CIS Chapter 10
3: Challenging AACSB: Application of Knowledge; Written and Oral Communication LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 35) What is dynamic pricing and how is it used in e-commerce?
In dynamic pricing, the price of a product varies depending on the demand characteristics of the customer or the supply situation of the seller. For instance, online retailers from Amazon to Walmart change prices on many products based on time of day, demand for the product, and users' prior visits to their sites. Using big data analytics, some online firms can adjust prices at the individual level based on behavioral targeting parameters such as whether the consumer is a price haggler (who will receive a lower price offer) versus a person who accepts offered prices and does not search for lower prices. Prices can also vary by zip code, based on economic characteristics of the purchaser's geographic location. Uber, along with other ride services, uses surge pricing to adjust prices of a ride based on demand.
3: Challenging AACSB: Application of Knowledge; Written and Oral Communication LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 33) Describe the use of personalization and customization in e-commerce. What business value do these techniques have?
In personalization, merchants can target their marketing messages to specific individuals by adjusting the message to a person's name, interests, and past purchases. For example, Amazon.com greets each logged in user with their user name. With customization, merchants can change the delivered product or service based on a user's preferences or prior behavior. The Wall Street Journal Online allows you to select the type of news stories you want to see first and gives you the opportunity to be alerted when certain events happen. The ability of Internet technology to track customer behavior at websites, along with records of purchases and other behavior, allows merchants to create a detailed profile of a customer. These profiles can be used to create unique personalized web pages that display content or ads for products or services of special interest to each user, improving the customer's experience and creating additional value. The business value of personalization is reduced marketing costs, as you spend only the money to target customers that are more likely to be receptive and are more profitable, and improved sales results from increased customer response to personalized sites that better serve their own purposes and shopping needs. Personalization can achieve some of the benefits of using individual salespeople for dramatically lower costs.
1: Easy AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 57) List and describe at least five different Internet business models. Which of these models do you think would be the most risky for a startup business today? Support your answer.
Internet business models include: e-tailer, transaction broker, market creator, content provider, community provider, portal and service. The choice of riskiest model will depend on the individual student. A sample answer is: Today the riskiest model would be a content-provider, because most, if not all, of the major offline entertainment and content producers such as television networks and newspapers are online. They would be your competitors, and already have the means for content creation and distribution in place. All of the other business models do not have the risk of creating brand new content.
1: Easy AACSB: Application of Knowledge LO: 10.3: How has e-commerce transformed marketing? 67) ________ attempts to leverage the fact that there is always some demand, however small, for a product. A) Long tail marketing B) Behavioral targeting C) Crowdsourcing D) Predictive marketing E) Profiling
A
1: Easy AACSB: Analytical Thinking LO: 10.5: What is the role of m-commerce in business and what are the most important m-commerce applications? 92) Which of the following is the largest mobile advertising market? A) Google B) Yahoo C) Facebook D) Microsoft E) Twitter
A
1: Easy AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 42) Which of the following Internet business models involves creating an online digital environment that enables people with like interests to share information? A) Community provider B) Service provider C) Market creator D) Transaction broker E) E-tailer
A
2: Moderate AACSB: Analytical Thinking LO: 10.2: What are the principal e-commerce business and revenue models? 37) Craigslist is an example of: A) C2C e-commerce. B) B2B e-commerce. C) B2C e-commerce. D) M-commerce. E) B2G e-commerce.
A
2: Moderate AACSB: Analytical Thinking LO: 10.2: What are the principal e-commerce business and revenue models? 46) Which of the following best illustrates the transaction fee revenue model? A) eBay receives a small fee from a seller if a seller is successful in selling an item. B) Yelp receives a fee after steering a customer to a participating website where he or she makes a purchase. C) Photobucket provides basic services for free, but charges a premium for advanced services. D) Apple accepts micropayments for single music track downloads. E) Pandora provides free service with limited play and advertising.
