Chapter three: The E-marketing Plan

After the completion of this chapter, students will be able to:

 Discuss the nature and importance of an e-marketing plan and outlines its seven steps
 Show the form of an e-marketing objectives and highlight the use of an objective-strategy
matrix
 Describe the tasks that marketers complete in tiers 1 and 2 as they create e-marketing
strategies
 List some key revenues and costs identified during the budgeting step of the e-marketing
planning process

3.1 Overview of the E-marketing planning process

How can information technologies assist marketers in building revenues and market share or
lowering costs? How many firms identify a sustainable competitive advantage with the internet
when the landscape is constantly changing? The answer lies in determining how to apply digital
data and information technologies both effectively and efficiently. 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,
and plan evaluation/corrective action. This chapter examines the first of these steps: the e-
marketing plan.
3.2 Creating an E-marketing plan
The e-marketing plan is a blueprint for e-marketing strategy formulation and implementation. 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 intent of the marketing plan is to guide delivery of the desired
results measured by a performance metrics according to the specifications of the e-business
model imbedded in the firm’s e-business strategy. The Exhibit 3-1, shows where the e-
marketing plan fits in the process.

The e-marketing plan serves as a road map to guide the direction of the firms, allocate resources
and make tough decisions at critical junctures. Many companies short-circuit this process and
develop strategies ad hoc. Some of them are successful, but many more fail. Nonetheless, some
of the best firms discover successful e-commerce tactics accidentally and then use those
experiences to build a bottom up plan. Such was the case with eSchwab, the online stock trading
firm, which allowed its online channel successes to change the entire brick-and-mortar firm.
Whether the result of top-down or bottom up planning, firms must plan for long term
sustainability.

Legal-ethical
Technology Internet Market
E
Competition and other factors

SWOT
E-business E-marketing plan
S Strategy/model

E-marketing Implementation
Strategy Marketing mix/CRM

P Performance metrics

Exhibit 3-1 E-marketing plan – strategy formulation and Implementation

This chapter is structured around a seven step traditional marketing plan. It presents a generic
plan that includes a menu of tasks from which marketers can select activities relevant to their
firm, industry, brands, and internal processes. It assumes that a higher level corporate plan is
already in place, outlining the firm’s goals, e-business strategies and selected enterprise level e-
business models. If such plan has not already been formulated, marketers must go through the
environmental scan and SWOT analyses prior to creating the plan.
3.3 A Seven step E-marketing plan
Seven key planning elements include a situational analysis, e-marketing strategic planning, the
plan objectives, e-marketing strategy, an implementation plan, the budget, and a plan for
evaluating success.
We can not overemphasize the need to include feedback mechanisms to assess the plan’s
success and to use in making course corrections along the way, especially in the fast-paced e-
 business environment. In fact, some marketers recommend contingency plans and “trigger
points” that if reached will invoke strategy refinement.
Step Tasks
1. Situational analysis Review the firm’s environmental and SWOT analysis.
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.

Determine the fit between the organization and its changing

2. E-marketing strategic market opportunities; perform marketing opportunity analysis,
planning demand and supply analysis and segment analysis.
Tier 1 strategies
 Segmentation
 Targeting
 Differentiation
 Positioning

Identify general goals flowing from e-marketing strategy.

3. Objectives Identify revenue streams suggested by e-business models.

Tier 2 strategies
4. E-marketing strategy Design the offer, value, distribution, communication, and
market/partner relationship management strategies.
Modify objectives as warranted.

Design e-marketing mix tactics:

 Product/service offering
5. Implementation plan  Pricing/valuation
 Distribution/supply chain
 Integrated communication mix
Design relationship management tactics
Design information gathering tactics.
Design organizational structures for implementing the plan.
Forecast revenue
Evaluate costs to reach goals

Identify appropriate performance metrics.

