E-commerce Midterm

Major B2C models

1) portal 2) e-tailer 3) content provider 4) transaction broker 5) market creator 6) community provider

Which of the following online advertising formats attracted the least amount of spending in 2014? A) search B) classifieds C) rich media D) e-mail

D) e-mail

A company's strong linkages with its customers decrease switching costs.

False

Describe the major issues surrounding the decisions to build and/or host your own e-commerce Web site or to outsource some aspects of site development. Include the advantages and disadvantages of each decision.

If you decide to build an e-commerce Web site in-house, you will need a multiskilled staff including programmers, graphic artists, Web designers, and project managers. You will also have to select and purchase software and hardware. Building a site from scratch involves a great deal of risk, and the costs can be high because many of the required elements of an e-commerce site such as shopping carts, credit card authentication and processing, inventory management, and order processing are quite complex. Specialized firms have already perfected these tools and your staff will often have to learn to build all of these features themselves. The advantage is that you and your staff may be able to build a site that exactly suits the specific needs of your company. Another advantage is that you will be developing a skilled staff and consequently acquiring an invaluable supply of in-house knowledge that will enable your firm to change the site if necessary due to the rapidly changing business environment. If, on the other hand, you decide to purchase an expensive site-building package, you will have to evaluate different packages to decide which one will be best suited to your firm's needs. This can be a lengthy process and some packages may have to be modified. Additional vendors may have to be hired to execute the modifications, and this can cause the costs to mount rapidly. You can also purchase less expensive, prebuilt templates, but you will be limited to the functionality already built into the template. You can choose templates from merchant-solution vendors such as Amazon Stores, or use the templates from a site-building tool such as WordPress. Brick-and-mortar retailers can generally design a site themselves because they have a skilled staff in place and have made large investments in information technology, such as databases and telecommunications. They will usually use outside vendors to build the e-commerce applications for the site. Medium-size startups will often purchase a prepackaged site-building tool and make modifications as necessary. Small startups that only require a simple virtual storefront will usually use a template. The hosting decision is independent from the building decision, but the two are usually considered at the same time. Most businesses choose to outsource hosting because it is generally less expensive than it would be for them to purchase all of the hardware and the physical space, lease the communications lines, and hire the staff. Large hosting firms can build the telecommunication links and emergency power supplies and achieve economies of scale by establishing huge "server farms" in strategic locations around the country. If you host your own site you must also build the security and backup capabilities yourself. Another option is co-location in which a firm purchases or leases a Web server and has total control over its operation, but the server is located in the vendor's physical facility. In a co-location agreement, the vendor maintains the facility, the machinery, and the communication lines. Small ISPs may not be able to provide service that is as reliable as the large providers. The disadvantage of outsourcing hosting is that as your business grows, you may need more power or services than the hosting company can provide. This is the main reason that firms will decide to host their own sites, but the costs will almost always be higher than if they had chosen an outsourcing firm.

With ________, the contents of a Web page are stored as objects in a database, rather than being hard-coded in HTML.

dynamic page generation

Beginning the e-commerce development process with a mobile presence rather than a desktop Web site is referred to as ________.

mobile first design

A(n) ________ is a set of public statements to customers declaring how you will treat any personal information that you gather from them on your Web site.

privacy policy

Major B2B models

1) e-distributor 2) e-procurement 3) exchange 4) industry consortium 5) private industrial network

The ability to retain user attention and engagement is an important attribute for which revenue model? A) advertising revenue model B) subscription revenue model C) transaction fee revenue model D) sales revenue model

A) advertising revenue model

Which of the following measures the average length of stay at a Web site? A) loyalty B) stickiness C) recency D) retention rate

B) stickiness

If you want to determine the size of your Web site's audience, the metric you will use for the most accurate measurement will be: A) page views. B) unique visitors. C) hits. D) reach.

B) unique visitors.

A ________ specifically details how you plan to find customers and to sell your product. A) sales analysis B) business plan C) competitive strategy D) market strategy

D) market strategy

Which element of the business model addresses the question of why a customer should buy from the firm? A) revenue model B) competitive advantage C) market strategy D) value proposition

D) value proposition

Creating multiple variations of information goods and selling these to different market segments at different prices is called: A) bundling. B) customization. C) dynamic pricing. D) versioning.

