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					                                                                                                                                                    2008.10.12.




                                                                                 Topics
E - marketing
Business models, online marketing planning,

                                                                                 •   Strategic planning
                                                                                 •   Business models
                                                                                 •   Strategic marketing plan
                                                                                 •   Target marketing strategy

                                         István Eszes Ph.D.

                                         istvan@eszes.net
                                         www.eszes.net                           October 12, 2008                      www.eszes.net                          2




Strategic Planning                                                               SWOT Analysis
                                                                                 Strengths, Weaknesses, Opportunities, and Threats




 •     The managerial process of developing and                                      • It examines:
       maintaining a viable fit between the organization’s                                          - The company’s internal strengths and weaknesses with
       objectives, skills, and resources and its changing                                             respect to the environment,
       market opportunities.                                                                        - The competition and looks at external opportunities
                                                                                                      and threats.
 •     Two key elements of strategic planning are:
         - The preparation of a SWOT analysis,                                       • Opportunities may help to define a target market or identify new
         - The establishment of strategic objectives.                                  product opportunities, while threats are areas of exposure.




                                                                                 Strategic Objectives
     Example
                                                                                        – Growth. How much can the firm reasonably expect to grow in
                                                                                          terms of revenues, and how fast?
  The Amazon story                                                                      – Competitive position. How should the firm position itself against
                                                                                          other firms in the industry? Viable positions are:
                                                                                              - Industry leader (Microsoft),
     Strength        A smart and talented team that stayed focused and
                     learned what it didn’t know.                                             - Price leader (Priceline.com),
     Weakness        No experience in:                                                        - Quality leader (Mercedes),
                              -Selling books                                                  - Niche firm (Google.com),
                              -Processing credit card transactions
                                                                                              - Best customer service (Dell.com).
                              -Boxing books for shipment
     Opportunity     To sell online.
                                                                                        – Geographic scope. Where should the firm serve its
     Threat          A full-scale push by one of the large bookstore chains to
                     claim the online market.                                             customers on the continuum of local to multinational?




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 From Strategy to Electronic                                                   E-business strategy flows from the firm’s environmental analysis.
 Strategy



  E-Business Strategy =


  Corporate Strategy + Information Technology




 Business model                                                            Components of a Business Model
                                                                            Developing a business model in the networked economy requires
                                                                            four key choices on the part of the senior management:

                                                                                                                                      • Specify the value proposition or
                                                                                                     Value Cluster                    the value cluster for the business




                                                                                                                                      • Articulate the online product,
                                                                                                  Marketspace Offering
• A method by which the organization sustains itself in the                                                                           service and information offer


  long term, and includes its value proposition for partners
  and customers as well as its revenue streams.                                                                                       • Define how the company needs to
                                                                                                   Resource System                    align its resources to deliver the
                                                                                                                                      value proposition

• A firm will select one or more business models as
  strategies to accomplish enterprise goals.                                                        Financial Model
                                                                                                                                      • Define and select the most
                                                                                                                                      appropriate revenue model to
                                                                                                                                      pursue




 Value Proposition/Cluster                                                 Value Proposition/Cluster
                                                                            The definition of the value proposition is the result of a combination of
                                                                            choices about the customers, the benefits offered and the unique capabilities of the
                                      Defining the value proposition or     firm:
                                      the value cluster requires
                                      managers to answer the following
                                      questions:
           Value Cluster
                                      • Which target segments should
                                      the company focus on?
                                                                               Target                Key Benefits            Unique                        Value
                                                                              Segments        +        Offered        +    Capabilities                  Proposition
        Marketspace Offering          • What is the combination of
                                      customer benefits that is offered?

                                      • What makes the firm and its
                                      partners better positioned to
         Resource System
                                      deliver the offering than anybody
                                      else?


          Financial Model




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Marketspace Offering                                                                                       Resource System


                                                                                                                                                                        A series of activities is required to
                                                                                                                                                                        construct a resource system:
                                                                                                                           Value Cluster
                                                                                                                                                                        1. Identify core benefits in the
                    Value Cluster                              Defining the Marketspace offering                                                                        value cluster.
                                                               requires managers to complete
                                                               the following sequential tasks:                                                                          2. Identify capabilities that relate
                                                                                                                     Marketspace Offering                               to each benefit.
             Marketspace Offering                              • Identify the scope of the offering
                                                                                                                                                                        3. Link resources to each
                                                               • Identify the customer decision                                                                         capability.
                                                               process                                                  Resource System
               Resource System                                                                                                                                          4. Identify to what degree the firm
                                                               • Map the offering to the                                                                                can deliver each capability.
                                                               consumer decision process
                                                                                                                         Financial Model                                5. Identify partners who can
                   Financial Model                                                                                                                                      complete capabilities.