A
2: Moderate AACSB: Analytical Thinking LO: 10.2: What are the principal e-commerce business and revenue models? 47) In which of the following revenue models does a website charge a fee for access to some or all of its offerings on a continual, regular basis? A) Subscription B) Advertising C) Transaction fee D) Sales E) Affiliate
A
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 10) Which of the following dimensions of e-commerce technology has the potential to raise the quality of information? A) Information density B) Richness C) Customization D) Interactivity E) Ubiquity
A
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 17) Reducing the business process layers in a distribution channel is called: A) disintermediation. B) BPR. C) market segmentation. D) network effects. E) dynamic pricing.
A
2: Moderate AACSB: Application of Knowledge LO: 10.5: What is the role of m-commerce in business and what are the most important m-commerce applications? 93) Geoadvertising sends ads to users based on their: A) GPS locations. B) user addresses. C) shopping preferences. D) website behaviors. E) social media presence.
A
3: Challenging AACSB: Analytical Thinking LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 20) Compared to traditional goods, digital goods have: A) greater pricing flexibility. B) lower marketing costs. C) higher production costs. D) higher inventory costs. E) higher marginal costs.
A
1: Easy AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 14) Information ________ exists when one party in a transaction has more information that is important for the transaction than the other party. A) transparency B) asymmetry C) complexity D) discrimination E) optimization
B
2: Moderate AACSB: Application of Knowledge; Written and Oral Communication LO: 10.2: What are the principal e-commerce business and revenue models? 59) What methods could a portal use to generate revenue? Which do you think might be most successful, and why?
Advertising, subscriptions, selling collected marketing information, and directing buyers to sellers could all generate revenue. Student evaluations will vary. A sample answer is: I would think the most successful method would be through collecting marketing information, because as a portal that links to large amounts of external information and attracts repeat customers, the portal would have the opportunity to gather a lot of information about each user.
1: Easy AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 39) Which of the following types of e-commerce involves consumers selling goods and services to other consumers? A) B2B e-commerce B) C2C e-commerce C) M-commerce D) B2C e-commerce E) B2G e-commerce
B
1: Easy AACSB: Application of Knowledge; Written and Oral Communication LO: 10.5: What is the role of m-commerce in business and what are the most important m-commerce applications? 98) Which of the following is a milestone for the Phase 1: Planning phase of developing an e-commerce presence? A) Website plan B) Web mission statement C) Functional website D) Social media plan E) Mobile media plan
B
2: Moderate AACSB: Analytical Thinking LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 3) A marketplace extended beyond traditional boundaries and removed from a temporal and geographic location is called a(n): A) exchange. B) marketspace. C) online marketplace. D) e-hub. E) private industrial network.
B
2: Moderate AACSB: Analytical Thinking LO: 10.2: What are the principal e-commerce business and revenue models? 41) Transaction brokers: A) generate revenue from advertising or from directing buyers to sellers. B) save users money and time by processing online sales transactions. C) provide a digital environment where buyers and sellers can establish prices for products. D) sell physical products directly to consumers or individual businesses. E) create revenue by providing digital content.
B
2: Moderate AACSB: Analytical Thinking LO: 10.2: What are the principal e-commerce business and revenue models? 45) Which of the following best illustrates the affiliate revenue model? A) eBay receives a small fee from a seller if a seller is successful in selling an item. B) Yelp receives a fee after steering a customer to a participating website where he or she makes a purchase. C) Photobucket provides basic services for free, but charges a premium for advanced services. D) Apple accepts micropayments for single music track downloads. E) Pandora provides free service with limited play and advertising.
B
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 11) The effort required to locate a suitable product is called: A) price discrimination. B) search costs. C) menu costs. D) shopping costs. E) market entry costs.
B
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 7) Which of the following is not one of the unique features of e-commerce technology? A) Information density B) Transparency C) Richness D) Social technology E) Universal standards
B
2: Moderate AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 43) Market creators: A) save users money and time by processing online sales transactions. B) provide a digital environment where buyers and sellers can establish prices for products. C) create revenue by providing digital content over the web. D) sell physical products directly to consumers or individual businesses. E) provide an online meeting place where people with similar interests can communicate.
