Test 2 E-commerce

E-mailing buyers to warn them away from a seller is a type of auction fraud known as: A) transaction interference. B) bid siphoning. C) bid rigging. D) shill bidding.

A

________ refers to the feeling of having been too cheap in bidding and failing to win an auction. A) Winner's lament B) Winner's regret C) Loser's lament D) Loser's regret

C

________ refers to the use of secondary user IDs or bidders who have no actual intention to buy to artificially raise the price of an item. A) Bid manipulation B) Shill feedback C) Shill bidding D) Bid rigging

C

When did the first online communities form? A) the 1970s B) the 1980s C) the 1990s D) the 2000s

B

Which of the following allows the consumer to enter a maximum price and the auction software automatically places incremental bids, up to that maximum price, as their original bid is surpassed? A) watch lists B) proxy bidding C) sealed bidding D) price matching

B

Which of the following involves e-mailing another seller's bidders and offering the same product for less? A) transaction interception B) bid siphoning C) shill bidding D) persistent bidding

B

Which of the following involves the feeling after winning an auction that you paid too much for an item? A) herd behavior B) winner's regret C) seller's lament D) loser's lament

B

Which of the following is the second leading social network in the United States in terms of monthly unique visitors? A) Twitter B) LinkedIn C) Instagram D) Pinterest

B

Which of the following types of auctions "shields the brand" of the seller? A) English auction B) Name Your Own Price auction C) Dutch auction D) penny auction

B

All of the following are benefits of auctions except: A) more efficient price discovery. B) lower transaction costs. C) decreased price transparency. D) increased market efficiency.

C

On which of the following do users spent the least amount of time per day? A) Snapchat B) Tumblr C) LinkedIn D) Pinterest

C

Which of the following companies purchased Instagram? A) Google B) Apple C) Facebook D) Microsoft

C

A(n) ________ offers members focused discussion groups, help, information, and knowledge related to an area of shared interest. A) practice network B) general community C) affinity community D) interest-based social network

A

After Google, the next portal/search engine site with the most unique visitors is: A) Yahoo. B) Microsoft. C) AOL. D) Facebook

A

All of the following are solutions to the problem of high monitoring costs except: A) seller rating systems. B) watch lists. C) proxy bidding. D) fixed pricing.

A

Which of the following has the highest penetration of social network usage among the general population? A) North America B) Latin America C) Europe D) Asia-Pacific

A

Which of the following is a leading social network in Germany? A) Xing B) Tuenti C) Orkut D) Mixi

A

A(n) ________, in which the highest bidder wins, is the most common form of auction. A) Dutch Internet auction B) Japanese auction C) English auction D) reverse auction

C

Which of the following is a community of members who self-identify with a demographic or geographic category? A) practice network B) sponsored community C) affinity community D) interest-based social network

C

BlackPlanet is an example of a(n) ________ social network. A) practice-based B) interest-based C) affinity-based D) general

C

Facebook owns which of the following? A) Pinterest B) Snapchat C) WhatsApp D) Tumblr

C

In 2017, Fortune 500 companies used ________ more than Facebook. A) Twitter B) Tumblr C) LinkedIn D) Pinterest

C

In 2018, around what percentage of the total United States population used social networks? A) 50% B) 60% C) 70% D) 80%

C

Instagram is an example of a(n): A) interest-based social network. B) affinity community/social network. C) general community/social network. D) practice network

C

The term ________ refers to the advantages conferred as an auction site becomes larger in terms of visitors and products for sale. A) siphoning B) herd behavior C) network effects D) channel expansion

C

Which of the following is not a risk or cost of Internet auctions? A) delayed consumption costs B) equipment costs C) price transparency D) trust risks

C

Which of the following is not one of the defining functions of a portal? A) commerce B) content C) auctions D) navigation of the Web

C

Which of the following is not one of the top factors a business should consider when planning an Internet auction? A) type of product B) type of auction C) location of auction D) bid increments

C

Which of the following now owns LinkedIn? A) Facebook B) Google C) Microsoft D) Verizon

C

Which of the following types of auctions is perfect for sellers that have many identical items to sell? A) English auctions B) Name Your Own Price auctions C) Dutch Internet auctions D) group buying auctions

C

________ is the tendency to gravitate toward, and bid for, auction listings with one or more existing bids. A) Group buying B) Winner's regret C) Herd behavior D) Bid rigging

C

________ of procurement officers use auctions to purchase goods. A) Approximately 80% B) Less than a quarter C) Over one third D) Approximately 25%

C

In 2018, which age group had the fastest growing rate of Facebook usage? A) 12-34 B) 35-45 C) 46-65 D) adults over 65

D

Priceline is an example of a(n): A) English auction. B) Dutch auction. C) penny auction. D) Name Your Own Price auction

D

The amount of time visitors spend on a site is a measure of: A) reach. B) loyalty. C) conversation. D) engagement.

