E-Marketing, 3rd edition Chapter 3: The E-Marketing Plan © Prentice Hall 2003

E-Marketing, 3rd edition
Judy Strauss, Adel I. El-Ansary, and Raymond Frost
Chapter 3: The E-Marketing Plan
© Prentice Hall 2003
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
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?
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.
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
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.
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
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.
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
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.
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.
The Venture Capital E-Marketing Plan

9 questions that every business plan should
answer:
1.
2.
3.
4.
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?
The Venture Capital E-Marketing Plan
9 questions that every business plan should
answer:

5.
6.
7.
8.
9.
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?
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.
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
A Six-Step E-Marketing Plan
Step
Situation analysis
Link e-business with
e-marketing strategy
Objectives
Implementation plan
Budget
Evaluation plan
Tasks
Review the firm’s environmental and SWOT analyses.
Review the existing marketing plan and any other information
that can be obtained about the company and its brands.
Review the firm’s e-business objectives, strategies, and
performance metrics.
Identify revenue streams suggested by e-business models
Tier 1

Perform Marketing Opportunity Analysis to identify
target stakeholders.
Specify brand differentiation variables.
Select positioning strategy.
Tier 2
Design the offer, value, distribution, communication, and
market/partner relationship management strategies.
Identify general goals.
Select target specific goals.
Design e-marketing mix tactics.
 product/service offering
 pricing/valuation
 distribution/supply chain
 integrated communication mix
Design relationship management tactics.
Design information gathering tactics.
Design organizational structures for implementing the plan.
Forecast revenues.
Evaluate costs to reach goals.
Identify appropriate performance metrics.
Exhibit 3 - 1 Marketing Plan Process
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
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.
Opportunities
Threats
Pending security law means costly software
 Hispanic markets growing and
upgrades.
untapped in our industry.
Competitor X is aggressively using e Save postage costs through e-mail
commerce.
marketing.
Strengths
Weaknesses
1. Strong customer service department.
1. Low tech corporate culture
2. Excellent Web site and database
2. Seasonal business: peak is summer
system.
months.
E-business Goal: Initiate e-commerce in within one year.
Metric: Generate $500,000 in revenues from e-commerce during the first year.
Exhibit 3 - 1 SWOT, Objective, and Metric Example from E-Business Plan
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 ecommerce.
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.
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
Step 2—Link E-Business with
E-Marketing Strategy

Marketers need to:
1
Review the marketing and e-business plans,
2 Conduct a strategic planning to help achieve the firm’s ebusiness 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),
4
Further, marketers design customer and partner relationship
strategies (CRM/PRM).
Differentiation
Tier 1
tasks
Tier 2
tasks
Segmentation
Positioning
Targeting
E-Marketing
Strategy
Offer
CRM/PRM
Communication
Value
Distribution
Exhibit 3 - 1 Formulating E-Marketing Strategy in Two Tiers
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.
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, emarketing initiatives, …
Identify future industry changes.
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.
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.
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.
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
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.
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.
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).
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
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).
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.
E-Marketing Objective-Strategy Matrix
Objective-strategy matrix presents the firm’s e-marketing
strategies and accompanying goals.
Online Goals
Online
Advertising
Find
affiliates
Gather
customer
information
Improve
customer
service
Increase
brand name
awareness
Sell goods or
services
Database
Marketing
Online Strategies
Direct
Online Sales
E-mail
Viral
Marketing
No
No
No
No
Yes
No
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Exhibit 3 - 1 E-Marketing Objective-Strategy Matrix
Source: Adapted from Embellix eMarketing Suite
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
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.
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 intelligence uses the Internet for secondary
research,
assisting
firms
in
understanding
competitors and other market forces.
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
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.
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,
Subscription fees,
Sales at partner sites,
fees.
- Advertising sales,
- Affiliate referrals,
- Commissions, and other
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.
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.
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.
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
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 …
Key Terms
•Angel investors
•Online bidding
•Demand analyses
•Partner Relationship
Management (PRM)
•Direct marketing
•Dynamic pricing
•E-marketing plan
•Market Opportunity Analysis
(MOA)
•Segment analysis
•Situation analysis
•Supply analyses
•Venture Capital (VC)
Review Questions
1.
2.
3.
4.
5.
6.
7.
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
component?
plans
need
an
evaluation
Discussion Questions
1.
2.
3.
4.
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?