Ecommerce Marketing Plan
By: Anastasia Kurdina
Ecommerce Marketing Plan
By: Anastasia Kurdina
Concept of Service
The current work deals with marketing offer of e-commerce service. It highlights the essential
steps of marketing of a brand-new firm offering services of website construction, design,
programming, development, and promotion. The service should be provided exclusively online via
the site of the company. Online business operations include ordering, agreement on
requirements, elaboration of design, and providing constant customer support.
The service implementation process should include the following stages:
Defining goals of the site. This may include either physical meeting or discussion of the product in
question via Internet.
Developing the website structure. This stage is aimed at flashing out technical aspects of the site.
It should include definition of necessary technology, type and specifications of site navigation.
Website design and built. Developing layout and graphics of the site. This may include
elaborating the company's genuine creative approach in developing the graphic looks of the
order, or complying with the requirements presented by the customer as to general look of the
project.
Website programming and built. This stage depends on details of each specific project and
definite requirements posed as to the quality and level of the site. Also, this process varies
according to the kind of customer and destination of the site contemplated. All features of the site
are subject to examination and test by both company's specialist and customer.
Technical release of the site. Once technical aspects of the project finished, the customer should
be provided with free consultation along with further site marketing and promotion services,
techniques, and practical advice.
Ongoing site maintenance. This is the stage when the job of creating the customer's site is
finished. But the company guarantees keeping all its sites current in terms of graphics,
technology, navigation and usability. After release of the site, the company continues working
with the customer as to establishing a schedule for the website regular review and maintenance
to meet clients' requests, accommodate users' feedbacks, incorporating new system updates and
new technologies.
It is a fact that the idea of the internet-commerce of this type is not brand-new, and for a new
company to enter the market and receive profit out of its business, it is necessary to invent some
novel elements in the service offered. The innovative elements that this project contains
compared to large variety of competitors functioning on IT e-commerce market are based on
combination of cost leadership and differentiation generic strategies (according to M. Porter, [1]).
Therefore, the project is launched in B2C format, though there can be differentiation of customers
and hence differentiation of the level and variety of services offered to each individual customer,
and the project is for-profit, small business case. This new business is intended to compete with
both large business providers of site development services and small business representatives
dealing with this issue.
Another unique feature of the project is wide variety of services included in one business offer.
This includes: web-design, redesign of existing site, possibility of working with many programming
languages, site management, allocation in search engines, animation, free hosting offer, email
registration, web mail and POP3 access, ftp access, tools for web statistics, domain name
registration, other services like full life website consulting, flash animation creation, elaboration of
graphic and logo design, e-commerce and shopping carts, site management, administering and
maintenance, banner ads, marketing, engine position enhancing and promotions, search engine
optimization, software testing and even online training.
Industry Overview
The industry of e-commerce is one of the fastest and most dynamically developing industries
worldwide. Today it is quite difficult to accurately define the impact of the Internet on commerce in
exact figures, but according to the estimates by 2000 there were about 260 million Internet users
worldwide and by mid 2003 their number has grown more than twice and reached 580 millions.
By 2005, their number is estimated to reach more than 770 million.
These figures show that the Internet has become very important and significant business medium
through which buyers and sellers not only conduct transactions that were earlier conducted live,
but carry out online-specific business buy-and-sell operations. Only three years ago, in the first
three quarters of 2002, according to the figures of Department of Commerce [3], e-commerce
transactions amounted to more than 20 billion dollars. It should be taken into account that those
numbers are significantly lower than the amount of actual real transactions.
Today, e-commerce is booming. Market size of e-commerce has reached immense volumes.
Moreover, this growth tends to accelerate. While in 2002 total volume of retail American e-
commerce sales was fixed at $44 billion, one year later it increased to 56 billion. Then, in 2003,
online sales made only 1.6 of total sales, providing the ground to suggest that there is very large
growth potential. Online sales are predicted to rise to 2.9% by the year of 2007. Thus, Internet
economy force became more integral part of the entire US economy than it has ever been.
Research conducted by the Cisco Systems (available at [2]) shows that the Web is transforming
the way people work and the revenue from Internet transactions annually grows by more than 50
percent.
Jupiter Research [4] reports that American B2B Internet commerce rates increased noticeably
over the past 5 years and amount from $336 billion in 2000 to $ 6.3 trillion in 2005. Jupiter
mentions five industries that have more than half of all buying and selling operations online.
