Chapter 3: The E-Marketing 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?
 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.
 L
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-MarketingPlan
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-B u sin
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 The Napkin Plan (experiment)
 Dot-com entrepreneurs were known to simply jot their
ideas on a napkin over lunch and then run off to find
financing.

 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.
 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),

 The Venture Capital E-Marketing Plan
 9 questions that every business plan should
answer:
1. Who is the new venture’s customer?
2. How does the customer make decisions about
buying this product or service?
3. To what degree is the product or service a
compelling purchase for the customer?
4. How will the product or service be priced?
 The Venture Capital E-Marketing Plan
 9 questions that every business plan should
answer:
5. How will the venture reach all the identified
customer segments?
6. How much does it cost (in time and resources)
to acquire a customer?
7. How much does it cost to produce and deliver
the product or service?
8. How much does it cost to support a customer?
9. How easy is it to retain a customer?
 A Six-Step E-Marketing Plan
Situation analysis 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 matrix.

E-Marketing strategic planning Determine the fit between the organizational nd its changing market
opportunities.
Tier 1 Strategies
Segmenting, Targeting, Differentiation and positioning

Objectives Identify general goals.

E-Marketing strategy Identify revenue streams suggested by e-business model.

Tier 2
Design the offer, value, distribution, communication, and
market/partner relationship management strategies.

Implementation plan 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.

Budget Forecast revenues.

Evaluate costs to reach goals.

Evaluation plan Identify appropriate performance metrics.

 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
 Hispanic markets growing and Pending security law means costly software
untapped in our industry. upgrades.
 Save postage costs through e-mail Competitor X is aggressively using e-
marketing. commerce.
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 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.
 Step 2—E-Marketing Strategic
Planning
 Marketers need to:
1 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),
4 Further, marketers design customer and partner relationship
strategies (CRM/PRM).
 Differentiation
Segmentation
Tier 1
tasks
Positioning Targeting

E-Marketing
Offer Strategy
Tier 2 CRM/PRM

tasks
Value Communication

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, e-
marketing 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.
 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 Strategies

Online Database Direct Online Sales Viral
Advertising Marketing E-mail Marketing
Find
affiliates
No No No No Yes
Gather
customer No Yes Yes Yes Yes
information
Improve
customer No Yes Yes Yes No
service
Increase
brand name Yes Yes Yes Yes Yes
awareness
Sell goods or
services
Yes Yes Yes Yes Yes

Exhibit 3 - 1 E-Marketing Objective-Strategy Matrix

Source: Adapted from Embellix eMarketing Suite
 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.
 The Offer: Product Strategies
 The organization can:
- Sell merchandise, services, or advertising on the Web site,
- Adopt a 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).
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, - Advertising sales,
- Subscription fees, - Affiliate referrals,
- Sales at partner sites, - Commissions, and other fees.
 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.
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 …
Review Questions
1. What are the six steps in an e-marketing plan?
2. Why do entrepreneurs seeking funding need a venture
capital e-marketing plan rather than a napkin plan?
3. What is the purpose of the marketing opportunity analysis
and the segment analysis?
4. What four elements in tier one and five elements in tier
two are devised for e-marketing strategy?
5. What is the purpose of an e-marketing objective-strategy
matrix?
6. How do managers use budgeting within the e-marketing
planning process?
7. Why do e-marketing plans need an evaluation
component?
Discussion Questions
1. If you had money to invest, what would you look for
in a venture capital e-marketing plan?
2. What kinds of questions should a firm ask in
developing an e-marketing plan to serve customers in
current markets through an online channel?
3. 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?
4. 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?