B
2: Moderate AACSB: Application of Knowledge LO: 10.3: How has e-commerce transformed marketing? 63) Exposing an individual to ads that are chosen and based on the online behavior of the individual is referred to as: A) clickstream advertising. B) behavioral targeting. C) online profiling. D) long tail marketing. E) prediction marketing.
B
2: Moderate AACSB: Application of Knowledge; Written and Oral Communication LO: 10.3: How has e-commerce transformed marketing? 75) Which of the following statements about B2B e-commerce is not true? A) Eighty percent of online B2B e-commerce is still based on EDI. B) B2B e-commerce represents approximately 10% of the overall B2B marketplace. C) B2B e-commerce only includes commercial transactions between firms. D) B2B e-commerce revenues are expected to grow to over $8 trillion by 2019. E) B2B e-commerce accounts for more revenue than B2C e-commerce.
B
3: Challenging AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 5) Disintermediation has which of the following effects? A) It reduces the ties between consumers and businesses. B) It lowers costs to the consumer. C) It increases costs of manufacturing. D) It reduces the cost of advertising. E) It has no impact.
B
3: Challenging AACSB: Application of Knowledge LO: 10.4: How has e-commerce affected business-to-business transactions? 76) Which of the following statements about EDI is not true? A) Each major industry in the United States has EDI standards. B) Today, EDI is only used for document automation. C) Many organizations still use private networks for EDI. D) EDI systems are increasingly web-enabled. E) About 80 percent of online B2B e-commerce is still based on EDI.
B
1: Easy AACSB: Application of Knowledge; Written and Oral Communication LO: 10.2: What are the principal e-commerce business and revenue models? 58) List and describe the three main categories of electronic commerce. Which do you think is ultimately the most valuable to the individual consumer? Support your answer.
Business-to-consumer, business-to-business, and consumer-to-consumer. All three are valuable to the consumer, but in the long run, business-to-business may be the most valuable to the individual consumer because it will reduce prices and increase both goods and services. (Other opinions, of course, are supportable.)
1) When did e-commerce begin? A) 1965 B) 1983 C) 1995 D) 1999 E) 2000
C
1: Easy AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 15) Which feature of Internet technology has had the most effect in the Internet's rapid spread across the globe? A) Ubiquity B) Global reach C) Universal standards D) Social technology E) Personalization
C
1: Easy AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 40) Which of the following is an example of the content provider Internet business model? A) ETrade B) eBay C) iTunes D) Facebook E) Dropbox
C
1: Easy AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 51) Netflix uses which of the following revenue models? A) Advertising B) Transaction fee C) Subscription D) Freemium E) Affiliate
C
1: Easy AACSB: Application of Knowledge LO: 10.6: What issues must be addressed when building an e-commerce presence? 99) Which of the following is not one of the four main types of e-commerce presence? A) Social media B) Offline media C) Blog D) Email E) website
C
2: Moderate AACSB: Analytical Thinking LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 16) Varying a product's price according to the supply situation of the seller is called ________ pricing. A) menu B) flexible C) dynamic D) asymmetric E) transparent
C
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 12) Information density refers to the: A) richness-complexity and content-of a message. B) total amount and quantity of information delivered to consumers by merchants. C) total amount and quantity of information available to all market participants. D) amount of information available to reduce price transparency. E) ease with which consumers can find out the variety of prices in a market.
C
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 9) Which of the following dimensions of e-commerce technology involves the integration of video, audio, and text marketing messages into a single marketing message and consumer experience? A) Ubiquity B) Personalization/customization C) Richness D) Interactivity E) Information density
C
2: Moderate AACSB: Application of Knowledge LO: 10.3: How has e-commerce transformed marketing? 64) Which of the following best describes the digital social graph? A) A person's direct and indirect relationships B) All of a person's closest digital relationships C) A mapping of all online social relationships D) All of the online and offline relationships a person has E) A map of your 10 closest friends
C
2: Moderate AACSB: Application of Knowledge LO: 10.3: How has e-commerce transformed marketing? 65) Facebook's Like button is an example of which of the following? A) Social sign-on B) Collaborative shopping C) Network notification D) Social search E) Crowdsourcing
C
3: Challenging AACSB: Analytical Thinking LO: 10.4: How has e-commerce affected business-to-business transactions? 81) Which of the following statements about exchanges is not true? A) Exchanges are independently owned third-party Net marketplaces. B) Some exchanges provide vertical markets. C) Exchanges are the most successful form of B2B commerce. D) Some exchanges enable a spot market. E) Go2Paper is an example of an exchange.
