Preparing Your Marketing Plan

• DUE April 25th, 2008• 10 weeks from today• Get started by developing an idea• Research on sample Marketing Plan

Documents

MRKG 2312: E-commerce