These are: aerospace and defense, chemicals, electronics, motor vehicle and parts, and
computer and communications equipment and software. Among these industries, computer and
communications equipment and software is leading with estimated number of online sales in this
2005 year reaching to $1 trillion.
That is very important for the current study since the project in question is to be launched in
computer and communications industry. Therefore, proceeding from the trends mentioned in the
industry of electronic commerce, one can assume that the direction of one's business connected
to online service and e-commerce, notwithstanding powerful competition, has all the chances to
further develop and gain success since this market sector is subject to enhancement,
development and transformation. Since the number of Internet users is growing and the number
of companies willing to be represented on the Web is increasing along with the number of
companies launching online business, there is very high and further increasing demand in
providing programming, design, site development and marketing services. Therefore, a new firm
in the industry theoretically has solid opportunities to enter the market, whatever saturated it may
be, and successfully develop. On the basis of abovementioned, the outline of relevant business
target market gets clearly seen.
Target Market
The target market of the project is very vast one. It varies from individuals with the minimum
requirements as to functionality, appearance and program possibilities of the site, to large
companies with more solid and expensive orders. Since there are very different kinds of
customers with various interests and needs, each requiring different approach and professional
level of performance, they should be segmented into distinct groups. By segmenting the
customers, the company increases its chances on success.
The customers were divided according to the level of the desired product complexity. After such
criterion, three levels can be distinguished: those requiring basic site development; intermediate
level, and sophisticated one. Basic level implies comparatively low cost of services and is fine for
individual customers, non-professional companies specializing, for example, in online selling of a
small range of products. According to its name, this solution anticipates limited functionality,
simple design, and quick implementation of the order.
Second group of customers comprises those with intermediate level orders. Such sites should
include professional design and more complicated site development process. These orders
require facilities for data processing, secure ordering or data exchange encryption, vast range of
design patterns. Also, development of relevant site information database and more
straightforward in usage software may be added to requirements of customers in this group.
Target customers for such services are companies looking for sites for their business, freelance
businessmen, companies of any profile with middle range requirements to the site's professional
and programming capabilities and design. This segment of target market is very large and is
estimated to bring essential part of orders and revenues.
The third level of orders' complicacy is one requiring sophisticated solution. It provides for cutting
edge and highest-level design and functionality. Sites of this type can be designed specifically to
be able to integrate with the customer's existing systems. The site should include all newest high-
tech features with such possibilities as personalized pages able to recognize previous visitor
choices, professional design, assistance and compliance with the most demanding technical
requirements. Site of such level should be constructed with usage of complicated and modern
program software, dynamic databases, and requires thorough professional programming work
and excellent design. The product of this type aims at high-profit segment of market represented
by large companies and other business, public, or political entities.
The company's flexibility in relation to its ability to comply with customers' requests of different
levels of complexity constitutes the firm's competitive advantage, since it expands its target
market significantly without requiring involvement of solid additional resources due to its capacity
to comply with the customers' requirements from all three segments [7]. As for defining specific
industries that the service is targeted at, our service is able to comply with the requests in such
fields as communications, media, fashion, e-commerce, manufacturing, publishing, cooking,
finance, education, entertainment, lifestyle development, advertisement public service, and
others.
In defining target market and customers segment groups another very important feature should
be noted. This feature is due to the nature of Internet marketing and it noticeably contributes to
the expanding of the service's target market. This is international nature on e-commerce and
ability to interact and conduct business with clients irrespective of their nationality. Therefore,
target market of service proposed isn't limited with the US market only, since neither of the stages
of the order fulfillment requires physical presence and interaction with clients. Everything in site
development process can be settled online including payment and technical support. Therefore,
the geography of business can cover countries of the European Union, Japan and other high
developed markets. The European Union, for instance, is a vast, dynamically developing and
promising market with progressive online-service industry and large market of customers that
might apply to such type of services.
However, this situation contains threats along with advantages. Due to international nature of the
business, companies with similar range of service offers can emerge in countries other than the
USA and the EU. This contains threat since in developing countries and countries with transitional
economy the cost of similar services is significantly lower. Therefore, the business may be
subject to serious competition in fighting for the first and second target market groups.
The advantage of the current project thus depends on proper implementation of the so-called 4-P
e-commerce marketing strategy: right choice of product (service), its unique features compared to
competitors; right choice of place (the advantage of the company concerned is that it really is
situated in the USA and can afford physical representation of its business, including offline
advertisement); relevant price policy (combining ability to get desired profit and cost-leadership
strategy), and active successful promotion [6].