C
3: Challenging AACSB: Application of Knowledge LO: 10.4: How has e-commerce affected business-to-business transactions? 77) The process of sourcing goods and materials, negotiating with suppliers, paying for goods, and making delivery arrangements is called: A) social media. B) SCM. C) procurement. D) sourcing. E) EDI.
C
3: Challenging AACSB: Application of Knowledge LO: 10.5: What is the role of m-commerce in business and what are the most important m-commerce applications? 91) Which of the following is the fastest growing form of location-based service in 2015? A) Geosocial services B) Geoinformation services C) On-demand economy firms D) Geomapping E) Geoadvertising
C
1: Easy AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 2) In 2015, what percentage of mobile phone users accessed the Internet by using their phones? A) About 10 percent B) About 33 percent C) About 50 percent D) About 75 percent E) About 90 percent
D
1: Easy AACSB: Application of Knowledge LO: 10.3: How has e-commerce transformed marketing? 66) Which of the following is the fastest growing format of online advertising? A) Search engine ads B) Video ads C) Rich media ads D) Classified ads E) Email
D
2: Moderate AACSB: Analytical Thinking LO: 10.2: What are the principal e-commerce business and revenue models? 38) Which of the following types of e-commerce involves selling products and services directly to individual consumers via the Internet? A) B2B e-commerce B) G2B e-commerce C) M-commerce D) B2C e-commerce E) B2G e-commerce
D
2: Moderate AACSB: Analytical Thinking LO: 10.2: What are the principal e-commerce business and revenue models? 49) Content providers use ________ systems to process large amounts of very small monetary transactions cost-effectively. A) subscription B) mobile payment C) transaction fee D) micropayment E) freemium
D
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 18) All of the following are increased in traditional markets compared to digital markets except: A) search costs. B) menu costs. C) switching costs. D) network effects. E) information asymmetry.
D
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 8) Which of the following dimensions of e-commerce technology involves engaging consumers in a dialog that dynamically adjusts the experience to the individual? A) Ubiquity B) Personalization/customization C) Richness D) Interactivity E) Information density
D
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 13) Selling the same goods to different targeted groups at different prices is called: A) cost customization. B) cost optimization. C) price gouging. D) price discrimination. E) price optimization.
D
2: Moderate AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 44) Which of the following best illustrates the sales revenue model? A) eBay receives a small fee from a seller if a seller is successful in selling an item. B) Yelp receives a fee after steering a customer to a participating website where he or she makes a purchase. C) Photobucket provides basic services for free, but charges a premium for advanced services. D) Apple accepts micropayments for single music track downloads. E) Pandora provides free service with limited play and advertising.
D
2: Moderate AACSB: Application of Knowledge LO: 10.4: How has e-commerce affected business-to-business transactions? 78) A secure website that links a large firm to its suppliers and other key business partners is called a(n): A) e-hub. B) marketspace. C) exchange. D) private industrial network. E) Net marketplace.
D
2: Moderate AACSB: Application of Knowledge LO: 10.5: What is the role of m-commerce in business and what are the most important m-commerce applications? 94) What percent of online retailers now have m-commerce websites? A) 15 percent B) 25 percent C) 55 percent D) 75 percent E) 85 percent
D
3: Challenging AACSB: Analytical Thinking LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 6) Which of the following is the best description of ubiquity as it relates to e-commerce technology? A) E-commerce technology employs the same set of standards across the globe. B) E-commerce technology permits commercial transactions to cross cultural and national boundaries. C) E-commerce technology allows personalized messages to be delivered to individuals as well as to groups. D) E-commerce technology is available everywhere and anytime. E) E-commerce technology reduces information costs.
