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

1. E-Marketing, 3rd editionJudy Strauss, Adel I. El-Ansary,and Raymond Frost Chapter 3: The E-Marketing Plan © Prentice Hall 2003

2. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

3. Overview of the E-Marketing Planning Process • How can information technologies assist marketers in building revenues and market share or lowering costs? • How can firms identify a sustainable competitive advantage with the Internet when so little is understood about how to succeed?

4. Overview of the E-Marketing Planning Process • The best firms have clear visions that they translate, through the marketing process, from e-business objectives and strategies into e-marketing goals and well-executed strategies and tactics for achieving those goals. • This marketing process entails three steps: • Marketing plan creation, • Plan implementation, • Evaluation/corrective action.

5. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

6. Creating an E-Marketing Plan • E-marketing plan:It is a guiding, dynamic document that links the firm’s e-business strategy (e-business model) with technology-driven marketing strategies and lays out details for plan implementation through marketing management. • The e-marketing plan serves as a roadmap to guide the direction of the firm, allocate resources, and make tough decisions at critical junctures. • There are two common types of e-marketing plans: • The napkin plan, • The venture capital plan.

8. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

9. The Napkin Plan • Dot-com entrepreneurs were known to simply jot their ideas on a napkin over lunch and then run off to find financing. • The big company version of this is the just-do-it. An employee has an idea, and convinces management to just do it. • These plans sometimes work and are sometimes even necessary but they are not recommended when substantial resources are involved. Sound planning and thoughtful implementation are needed for long-term success in business.

10. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

11. The Venture Capital E-Marketing Plan • Small to mid-sized firms and entrepreneurs with start-up ideas usually begin with a napkin plan without going through the entire traditional marketing planning process. • BUT as the company grows and needs capital, it has to put together a comprehensive e-marketing plan. • Where does an entrepreneur go for capital? • Sometimes bank loans, • Most of the time, it is equity financed, • Private funds (friends and family), • Angel investors, • Venture capitalists.

12. The Venture Capital E-Marketing Plan • Investors are looking for a well-composed business plan, and more importantly, a good team to implement it. • The business plan should contain enough data and logic to prove that: • The e-business idea is solid, • The entrepreneur has some idea of how to run the business.

13. The Venture Capital E-Marketing Plan • 9 questions that every business plan should answer: • Who is the new venture’s customer? • How does the customer make decisions about buying this product or service? • To what degree is the product or service a compelling purchase for the customer? • How will the product or service be priced?

14. The Venture Capital E-Marketing Plan • 9 questions that every business plan should answer: • How will the venture reach all the identified customer segments? • How much does it cost (in time and resources) to acquire a customer? • How much does it cost to produce and deliver the product or service? • How much does it cost to support a customer? • How easy is it to retain a customer?

15. The Venture Capital E-Marketing Plan • VCs look for a way to get their money and profits out of the venture within a few years: • The golden exit plan is to go public and issue stock in an initial public offering (IPO), • As soon as the stock price rises sufficiently, the VC cashes out and moves on to another investment. • All VCs’ investments are not successful. But if even one out of 20 is an Amazon.com, the risk was well worth the reward.

16. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

17. A Six-Step E-Marketing Plan

18. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

19. Step 1—Situation Analysis Planning for e-marketing does not mean starting from scratch but working with existing business, e-business, and marketing plans is an excellent place to start.

20. Step 1—Situation Analysis • The organizational e-business plan: SWOT analysis => e-business strategy. • The marketing plan: gathers information about the firm’s products, the markets currently served, and so forth. • The distribution plan: identifies areas where the products are currently sold and suggests geographic gaps that might be receptive to e-commerce. • Promotion plan information: gives clues about how the Internet fits with the firm’s current advertising, sales promotion, and other marketing communications. • The firm and brand positioning in the marketplace: Internet planners must decide how closely Web site content and promotion will follow current positioning strategies. • The marketer moves to strategy formulation.

21. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

22. Step 2—Link E-Business with E-Marketing Strategy • Marketers need to: • Review the marketing and e-business plans, 2 Conduct a strategic planning to help achieve the firm’s e-business goals + define potential revenue streams, 3 Create supporting e-marketing strategy for the e-business goals: A Tier one strategy: marketers design segmentation, targeting, differentiation, and positioning strategies, B Tier two strategy deals with the 4P’s and relationship management by creating strategies around the offer (product), value (pricing), distribution (place), and communication (promotion), • Further, marketers design customer and partner relationship strategies (CRM/PRM).

