Operating expenditures

As with the startup expenditures, the operating expenditures involve employee time. The e-commerce manager, MIS, programmers, graphics people, and customer service representatives must all be involved on the operational side of an e-business. Further telecommunication expenses are incurred monthly or quarterly, as well as basic utility expenses. 

Advertising also comes into play on the operational side of an e-business. Literature and other ‘hard’ advertising pieces must be created. Pay-per-click advertising and e-marketplaces should be advertised in so that horizontal partners push users to your site.  ABC may also wish to conduct live web demonstrations of its capabilities. This per-month resource must be budgeted.

While some business costs can be reduced in the e-business environment, it is more accurate to say that money can be spent more wisely after e-business implementation as a result of better reporting, trends data, and better accountability for marketing dollars spent versus true customer acquisition, ROI and lifecycle earnings from a customer.

The budgeting process is just as important in the e-business environment, so we will discuss budgeting in the next post.

Copyright | emarketingprofs | All Rights Reserved

ABC believes it can accomplish these strategic goals by advertising in horizontally integrated e-marketplaces and by optimizing its website for content and backward linkage to increase its web page ranking and popularity with the major search engines.   ABC must answer which marketplaces will drive its target market to its website. Business-to-Business marketplaces like ThomasNet, Global Spec, Vert-Markets and similar horizontally integrated e-marketplaces could offer relevant lead generation for ABC. ABC must also answer the question of which advertising methods would offer the best brand awareness opportunities for the company. 

ABC could look towards various brokerage models when determining the appropriate marketing mix. Brokerage models are used to bring buyers and sellers together in an effort to establish business connections between them in order to form a mutually agreeable transaction. One example of a brokerage model is a search agent. Search agents attempt to take the user’s query, or criteria, for a specific good or service and find the best provider or best price for the user. Examples of brokerage models are, as mentioned above, e-marketplaces. E-marketplaces have many companies that advertise on their sites. When the user enters their criteria, the system selects the best company to fulfill the needs of the user. 

Another example of a brokerage model is the auction broker. Auction brokers do not get involved in the transaction, they simply take a percentage of the sales commission or require a small listing fee to list products or services on it site. An example of an auction broker would be E-bay. E-bay has a section of its website dedicated to the small business. ABC could look here in an attempt to procure auction brokerage business while getting rid of excess inventory.

A further example of a brokerage model business is the distributor. Distributor sites serve as an online catalog and lead generating tool for their advertisers. An example of a B2B online distributor would be ThomasNet’s online catalog of industrial manufacturers and distributors. ABC must also question how it wants to create brand awareness throughout the industry.

In the next post, we will discuss branding and positioning for our fictional company.

Copyright | emarketingprofs | All Rights Reserved