D) versioning.

First movers are always more successful than follower firms.

False

In the United States today, single, white, young college-educated males with high income dominate the Internet in terms of percentage of Internet usage.

False

Discuss the implications of each of the unique features of e-commerce technology for the overall business environment.

The ubiquity of e-commerce creates new marketing channels and expands the size of the overall market. It also creates new efficiencies in industry operations and lowers the costs to firms of sales operations. By reducing the cost of information, the Internet provides each of the key players in the value chain for an industry with new opportunities to maximize their positions by lowering costs and/or raising prices. Manufacturers can develop direct relationships with their customers through their own Web sites and bypass the costs of distributors and retailers. Distributors can develop highly efficient inventory management systems to reduce their costs, and retailers can develop efficient customer relations management systems to strengthen their service to customers. Customers can use the Web to search for the best quality, prices, and delivery methods, thus reducing their transaction costs and the prices they pay for goods. The global reach of e-commerce lowers barriers to entry and expands the market at the same time. This lowers the costs of both industry and firm operations through production and sales efficiencies. When the operational efficiency of an entire industry increases, it helps the industry to compete with alternative industries and lowers prices and adds value to consumers. The universal standards of e-commerce lower barriers to entry while at the same time intensifying competition within an industry. Universal standards also reduce the costs for communications and computing, enabling firms to engage in broad-scope strategies. Communications efficiencies can also enable firms to outsource some primary and secondary activities to specialized, more efficient providers without affecting the consumer. The Internet can also be used to precisely coordinate the steps in the value chain for a firm, thus reducing overall costs. The richness of e-commerce reduces the strength of powerful distribution channels. It also allows firms to reduce their reliance on traditional sales forces and can enhance post-sales support services. The interactivity of e-commerce reduces the threat of substitutes through the enhanced use of customization. It also reduces industry and firm costs by enabling differentiation strategies. In their totality, the differentiation features of a product constitute the customer value proposition for a firm. The ability of the Web to personalize the shopping experience and to customize a product to the particular demands of each consumer are the most significant ways in which the interactivity of the Web can be used to differentiate products. The use of Internet technology to personalize and customize a customer's experience or product reduces threats of substitutions, raises barriers to entry, reduces value chain costs by lessening reliance on sales forces, and enables personalized marketing strategies. The information density on the Web weakens powerful sales channels, thus shifting bargaining power to the consumer, while also lowering the costs of obtaining, processing, and distributing information about suppliers and consumers. The use of social technologies shifts programming and editorial decisions to consumers; creates substitute entertainment products; and energizes a large group of new suppliers. E-commerce firms can also leverage the ubiquitous nature, the global reach, the interactivity, and the information density of the Web to differentiate products and services. Firms can make it possible for consumers to purchase a product from home, work, or on the road, anywhere in the world. They can create Web-based experiences with unique interactive content and store and process product information, warranties, and helpful hints to differentiate their product and their firm from the competition.

Cookies, when combined with Web beacons, can be used to create cross-site profiles.

True

A perfect market is one in which: A) there are no competitive advantages or asymmetries because all firms have equal access to all the factors to production. B) one firm develops an advantage based on a factor of production that other firms cannot purchase. C) one participant in the market has more resources than the others. D) competition is at a minimum, as each niche market within an industry is served by the company with the greatest competitive advantage.

A) there are no competitive advantages or asymmetries because all firms have equal access to all the factors to production.

Which of the following involves a company giving away a certain level of product or services without charge, but then charging a fee for premium levels of the product or service? A) advertising revenue model B) subscription revenue model C) freemium strategy D) transaction fee revenue model

C) freemium strategy

The process of slicing digital messages into parcels, sending them along different communication paths as they become available, and reassembling them at the destination point is called: A) routing. B) the Transmission Control Protocol. C) packet switching. D) the File Transfer Protocol.

C) packet switching.

Amazon Web Services is an example of cloud computing.

True

It is expected that by 2018, mobile commerce will account for almost 30% of all B2C e-commerce.