Competitors' Analysis
To have the business succeed, the company should analyze rapidly changing situation of its
target Internet market segment during the project launch. It is clear that today Internet business is
extremely crowded and competitors are very strong, but this fact shouldn't discourage new
entrepreneurs. To the contrary, taking into account democracy of e-business and easiness of
entering the market, it is quite possible to occupy some niche in e-commerce by offering quality
and unique products.
Before making the offer, it is necessary to conduct thorough analysis to understand the
competitors' strategies, their assets and "white halls" to be filled by one's business. In analyzing
competitors' marketing mix, first of all the leaders of the industry should be identified. As to the
business in question, the attention should be paid to the largest companies offering services of
websites development and design. Some results of the research are presented below:
Web Design New York Company Ecommerce Partners, specializing in custom website
development. Its target market are global companies and they identify themselves as complete
service online website development agency offering a wide array of dynamic solutions that range
from software for online brochures to elaborated e-commerce website applications and program
products. Besides web design, the company specializes in creating content management tools,
workflow and customer relationship management systems, databases, flash and animation sites,
relevant and appropriate programming and administrative support.
Botics Company. It's a five-year old company specializing in planning, designing and executing
programming solutions to the organizations aiming at being represented on the web. Not only
does the company offer services of website design and development, but combines advertising,
computer technology services, design, publishing and promotional support. The company
possesses creative and professional team and claims to provide highly creative and hardworking
solution to all problems connected to the Internet.
Intelex Corporation is solid website development company offering a broad range of products
including web design, graphic design, printing, hosting, and website marketing, with the target
market constituting entire North America region. The company also offers services of Internet
consulting, e-commerce hosting and marketing.
Other solid players of the market include Bridport Web Designers UK (strong in search engine
promotion), Borland's Services, Developreneurs Company and many others. These were large
companies and corporations; but in the segment of website design and development there also
function private entrepreneurs, freelance designers and programmers, small design and
programming firms.
On the basis of the abovementioned information the following conclusion is made. All competitors
of e-commerce business specializing at site development and design may be divided into two
groups. One of them includes big companies which target at global big business companies and
cover wide range of industry they can offer their services. The strengths of these companies are:
they are solid and have gained strong ground of the business controlling definite part of it; they
employ highly-professional staff which include web designers, programmers, economists,
marketers, promo-managers, lawyers and other numerous consultants; they have experience in
this work and solid portfolio. Weakness: the prices are too high therefore the target market is
limited to the high profit organizations. Being able to offer the product of the same quality for the
lower price, one can gain cost leadership advantage.
The second type of competitors consists of small business representatives. These are either
individual entrepreneurs, small companies of freelance designers and programmers. They offer
relatively low price for the required services, but their array of offers is limited respectively. In this
market segment, according to M.Porter [1], the differentiation strategy should be applied to gain
ground over the competitors of this type.
Competitive Scenario of Relevant Target Market
On the basis of 5 forces analysis, introduced by Michael Porter, the competitive characteristics of
the target market can be distinguished:
Rivalry in the industry is high. This is caused by large number of competitors, low switching costs,
comparatively low level of product differentiation, high strategic stakes (caused by potential for
great gains), diversity of rivals and the industry shakeout is incited by growing nature of the
market and the high profits possibilities within it which stimulates new companies to enter this
market.
On the contrary, threat of substitutes in this business is insignificant
Buyer power is not strong in the industry. Customers are numerous and cannot dictate the price
trend in the industry.
Supplier power is not significant as well. Since IT technologies, design and programming
activities belong to the intellectual activities, the only resource they rely on is people, performers
of the services. Therefore, small number of the company's employees and intellectual resource
cost in this case have little potential of dictating the company's prices.
Barriers to entry and threats to entry the industry bear little significance as well. This is inherent to
the industry of e-commerce and is attributed to absence of governmental barriers as for entering
the industry, little influence of barriers caused by patents and proprietary knowledge in the
Internet commerce industry; no restricted distribution channels, and what is most important, little
starting capital due to the absence of need for tangible property to be purchased by non-e-
commerce business. To the contrary, the industry is characterized by little brand franchise, good
access to the channels of distribution and low scale threshold, which contributes to the easy entry
in the industry.
Proceeding from the abovementioned information one can conclude that the most important
factor in industry rivalry is the large number of competitors. All the others Michael Porter's forces
that impact the industry are favorable for entrance and successful development of new business.