Type of Financial Models                                                                                    Revenue Models
  A variety of financial models can be used to assess the value of the business                              While firms can pursue a number of revenue models, some are used most
  model that follows from the resource system. Three examples are:                                           frequently:
                                                                                                                            Advertising

                                                                                                               • Advertising revenues can be generated through the selling of ads, site sponsorships, event
                                                                                                               underwriting, etc. (e.g., Yahoo, AOL, Business2.com)

              Revenues               Shareholder                  Growth
                                     Value Models
                                                                                                                 Product, Service, Information
               Models                                             Models
                                                                                                               • Revenues can be generated from the sales of goods and services (e.g., Amazon, CDNow,
             • Identify the flow     • Assess how the          • Assess how the                                Buy.com)
             of cash into the        company intends           company will be
             organization            to generate cash          able to drive
                                                                                                                            Transaction
                                     flow or                   revenue growth
                                     shareholder value
                                                                                                               • Revenues can be accrued from charging a fee or taking a portion of the transaction sum for
                                                                                                               facilitating a customer-seller transaction (e.g., Schwab, eBay)

                                                                                                                           Subscription

                                                                                                               • Website can gain revenues by offering subscription services for information (e.g., FT.com,
                                                                                                               NYTimes.com)




Strategic Marketing Plan                                                                                    Internal and External Influences


                                                                                                                                        Corporate Objectives and Strategy




                                                                                                                                                   Marketing Strategy




                                                                                                           Market Structure                                                                           Competitor
                                                                                                                                             Internet Marketing Strategy
                                                                                                            and Demand                                                                                Strategies



                                                                                                                                                                                                  Internal Influences
                                                                                                                                       Emerging Opportunities and Threats
                                                                                                                                                                                                  External Influences
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Internet Marketing Strategy                                                                                              Strategic Marketing Planning Process
 Strategy Development




                                                                                                                         Goal Setting
                        Marketing Objectives




                                                                                                                          Phase 1
                                                                                                                                        Mission
                           and Strategies




                                                          Environment Analysis
                                                                                                                                          Corporate Objectives

                                                   Develop Internet Marketing Strategy




                                                                                                            Review and
                                                                                                                                       Marketing Audit




                                                                                                              Modify
                                                                                                                             Phase 2      SWOT  Analysis
                                                                                                                         Situation Review
                                                      Define Internal Marketing Plan                                                        Assumptions
                                                                                                                                              Marketing Objectives and Strategies
 Strategy Execution




                                                     Create / update online presence                                           Phase 3          Estimate Expected Results
                                                                                                                         Strategy Formulation
                                                                                                                                                  Identify Alternative Plans and Mixes
                                                  Execute e-marketing communications
                                                                                                                                  Phase 4                 Budget
                                                                                                                             Resource Allocation             Detailed Implementation Programme Y1
                                                      Maintain and Monitor Metrics                                             And Monitoring




Target Marketing Strategy                                                                                                     Porter Strategy Model

Informed by:                                            Stage of Target Marketing                                                 Key concepts:
                                                                                               Informs:
                                                                                                                                  •   There are only three basic strategies
 Market Research                                             Segmentation                       Market Segment
                                                                                                                                  •   Each implies a different business model
 And Analysis of                                            Identify customer                   Definition                        •   Firms can pursue only one strategy at the time
 Customer Data                                          needs and segment market                                                                                      Possible Strategies
                                                                                                                                                Differentiation                 Cost                        Niche
                                                               Target Marketing                 Target Segments
 Demand Analysis                                                                                                                               • Requires constant        • Focus on gaining         • Focus the business
                                                              Evaluate and Select               Online Revenue
                                                                                                Contribution for each           Business       innovation and             competitive advantage      on a particular
                                                               Target Segments                                                                 leadership on the          on costs while             segment of the market
                                                                                                Segment                         Model          benefits that matter       maintaining parity         and then pursue either
                                                                                                                                               most to the customer       level on differentiation   differentiation or cost
                                                                  Positioning                   Online Value                                                                                         strategy
 Competitor Analysis,                                                                           Proposition
 Internal Analysis                                           Identify Proposition for
                                                                 each Segment                   Online Marketing                Networked
                                                                                                Mix                             Economy        • Travelocity.com        • Lowestfare.com             • Lastminute.com
                                                                                                                                Example
                                                                  Planning                      Online Marketing
 Evaluation of                                                                                  Mix
 Resources                                                   Deploy Resources to
                                                                achieve Plan                    Restructuring




Will the Internet be Significant?

                        Start

                                               Customer Access
 Low                                             To Internet?                           High



  Primarily                                             No                 Internet Value               Yes
Complementary                                                           Proposition Similar?
   Effect
                                                                                                       Primarily
                                                                                                     Complementary
                                                   Can Product be                                       Effect
            No                                     Standardized?                        Yes


  Primarily                                                                 Primarily
Complementary                                                              Replacement
   Effect                                                                     Effect
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