6. Budget

7. Evaluation plan
Exhibit 3-2 marketing plan process
Step 1- Situational analysis
This is the first step in which the marketers will conduct the situation analysis by reviewing
environmental and SWOT analysis. The marketing environment is ever changing, providing
plenty of opportunities to develop new products, new markets, and new media to communicate
with customers, plus new channels to reach business partners. At the same time, the environment
poses competitive, economic, and other threats. Three key environmental factors that affect e-
marketing and are part of any situation analysis include legal, technological, and market related
factors.

The SWOT analysis (strength, weaknesses, opportunities, and threats) flows from a situation
analysis that examines the company’s internal strengths and weaknesses with respect to the
environment and 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. For example, when [Link] seized the opportunity to sell online, it had no
significant competition. Its biggest threat was a full scale push by one of the large bookstore
chains to claim the online market. The company’s greatest weakness was that it had no
experience selling books or even processing credit card transactions. What’s more, it had no
experience boxing books for shipment and originally packed them on the floor until a visiting
carpenter suggested building package tables. The company’s greatest strength was a smart and
talented team that stayed focused and learned what it didn’t know. Fortunately for Amazon, the
big stores were caught napping. The delay by the bookstore chains gave Amazon the opportunity
to establish its brand online. Barnes & Noble ([Link]) did not fight back until Amazon
was on the eve of a stock offering. By then it was too late.

Internal capability Example

Customer interaction E-commerce, customer service, distribution channel

Production and fulfillment SCM, production scheduling, inventory management

People Culture, skills, knowledge management, leadership and

commitment to e-business.

Technology EPR systems, legacy applications, networks, website,

security, IT skills

Core infrastructure Financial systems, R&D, HR

Exhibit 3-3 key internal capabilities for E-business

Bear in mind that a company’s strengths and weaknesses in the online world may be somewhat
different from its strengths and weaknesses in the brick-and- mortar world. Exhibit 3-3 displays a
few of the key capabilities needed by e-business firms. Barnes & Noble has enormous strengths
in the brick and mortar world but they do not necessarily translate into strengths in the online
world. Barnes & Noble can easily find itself in the unfortunate position of channel conflict-
having to explain to channel partners why customers can purchase for less online than in the
store. However, Amazon has no potential channel conflict because it only sells online.
Step 2 – E-marketing strategic planning
After reviewing the situation analysis and currently used marketing plans, marketers engage in
strategic planning. The strategic planning process involves determining the fit between the
organization’s objectives, skills, and resources and its changing opportunities. We present tasks
as tier 1 strategies, including segmentation, targeting, differentiation, and positioning. During
this phase, marketers uncover opportunities that help formulate the e-marketing objectives.
Marketers conduct a market opportunity analysis (MOA), including both demand and supply
analysis, for segmenting and targeting. The demand analysis portion includes market
segmentation analysis to describe and evaluate the potential profitability, sustainability,
accessibility, and size of various potential segments.

