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MRKG 2312: E-Commerce

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Agenda

• Questions?

• Begin discussion on Strategic eMarketing

• Project emailed to class email address • due May 02, 2008

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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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We have the right model for the Internet age ….. [including] …. a partnership of trust and communications among our people, our customers, and our suppliers

Michael Dell

Dell has entered into an agreement with Wal-Mart that will put its desktops in 3,400 of the chain's stores beginning June 10, 2007,retailing for under $700.

What you measure is what you get: the Performance metrics you use affect the behavior of your managers and employees.

David Norton and Robert Kaplan

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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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P

Legal - Ethical Technology Competition Other factors

E-Business Strategy

Performance Metrics

SWOT

E-Marketing Plan

E-Marketing Strategy

E-Marketing Mix CRM

Markets

Internet E

S

Exhibit 2 - 1 Focusing on Strategy and Performance

E-business strategy flows from the firm’s environmental analysis.

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From Strategy to Electronic Strategy

• Most strategic plans explain the rationale for the chosen objectives and strategies. There are four appropriate types of rationale:

1. Strategic justification shows how the strategy fits with the firm’s overall mission and business objectives,

2. Operational justification identifies and quantifies the specific process improvements that will result from the strategy,

3. Technical justification shows how the technology will fit and provide synergy with current information technology capabilities,

4. Financial justification examines cost/benefit analysis and uses standard measures (ROI, NPV).

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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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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.

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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

Leve

l of b

usine

ss Im

pact

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

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Activity-level models• Online purchasing

• Order processing

• E-mail

• Content publisher (brochureware)

• Business intelligence

• Online advertising

• Online sales promotion

• Pricing strategies

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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

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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

http://www.balancedscorecard.org/basics/bsc1.html

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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.

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Customer Perspective

Internal Business Perspective

Innovation and Learning Perspective

Financial Perspective

Goals Measures Goals Measures Goals Measures Goals Measures

Exhibit 2 - 1 The Balanced Scorecard Has Four Perspectives

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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

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SWOT AnalysisStrengths, Weaknesses, Opportunities, and Threats

• It examines:- The company’s internal strengths and weaknesses

with respect to the environment,- The competition and looks at external opportunities

and threats.

• Opportunities may help to define a target market or identify new product opportunities, while threats are areas of exposure.

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Strength A smart and talented team that stayed focused and learned what it didn’t know.

Weakness No experience in:

-Selling books

-Processing credit card transactions

-Boxing books for shipment

Opportunity To sell online.

Threat A full-scale push by one of the large bookstore chains to claim the online market.

Example

The Amazon story

Project Guideline• Project task

• Due time

• Guidelines

• Questions?

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