D

The profit a seller makes at auction is a function of all of the following except: A) initial pricing. B) auction length. C) the number of units for auction. D) watch lists

D

The technology used by early online communities was limited to mostly: A) instant messaging. B) FTP. C) e-mail. D) bulletin boards.

D

To address the falling price of display ads and declining user engagement, Yahoo acquired all of the following except: A) Tumblr. B) Flickr. C) Aviate. D) Instagram

D

WebMD.com is an example of a: A) general purpose portal. B) vertical market portal based on affinity group. C) vertical market portal based on focused content. D) focused content portal.

D

Which of the following is an example of a practice network? A) PredictWallstreet B) Instagram C) DebatePolitics D) Doximity

D

Which of the following is not one of the typical portal revenue sources? A) commissions on sales B) subscription fees C) tenancy deals D) referral fees

D

Which of the following purchased Yahoo? A) AT&T B) Microsoft C) AOL D) Verizon

D

Which of the following statements about Instagram is not true? A) Instagram trails only Facebook in U.S. ad revenue. B) Instagram is a social network that focuses on video and photo sharing. C) Instagram is growing more quickly than Facebook. D) Instagram users spend more time on Instagram than Facebook users spend on Facebook.

D

Closed bidding offers the advantage of herd effects. T/F

False

Consumers in auctions are driven solely by value maximization. T/F

False

Facebook is the fastest growing of the most popular social networks. T/F

False

In B2C auctions, consumers control assets and use dynamic pricing to establish the price.

False

What business models do portals use?

Portals receive income from several different sources. The revenue base of portals is changing and dynamic, with some of the largest sources of revenue declining. Typical revenue sources include general advertising, tenancy deals, commissions on sales, subscription fees, and fees from applications and games. The business strategies of both general and vertical portals have changed greatly because of the rapid growth in search engine advertising and intelligent ad placement networks such as Google's AdSense. General portal sites such as AOL and Yahoo did not have well-developed search engines, and hence have not grown as fast as Google, which has a powerful search engine. Portal sites have invested billions of dollars to catch up with Google. On the other hand, general portals have content, which Google did not originally have, although it has since added content by purchasing YouTube and adding Google sites devoted to news, financial information, images, and maps. General portals are attempting to provide more premium content focused on subcommunities of their portal audience. Advertisers on portals are especially interested in focused, revenue-producing premium content available on portals because it attracts a more committed audience. For instance, financial service firms pay premium advertising rates to advertise on portal finance service areas such as Yahoo's Finance pages. There is a direct relationship between the revenue derived from a customer and the focus of the customer segment. The survival strategy for general purpose portals in the future is therefore to develop deep, rich, vertical content to reach customers at the site. The strategy for much smaller vertical market portals is to put together a collection of vertical portals to form a vertical portal network, a collection of deep, rich content sites. The strategy for search engine sites like Google is to obtain more content to attract users for a long time and expose them to more ad pages (or screens).

Which of the following early leaders in social networking has been reinvented as a music-oriented social network? A) Vevo B) Myspace C) Polyvore D) Tumblr

B

Which social network functionality allows users to view a list of updates from friends as well as advertisements and notifications in chronological order? A) message board B) timeline C) friends' network D) newsfeed

D

Keeping bid increments low decreases the number of bidders and lowers the frequency of their bids. T/F

False

Penny auctions don't require money to bid. T/F

False

Portals are not immune to network effects.

False

Vertical content portals and affinity group portals tend to be more well-known brands than general-purpose portals

False

Discuss the impact social networks have had on how businesses operate, communicate, and serve their customers.

Social networks have had an important impact on how businesses operate, communicate, and serve their customers. The most visible business firm use of social networks is as a marketing and branding tool. The most popular social network tool for large corporate businesses is LinkedIn, with 98% of the Fortune 500 using LinkedIn. Twitter is the second most popular, used by 88%, while 85% use Facebook. A less visible marketing use of networks is as a powerful listening tool which has strengthened the role of customers and customer feedback systems. Social networks are where corporate brands and reputations are formed, and firms today take very seriously the topic of "online reputation," as evidenced by social network posts, commentary, chat sessions, and Likes. In this sense, social network sites have become an extension of corporate customer relationship management systems and extend existing market research programs. Beyond branding, social network sites are being used increasingly as advertising platforms to contact a somewhat younger audience than websites and e-mail, and as customers increasingly shift their eyeballs to social networks. Rosetta Stone, for instance, uses its Facebook page to display videos of its learning technology, encourage discussions and reviews, and post changes in its learning tools. Public social networks like Facebook have not been used extensively in firms as collaboration tools thus far. However, in 2016, Facebook launched its Workplace app, designed to spur collaboration and networking inside large firms. Over 14,000 organizations worldwide use this relatively new app.