True

Online traffic is driven by offline brands and shopping.

True

Prior to the development of e-commerce, Web sites primarily delivered static HTML pages.

True

Social technologies change industry structure by shifting programming and editorial decisions to consumers and creating substitute entertainment products.

True

The Internet's universal standards can change industry structure by lowering barriers to entry and intensifying competition within an industry.

True

The annual maintenance cost for a Web site is likely to be as high as its development cost.

True

The major hubs in the United States where the Internet backbone intersects with regional and local networks are now commonly referred to as Internet Exchange Points (IXPs).

True

The practice of owning (or leasing) and managing your own Web servers but housing them in a vendor's physical facility is known as ________.

co-location

Client/server technology

Allows information stored on web servers to be shared with users on their own computers

________ verifies that the business objectives of the system as originally conceived are in fact working. A) System testing B) Acceptance testing C) Unit testing D) Implementation testing

B) Acceptance testing

A ________ is a repository of customer information that records all of the contacts that a customer has with a firm and generates a customer profile available to everyone in the firm with a need to know the customer. A) customer service chat system B) CRM system C) data warehouse D) transactive content system

B) CRM system

Which of the following companies utilizes a transaction fee revenue model? A) Yahoo B) E*Trade C) Twitter D) Sears

B) E*Trade

Packet switching

Slices and routes digital messages into packets and sends them to their destinations

Advantages and disadvantages of building an in-house site

Advantages -change and adapt the site with market demands -build a site that does exactly what the company needs Disadvantages -higher costs -greater risks of failure -more time consuming process -longer learning curve for the staff

5 major types of e-commerce

1) B2C 2) B2B 3) C2C 4) Social 5) Mobile 6) Local

3 Phases of the history of the internet

1) Innovation Phase (1961-1974) -purpose was to link researchers 2) Institutionalization Phase (1975-1995) -government provided funds to expand the fundamental blocks into a complex military communications system 3) Commercialization Phase (1995-Present) -government encourage corporations to take responsibility for expanding the network and commercializing it

Current structure of the internet

1) backbone - high-bandwith fiber optic cables 2) IXPs - use switching to connect regional hubs with cables 3) ISPs - last mile of service to homes 4) Governing bodies

Basic business and system functionalities an e-commerce site should include

1) digital catalog 2) product database 3) customer on site tracking 4) sales database 5) ad server 6) site tracking and reporting system 7) inventory management system

Around ________ % of households in the United States have broadband access to the Internet. A) 45 B) 55 C) 75 D) 85

C) 75

Which of the following is the core communications protocol for the Internet? A) Telnet B) FTP C) TCP/IP D) TLS

C) TCP/IP

Which of the following measures the ratio of items purchased to product views? A) conversion rate B) cart conversion rate C) browse-to-buy ratio D) view-to-cart ratio

C) browse-to-buy ratio

Organizations that typically provide an array of services to start-up companies along with a small amount of funding are referred to as: A) angel investors. B) crowdfunders. C) incubators. D) venture capital investors.

C) incubators.

Which of the following helps you understand the marketing effectiveness of your e-commerce site? A) shopping cart B) product database C) site tracking and reporting system D) inventory management system

C) site tracking and reporting system

TCP/IP

Core communications protocol for the internet

Define and describe the functionality of customer relationship management (CRM) systems.

Customer relationship management systems -repositories for customer information -records all of the contacts a customer has with a firm including its Web site -generate a profile of each customer that is available to everyone in the firm who requests the data -contain analytical software that will make this data valuable to the firm. -part of the evolution towards customer-centric and segmented market-based businesses, and away from this product-based model -use database technology with capabilities for assessing the needs of individual customers and differentiating products to meet those needs -customer profiles can include a map of the customer's relationship with the firm, the products he or she has bought and the frequency of purchases, the demographic and psychographic profile for each customer, profitability measures, a complete contact history, and marketing and sales information containing marketing campaigns that the customer received and the customer's responses to them. -can be used to sell additional products and services, develop new products, increase product utilization, reduce marketing costs, identify and retain profitable customers, optimize service delivery costs, retain high lifetime value customers, enable personal communications, improve customer loyalty, and increase product profitability. - in the past - generally did not maintain a single storehouse of customer information -customer data was organized along product lines with each product line maintaining a separate customer list.