Segment analysis in the B2C market uses descriptor such as demographic characteristics,
geographic location, selected psychographic characteristics (such as attitude toward technology
and wireless communication device ownership), and past behavior toward the product (such as
purchasing patterns online and offline). B2B descriptor includes firm location, size, industry,
type of need, and more. This descriptor helps firms identify potentially attractive markets. Firms
must also understand segment trends- are they growing of declining in absolute size and product
use?
Firms use traditional segmentation analysis when they enter new markets through the online
channel; however, if the firm plans to serve current markets online, it will delve more deeply into
these customers’ needs. Which of the firm’s customers will want to use the internet? How do the
needs of customers using the firm’s web site differ from those of other customers? Fore example,
most internet users expect e-mail to be answered within 24 hours but will be satisfied if a postal
letter is answered with in weeks. In addition, firms often discover new markets as these
customers find their way to the web site. Marketers can use cookies, database analysis, and other
techniques to discover how best to serve these new markets.
The purpose of a supply analysis is to assist in forecasting segment profitability as well as to
find competitive advantages to exploit in the online market. Only by carefully analyzing
competitive strengths and weaknesses can a firm find its own performance advantages.
Therefore, firms should review the competition, their e-marketing initiatives, and their strengths
and weaknesses prior to developing e-marketing initiatives. Firms must also try to identify future
industry changes- which new firms might appear online, and which will drop away?
With a thorough MOA, the company can select its target market and understand its
characteristics, behavior, and desires in the firm’s product category. Furthermore, firms will want
to understand the value propositions for each market.
Another tier 1 step in e-marketing strategic planning includes identifying brand differentiation
variables and positioning strategies. Based on an understanding of both the competition and
the target(s), marketers must decide how to differentiate their products from competitors’
products in a way that provides benefits perceived as important by the target.
Following from the differentiation is the positioning statement: the desired image for the brand
relative to the competition. If this positioning strategy was already decided upon in the
traditional marketing plan, e-marketing must decide whether it will be effective online as well. If
planning for a new brand or market, e-marketers must decide on branding strategies of
differentiation and positioning at this point in the process.
Step 3 Objectives
In general, an objective in an e-marketing plan takes a form that includes the following aspects:
 Task (what is to be accomplished)
 Measurable quantity (how much )
 Time frame (by when)
Assume that Amazon wants to increase the number of associates in its affiliate program from
800,000 to 900,000 in one year. This type of objective is easy to evaluate and a critical part of
the e-marketing plan. The plan will often include the rationale for setting each objective –why
each is desirable and achievable given the situation analysis findings, e-marketing, and e-
business strategy.
Even though e-commerce transactions are an exciting dimension of an e-business presence, other
objectives are also worthwhile, especially when the firm is using technology only to create
internal efficiencies such as target market communication. In fact, most e-marketing plans aim to
accomplish multiple objectives such as the following:
 increase market share
 increase sales revenue (measured in dollar or units)
 reduce cost ( such as distribution and promotion costs)
 achieve branding goals ( such as increasing brand awareness)
 improve databases
 achieve customer relationship management goals ( such as increasing customer
satisfaction, frequency of purchases, or customer retention rates)
 improve supply chain management ( such as by enhancing member coordination, adding
partners, or optimizing inventory levels)

Step 4 Marketing strategies

Next, marketers craft strategies regarding the 4 Ps and relationship management to achieve plan
objectives regarding the offer (product), value (pricing), distribution (placing), and
communication (promotion). Further, marketers design customer and partner relationship
strategies (CRM/PRM). For clarification we call these tier 2 strategies. In practice, tier 1 and tier
2 strategies are interrelated; for example, marketers select the best target market and identify a
competitive product position, which dictates the ideal type of advertising, pricing, and so forth.
Steps 2, 3, and 4 are an iterative process because it is difficult to know what the brand position
should be without understanding the offer that comprises the brand promise (i.e the benefits the
firm promises to customers). The following are some of the tier 2 strategies in detail in
subsequent chapters.
I. The offer: Product strategies
The organization can sell merchandise, services, or advertising on the web site. It can adopt one
of the e-business models discussed so far such as online auctions, to generate a revenue stream.
The firm can create new brands for the online market or simply sell selected current or enhanced
products in that channel. Obviously, the previous analysis will reveal many options. If the firm
offers current brands online, it will need to solve many different problems, such as the way
colors appear differently on a computer screen than in print. The most astute firms take
advantage of information technology capabilities to alter their online offerings. For example,
Dell computer allows product customization in a jiffy: customers configure the computer they
want to buy using an online form, and the database returns a page that includes current
information about the computer and its price.
II. The value: Pricing strategies
A firm must decide how online product prices will compare with offline equivalents. To make
these decisions, firms consider the differing costs of sorting and delivering products to
individuals through the online channel as well as competitive and market concerns. Two
particularly important online pricing trends include the following:

 Dynamic pricing. The strategy applies different price levels for different customers or
situations. For example, a first time buyer or someone who hasn’t purchased for many
months may receive lower prices than a heavy user, or prices may drop during low demand
periods. The internet allows firms to price items automatically and “on the fly” while users
view pages.
 Online bidding. This approach presents a way to optimize inventory management. For
instance, a few Seattle hotels allow guests to bid for hotel rooms on slow days, instructing its
reservation agents to accept various minimum bid levels depending on occupancy rates for
 any given day. [Link], [Link], and many B2B exchanges operate exclusively using
this strategy.
III. Distribution strategies
Many firms use the internet to distribute products or create efficiencies among supply chain
members in the distribution channel. Consider these examples:
 Direct marketing. Many firms sell directly to customers, bypassing intermediaries in the
traditional channel for some sales. In B2B markets, many firms realize tremendous cost
reductions by using the internet to facilitate sales.
 Agent e-business models. Firms such as eBay and E*TRADE bring buyers and sellers
together and earn a fee for the transaction.
IV. 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 page
and e-mail to communicate with their target markets and business partners. Companies build
brand images, create awareness of new products, and position products using the web and e-mail.
Database marketing is a key to maintaining records about the needs, preferences, and behavior of
individual customers so companies can send relevant and personalized information and
persuasive communication at strategic times.
V. Relationship management strategies
Many e-marketing communication strategies also help build relationships with a firm’s partners,
supply chain members, or customers.

However, some firms up the ante by using customer relationship management (CRM) or
partnership management (PRM) software to integrate customer communication and purchase
behavior into a comprehensive database. They then use CRM software to retain customers and
increase average order values and lifetime value. Other firms build extranets- two or more
proprietary networks linked for better communication and more efficient transactions among
firms as in PRM.
One simple way to present way to present the firm’s goals and accompanying e-marketing
strategies is through an objective-strategy matrix. This graphical device helps marketers better
understand their implementation requirements (Exhibit 3.6). Each cell contains a yes or no,
depending on how the marketer will link particular goals and strategies.

Online goals online strategies

Online Database Direct online viral

Advertising marketing e-mail sales marketing

Find affiliates No No No No Yes

Gather customer information No Yes Yes Yes Yes
Improve customer service No yes yes yes No
Increase brand name awareness yes yes yes yes yes
Sell goods or services yes yes yes yes yes
Enhance company image possibly yes yes yes yes
Engage in suggestive selling possibly yes yes yes yes
Generate sales leads No No yes yes yes
Exhibit 3.6 E-marketing objective strategy matrix

Step 5 Implementation plan

Now comes the part everyone enjoys: deciding how to accomplish the objectives through
creative and effective tactics. Marketers select the marketing mix (4Ps), relationship
management tactics, and other tactics to achieve the plan objectives and then devise detailed
plans for implementation ( the action plans ). They also check to be sure the right marketing
organization is in place for implementation ( i.e. staff, department structure, application service
providers, and other outside firms). The right combination of tactics will help the firm meet its
objectives effectively and efficiently.

E-marketers pay special attention to information gathering tactics because information

technologies are especially adept at automating these processes. Web site forms, feedback e-
mail, and online surveys are just some of the tactics firms use to collect information about
customers, prospects, and other stakeholders. Other important tactics include the following:
 Web site log analysis software helps firms review under 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.
Step 6- Budget
A key part of any strategic plan is to identify the expected returns from an investment. These
returns can then be matched against costs to develop a cost/benefit analysis, ROI calculation, or
internal rate of return (IRR), which management uses to determine whether the effort is
worthwhile. Marketers today are especially concerned with adequate return on marketing
investment (ROMI). During plan implementation, marketers will closely monitor actual revenues
and costs to see that results are on track for accomplishing the objectives. The following sections
describe some of the revenues and costs associated with e-marketing initiatives.
I. Revenue forecast
In this budget section, the firm uses an established sales forecasting method for estimating the
sales revenues in the short, intermediate, and long term. The firm’s historical data, industry
report, and competitive actions are all inputs to this process. An important part of forecasting is
to estimate the level of web site traffic over time, because this number affects the amount of
revenue a firm can expect to generate from its site. Revenue streams that produce internet profits
come mainly from web site direct sales, advertising sales, subscription fees, affiliate referrals,
sales at partner sites, commissions, and other fees. Companies usually summarize this analysis in
a spreadsheet showing expected revenues over time and accompanying rationale.