D
3: Challenging AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 19) Compared to digital markets, traditional markets have: A) lower search costs. B) stronger network effects. C) higher delayed gratification effects. D) higher transaction costs. E) greater transparency.
D
3: Challenging AACSB: Application of Knowledge; Written and Oral Communication LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 36) Which of the following Internet business models does Amazon use? A) Content provider B) Portal C) Market creator D) E-tailer E) Transaction broker
D
3: Challenging AACSB: Application of Knowledge; Written and Oral Communication LO: 10.2: What are the principal e-commerce business and revenue models? 62) Netflix's public announcement of a reward for a technology solution to its movie recommendation system is an example of: A) prediction markets. B) behavioral targeting. C) long-tail marketing. D) crowdsourcing. E) social sign-on.
D
3: Challenging AACSB: Application of Knowledge; Written and Oral Communication LO: 10.4: How has e-commerce affected business-to-business transactions? 90) Which of the following statements about m-commerce is not true? A) In 2015, m-commerce represented about 25 percent of all e-commerce. B) M-commerce is the fastest growing form of e-commerce. C) In 2015, in-app sales to mobile devices account for about $9 billion in m-commerce revenues. D) In 2015, the main areas of growth are in mass market retailing and location-based services. E) In 2015, m-commerce generated over $75 billion in revenue.
D
2: Moderate AACSB: Application of Knowledge; Written and Oral Communication LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 34) What are digital goods and how does the Internet impact the market for digital goods?
Digital goods are goods that can be delivered over a digital network. Music tracks, video, Hollywood movies, software, newspapers, magazines, and books can all be expressed, stored, delivered, and sold as purely digital products. For the most part, digital goods are intellectual property, which is defined as "works of the mind." Intellectual property is protected from misappropriation by copyright, patent, and trade secret laws. Today, all these products are delivered as digital streams or downloads while their physical counterparts decline in sales. The impact of the Internet on the market for digital goods is nothing short of revolutionary. Businesses dependent on physical products for sales-such as bookstores, music stores, book publishers, music labels, and film studios-face the possibility of declining sales and even destruction of their businesses. In general, for digital goods, the marginal cost of producing another unit is about zero (it costs next to nothing to make multiple copies of a digital file such as a music file). However, the cost of producing the original first unit is relatively high-in fact, it is nearly the total cost of the product because there are few other costs of inventory and distribution. Costs of delivery over the Internet are very low, inventory costs are low, marketing costs often remain the same, and pricing can be highly variable. On the Internet, the merchant can change prices as often as desired because of low menu costs.
1: Easy AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 4) All of the following are examples of "on demand" companies except: A) Uber. B) Airbnb. C) Lyft. D) Instacart. E) Yummly.
E
1: Easy AACSB: Application of Knowledge LO: 10.4: How has e-commerce affected business-to-business transactions? 83) Procurement involves all of the following except: A) negotiating with suppliers. B) paying for goods. C) making delivery arrangements. D) sourcing. E) production scheduling.
E
2: Moderate AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 48) Which of the following best illustrates the advertising revenue model? A) eBay receives a small fee from a seller if a seller is successful in selling an item. B) Yelp receives a fee after steering a customer to a participating website where he or she makes a purchase. C) Photobucket provides basic services for free, but charges a premium for advanced services. D) Apple accepts micropayments for single music track downloads. E) Pandora provides free service with limited play and advertising.
E
2: Moderate AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 50) Which of the following companies uses the market creator business model? A) Expedia B) ETrade C) Facebook D) Yahoo E) eBay
E
2: Moderate AACSB: Information Technology LO: 10.4: How has e-commerce affected business-to-business transactions? 79) Net marketplaces typically provide all of the following except: A) catalogs. B) automated purchasing. C) processing and fulfillment. D) sourcing. E) shared product design and development.
