E-M ARKETING /6E
C HAPTER 2
C HAPTER 2 O BJECTIVES
2-2

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 performance metrics and
the Balanced Scorecard to measure e-business
and e-marketing performance.
 Enumerate key performance metrics for social
media communication.
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T HE A MAZON S TORY
2-3


Founded in 1995 as an online retailer.
 Did not become profitable until Q4 2001.
 In 2011, generated $48.1 billion in net sales,
$631 million in net income.
Leveraged its competencies into different ebusiness models.
 Core business is online retailing, “everything
store.”
 Established e-commerce partnerships with
Target, Macy’s, and others.
 Developer services provider.
 Content provider.
 Created the first affiliate program.
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T HE A MAZON S TORY, C ONT.
2-4

Founder and CEO Jeff
Bezos is not interested
in expanding to the
physical world.

Amazon’s success is
based on selection,
lower prices, product
availability, innovative
technology, and better
product information.

Which of Amazon’s
core competencies do
you think will drive its
strategy in the future?
https://www.youtube.com/
watch?v=98BIu9dpwHU
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S TRATEGIC P LANNING
2-5
Explain the
importance
of strategic
planning,
strategy, ebusiness
strategy,
and emarketing
strategy.
“process of developing and maintaining a
strategic fit between the organization’s goals
and capabilities 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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ESP: E NVIRONMENT, S TRATEGY,
AND P ERFORMANCE
2-6




The e-marketing plan flows from the
organization’s overall goals and strategies.
The ESP framework illustrates the
relationships among environment, strategy,
and performance.
A SWOT analysis of the business environment
(E) leads to the development of strategy (S)
and the measurement of performance (P).
Performance metrics are designed to evaluate
effectiveness and efficiency of e-business and
e-marketing operations.
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2-7
ESP F RAMEWORK
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S TRATEGY
2-8

Strategy is the means to achieve a goal.




Military roots.
Tactics are detailed plans to implement the
strategies
Objectives, strategies & tactics can exist at
many different levels in a company.
E.g. Growing 10%
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E-S TRATEGY
2-9
E-business strategy
 Strategy that deploys enterprise
resources to reach performance
objectives and create competitive
advantages.
 Corporate-level (enterprise-level)
 E.g. Wal-Mart, MIS with suppliers
 E-marketing strategy
 Strategy that capitalizes on information
technology to reach specified
marketing objectives.

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E - BUSINESS PROJECTS
2-10
Most strategic plans explain the rationale for the
chosen objectives and strategies.
 Four appropriate types of rationale for e-business
projects:






Financial justification examines cost/benefit analysis and
uses standard measures such as ROI.
Operational justification determines whether the
company has the staff capability to engage customers in
social media.
Organizational justification involves the corporate culture
and its fit with the new strategy.
Strategic justification shows how the strategy fits with the
firm’s overall mission, goals, and strategies.
Technical justification asks whether the company has the
technical expertise needed to implement the project.
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B USINESS M ODELS
2-11

A business model is a method for longterm survival and a value proposition for
partners, customers, and revenue.

An e-business model is a 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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2-12
Identify the
main ebusiness
models at
the activity,
business
process,
and
enterprise
levels.
S ELECTING A B USINESS M ODEL

A firm will select one or more business
models as strategies to accomplish
enterprise goals.

Components of business model selections:
Customer value
Scope
Price
Revenue sources
Connected activities
Implementation
Capabilities
Sustainability
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S ELECTING A B USINESS
M ODEL , C ONT.
2-13
Customer value
create value through product
offerings that are differentiated
from the competition.
Scope
which markets does the firm
serve and are they growing?
Price
are the products priced to appeal
to markets and achieve company
share and profit objectives?
Revenue sources where is the money coming from?
Is it plentiful enough to sustain
growth and profit objectives over
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PUBLISHING AS PRENTICE HALL
time?
2-14
S ELECTING A B USINESS
M ODEL , C ONT.
Connected
activities
What activities will the firm need
to perform to create value? Does
the firm have those capabilities?
Implementation Does the company actually have
the ability to make it so?
Capabilities
Does the firm have the financial,
core competencies, and human
resources available to make the
selected models work?
Sustainability
Will the model selected create a
competitive advantage over
time?
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E-B USINESS M ODELS
2-15
E-business models are defined by a
method in 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.
 Even though the Internet spawned the
vast majority of e-business models, it is
very important to remember that emarketing and e-business models may
operate outside the Internet.