24. Tier One E-Marketing Strategic Planning: Segmenting & targeting • Market opportunity analysis (MOA): • The demand analysis = market segmentation analyses to describe and evaluate the potential profitability, sustainability, accessibility, and size of various potential segments. • The segment analysis in the B2C market with demographic characteristics, geographic location, selected psychographic, and past behavior toward the descriptors help firms identify potentially attractive markets. • Allows the company to select its target market and understand its characteristics, behavior, and desires in the firm’s product category.

25. Tier One E-Marketing Strategic Planning: Segmenting & targeting Tools: - Traditional segmentation analyses. • Analyzes of customer bases using cookies, database analyses, and other techniques, • Supply analysis: forecasts segment profitability + finds competitive advantages, • Study of competition to find the company own performance advantages.: strengths and weaknesses, e-marketing initiatives, … • Identify future industry changes.

26. Tier One E-Marketing Strategic Planning: Identifying brand differentiation variables and positioning strategies • The understanding of the competition + the target(s) • Differentiation of the products to provide benefits perceived as important by the target. • The positioning statement: the desired image for the brand relative to the competition.

27. Tier Two E-Marketing Strategic Planning The two Tiers are elaborated in an interactive process: It is difficult to know what the brand position should be without understanding the offer that comprises the brand promise.

28. The Offer: Product Strategies • The organization can: • Sell merchandise, services, or advertising on the Web site, • Adopt an e-business model such as online auctions, • Create new brands for the online market, • Simply sell selected current or enhanced products in that channel. • A firm must decide how online product prices will compare with offline equivalents considering the differing costs of sorting and delivering products to individuals through the online channel as well as competitive and market concerns.

29. The Offer: Product Strategies • There are two online pricing trends are: • Dynamic pricing—this strategy applies different price levels for different customers or situations. The Internet allows firms to price items automatically and “on the fly” while users view pages, • Online bidding—this presents a way to optimize inventory management. • E.g. Priceline.com, eBay.com

30. Distribution Strategies • Many firms use the Internet to distribute products or create efficiencies among supply chain members in the distribution channel. • Direct marketing—Many firms sell directly to customers, by-passing intermediaries in the traditional channel for some sales. • Agent e-business models—Firms such as eBay and E*Trade bring buyers and sellers together and earn a fee for the transaction.

31. Marketing Communication Strategies • The Internet spawned a multitude of new marketing communication strategies, both to draw customers to a Web site and to interact with brick-and-mortar customers. • Firms use Web pages and e-mail to: • Communicate with their target markets and business partners, • Build brand images, • Create awareness of new products, • Position products using the Web and e-mail.

32. Relationship Management Strategies • E-marketing communication strategies help build relationships with a firm’s partners, supply chain members, or customers using: • Customer relationship management (CRM) software to retain customers and increase average order values and lifetime value, • Partner relationship management (PRM) software to integrate customer communication and purchase behavior into a comprehensive database, • Extranets—two or more proprietary networks linked for better communication and more efficient transactions among firms (PRM).

33. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

34. Step 3— Formulate Objectives • In general, an objective in an e-marketing plan takes the form: • Task (what is to be accomplished), • Measurable quantity (how much), • Time frame (by when).

35. Typical E-Marketing Objectives • Most e-marketing plans aim to accomplish multiple objectives such as: • Increase market share, • Increase sales revenue, • Reduce costs, • Achieve branding goals, • Improve databases, • Achieve customer relationship management goals, • Improve supply chain management.

36. E-Marketing Objective-Strategy Matrix Objective-strategy matrix presents the firm’s e-marketing strategies and accompanying goals.

37. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

38. Step 4 — Design Implementation Plan to Meet the Objectives • Select: • The marketing mix (4 Ps), • Relationship management tactics, • Other tactics to achieve the plan objectives. • Devise detailed plans for implementation. • Check the right marketing organization is in place for implementation.