Encouraging users to click a Like button is an example of which step in the social marketing process? A) fan acquisition B) brand strength C) community D) amplification

D) amplification

An asymmetry exists whenever all participants in a market have equivalent resources.

False

DNS is the protocol that provides the Internet addressing scheme.

False

When developing an e-commerce presence, it is important to understand that the technology must drive business decisions, not the reverse.

False

Name and describe the five steps in the social marketing process.

The five steps in the social marketing process: 1) fan acquisition -using ads to attract people to the page 2) engagement -encourage users to interact with the page/content 3) amplification -encourage users to use social media features to share the brand 4) community -create a stable group of fans 5) brand strength. -strengthening and generating more sales

A value proposition defines how a company's product or service fulfills the needs of a customer.

True

Which system functionality must your Web site have in order to be able to personalize or customize a product for a client? A) an ad server B) a site tracking and reporting system C) an inventory management system D) customer on-site tracking

D) customer on-site tracking

Dynamic page generation enables the use of a content management system.

True

E-commerce has increased price competition in nearly all markets.

True

Evidence suggests that real-time customer chat lowers shopping cart abandonment rates.

True

Firms that fail to produce returns greater than alternative investments typically go out of business.

True

HTTP is the Internet protocol used to transfer Web pages.

True

Discuss the revolution in Internet marketing technologies. What are the four main broad impacts the Internet has had on marketing?

1) scope of communication -the Internet as a communications medium has broadened the scope of marketing. Marketing messages can now easily reach a greater number of people 2) richness of communications -the Internet has increased the richness of marketing communications by combining text, video, and audio content into rich messages. Some even think that the Web is a richer medium than television or video because of the complexity of messages and the huge amount of, and wide ranging, content that is available 3) expanded information for marketers about consumers -the Internet has greatly expanded the information intensity of the marketplace by providing marketers with fine-grained, detailed, real-time information about consumers as they transact in the marketplace 4) consumer availability -the always-on, always-attached, environment created by mobile devices results in consumers being much more available to receive marketing messages. One result is an extraordinary expansion in marketing opportunities for firms.

A firm's ________ describes how a firm will produce a superior return on invested capital. A) value proposition B) revenue model C) market strategy D) competitive advantage

B) revenue model

Advantages of dynamic page generation include all of the following except: A) lowered menu costs. B) market segmentation. C) nearly cost-free price discrimination. D) client-side execution of programming.

D) client-side execution of programming.

Define organizational development and describe its importance in relation to the implementation of a business plan and strategy.

Organizational development - a plan that describes how the company will organize the work that needs to be accomplished in the business plan or strategy. Work is divided into functional departments Jobs within these functional areas are defined, and then recruitment begins for specific job titles and responsibilities. Typically, in the beginning, generalists who can perform multiple tasks are hired. As the company grows, recruiting becomes more specialized. For instance, at the outset, a business may have one marketing manager. But after two or three years of steady growth, that one marketing position may be broken down into seven separate jobs done by seven individuals. All firms — new ones in particular — need an organization to efficiently implement their business plans and strategies. Many e-commerce firms and many traditional firms that attempt an e-commerce strategy have failed because they lacked the organizational structures and supportive cultural values required to support new forms of commerce.

Interactivity that enables product customization alters industry structure by reducing the threat of substitutes.

True

What is Web analytics software and what is it used for?

- software package that collects, stores, analyzes, and graphically presents data on each of the stages in the conversion of shopper to customer process on e-commerce sites. -help business managers optimize the return on investment on their Web sites and social marketing efforts -build a detailed understanding of how consumers behave when visiting their Web sites. -help analyze where customers come from, what they do on the site, and which content is most appealing, as well as how users shop, add to their shopping cart, and whether they abandon their shopping cart -allows managers to measure the impact of specific marketing campaigns.

Briefly describe the development of the World Wide Web including the key players.