II. Intangible Benefits

The intangible benefits of e-marketing strategies are much more difficult to establish, as are
intangible benefits in the brick-and-mortar world. How much brand equity is created, For
example, through an American Airlines program in which customers receive periodic e-mail
message about their frequent-flyer account balances? What is the value of increased brand
awareness from a web site? Putting a financial figure on such benefits is challenging but
essential for e-marketers.
III. Cost savings
Money saved through internet efficiencies is considered soft revenue for a firm. For example, if
the distribution channel linking a producer with its customers contains a wholesaler, distributor,
and retailer, each intermediary will take a profit. A typical markup scheme is 10 percent from
manufacturer to the wholesaler, 100 percent from wholesaler to the retailer, and 50 percent to the
consumer. Thus, is a producer sells the product to a wholesaler for $50, the consumer ultimately
pays $ 165. If the producer cuts out the intermediaries (disintermediation) and sells its product
online directly to the consumer, it can price the product at $85 and increase revenue by $30.
Whether this approach translates into profits depends on the cost of getting the product to the
consumer. Other examples include the $5,000 a marketer might save in printing and postage for
a direct mail piece costing $1.00 per piece to 5000 consumers, or the $270 million Cisco actually
saved in one year on handling costs for its online computer system sales.
IV. E-marketing costs
E-marketing entails many costs, including costs for employees, hardware, software,
programming, and more. In addition, some traditional marketing costs may creep into the e-
marketing budget- for example, the cost of offline advertising to draw traffic to the web site. For
simplicity, this section will discuss technology-related cost items only. See the “Let’s Get
Technical” box for the steps required to build a web site. Consider that the cost of web site
(except the most basic) can range from $5,000 to $50 million. Following are just a few of the
costs site developers incur:
 Technology cost. These costs include 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.
 Salaries. All personnel who 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-things such as registering multiple domain names and hiring
consultants to write content or perform other development and design activities.
 Marketing communication. All advertising, public relations, and promotions activities, both
online and offline that directly relate to drawing site traffic and enticing them to return and
purchase are begged here. Other costs include 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 7- Evaluation plan
Once the e-marketing plan is implemented, its success depends on continuous evaluation. This
type of evaluation means e-marketers must have tracking systems in place before the electronic
doors open. What should be measured? The answer depends on plan objectives. Review the
balance scorecard (BSC) for e-business to see how various metrics relate to specific plan goals
In general, today’s firms are quite ROI driven. As a result, e-marketers must show how their
intangible goals, such as brand building or CRM, will lead to higher revenue down the road.
Also, they must present accurate and timely metrics to justify their initial and ongoing e-
marketing expenditures throughout the period covered by the plan.

3.4 Summary
The e-marketing plan is a guiding, dynamic document for e-marketing strategy formulation and
implementation. The purpose is to help the firm achieve its desired results as measured by
performance metrics according to the specifications of the e-business model and e-business
strategy. Creating an e-marketing plan requires seven steps. The first is to conduct the situation
analysis by reviewing environmental and SWOT analysis. In the second step, marketers perform
strategic planning which includes a marketing opportunity analysis to develop segmentation,
targeting, differentiation, and positioning strategies (tier 1 strategies). Next, e-marketers
formulate objectives, usually setting multiple objectives; they may use an objective- strategy
matrix to guide implementation. In the fourth step, e-marketers design e-marketing strategies for
the 4Ps and relationship management (tier 2 strategies). In the fifth step, e-marketers develop an
implementation plan with suitable 4Ps marketing mix, select appropriate relationship
management tactics, design information gathering tactics and other tactics to achieve the plan
objectives and then devise detailed plans for implementation ( the action plans ). In the next step,
e-marketers prepare revenue forecast to estimate the expected returns from the plan’s investment
and detail the e-marketing costs to come up with a calculation that management can use to
determine whether the effort is worthwhile. In the final step of the plan, e-marketers use tracking
systems to measure results and evaluate the plan’s success on a continuous basis.