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Chapter 3:
The E-Marketing Plan


Learning Objectives (PPT 3-2)

Overview of the E-Marketing Planning Process

The e-marketing planning process entails three steps: marketing plan creation, plan
implementation, and plan evaluation/corrective action.

Creating an E-Marketing Plan

The e-marketing plan is a blueprint for e-marketing strategy formulation and
implementation. It serves as a road map to guide the direction of the firm, allocate
resources, and make tough decisions at critical junctures.

The Napkin Plan
The idea that many dot.com entrepreneurs were known to simply jot their ideas
on a napkin over lunch or cocktails and then run off to find financing. This is also
known as the just-do-it, activity-based, bottom-up plan.

The Venture Capital E-Marketing Plan
Dot.coms can be financed privately through angel investors or family/friends, or
through venture capitalists. Venture capitalists invest in good ideas with
competent people running the business and generally look for an exit plan to get
their money and profits out of the venture within a few years.

A Seven-Step E-Marketing Plan

Seven key planning elements include a situation analysis, e-marketing strategic planning,
the plan objectives, e-marketing strategy, an implementation plan, the budget, and a plan
for evaluating success.

Step 1 Situation Analysis

The situation analysis is also known as the SWOT (strengths, weaknesses, opportunities,
and threats) analysis which examines the internal strengths and weaknesses and the
external opportunities and threats. Three key environmental factors that affect e-
marketing include legal, technological, and market-related factors.

Step 2 E-Marketing Strategic Planning

Strategic planning involves determining the fit between the organizations objectives,
skills, and resources and its changing market opportunities, also known as tier 1
strategies. This includes segmentation, targeting, differentiation, and positioning.





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Step 3 Objectives

Objectives are to be task specific (what is to be accomplished), measurable (how much),
time specific (by when) and realistically attainable.

Step 4 E-Marketing Strategies

E-marketing strategies involve the 4 Ps and relationship management to achieve plan
objectives regarding the offer (product), value (pricing), distribution (place), and
communication (promotion). These are called tier 2 strategies.

The Offer: Product Strategies
A firm can sell merchandise, services, or advertising on its Web site. They can
create new brands for the online market or sell selected current or enhanced
products in that channel.

The Value: Pricing Strategies
A firm must decide on how online product prices will compare with offline
equivalents and usually use either dynamic pricing r online bidding.

Distribution Strategies
Many firms use the Internet to create efficiencies among supply chain members
through direct marketing or agent e-business models.

Marketing Communication Strategies
Firms use Web pages and e-mail to communicate with their target markets and
business partners. Firms build brand images, create awareness of new products,
and position products using the Web and e-mail

Relationship Management Strategies
E-marketing communication strategies also help build relationships with a firms
partners, supply chain members, or customers.

Step 5 Implementation Plan

This is the step in which the marketer selects the marketing mix the 4 Ps, relationship
management tactics, and other tactics to achieve the plan objectives and then devises
detailed plans for implementation. Importance is placed on information gathering tactics,
web site log analysis, and business intelligence.

Step 6 Budget

Marketers need to determine the returns from an investment: cost/benefit analysis, return
on investment (ROI), internal rate of return (IRR), and return on marketing investment
(ROMI).

Revenue Forecast
The firm uses an established sales forecasting method for estimating the site
revenues in the short, intermediate, and long term.



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Intangible Benefits intangible benefits include brand equity, brand
awareness and similar objectives that may be difficult to measure.
Cost Savings using the Internet creates efficiencies in the supply chain
which typically increases profits by eliminating intermediaries.

E-Marketing Costs Costs for e-marketing are wide reaching and may
include costs for: employees, hardware, software, programming, and
more. Costs for the Web site may include: technology costs, site design,
salaries, marketing communications, and others.

Step 7 Evaluation Plan

Once the e-marketing plan is implemented, its success depends on continuous evaluation
which means marketers must have a tracking system in place before the electronic doors
open.


Chapter 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. Although some entrepreneurs use a napkin plan
to informally sketch out their ideas, a venture capital e-marketing plan will help show
that the e-business idea is solid and the entrepreneur has an idea of how to run it.
Creating an e-marketing plan requires seven steps. The first is to conduct a
situation analysis by reviewing environmental and SWOT analyses, existing marketing
plans and company/brand information, and e-business objectives, strategies, and
performance metrics. In the second step, e-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 4 Ps and relationship management (tier 2 strategies).
In the fifth step, e-marketers develop an implementation plan with a suitable 4
Ps marketing mix, select appropriate relationship management tactics, design
information-gathering tactics, and select other tactics to achieve their objectives. They
must also devise detailed implementation plans during this step in the process. In the
next step, e-marketers prepare a revenue forecast to estimate the expected returns from
the plans 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 plans
success on a continuous basis.





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Chapter Outline

Opening Vignette: The Playboy Story (PPT 3-3)
Have the class read the opening vignette on the Playboy story. Discuss how CEO
Christie Hefner not only used a strategic e-marketing plan to revitalize Playboy, but did
so by converging several mediums into the complete Playboy experience. She did so by
devising an e-marketing plan that would leverage their current brand and the 4.5 million
readers. Playboy.com was the first U.S. Website for a nationally circulated magazine.
Discuss how the revenue sources selected from their e-marketing plan were critical to
their success and continued growth.


