ELC 310 DAY 3 ©2006 Prentice Hall

Agenda Return contracts Questions? Begin discussion on Strategic eMarketing Assignment 1 (due in 11 days) ©2006 Prentice Hall

E-Marketing 4/E Judy Strauss, Adel I. El-Ansary, and Raymond Frost Chapter 2: Strategic E-Marketing ©2006 Prentice Hall 2-1

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. ©2006 Prentice Hall 2-2

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? ©2006 Prentice Hall 2-3

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. ©2006 Prentice Hall 2-4

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. ©2006 Prentice Hall 2-5

E-business strategy flows from the firm’s environmental analysis. ©2006 Prentice Hall

From Strategy to Electronic Strategy Most strategic plans explain the rationale for the chosen objectives and strategies. There are four appropriate types of rationale: Strategic justification shows how the strategy fits with the firm’s overall mission and business objectives, Operational justification identifies and quantifies the specific process improvements that will result from the strategy, Technical justification shows how the technology will fit and provide synergy with current information technology capabilities, Financial justification examines cost/benefit analysis and uses standard measures (ROI, NPV). ©2006 Prentice Hall

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. ©2006 Prentice Hall 2-6

E-Business Model = Business Model + Information Technology 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. ©2006 Prentice Hall

Level of Commitment to E-Business ©2006 Prentice Hall 2-7

Activity-level models Online purchasing Order processing E-mail Content publisher (brochureware) Business intelligence Online advertising Online sales promotion Pricing strategies ©2006 Prentice Hall 2-8

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 ©2006 Prentice Hall 2-9

Enterprise-Level Models E-commerce Direct selling Content sponsorship Portal Online broker Exchange Auction Metamediary Purchasing agent Virtual mall ©2006 Prentice Hall 2-10

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. ©2006 Prentice Hall 2-11

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 ©2006 Prentice Hall 2-12

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. ©2006 Prentice Hall

©2006 Prentice Hall

The Balanced Scorecard Customer perspective Time Quality Performance and service Cost Internal perspective Cycle time Manufacturing quality Employee skills and productivity ©2006 Prentice Hall 2-13

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 ©2006 Prentice Hall 2-14

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 ©2006 Prentice Hall 2-15

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 ©2006 Prentice Hall 2-16

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. ©2006 Prentice Hall

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. ©2006 Prentice Hall

Assignment 1 Prepare a two to three page paper (not less than 500 and not more than 1000 words) that covers the listed requirements. Carefully articulate your career objectives (20%) Perform a SWOT analysis of your current situation as it relates to your desired career objectives (30%) You must have at least 5 items is each of the four areas (SWOT) Develop a strategic plan (less than a page!) the takes you from your current situation to your desired career objectives (30%) Develop a set of performance metrics that you will use to determine if your strategic plan is working. (20%) This assignment is due Tuesday, September 19 at 2PM. Resources http://www.quintcareers.com/SWOT_Analysis.html http://www.businessballs.com/swotanalysisfreetemplate.htm http://change.monster.com/articles/swot/ ©2006 Prentice Hall