1. E-Marketing, 3rd edition Judy Strauss, Adel I. El-Ansary, and Raymond Frost

2. Strategic Planning  Amazon uses strategic planning to get ready for a profitable and sustainable business future. Amazon  Strategic planning = the “managerial process of developing and maintaining a viable fit between the organization’s objectives, skills, and resources and its changing market opportunities.”  Two key elements of strategic planning are: -The preparation of a SWOT analysis, -The establishment of strategic objectives.

3. 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.

4. The Amazon storyAmazon  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 

5.  Opportunity: To sell online.  Threat :A full-scale push by one of the large bookstore chains to claim the online market.

6. Strategy  It is the means to achieve a goal.  It is concerned with how the firm will achieve its objectives, not what its goals are: 1.The firm sets its growth and other objectives, 2.It decides which strategies it will use to accomplish them, 3.The tactics are detailed plans to implement the strategies.  It is important to note that objectives, strategies, and tactics can exist at many different levels in a firm.

7. From Strategy to Electronic Strategy  E-business strategy: The deployment of enterprise resources to capitalize on technologies for reaching specified objectives that ultimately improve performance and create sustainable competitive advantage. Corporate-level business strategies including information technology components (Internet, digital data, databases, and so forth) become e-business strategies.  E-Business Strategy = Corporate Strategy + Information Technology

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

9. From Strategy to Electronic Strategy  Marketing strategy becomes e-marketing strategy when marketers use digital technology to implement the strategy: E-marketing strategy = marketing strategy + Information technology

10. 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).

11. From Business Models to E- Business Models Business model: a method by which the organization sustains itself in the long term, and includes its value proposition for partners and customers as well as its revenue streams. A firm will select one or more business models as strategies to accomplish enterprise goals.

12. How does a firm select the best business models? Critical components: Customer value. Does the model create value through its product offerings that is differentiated in some way from that of competitors? Scope. Which markets do the firm serve, and are they growing? Are these markets currently served by the firm, or will they be higher risk new markets? Price. Are the firm’s products priced to appeal to markets and also achieve company share and profit objectives?

13. How does a firm select the best business models? Revenue sources. Where is the money coming from? Is it plentiful enough to sustain growth and profit objectives over time? Connected activities. What activities will the firm need to perform to create the value described in the model? Does the firm have these capabilities? Implementation. The company must have the ability to actually make it happen. Capabilities. Does the firm have the resources (financial, core competencies, and so on) to make the selected models work? Sustainability. The e-business model is particularly appropriate if it will create a competitive advantage over time.

14. 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.

15. E-Business Models E-business models can capitalize on digital data collection and distribution techniques without using the Internet. Remember that e-marketing and e-business models may operate outside the Internet.  The term e-business models to include both Internet and offline digital models throughout the rest of our discussion.

16. Value and Revenue –Whether online or offline, the value proposition involves knowing what is important to the customer or partner and delivering it better than other firms. – Value encompasses the customer's perceptions of the product’s benefits, specifically its attributes, brand name, and support services. – Subtracted from benefits are the costs involved in acquiring the product, such as monetary, time, energy, and psychic.  Value = Benefits - Costs

18. Business intelligence (BI). This refers to the gathering of secondary and primary information about competitors, markets, customers, and more. E-commerce refers to online transactions: selling goods and services on the Internet, either in one transaction or over time with an ongoing subscription. Direct selling refers to a type of e-commerce in which manufacturers sell directly to consumers, eliminating intermediaries such as retailers. Content sponsorship online is a form of e-commerce in which companies sell advertising either on their Web sites or in their e-mail. A portal is point of entry to the Internet, such as the Yahoo! and AOL Web sites. They are portals because they provide many services in addition to search capabilities.

19. Pure Play  Pure plays = businesses that began on the Internet, even if they subsequently added a brick-and-mortar presence.  E.g. E*Trade is a pure play, beginning with only online tradingE*Trade  Pure plays face significant challenges: They must compete as new brands and take customers away from established brick-and-mortar businesses.  One way to change the rules is to invent a new e-business model, as Yahoo! and eBay did.YahooeBay

20. An Optimized System of E- Business Models E-business is the continuous optimization of a firm’s business activities through digital technology. Firms usually combine traditional business and e-business models. E.g. Schwab = combined its online and offline brokerages in a unified system.  The challenge: customers expect a high degree of coordination between online and offline operations.  The danger: the established corporate culture might squash e- commerce initiatives or slow them down with the best of intentions.  The solution: Many businesses have spun off their e-commerce operations as wholly owned subsidiaries or pure plays so they can compete without the weight of the parent business.

