Chapter 2:
Strategic E-Marketing and Performance Metrics
Learning Objectives
Strategic Planning
The managerial process of developing and maintaining a viable fit between the
organization’s objectives, skills, and resources and its changing market
opportunities by identifying the firm’s goals in areas such as: growth, competitive
position, geographic scope, as well as other objectives.
Environment, Strategy, and Performance
Organizations perform a SWOT analysis to determine what internal
strengths, weaknesses are, and external opportunities and threats may be.
From Strategy to Electronic Strategy
When business strategies include information technology components, they
become e-business strategies. Marketing strategies becomes e-marketing strategy
when marketers use digital technology to implement the strategy.
From Business Models to E-Business Models
A business model is a method by which the organization sustains itself in the long
term and includes its value proposition for partners and customers as well as its
revenue streams. Some factors involved in the decision of which business model
to follow depend on the following: customer value, scope, price, revenue sources,
connected activities, implementation, capabilities, and sustainability.
E-Business Models
What makes a business model an e-business model is the direct connection with
information technology, which includes its value proposition for partners and
Value and Revenue
An organization’s way of describing the way in which it creates value for
customers and partners. Value encompasses the customer’s perceptions of
the product’s benefits, specifically its attributes, brand name, and support
services. Value = Benefits – Costs.
Menu of Strategic E-Business Models
Exhibit 2.3 shows a number of opportunities for firms to provide
stakeholder value and generate revenue streams using information
technology. A key element in setting strategic objectives is to take stock
of the company’s current situation and decide the level of commitment to
e-business in general and e-marketing in particular. Models may be based
on the following:
Activity Level E-Business Models – which may include: online
purchasing, order processing, email, content publisher, business
intelligence, online advertising, online sales promotions, or social
media communication.
Business Process Level E-Business Models – these may be used to
increase the firm’s effectiveness: customer relationship
Performance Metrics Inform Strategy
Performance metrics are specific measures designed to evaluate the effectiveness
and efficiency of an organization’s operations. If strategy is a means to an end,
performance metrics allow the entire organization to know what results constitute
successful performance.
The Balanced Scorecard
Firms no longer focus specifically on financial performance and market share.
During the dot.com bust era, many focused on growth and suffered for it. The
Balanced Scorecard suggests that firms consider vision, critical success factors,
and performance metrics in four areas: customer, internal, learning and growth,
and financial.
Four Perspectives
Customer – Time, quality, performance and service, and cost.
Internal – Cycle time, manufacturing quality, and employee skills and
productivity.
Learning and growth – Penetration of new markets, number of new
products and the percentage of sales attributable to each, and the
improvement of processes such as CRM or SCM.
Financial – income and expense, return on investment, sales, and market
share growth.
Applying the Balanced Scorecard to E-Business and E-Marketing
Although unlimited amounts of information is available to e-business
firms, measuring and interpreting this information is a vital part to the
success of that firm. These metrics are also important to the success of an
e-business:
Metrics for the Customer Perspective – measures loyalty, lifetime
value, customer perceptions of product value, appropriateness of
selected targets, and customer buying patterns.
Social Media Performance Metrics
Social media metrics differ from most standard Web site metrics because users
interact with branded social media in many different ways. As with all
performance measurement, one must select metrics that can easily be measured on
a continuous basis and apply them directly to the organization’s social media
objectives. These include:
Awareness/Exposure Metrics — unique visitors, page views, impressions,
number of searches, search engine ranking, number of followers,
registrations, or subscribers.
Brand Health Metrics – share of voice, sentiment, and brand influence.
Chapter Summary
A business or e-business needs strategic planning to develop and maintain the
proper fit between the organization’s objectives, skills, and resources and its ever-
changing market opportunities. Key goals for growth, competitive position,
geographic scope, and other areas must be determined.
Strategy is defined as the means to achieve a goal. E-business strategy is
the deployment of enterprise resources to capitalize on technologies for reaching
An e-business model is a method by which the organization sustains itself
in the long term using information technology, including its value proposition for
partners and customers as well as its revenue streams. Companies deliver value by
providing more benefits in relation to costs, as perceived by customers and
partners. E-marketing improves the value proposition by increasing benefits,
decreasing costs, and increasing revenues.
Companies can become involved in e-business at the activity level,
business process level, enterprise level, or through a pure play. Commitment and
auction), and online agent (manufacturer’s agent, shopping agent, and reverse
auction).
Performance metrics are specific measures designed to evaluate the
effectiveness and efficiency of an organization’s operations. Web analytics helps
to analyze user behavior on a Web site by using server logs, cookie files, and page
tags. The Balanced Scorecard links strategy to measurement by asking
companies to consider their vision, critical success factors for accomplishing it,
and subsequent performance metrics in four areas: customer, internal, learning
and growth, and financial. The customer perspective uses measures of the value
delivered to customers. The internal perspective evaluates a company’s success at
meeting customer expectations through its internal processes. The learning and
Chapter Outline
Opening Vignette: The Amazon Story
Have the class read the opening vignette on the Amazon Story. Discuss with the class the
importance of strategic planning and how it was imperative to Amazon.com’s success.
How is it possible that Amazon.com could operate for 7 years without showing a profit?
How important are the co-branding partnerships and how do they drive revenue to
I. Strategic Planning
Strategic planning is defined as “the managerial process of developing
and maintaining a viable fit between the organization’s objectives, skills, and
resources and its changing market opportunities.”
