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/E
Judy Strauss, Adel I. El-Ansary, and Raymond Frost
Chapter 2: Strategic E-Marketing
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2-1
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
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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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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 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)
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Business Process
Activity
2-7
Click and Mortar
(eSchwab, most retailers)
Customer
Relationship
Management
Brochureware
E-Mail
Activity-level models
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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
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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
Goals
Goals
Measures
Measures
Innovation and
Learning
Perspective
Goals
Measures
Exhibit 2 - 1 The Balanced Scorecard Has Four Perspectives
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Financial
Perspective
Goals
Measures
The Balanced Scorecard
• Customer perspective
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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
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Income and expense metrics
ROI
Sales
Market share growth
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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
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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
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SWOT Analysis
Strengths, 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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Example
The Amazon story
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.
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Project Guideline
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Project task
Due time
Guidelines
Questions?
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