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E-B USINESS M ODELS , C ONT.
VALUE AND R EVENUE
2-16

Value




Value encompasses the customer’s perceptions of
the product’s benefits, specifically its attributes,
brand name, and support services.
Value is similar to the marketing concept, which
suggests that the social and economic justification
for an organization’s existence is the satisfaction of
customer wants and needs.
Value can be determine by determining whether
there are more benefits than costs: Value = Benefits
- Costs
Revenue


E-business strategies help to decrease internal costs
E-business strategies also increase the enterprise
revenue stream.
M ENU OF S TRATEGIC EB USINESS M ODELS
2-17

A key element in setting strategic
objectives is to take stock of the
company’s current situation and decide
the level of commitment to e-business in
general and e-marketing in particular.

The higher the firm travels up the pyramid,
the greater its level of commitment to ebusiness.
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L EVEL OF C OMMITMENT
TO E-B USINESS
Level of business Impact
2-18
Business Transformation
(competitive advantage,
industry redefinition)
Pure
Play
Pure dot-com
Pure Dot-Com
(Amazon, MySpace)
(Amazon)
Enterprise
Effectiveness
(customer
retention)
Efficiency
(cost
reduction)
Both online and offline
Click
(Delland
andMortar
most retailers)
(eSchwab, most retailers)
Business Process
Activity
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Customer
Relationship
Management
e-mail, blog
Brochureware
E-Mail
A CTIVITY -L EVEL
E-B USINESS M ODELS
2-19

This level affects individual business activities that
can save the firm money, is low risk, and can
include:
Online purchasing
2.
Order processing
3.
E-mail
4.
Content publishing
5.
Business intelligence (BI)
6.
Online advertising and public relations (PR)
7.
Online sales promotions
8.
Pricing strategies
9.
Social media communication
10. Search marketing
1.
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B USINESS P ROCESS -L EVEL
E-B USINESS M ODELS
2-20

This level changes business processes to increase
the firm’s effectiveness and can include:
1. Customer relationship management (CRM)
2. Knowledge management (KM)
3. Supply chain management (SCM)
4. Community building
5. Affiliate programs
6. Database marketing
7. Enterprise resource planning (ERP)
8. Mass customization
9. Crowdsourcing
10. Freemium
11. Location-based marketing
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E NTERPRISE -L EVEL EB USINESS M ODELS
2-21

The firm automates many business processes in a
unified system. Some traits of this level may be:
1.
2.
3.
4.
5.
E-commerce: refers to online transactions: selling
goods and services on the internet.
Social commerce: uses social media to facilitate
online sales.
Direct distribution: is when manufacturers sell
directly to consumers.
Content sponsorship: is a form of e-commerce in
which companies sell advertising on their Web
pages, YouTube videos, or other online media.
Portal: A portal is a point of entry to the internet
that combines diverse content from many
sources.
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E NTERPRISE -L EVEL
E-B USINESS M ODELS
2-22
6.
7.
8.
9.
Social network sites: are those that bring
users together to share interests and personal
or professional profiles.
Online brokers: are intermediaries who assist
in the purchase negotiations without actually
representing either buyers or sellers (Online
exchange, Online auction, B2B exchange).
Manufacturer’s agents represent more than
one seller.
Purchasing agents represent buyers.
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P URE P LAY
2-23
Pure plays are businesses that began on
the internet.
 They represent the final level of the
pyramid.
 Pure plays face significant challenges.
 They must compete as new brands.
 They may need to take customers away
from established businesses.
 Some pure plays have redefined industries:
Yahoo!, Twitter, and eBay.