A website designed around a community of members who self-identify with a demographic or geographic category is classified as a(n): A) interest-based social network. B) affinity community. C) practice network. D) sponsored community.

B

Describe the evolution of social networks from their earliest appearance.

The earliest social networks, in the mid-1980s and 1990s were community bulletin boards, or discussion groups, like The Well. In the early 2000s, technology changed, bringing in blogging, photo sharing features. As the Internet user population expanded, more and more socially oriented sites appeared, including Facebook, allowing users to share content directly with each other. More recently, in the late 2000s and early 2010s, as the Internet became available to browse (and post to) via mobile devices, more and more photo and video sharing social networks have emerged, such as Pinterest and Instagram. A new crop of social networks launched since 2008 (i.e., Snapchat and WhatsApp) focus on messaging.

Identify and describe the main types of portals.

There are two primary types of portals: general purpose and vertical market. General purpose portals attempt to attract a very large general audience and then retain the audience on- site by providing in-depth vertical content channels. Vertical market portals (sometimes also referred to as destination sites or vortals) attempt to attract highly focused, loyal audiences with a deep interest either in community or specialized content — from sports to the weather. In addition to their focused content, vertical market portals have recently begun adding many of the features found in general purpose portals

A community site created by a corporation is called a sponsored community site. T/F

True

Auction prices are often higher than prices in fixed priced markets. T/F

True

In a Dutch Internet auction, a single seller puts up multiple items for bidding. T/F

True

More than two-thirds of Internet users worldwide participate in social networks. T/F

True

Priceline's auctions utilize fixed pricing. T/F

True

The original portals in the early days of e-commerce were search engines. T/F

True

________ is the market leader in C2C auctions. A) Amazon B) eBay C) uBid D) eBid

B

One of the first online virtual communities was: A) The Well B) Myspace C) AOL D) Salon.com

A

One partial solution to high monitoring costs is ________ pricing. A) fixed B) dynamic C) allocated D) distress

A

PredictWallStreet is an example of a(n): A) interest-based social network. B) affinity community. C) sponsored community. D) practice network.

A

The fact that participating in an Internet auction means that you will need to purchase a computer, learn to use it, and pay for Internet access, is an example of ________ costs. A) equipment B) fulfillment C) delayed consumption D) monitoring

A

Threatening negative feedback in return for a benefit is an example of: A) feedback extortion. B) offensive shill feedback. C) defensive shill feedback. D) sending spam.

A

All of the following types of auctions involve single units except: A) an English auction. B) a Dutch Internet auction. C) a Name Your Own Price auction. D) a penny auction.

B

Each of the following is one of the top seven social network sites in the United States, in terms of monthly unique visitors, except: A) Tumblr. B) Myspace. C) Instagram. D) Pinterest.

B

Facebook was the leader in U.S. ad spending revenues on social networks in 2018. What company earned the second most amount of ad spending revenue? A) Snapchat B) Instagram C) Pinterest D) Twitter

B

Howard Rheingold, one of The Well's early participants, coined the term ________ to refer to "cultural aggregations that emerge when enough people bump into each other often enough in cyberspace." A) social networks B) virtual communities C) community portals D) social forums

B

The time spent watching and reviewing auction bids is a part of ________ costs. A) pricing B) monitoring C) delayed consumption D) fulfillment

B

Which of the following statements best describes the potential impact of network effects with respect to portals? A) Specialized vertical market portals attract only a small percentage of the audience, while a few large megaportals garner most of the market. B) The value of the portal to advertisers and consumers increases geometrically as reach increases. C) The greater the amount of content provided by a portal, the greater its value to the community. D) The greater number of portals available, the greater the potential audience for each.

B

________ occurs when sellers agree informally or formally to set floor prices below which they will not sell on auction items. A) Discriminatory pricing B) Price matching C) Bid rigging D) Distress pricing

B

A ________ permits the consumer to monitor specific auctions of interest, requiring the consumer to pay close attention only in the last few minutes of bidding. A) bidding fee auction B) channel manager C) watch list D) rating system

C

Describe four shared characteristics of social networks

Social networks involve (1) a group of people, (2) shared social interactions, (3) common ties among members, and (4) people who share an area for some period of time.

If a large number of Internet users set Facebook as their primary destination on their web browser, should Facebook be considered a portal?

