MIS 677 – E-Commerce – Summer 2015-Reference Chapter for Assignment 2: Chapter 6: E-Commerce Marketing and Advertising Concepts

| March 29, 2017

Question
MIS 677 – E-Commerce – Summer 2015

Assignment 2 – 10 Points

Reference Chapter for Assignment 2: Chapter 6: E-Commerce Marketing and Advertising Concepts

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Use the above Online Consumer Purchasing Model and information provided to assess the effectiveness of an e-mail marketing campaign for a small-sized e-commerce company focused on sales of trendy apparel to the ages 18-26 young adult market in the United States.

For this e-mail marketing campaign:

The company purchased and used 100,000 e-mails @ 25 cents cost per e-mail address.

The expected click through rate is 15%

The conversion to customer rate is 10%

The loyal customer retention rate is 25% (for the purpose of this e-mail marketing campaign assume that a loyal customer makes two purchases).

The average sale is $60.00

The profit margin is 50%

Answer/Respond to the following:

1. Does this e-mail marketing campaign produce a profit? (Must show all work to support answer to receive credit).

Total Email =

$100,000.00

Total cost=

$ 25,000.00

(Total email X .25)

The expected click through rate=

$ 15,000.00

(Total click through X .15)

The conversion to customer rate=

$ 1,500.00

(Conversion to customer X .10)

Number of Loyal customer =

$ 375.00

(No of total customer who bought at least once X .25)

Total Number Of Purchase=

$ 1,875.00

(1500 + 375)

Total Sales amount =

$112,500.00

(Total Number of Purchase X $60)

Total profit from the sales amount =

$ 56,250.00

(Total Sales amount X .5 )

Total Net Profit =

$ 31,250.00

(Total profit from the sales amount – Total cost)

Yes, the e-mail marketing campaign produced $31,250.00 worth of profit from the e-commerce company.

2. Suggest some specific ways to increase the response rate to this e-mail marketing campaign.

The marketing potential of e-mail is evident in the way it is competing other media as a form of direct communication. E-mail has been adopted by both consumers and businesses globally. Email marketing is geared towards developing relationships over time. Enhancing this process can be achieved through email personalization. Various studies have found out that the more the number of personalization elements in an email, the better the response rate. Its starts by addressing(Kaushik, 2011) the recipient by their name. Genuine personalization is a situation whereby emails are customized to the particular profile, preferences and interests of every recipient. Personalized emails give the impression that time has been taken to write to the individual making them feel good and obliged to respond(Pavlov, Melville, & Plice, 2008).

The time of the day or year affects the response rate received through email marketing. There are many times when things are more sensitive. The sooner the email is sent, the higher the chances of getting more response. The time of the year also matters, for example offering a

tropical vacation on summer might not be as effective as offering the same in winter time. Sending emails on holidays might go unnoticed as opposed to working days(Kaushik, 2011).

Organizations spend a lot of money and time on the creative part of email marketing development leaving out fewer resources on call to action. Creating a great call to action entails telling your audience exactly what you intend to do and by when. This has demonstrated to enhance and increase the response of email marketing by convincing the email recipients to take action right away (Stein & Devaney, 2013).

To enhance response, the design element must be put into consideration. Graphics should not be overdone or underdone. Too much graphics take more time to load on a webpage leaving the user frustrated. This has been proved to increase response to emails. In addition, message should contain tangible benefits that the user can derive from responding to the email such as saving time, money and convenience. A user should be given an option of opt out or as popularly known as unsubscribe. This eliminates the number of uninterested users helping the company to focus on only the interested market segment (Stein & Devaney, 2013).

3. Are e-mail marketing campaigns effective? If not, why not? If yes, why are they effective and which specific types of e-mail marketing campaigns are most effective?

The effectiveness of email marketing strategy is determined by the strategy put in place by the organization. A study conducted by Custora, a predictive analytics firm found out that customer acquirement through email has quadrupled in the past four years and currently accounts for approximately seven percent of customer acquisitions. Customers who go to a business through email have shown a tendency of shopping more in addition to spending more. The study

conducted by Custora demonstrated that email customers are eleven percent more valuable than average (Stein & Devaney, 2013).

Email is still effective due to the fact that it is permission based. The people in an organizations email list have given the organization the green light to send them messages. With the advancement in technology such as smart phones and tablets, customers are always listening. For emails to be effective, they should not annoy. This can be achieved through giving your audience the power to decide when they can receive emails. Emails require a different tone compared to social media. The same message utilized in social media cannot be replicated in email(Kaushik, 2011).

Mobile devices have made email marketing the most powerful customer acquisition mode. They enable better email marketing in a variety of ways. For instance, some brands place messages at their checkout counters telling clients to leave their email address and they will get five percent discount in their next purchase. In such a manner, they create their email lists. Mobile gives birth to an array of challenges to marketers. This means that they must be coded to be attractive on smart phones. Seventy percent of consumers will unsubscribe from emails in a case where they look bad. With the right email strategies, email marketing will drive up sales (Stein & Devaney, 2013).

References

Kaushik, A. (2011). Email Marketing: Campaign Analysis, Metrics, Best Practices. Retrieved from http://www.kaushik.net/avinash/email-marketing-campaign-analysis-metrics-practices/

Pavlov, O. V., Melville, N., & Plice, R. K. (2008). Toward a sustainable email marketing infrastructure. Journal of Business Research, 61(11), 1191–1199. http://doi.org/10.1016/j.jbusres.2007.11.010

Stein, T., & Devaney, T. (2013). Why Email Is Still More Effective Than Social Media Marketing. Retrieved July 1, 2015, from Forbes : http://www.forbes.com/sites/capitalonespark/2013/10/01/why-email-is-still-more-effective-than-social-media-marketing/

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