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P ERFORMANCE M ETRICS
I NFORM S TRATEGY
2-24
Discuss the
use of
performance
metrics and
the
Balanced
Scorecard to
measure ebusiness
and emarketing
performance
.
Performance metrics (Key performance
indicators KPIs) are specific measures
designed to evaluate the effectiveness and
efficiency of operations, online and offline.
 Performance metrics:
 Provide measurable outcomes.
 Must be easy to understand and use.
 Must be actionable.
 Can motivate employees to make
decisions that lead to desired outcomes.

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W EB A NALYTICS
2-25
Web analytics is the e-marketing term for
the study of user behavior on Web pages.
 Metrics measure activities such as:
 Click throughs from advertising
 Page views
 Number of comments posted on a blog
 Number of fans on a company
Facebook page
 Conversions to sales

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D ATA C OLLECTION
2-26
Data for web analytics are collected in
several ways:
 Website server logs, IP addresses are
recorded
 Cookie files are written
 Page tags are inserted
 Geolocation tracks users
 Web analytics software helps companies
analyze data on server logs for marketing
purposes.

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2-27
O NLINE M ARKETING
M EASUREMENT TOOL U SE
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T HE B ALANCED S CORECARD
2-28

The Balanced Scorecard provides a
framework for understanding e-marketing
metrics.

The Balanced Scorecard provides 4
perspectives.

Customer perspective

Internal perspective

Learning and growth perspective

Financial perspective
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2-29
T HE B ALANCED S CORECARD
(C ONT.)
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T HE B ALANCED S CORECARD :
C USTOMER P ERSPECTIVE
2-30

The customer perspective scorecard includes
ways to measure goals such as customer
loyalty and retention, engagement,
satisfaction, etc.

Loyalty and satisfaction measures may
include percentage of visitors who return
to site, time between visits, and shopping
cart abandonment.

Customer engagement could include the
number of comments, photos or videos
posted.
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T HE B ALANCED S CORECARD :
I NTERNAL P ERSPECTIVES
2-31

The Internal perspective scorecard
includes ways to measure goals
related to the quality of online
services and measures for the entire
supply chain.




Number of customers who use service
Number of complaints in social media
Amount of time to answer customer e-mail
Number of website updates per day
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2-32
T HE B ALANCED S CORECARD :
L EARNING & G ROWTH P ERSPECTIVES

The learning and growth perspective
scorecard includes human resources,
product innovation and continuous
improvement of marketing processes.
 Number of new products and features
 Number of customer complaints and
fixes
 Conversions from online leads
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T HE B ALANCED S CORECARD :
F INANCIAL P ERSPECTIVES
2-33

The financial perspective scorecard
includes ways to measure financial goals
such as sales, profit and return on
investment.
 Sales growth and market share
 Return on invested capital
 Average order value
 Individual customer profit
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S OCIAL M EDIA P ERFORMANCE
M ETRICS
2-34
Enumerate
key
performance
metrics for
social media
communication






Unique visitors
Page views
Impressions
Number of searches
Search engine ranking
Number of followers, registrations, or
subscribers
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2-35
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B RAND H EALTH M ETRICS
2-36

Share of Voice (SOV)

Sentiment

Brand influence
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E NGAGEMENT M ETRICS
2-37

Content viewership

Tagging, bookmarking or “likes”

Membership/Follower

Number of shares

Content creation
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2-38
A CTION & I NNOVATION M ETRICS
Action metrics
 Click-through to an advertiser’s site.
 Contact form completion or
registration.
 Event attendance.
 Purchase.
 Innovation metrics
 Number of ideas shared.
 Trend spotting.

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2-39
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Publishing as Prentice Hall
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