I. Overview of the E-Marketing Planning Process (PPT 3-4)

A. Questions to be asked
1. How can information technologies assist marketers in building
revenues and market share?
2. How can information technologies assist in lowering costs?
3. How can firms identify a sustainable competitive advantage with the
Internet during constant change?

B. This marketing process entails three steps:
1. Marketing plan creation
2. Plan implementation
3. Plan evaluation and corrective action

Chapter 3 will examine the first of these steps: the e-marketing plan

II. Creating an E-Marketing plan

The e-marketing plan is a blueprint for e-marketing strategy formulation and
implementation. The Gartner Group correctly predicted that up to 75% of all e-business
projects prior to 2002 would fail due to fundamental flaws in planning. If brick-and-
mortar companies realize the importance that planning play in the success of their
business, why would so many dot.com companies overlook this?

A. The Napkin Plan (PPT 3-5)
1. Dot.com entrepreneurs wrote down ideas on napkins over lunch or
cocktails.
2. Larger corporations have versions of this called just-do-it, activity-
based, bottom-up plans.
3. This is considered a starting point, but not sufficient for long-term
success.








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B. The Venture Capital E-Marketing Plan smaller firms may be able to start
with the Napkin plan, but as a firm grows it will require capital, and
financiers or investors will require a comprehensive e-marketing plan.
1. Types of investors (PPT 3-5)
a. Private funds (usually the smallest amount of investment)
b. Angel investors (contribute up to hundreds of thousands of
dollars)
c. Venture capitalists (may contribute up to millions of
dollars)
2. Questions that business plans should over
a. Who is the new ventures customers?
b. How does the customer make decisions about buying this
product or service?
c. To what degree is the product or service a compelling
purchase for the customer?
d. How will the product or service be priced?
e. How will the venture reach all the identified customer
segments?
f. How much does it cost (in time and resources) to acquire a
customer?
g. How much does it cost to produce and deliver the product
or service?
h. How much does it cost to support a customer?
i. How easy is it to retain a customer?
3. Exit plan
a. Investors look for a way to get their money and profits out
of the venture
b. Ideally, investors hope to go public and issue stock.

The google.com IPO is an example of Venture Capitalists reaping the rewards from an
investment. Google.com went public in August of 2004 at $85 per share under the ticker
symbol GOOG. As of December of 2004, Google.com shares are trading for $171 per
share after a high of $201 per share.

III. A Seven-Step E-Marketing Plan (PPT 3-6)

Seven Key planning elements are included in the seven-step e-marketing plan. One
commonly overlooked element that is crucial to the success of an e-business is feedback.
Many experts recommend a contingency plan and trigger points that if reached will
invoke strategy refinement. The steps of the e-marketing plans are detailed below.

A. Step 1 Situational Analysis (PPT 3-7, 3-8)
1. Also known as a SWOT analysis which measures:
a. Strengths (internal)
b. Weaknesses (internal
c. Opportunities (external)
d. Threats (external






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2. Environmental factors (PPT 3-7)
a. Legal
b. Technological
c. Market-related factors
3. A firms strengths and weaknesses for the online world may be
different than for its brick-and-mortar business.

B. Step 2 E-Marketing Strategic Planning determining a fit between the
organizations objectives, skills, and resources and its changing market
opportunities. These tier 1 strategies may include:
1. Market opportunity analysis (PPT 3-9)
a. Demand analysis
b. Segment analysis
2. Supply analysis
3. Identifying brand differentiation variables
4. Positioning strategies

C. Step 3 Objectives in general, an objective in an e-marketing plan takes
the form: (PPT 3-10)
1. Task (what is to be accomplished)
2. Measurable quantity (how much)
3. Time frame (by when)
4. Sample objectives may be:
a. Increase market share
b. Increase sales revenue
c. Reduce costs
d. Achieve branding goals
e. Improve databases
f. Achieve customer relationship management goals
g. Improve supply chain management

D. Step 4 E-Marketing Strategies Marketers craft strategies regarding the 4
Ps and for customer and relationship strategies, called Tier 2 strategies.
Tier 1 and Tier 2 strategies are interrelated. Tier 2 strategies may include:
1. The Offer: Product Strategies (PPT 3-11)
a. Sell merchandise, services or advertising on the Website
b. Online auctions
c. Create new brands for the online market
d. Sell selected current or enhanced products
2. The Value: Pricing Strategies how online product prices will
compare with offline equivalents. Two pricing trends are:
a. Dynamic pricing different price levels for different
customers or situations
b. Online bidding allowing customers to bid for products or
services to alleviate for slow business periods.
3. Distribution Strategies firms use the Internet to distribute products
or create efficiencies among supply chain members
a. Direct marketing
b. Agent e-business models



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4. Marketing Communication Strategies used to draw customers to a
Web site and to interact with brick-and-mortar customers.
5. Relationship Management Strategies (PPT 3-11)
a. Customer Relationship Management (CRM)
b. Partner Relationship Management (PRM)