Though the industry where the business operates is attractive and dynamic, it is not enough to be
successful. Another very important factor is position of the firm within the industry. The business
in question has the chance to acquire strength by combining cost leadership strategy and
differentiation strategy. In that, the first strategy should be applied when dealing with the second
and third segment of target market, that is with medium and large business, and the first one is
generally applied to the first and second segments, represented by individuals, small business
and medium business.
These are the main strategies' targets though that does not mean that differentiation strategy,
implying unique attributes of the service proposed shouldn't be applied to the large business
segment, but in that case that won't be comparative advantage since large IT web-design and
programming companies generally in supply of these business have all the necessary
characteristics for the implementation of this strategy, offering not only unique services, but a
wide and various range of them.
Therefore, in assessing the company's chances to successfully enter this market, a complete
SWOT analysis should be made.
Strengths
Professional and high-quality site
Evading intermediaries, direct connection with end-users
An idea of flexible business able to respond to variety of requests
Strong creative and programmers' team
Mobile and easy-lo-launch business
Innovative members
Wide range of services
Comparatively low price
Superior technology used
A level playing rules of the industry, where small business can show as credible and professional
as its large competitors
24-hours working pattern
Great attention to customer satisfaction and informing
Reduced costs compared to non-online business
Streamlined business processes reducing the cost of the customers' operations
Weaknesses
Relatively small number of staff members
Scarce legislative ground, need for legal advice and study of regulation in the field
Opportunities
Possible offers of multi-channel marketing expertise, business and site analysis, creative
development offer, pay-per-click technique service, services of affiliate marketing, Search engine
optimization and possibly others.
Enhancing design solutions to include: website design, animation, multimedia integration, flash
design, logo design, character development, web design maintenance and hosting
Active promotion campaign including as much means of e-commerce marketing as possible
Constant conducting user testing and arranging receiving their feedback to be able to objectively
evaluate the quality of the services rendered
Possibility to enhance the company's team in future to create British, French, EU websites of the
company to access these countries' markets
Access of the business to global markets
Flexible programs of price reduction, offering free site maintenance, assistance and consultation
Developing and offering unique custom software at competitive price
Possibility to sell the program's script to the customers for their independent work
Threats
A great number of competitors
Great IT, web-design and programming companies which have more experience in delivering
such services and have their constant customers
Threat of business overflowing with small business companies from transitional economy
countries able to offer lower price for their services
Security issues can pose threat and should be thoroughly considered
Business Growth Evaluation and Government Policies
Internet business growth is different from those predicted by economic growth theories. These
traditional growth theories attribute growth to the factor submission ideas. According to them,
growth is caused exclusively by either better technology or capital accumulation. In Internet
economy, there is possibility for short-term lags and lock-ins before the Internet realizes its
potential in its fullest scope.
The economic growth in the Internet industry is not only driven by information acquisitions
broadened due to Internet, but also by dynamic interaction of the Internet and business structures
[3]. Talking about the business of web design and site development in particular, there is a strong
tendency of increasing demand for services like these and firms able to offer wide array of
services in combination with comparatively low prices have great potential to develop, extend and
broaden the range of services proposed.
Another important issue to be considered while launching the project is compliance with the
government policies in the industry. Concerning business of e-commerce, it should be noted that
the United States positions itself as free economy in general and puts forward a principle of
deregulations. This in particular concerns e-commerce. In this field, the USA tries to implement
"laisser-faire" philosophy, which is good for the business, since the government poses no
obstacles as to entering this market and functioning in it. Still, there are a number of regulations
and acts making the framework of e-commerce regulations, which should be studied and adhered
to [8]. They are as follows: Framework of Electronic commerce, which states that the private
sector plays the leading role in this business and the government should in its turn avoid posing
restrictions on the area and the e-commerce should be simplified and facilitated on the global
basis.
Therefore, according to the unique nature of e-commerce, existing regulatory patterns of
commerce may not be applicable to e-commerce. The USA admits binding power of electronic
contracts. Terms of these contracts are governed by traditional contract common law along with
the Uniform Commercial Code (UCC), though there was an attempt to create regulatory act that
would better suit the nature of electronic transactions - Uniform Computer Information
Transactions Act (UCITA). The situation with the internet taxation is also encouraging. Today, the
US has declared moratorium on new or discriminatory Internet taxation. There is the Internet Tax
Freedom Act (ITFA). In 2003, it was expanded by the Internet Tax Nondiscrimination Act (INTA).
That's the federal policies, the states' ones are different [4].