Student answers will vary but should include reference to social networks broadening their offerings to become more portal-like. An example answer is: While Facebook can be a primary destination, the goal of Facebook is to keep users occupied and communicating with each other. One of the main goals of a portal is to provide avenues to third party content and other areas of the Internet. Although social networks are aiming to include portal-like features, to keep and grow audiences, the primary goals of a portal currently don't include social sharing.

What are the costs and risks for buyers at an auction, and how have auction sites sought to reduce these risks?

The costs for buyers when they participate in an auction are delayed consumption, monitoring costs, equipment costs, trust risks, and fulfillment costs. Delayed consumption occurs because auctions can go on for days and the product must then be shipped to the buyer. Buyers will typically want to pay less for an item for which they cannot receive immediate gratification. Buyers must also spend time monitoring the bidding, returning to the site frequently to see if they need to raise their bid. They must also purchase, or have already purchased, computer systems and Internet service, and learned how to operate these systems. Since buyers must pay for packing, shipping, and insurance, they will factor these fulfillment costs into their bid price. Consumers also face an increased risk of experiencing a loss because online auctions are a major source of Internet fraud. Auction sites have sought to reduce these trust risks through various methods including rating systems, watch lists, and proxy bidding. Rating systems are designed so that previous customers can evaluate sellers based upon their experience with them. These evaluations are posted on the site for other buyers to see. Watch lists allow buyers to monitor specific auctions as they proceed over several days and only pay close attention in the last few minutes of bidding. In proxy bidding systems, buyers can enter the maximum price they are willing to pay, and the auction software will automatically place incremental bids as their original bid is surpassed. In addition, one partial solution to high monitoring costs is, ironically, fixed pricing. At eBay, consumers can reduce the cost of monitoring and waiting for auctions to end by simply clicking on the "Buy It Now!" button and paying a premium price.

Describe the four major Internet auction types discussed in the chapter and how they function.

The four major types of Internet auctions are English, Dutch Internet, Name Your Own Price, and penny (bidding fee) auctions. In an English auction, a single item is up for sale from a single seller. Multiple buyers bid against one another within a specific time frame. The highest bidder wins the object, as long as the high bid has exceeded the reserve bid set by the seller, below which she refuses to sell. In Dutch Internet auctions, sellers with many identical items to sell list a minimum price or starting bid and buyers indicate both a bid price and a quantity desired. All winning bidders pay the lowest winning bid that clears the available quantity. Those with the highest bid are assured of receiving the quantity they desire, but only pay the amount of the lowest successful bid. This is referred to as a uniform pricing rule. In Name Your Own Price or reverse auctions, buyers specify the price they are willing to pay for an item and multiple sellers bid for their business. This is one example of discriminatory pricing in which winners may pay different amounts for the same product or service depending upon how much they have bid. In a penny (bidding fee auction), you typically must pay the penny auction site for bids ahead of time, typically 50 cents to $1 dollar, usually in packs costing $25-$50. Once you have purchased the bids, you can use them to bid on items listed by the penny auction site (unlike traditional auctions, items are owned by the site, not third parties). Items typically start at or near $0 and each bid raises the price by a fixed amount, usually just a penny. Auctions are timed, and when the time runs out, the last and highest bidder wins the item. Although the price of the item itself may not be that high, the successful bidder will typically have spent much more than that. Unlike a traditional auction, it costs money to bid and that money is gone even if the bidder does not win the auction. The bidder's cumulative cost of bidding must be added to the final price of a successful bid to determine the true cost of the item.

What are the benefits of Internet auctions to sellers, buyers, and market makers in an auction?

The general benefits of auctions to sellers and buyers are liquidity, price discovery, price transparency, market efficiency, lowered transaction costs, consumer aggregation, and network effects. Sellers and buyers are connected in a global marketplace where even difficult to price items can be competitively priced based on supply and demand. Everyone in the world can see the asking and bidding prices for items, although prices can vary from auction site to auction site. Buyers are offered access to a selection of goods that would be impossible to access physically. Buyers and sellers benefit by the reduced costs of selling and purchasing goods compared to the physical marketplace. A large number of consumers who are motivated to buy are amassed in one marketplace, which is a great convenience to the seller. Network effects are achieved because the larger an auction site becomes in both the numbers of users and products, and ultimately increasing the value of the marketplace.

What business models do social networks use?

The most popular general social networks, such as Facebook, have adopted an advertising model, and make money from ads displayed to users. There are number for profit and non-profit networks that stay afloat from user donations, member dues, premium services, or through sponsorship financing.

The value of portals to advertisers and content owners is primarily a function of the size of the audience the portal reaches, and the length of time visitors stay on the site. T/F

True