MRKG 2312: E-Commerce. Agenda. Questions? Begin discussion on Strategic eMarketing Project emailed to class email address due May 02, 2008. E-Marketing 4/E Judy Strauss, Adel I. El-Ansary, and Raymond Frost. Chapter 2: Strategic E-Marketing.
Agenda • Questions? • Begin discussion on Strategic eMarketing • Project emailed to class email address • due May 02, 2008
E-Marketing 4/EJudy Strauss, Adel I. El-Ansary, and Raymond Frost Chapter 2: Strategic E-Marketing 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
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. 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? 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. 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. 2-5
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).
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. 2-6
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.
Activity-level models • Online purchasing • Order processing • E-mail • Content publisher (brochureware) • Business intelligence • Online advertising • Online sales promotion • Pricing strategies 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 2-9
Enterprise-Level Models • E-commerce • Direct selling • Content sponsorship • Portal • Online broker • Exchange • Auction • Metamediary • Purchasing agent • Virtual mall 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. 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 http://www.balancedscorecard.org/basics/bsc1.html 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.
The Balanced Scorecard • Customer perspective • Time • Quality • Performance and service • Cost • Internal perspective • Cycle time • Manufacturing quality • Employee skills and productivity 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 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 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 2-16
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.
Example The Amazon story
Project Guideline • Project task • Due time • Guidelines • Questions?