Today, Internet transactions are taxed in the similar manner to the catalog sales - according to
physical presence. Also, the Federal Trade Commission Act and The Computer Fraud and Abuse
Act should be complied with.
Price Strategies
Adopting relevant price strategy bringing benefits to the current business is another very
important issue. It was mentioned above that the company's strategy of entering the market will
be based on combining differentiation strategy with cost-leadership one. According to that, the
firm plans to adopt the penetration pricing strategy aiming to set in first low prices for its services
in order to enter the mass e-commerce market. Also, the firm should consider applying bundle
pricing, targeted at offering two or more services in one package price. This offer will deal with
free consultations, free site support offers and some free software to support databases and site
content.
Also, quantity discounts, selling larger number of services at lower price, will be applied, since the
company wants its customers to return and order additional services. Of course, pricing strategy
should be able to quickly adapt to the environment, economic and competition conditions. Only in
that way, being deliberate about pricing, the business will be able to stay in the industry for long,
since, as Dr. Ralph F. Wilson assumes, " pricing is the only one of the 4 Ps of Marketing that
brings revenue in rather than sending it out" [5]
Promotion Strategy
One of the most important issues to be considered in marketing plan is promotion strategy. There
is genuinely great variety of promotion strategies, but in general they can be grouped into 8
categories: search engines, viral strategies, linking strategies, public relations, traditional media,
e-mail publishing, networking and paid advertising [6]. The promotional strategy of the company,
in order to enter the market, should be thorough, well thought and effective. For this, the essential
promotion concepts to be applied by the current business should be: search engine positioning
and optimization which proves to be indispensable and most important component of the
promotion strategy of the company. This component deals with on-page and off-page
optimization and is targeted to result in good search engines ranking and presence in top ten
search results. Such work should be performed by a group of webmasters and should include,
besides linking strategies, quality content and programming, blog and article submission
activities. The linking element, entering search engines optimization strategies, includes banner
exchanges, awards for best trafficking, and reciprocal links strategies.
Other advertising strategy to be adopted by the company is networking. It will be done basically
through news groups and lists of email discussion such as for instance John Audette's I-sales
discussion lists [6]. In lists like that, representatives of certain industry hold discussion on current
issues in their field. Regular participation in such discussions builds reputation and fosters trust
among colleagues and representatives of adjacent industries.
Of course, one of the most effective types of promotion is paid advertising. That's very efficient
way to attract large number of customers. The most important advertisement types to be
implemented by the business concerned is banner ads, pay-per-click-links wthat may be
purchased on search engines, and paid ads in targeted e-mail newsletters.
The current marketing plan is the primary elaboration of the business idea and includes the first
steps to be made by the company to enter the market. It should be complemented and adopted to
further business preferences and needs.
Endnotes
1. Michael Porter. Competitive Strategy: Techniques for Analysing Industries and Competitors.
Princeton Hall, 2000.
2. Paul May, David Orchard. The Business of Ecommerce : From Corporate Strategy to
Technology (Breakthroughs in Application Development). Cambridge University Press, 2000
3. Ken Burke. Intelligent Selling: The Art & Science of Selling Online. Multimedia Live, 2002
4. The UCLA Internet Report: Surveying the Digital Future. UCLA Center for Communication
Policy, October, 2004
5. Dr. Ralph F. Wilson. Developing an Internet Marketing Plan. Web Marketing Today, Issue 74,
March 13, 2000 retrieved from < http://www.wilsonweb.com/wmt5/issue83.htm>
6. James R. Ogden. Developing a Creative and Innovative Integrated Marketing Communication
Plan: A Working Model. Prentice Hall, 1998
7. James D. Lenskold. Marketing ROI : The Path to Campaign, Customer, and Corporate
Profitability. McGraw-Hill; 1 edition, 2003
8. William E Hill. A marketing plan for final phase of conversion of Humboldt National Bank. Bank
Marketing Association, 1980
About the author
Anastasia Kurdina is a person of manifold gifts. Almost every her writing is followed by lavish
testimonials from satisfied customers. Anastasia specializes in marketing, management,
sociology, history, world cultures, literature and art.
Anastasia Kurdina is not an essay writer in a common sense. She is a Poet, an Analyst, an Artist,
a Critic, ... . Anastasia is one out of a few writers who remember "how it all started" :) . It is she
who sometimes accomplished every second order when Your Personal Writer was nothing more
nor less than 3 writers and one webmaster; it is she who has still been accomplishing special
orders, which naturally go beyond regular write-me-an-essay orders.
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