A. Part of the process of strategic planning is to identify goals in high–
level areas such as:
1. Growth – how much growth and how fast? You must first
2. Competitive position – how does the firm position itself against
other firms in the industry?
a. Industry leader – Google
b. Price leader – Priceline
3. Geographic scope – local, national or international?
4. Other objectives – number of industries to enter, range of
1. Environment — A SWOT analysis is used to determine the
firm’s internal strengths and weaknesses as well as the external
2. Strategy – is the means to achieve a goal. More important than
Discuss the areas outside of the business world that must use strategic planning –
athletics, military, political, etc. How might students use strategic planning in
assessing their career objectives?
II. From Strategy to Electronic Strategy
Review and explore the U.S. Census Bureau report on the amount of e-commerce
conducted. http://www.census.gov/mrts/www/ecomm.html
A. E-business strategy – the deployment of enterprise resources to
B. E-marketing strategy – he design of marketing strategy that capitalizes
on the organization’s electronic or information technology capabilities
to reach specified objectives.
C. Four appropriate types of rationale for e-business projects:
2. Operational justification determines whether the company has
the staff capability to engage customers in social media.
4. Strategic justification shows how the strategy fits with the
firm’s overall mission, goals, and strategies.
5. Technical justification asks whether the company has the
technical expertise needed to implement the project.
III. From Business Models to E-Business Models
A Business Model is a method by which the organization sustains itself in the long
term and includes its value proposition for partners and customers as well as its
revenue streams.
The following components might be used by a firm to determine the fit of
a business model and its environment.
A. Customer value – create value through product offerings that are
differentiated from the competition.
B. Scope – which markets does the firm serve and are they growing?
C. Price – are the products priced to appeal to markets and achieve
company share and profit objectives?
G. Capabilities – does the firm have the financial, core competencies, and
human resources available to make the selected models work?
H. Sustainability – will the model selected create a competitive advantage over
time?
During the “bust” years of the dot.com era in 2000-2002, over 750
IV. E-Business Models
E-business models are defined by a method in which the organization sustains
itself in the long term using information technology, which includes its value
proposition for partners and customers as well as its revenue streams. Even
though the Internet spawned the vast majority of e-business models, it is very
important to remember that e-marketing and e-business models may operate
outside the Internet.
A. Value and Revenue
1. Value
a. Value encompasses the customer’s perceptions of the
product’s benefits, specifically its attributes, brand
2. Revenue
a. E-business strategies help to decrease internal costs.
b. E-business strategies can also increase the enterprise
revenue stream.
B. Menu of Strategic E-Business Models – a key element in setting
strategic objectives is to take stock of the company’s current situation
Gartner Group poses these questions before embarking on any e-
business strategy:
1. Are the business models likely to change in my industry?
C. Level of Commitment to E-Business
1. Activity Level E-Business Models – affects individual
business activities that can save the firm money, is low risk,
and can include:
a. Online purchasing
b. Order processing
c. E-mail
d. Content publishing
2. Business Process Level E-Business Model – changes
business processes to increase the firm’s effectiveness and can
include:
a. Customer relationship management (CRM) and social
CRM
3. Enterprise Level E-Business Models – the firm automates
many business processes in a unified system. Some traits of
this level may be:
a. E-commerce
b. Social commerce
c. Direct distribution
4. Pure Play – businesses that began on the Internet, even if they
add a brick-and-mortar presence. Many experts believe that
eBay is the only viable pure play model in existence.
Internetnews.com reports that companies are finally recognizing the importance
of multiple communication vehicles (chat, blog, text, etc). Discuss how these
alternative forms of communication are affecting the ability to provide customer
service.
V. Performance Metrics Inform Strategy
Performance metrics are specific measures designed to evaluate the effectiveness
and efficiency of an organization’s operations. Because strategy is the means to
the end, performance metrics should be defined along with the strategy
formulation so the entire organization will know what results constitute successful
performance.
A. To measure strategy effectiveness, metrics must include:
a. Translation of a vision or strategy into measurable outcomes.
b. Must be easy to understand and use.
B. Web Analytics – a study of user behavior on Web pages
a. IP addresses are recorded
b. Cookie files are written
C. Social Engagement Metrics – Marketers measuring exactly how
visitors participate on the site rather than simply measuring whether or
not they landed on the page. Items to be measured are:
a. Time spent viewing a video, playing a game, or listening to
music Downloading a white paper, MP3 music file, ring tone,
or other content.
b. Bookmarking a website at a social bookmarking site such as
VI. The Balanced Scorecard
A. Balanced Scorecard
2. The Balanced Scorecard was developed in 1990 by two Harvard
Business School professors.
B. Four Perspectives – the Balanced Scorecard links strategy to measurement by
asking firms to consider performance metrics in the following four areas:
1. Customer Perspective
a. measures of the value delivered to customers
2. Internal Perspective
3. Learning and Growth Perspective
4. Financial Perspective
a. income and expense
Review with the students the Balanced Scorecard developed by Raytheon’s E–
Business and discuss how this might differ from a Balanced Scorecard for a
brick-and-mortar company.
C. Applying the Balanced Scorecard to E-Business and E-Marketing – firms are
experiencing information overload. A firm can use its website to record
virtually anything and everything a customer does on their website. The true
test is knowing what information is relevant and how to use this information
1. Metrics for the Customer Perspective
a. Loyalty/retention
2. Metrics for the Internal Perspective
a. the entire supply chain
3. Metrics for the Learning and Growth Perspective
4. Metrics for the Financial Perspective
a. profits
b. return on investment
What is a Balanced Scorecard? A new approach to strategic management was
developed in the early 1990’s by Drs. Robert Kaplan (Harvard Business School)
and David Norton. They named this system the ‘balanced scorecard’. Recognizing