-Invented between 1989 - 1991 by Dr. Tim Berners-Lee at CERN Laboratories -developed initial versions of 4 essential web components: HTML, HTTP, a server, and browser -text based -Marc Andreessen at NCSA developed a browser with a graphical user interface -1994 - Andreessen and Jim Clark found Netscape - first commercial browser -1995 - Microsoft releases Internet Explorer -> internet starts to take off

Explain how the Internet and the Web make e-commerce possible. Briefly discuss at least six features or services that support e-commerce.

-expansion of digital services to millions of amateur computer users -is a unique environment to establish a commercial marketplace -web features support e-commerce 1-email 2-search engines 3-Instant Messaging 4-chat 5-streaming 6-cookies E-mail, for example, can be used as a very effective marketing tool. E-commerce sites can buy e-mail lists from various sources and collate them with lists of their current customers to create a targeted advertising message that can be quickly and economically delivered and will produce a creditable response. Search engines have also become a crucial tool on e-commerce sites, providing a method for customers to quickly locate the product category or a specific product they are looking for. Instant messaging has been added to some e-commerce Web sites as a method of accessing customer support personnel. Streaming media enables live Web video, music, video, and other large-bandwidth files to be sent to users in a variety of ways that enable the user to play back the files. Web advertisers increasingly use video to attract viewers. Streaming audio and video segments used in Web ads and news stories are perhaps the most frequently used streaming services. Cookies are an important tool used by marketers to collect and store information about a user. These small text files are sent to the user's computer so that information from the site will load more quickly the next time they visit. More importantly from the e-tailer's perspective, cookies can retain information about the customer such as the number of pages visited, products examined, and other detailed information about a customer's behavior. Cookies enable sites to recognize returning visitors and target specific customers with special offers and marketing messages.

Discuss some of the unique features that must be taken into account when designing a mobile Web presence.

-mobile hardware is smaller -there are more resource constraints on data storage and processing power -The mobile platform is also constrained by slower connection speeds than provided by traditional desktop computers. As a result, file sizes should be kept smaller, and the number of files sent to the user reduced. -Mobile displays are much smaller and require simplification, and some screens are not as easily visible in sunlight. -Touch screen technology also introduces new interaction routines that are different from the traditional mouse and keyboard. -The mobile platform is not as easy to use as a data entry tool, and therefore choice boxes and lists should be used more frequently so that the user can easily scroll and touch-select options, rather than type them in. -You will also want to determine whether to create a mobile-friendly version of your e-commerce site or implement responsive Web design or adaptive Web design, or create an entirely new mobile app. You can choose to build a mobile Web app, a native app, or a hybrid app. 1) Building a mobile Web app that uses the mobile device's browser requires more effort and cost than developing a mobile Web site, suffers from the same limitations as any browser-based application, but does offer some advantages such as better graphics, more interactivity, and faster local calculations. 2) Building a native app, which is programmed for specific mobile operating systems, requires much more programming; however, it will allow you much greater creative rein in making a unique customer experience. 3) You can also choose to create a hybrid, cross-platform mobile app with various low-cost or open source app development toolkits.

What has changed in online marketing since 2007?

-rapid social network growth -growth of use of smartphones allow for local marketing -marketing is more focused on interaction between firms and clients instead of one-way impressions -lower control of brand messages because of social media -growth of mobile marketing

Internet and web features that support e-commerce

1) email 2) instant messaging 3) search engines 4) online forums 5) streaming media 6) cookies

Describe the four stages involved in business model disruption.

1) introduction of new product 2) improvement of product 3) products become better or superior 4) incumbents lose market share 1) disruptors, often funded by new sources of finance, introduce new products that are less expensive, less capable, and of poorer quality. These early products nevertheless find a niche in a market that incumbents do not serve or are unaware of. 2) disruptors improve their products at a rapid pace, taking advantage of newer technologies at a faster pace than incumbents, expanding their niche market, and eventually attracting a larger customer base from the incumbents' market. 3) the new products and business model become good enough, and even superior to products offered by incumbents. 4) incumbent companies lose market share, and either go out of business or are consolidated into other more successful firms that serve a much more limited customer base. Some incumbents survive by finding new customers for their existing product, adopting some of the newer products and business models in separate divisions of their firms, or moving into other often nearby markets.