E. Step 5 Implementation Plan marketers decide on the marketing mix,
relationship management tactics, and other tactics to achieve the plan
objectives. Tactics included: (PPT 3-13)
1. Information-gathering tactics
2. Web site log analysis
3. Business intelligence

F. Step 6 Budget identifying the expected returns from the investment
1. Revenue Forecast (short term, intermediate, and long term)
a. Intangible benefits (PPT 3-14)
b. Cost savings
2. E-Marketing costs
a. Technology costs
b. Site design
c. Salaries
d. Development expenses
e. Marketing Communication

G. Step 7 Evaluation Plan the success of the e-marketing plan relies on
continuous evaluation. (PPT 3-15)
1. Objectives
2. Balanced Scorecard
3. Return on Investment
4. CRM
5. PRM


Exercise Answers

(Exercise answers prepared by David Lan, University of Nevada, Reno, with assistance
from the authors)

Note
Discussion questions may require outside research wher eas r eview questions do
not require resear ch beyond the text.
Review Questions
1. What are the seven steps in an e-marketing plan?
The six steps are Situation analysis, e-marketing strategic planning, setting objectives,
e-marketing strategy to meet plan objectives, implementation plan (marketing mix),
budget, and evaluation of plan.



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2. Why do entrepreneurs seeking funding need a venture capital e -marketing plan
rather than a napkin plan?
Investors are looking for a well-composed business plan, and more importantly, a
good team to implement it. The plan prepared by entrepreneurs for VCs should be
about eight to ten pages long and contain enough data and logic to prove that (1) the
e-business idea is solid and (2) the entrepreneur has some idea of how to run the
business.
Napkin plans on the other hand are not recommended when substantial resources are
involved. This is because sound planning and thoughtful implementation are needed
for long-term success in business and e-business. This principle became increasingly
evident during the dot-com shakeout.
3. What is the purpose of the marketing opportunity analysis and the segment
analysis?
Marketers conduct a market opportunity analysis (MOA), including both demand and
supply analyses, for segmenting and targeting. The demand analysis portion includes
market segmentation analyses to describe and evaluate the potential profitability,
sustainability, accessibility, and size of various potential segments.
Segment analysis in the B2C market uses descriptors 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
descriptors include firm location, size, industry, type of need, and more. These
descriptors help firms identify potentially attractive markets. Firms must also
understand segment trendsare they growing or declining in absolute size and
product use?
4. What four elements in tier one and five elements in tier two are devised for e -
marketing strategy?
From Exhibit 3.5.
Tier one Positioning, Differentiation, Segmentation, and Targeting.
Tier two Offer, Value, Distribution, Communication, and CRM/PRM.
5. What is the purpose of an e-marketing objective-strategy matrix?
One simple way to present the firms e-marketing strategies and accompanying goals
is through an objective-strategy matrix. This is a graphical device that 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.
6. How do managers use budgeting within the e-marketing planning process?
A key part of any strategic plan is to identify the expected returns from an investment.
These 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.
This would include forecasting of revenue, intangible benefits, and cost savings.
Revenue forecasting would 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



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sales, advertising sales, subscription fees, affiliate referrals, sales at partner sites,
commissions, and other fees. Intangible benefits are much harder to budget for, how
does a manager account for brand equity or increased brand awareness? Putting a
financial figure on such benefits is challenging but essential for e-marketers. Finally,
money saved through Internet efficiencies is considered soft revenue for a firm.
Examples of savings could include those from channel markups, not having to
printing direct mail advertisements, postage, etc.
7. Why do e-marketing plans need an evaluation component?
Once the e-marketing plan is implemented, its success depends on continuous
evaluation. In general, todays 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.
Discussion Questions
8. If you had money to invest, what would you look for in a venture capital e-
marketing plan?
Given the dot com shakeout, companies must have a comprehensive e-marketing
plan to survive. The plan prepared by entrepreneurs for VCs should be about eight to
ten pages long and contain enough data and logic to prove that (1) the e-business idea
is solid and (2) the entrepreneur has some idea of how to run the business. William
Sahlman (1997) of Harvard University identifies nine questions that every business
plan should answer:
Who is the new ventures 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?
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?
9. What kinds of questions should a firm ask in developing an e-marketing plan to
serve customers in current markets through an online channel?
Venture capitalists typically look for an exit plana way to get their money and
profits out of the venture within a few years. These days, 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.





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10. 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?
Without concrete metrics measuring how much and when a task is considered
complete, e-marketers run the risk of delaying and putting off objectives in their
marketing strategy. A time element and minimum guidelines must be set for
accountability, otherwise objectives may be postponed indefinitely.
11. 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?

Determining value for intangible benefits is absolutely necessary for e-marketers.
Given the dot com shakeout, e-marketers are continuously asked for figures on ROI
and justification for continued spending. This entails research and analysis on
potential flights booked from online advertising campaigns, site usage, etc. Putting
a financial figure on such benefits is challenging but essential for e-marketers. The
days of wanton technology spending are over, management is asking for proof of
ROI.