21. An Optimized System of E- Business Models A fully optimized e-business that uses the Internet to sell is the sum of multiple e-business activities and processes: E-commerce, business intelligence, customer relationship management, supply chain management, and enterprise resource planning as represented in the following equation: EB = EC + BI + CRM + SCM + ERP

22. Performance Metrics The only way to know whether a company has reached its objectives is to measure results. Performance metrics = specific measures designed to evaluate the effectiveness and efficiency of an organization’s operations. Armed with this information, the company can make corrections to be sure it accomplishes the goal. Performance metrics should be defined along with the strategy formulation so the entire organization will know what results constitute successful.

23. Performance Metrics  Performance metrics used to measure strategy effectiveness: - Translate the vision, strategy, or e-business model into components that have measurable outcomes that various departments can use to create action plans, - Communicate to employees what results the firm values.  When employee evaluations are tied to the metrics, people will be motivated to make decisions that lead to the desired outcomes.

24. 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.

25. The Balanced Scorecard NOW, they use: The Balanced Scorecard = enterprise performance management systems that measure many aspects of a firm’s achievements. -50% of organizations worldwide have adopted the Balanced Scorecard with excellent results. -The scorecard approach links strategy to measurement by asking firms to consider their vision, critical success factors for accomplishing it, and subsequent performance metrics in four areas: Customer, internal, innovation and learning, and financial.

26. Four Perspectives 1.The customer perspective: -Uses measures of the value delivered to customers. -These metrics tend to fall into four areas: time, quality, performance and service, and cost. E.g. Time from order to delivery, customer satisfaction levels with product performance, amount of sales from new products, and industry-specific metrics such as equipment up-time percentage or number of service calls.

27. 2. The internal perspective: -Evaluates company success at meeting customer expectations through its internal processes. E.g.: cycle time (how long to make the product), manufacturing quality, and employee skills and productivity. Information systems are a critical component of the internal perspective for e- business firms.

28. 3.The innovation and learning perspective = the growth perspective: -Companies place value on continuous improvement to existing products and services as well as on innovation in new products. E.g. Number of new products and the percentage of sales attributable to each; penetration of new markets; and the improvement of processes such as CRM or SCM initiatives.

29. 4.The financial perspective: = Income and expense metrics as well as return on investment, sales, and market share growth. The point is to understand what the company wants to accomplish and devise performance metrics to monitor the progress and see that the goals are reached.

30. Scorecard Benefits  Obtain timely information to update its strategy.  Balance long-term and short-term measures and evaluate every part of the firm and how each contributes toward accomplishing selected goals.  It helps firms leverage their relationships with partners and supply chain members.  Go beyond financial metrics in measuring many different aspects that lead to effective and efficient performance.  Creates a long-term perspective for company sustainability.

31.  Forces companies to decide what is important and translate those decisions into measurable outcomes that all employees can understand.  A great communication tool because employees can use the scorecard as a guide to coordinate their efforts.  Support employee evaluation in that individual performance can be tied to successful outcomes on the metrics.  A way to measure intangible as well as tangible assets.  The are flexible and allow firms to select appropriate metrics for their goals, strategies, industry, and specific vision.

32. Components of price PRICE = INGREDIENT COST + SERVICE COST + PROFIT

33. Pricing  Focus on value – what is product or service worth to consumer  Value depends on Consumer perceptions How well service is provided How convenient service is How well benefits are explained  Value depends on all elements of marketing mix

34. Price Elasticity of Demand  % by which quantity demanded changes when there is a 1% change in price  Elastic – greater than 1% change in quantity  Inelastic – less than 1% change in quantity  Price elasticity of demand = consumer sensitivity to price

35. Pharmacy Goals  Maximize long-run profit  Increase sales or market share – penetration pricing  Increase sales of other products – loss leader pricing  Attract only customers willing to pay for better service – price skimming  Maintain status quo – match competitors’ prices

36. Estimate Net Income  $15,000 in assets for DCC  Want a 12% ROA  $15,000 x 0.12 = $1,800  Need $1,800 in annual profit to get 12% return  At volume of 500 sessions, average profit = 1,800/500 = $3.60  Assumes goal of long-run profit

37. Pricing Strategy  Consistent with focus on ROA  ROA = NI/Sales x Sales/Assets

38. Internal factors affecting pricing include the company’s marketing objectives, marketing mix strategy, costs, and organizational considerations. External factors that affect pricing decisions include the nature of the market and demand, competition, and other environmental elements. Besides that, a company may amortize its R&D cost over a period of time, which becomes an additional cost component.