39. Step 4 — Design Implementation Plan to Meet the Objectives • Information technologies are especially adept at automating these processes, this is why the information gathering tactics are important: • Web site forms, feedback e-mail, and online surveys, • Web site log analysis software helps firms review user behavior at the site and make changes to better meet the needs of users, • Business intelligenceuses the Internet for secondary research, assisting firms in understanding competitors and other market forces.

40. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

41. Step 5 — Budgeting • A key part of any strategic plan is to identify the expected returns from an investment. • Returns are matched against costs to develop a cost/benefit analysis, ROI calculation, or internal rate of return (IRR) • Determine whether the effort is worthwhile. • During plan implementation, marketers will closely monitor actual revenues and costs • To monitor of results are on track for accomplishing the objectives.

42. Revenue Forecast • The firm uses an established sales forecasting method for estimating the site revenues in the short, intermediate, and long term. • Inputs: The firm’s historical data, industry reports, and competitive actions. • An important part of forecasting is to estimate the level of Web site traffic over time. • This number affects the amount of revenue a firm can expect to generate from its site. • Revenue streams: • Web site direct sales, - Advertising sales, • Subscription fees, - Affiliate referrals, • Sales at partner sites, - Commissions, and other fees.

43. Budgeting • Intangible Benefits: • Putting a financial figure on such benefits is challenging but essential for e-marketers. • What is the value of increased brand awareness from a Web site? • Cost Savings: • Money saved through Internet efficiencies is considered soft revenue for a firm.

44. E-Marketing Costs • Costs for employees, hardware, software, programming, and more. • Some traditional marketing costs may creep into the e-marketing budget • The cost of a Web site can range from $5000 to $50 million. • Few of the costs site developers incur: • Technology costs: software, hardware, Internet access or hosting services, educational materials and training, and other site operation and maintenance costs. • Site design. Web sites need graphic designers to create appealing page layouts, graphics, and photos.

45. E-Marketing Costs • Other costs site developers incur: • Salaries. All personnel that work on Web site development and maintenance are budget items. • Other site development expenses. If not included in the technology or salary categories, any other expenses will be here (registration of multiple domain names and hiring consultants). • Marketing communication. All advertising, public relations, and promotions activities, both online and offline, to draw site traffic. Search engine registration, online directory costs, e-mail list rental, prizes for contests, and more. • Miscellaneous. Other typical project costs might fall here—expenses such as travel, telephone, stationery printing to add the new URL, and more.

46. Overview • Overview of the E-Marketing Planning Process • Creating an E-Marketing Plan • The Napkin Plan • The Venture Capital E-Marketing Plan • A Six-Step E-Marketing Plan • Step 1—Situation Analysis • Step 2—Link E-Business with E-Marketing Strategy • Step 3— Formulate Objectives • Step 4—Design Implementation Plan to Meet the Objectives • Step 5—Budgeting • Step 6—Evaluation Plan

47. Step 6 — Evaluation Plan • Once the e-marketing plan is implemented, its success depends on continuous evaluation. The tracking systems should be in place before the electronic doors open. • What should be measured? The plan objectives need to be evaluated with: • Balanced scorecard for e-business • ROI …

48. Key Terms • Angel investors • Demand analyses • Direct marketing • Dynamic pricing • E-marketing plan • Market Opportunity Analysis (MOA) • Online bidding • Partner Relationship Management (PRM) • Segment analysis • Situation analysis • Supply analyses • Venture Capital (VC)

49. Review Questions • What are the six steps in an e-marketing plan? • Why do entrepreneurs seeking funding need a venture capital e-marketing plan rather than a napkin plan? • What is the purpose of the marketing opportunity analysis and the segment analysis? • What four elements in tier one and five elements in tier two are devised for e-marketing strategy? • What is the purpose of an e-marketing objective-strategy matrix? • How do managers use budgeting within the e-marketing planning process? • Why do e-marketing plans need an evaluation component?

50. Discussion Questions • If you had money to invest, what would you look for in a venture capital e-marketing plan? • What kinds of questions should a firm ask in developing an e-marketing plan to serve customers in current markets through an online channel? • Why is it important for e-marketers to specify not only the task but also the measurable quantity and time frame for accomplishing an objective? • Why would the management of American Airlines expect its e-marketers to estimate the financial impact of intangible benefits such as building brand equity through e-mail messages to frequent flyers?