8 unique features of e-commerce

1) ubiquity - always available 2) global reach 3) universal standards 4) richness 5) interactivity 6) information density 7) personalization/customization 8) social technology

8 key elements of a successful e-commerce business model

1) value proposition 2) revenue model 3) market opportunity 4) competitive environment 5) competitive advantage 6) market strategy 7) organizational development 8) management team

Which of the following is not one of the four main methods advertisers use to behaviorally target ads? A) Nielsen ratings B) data collected from social networks C) integration of offline data D) clickstream data

A) Nielsen ratings

Which of the following is the most important tool in establishing a relationship with the customer? A) company Web site B) company CRM system C) Facebook D) search engine display ads

A) company Web site

Which of the following is an example of the subscription revenue model? A) eHarmony B) eBay C) E*Trade D) Twitter

A) eHarmony

Acquisition rate is a measure of the: A) percentage of visitors who indicate an interest in a site's products by registering or visiting a product's pages. B) percentage of visitors who become customers. C) percentage of existing customers who continue to buy on a regular basis. D) percentage of shoppers who do not return within a year after their initial purchase.

A) percentage of visitors who indicate an interest in a site's products by registering or visiting a product's pages.

What is the primary revenue model for an e-distributor? A) sales B) transaction fee C) advertising D) subscription

A) sales

Which of the following statements is not true? A) About 50% of Facebook's ad revenue in 2014 is expected to come from its mobile ad platform. B) The only way to access Facebook from a mobile device is to use a mobile app. C) Mobile ads are displayed in users' News Feeds. D) Facebook's mobile ad revenues are its fastest growing revenue stream.

B) The only way to access Facebook from a mobile device is to use a mobile app.

________ and ________ are typically the most easily identifiable aspects of a company's business model. A) Market strategy; market opportunity B) Value proposition; revenue model C) Value proposition; competitive environment D) Revenue model; market strategy

B) Value proposition; revenue model

The primary way a Web site is able to personalize the content presented to a visitor is through the use of: A) privacy policies. B) cookies. C) accessibility rules. D) site management tools.

B) cookies.

Impressions are a measure of the: A) number of times an ad is clicked. B) number of times an ad is served. C) number of http requests. D) number of pages viewed.

B) number of times an ad is served.

What are Web transaction logs, and how do they work in combination with registration forms, shopping cart databases, and tracking files to help firms understand how customers behave online?

Transaction logs -built into Web server software -record user activity at a Web site -more useful when it is combined with registration form data and shopping cart data -Log file analysis tools pull information from these files -can contain tens to hundreds of entries for each user. -supplemented by the use of cookies that are placed on a user's hard drive when he or she visits a site registration forms -gather personal data such as the name, address, phone number, zip code, e-mail address, and other optional information on the tastes and interests of the consumer. The shopping cart database -captures all the item selection, purchase, and payment data. -The data from transaction logs, registration forms, and the shopping cart database can also be combined with other information that users submit on product forms, contribute in chat rooms, or submit via e-mail messages to a firm to produce a veritable treasure trove of information for both individual merchant sites and for the industry as a whole. Cookies -allow a Web site to store data on a user's machine that can be retrieved later -provide Web marketers with a very quick means to identify each customer and to understand his or her prior behavior at the site -can be used to determine how many people are visiting a site, how many are repeat visitors, and how often they have visited -make shopping cart and quick checkout possible by allowing a site to keep track of a user as he or she adds to the shopping cart -can be combined with Web bugs to create cross-site profiles Web beacons (sometimes called Web bugs) -graphic files that are embedded in e-mails and on Web sites. -When a user opens an HTML format e-mail with an embedded Web beacon, a request is sent to the server for the graphic data -used to automatically transmit information about the user and the page being viewed to a monitoring server in order to collect personal browsing behavior and other personal information.

What technologies and techniques are employed by location-based mobile marketing and why is local mobile attractive to marketers?

Two techniques 1) geo-aware - identify user's location and then target with recommendations 2) proximity marketing - identify a perimeter and target users within it -more attractive because their is a higher likelihood of buying when targeted this way -3/4 mobile users are more likely to take action