E
3: Challenging AACSB: Analytical Thinking LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 21) Compared to traditional goods, digital goods have: A) lower costs of production. B) higher marginal costs per unit. C) equivalent copying costs. D) similar inventory costs. E) lower distribution costs.
E
3: Challenging AACSB: Analytical Thinking LO: 10.4: How has e-commerce affected business-to-business transactions? 80) Which of the following statements about Net marketplaces is not true? A) Some Net marketplaces sell direct goods. B) Some Net marketplaces serve vertical markets. C) Some Net marketplaces sell indirect good. D) Some Net marketplaces support contractual purchases based on long-term relationships. E) Some Net marketplaces are owned by a single firm and used to link solely to the firm's suppliers and key business partners.
E
3: Challenging AACSB: Application of Knowledge LO: 10.4: How has e-commerce affected business-to-business transactions? 82) Which of the following is an example of a direct good in the automobile industry? A) Computer equipment B) Paper C) Office furniture D) Roofing shingles E) Sheet steel
E
3: Challenging AACSB: Application of Knowledge LO: 10.5: What is the role of m-commerce in business and what are the most important m-commerce applications? 95) The Foursquare website is an example of which of the following? A) Social graph B) Collaborative shopping C) Net marketplace D) Crowdsourcing application E) Geosocial services
E
1: Easy AACSB: Analytical Thinking LO: 10.2: What are the principal e-commerce business and revenue models? 53) Blue Nile is an example of the content provider business model.
FALSE
1: Easy AACSB: Analytical Thinking LO: 10.2: What are the principal e-commerce business and revenue models? 54) Podcasting allows subscribers to listen to live, streaming radio and other audio content.
FALSE
1: Easy AACSB: Analytical Thinking LO: 10.3: How has e-commerce transformed marketing? 70) Behavioral targeting occurs at two levels: individual websites and through ISPs.
FALSE
1: Easy AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 23) Retail consumer e-commerce is growing at single-digit rates.
FALSE
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 26) Disintermediation provides major benefits to the distributor.
FALSE
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 30) Price transparency refers to the ability of consumers to discover what merchants actually pay for products.
FALSE
3: Challenging AACSB: Analytical Thinking LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 22) E-commerce refers to the use of any networking technologies to transact business.
FALSE
3: Challenging AACSB: Application of Knowledge LO: 10.3: How has e-commerce transformed marketing? 68) Rich media advertisements are a sales-oriented marketing format.
FALSE
3: Challenging AACSB: Application of Knowledge LO: 10.4: How has e-commerce affected business-to-business transactions? 84) EDI standards that take advantage of network communications have yet to be fully implemented at the industry level.
FALSE
3: Challenging AACSB: Application of Knowledge LO: 10.4: How has e-commerce affected business-to-business transactions? 86) Exchanges have become one of the most popular types of Net marketplace because they encourage competitive bidding that drives prices down.
FALSE
2: Moderate AACSB: Application of Knowledge; Written and Oral Communication LO: 10.5: What is the role of m-commerce in business and what are the most important m-commerce applications? 97) What are geosocial services and how are they being used?
Geosocial services help you find friends, or your friends to find you, by checking in to the service and announcing your presence in a restaurant or other place. Your friends are instantly notified. About 20 percent of smartphone owners use geosocial services. One example of a firm using geosocial services is Foursquare. Foursquare provides a location-based social networking service to 55 million registered individual users who may connect with friends, update their location, and provide reviews and tips for enjoying a location. Points are awarded for checking in at designated venues. Users choose to post their check-ins on their accounts on Twitter, Facebook, or both. Users also earn badges by checking in at locations with certain tags, for check-in frequency or for the time of check-in. More than 500,000 local merchants worldwide use the merchant platform for marketing.
2: Moderate AACSB: Application of Knowledge LO: 10.5: What is the role of m-commerce in business and what are the most important m-commerce applications? 96) Define location-based services and describe the main categories of these services. Which of the categories do you feel has the most potential in terms of e-commerce revenues, and why?
Location-based services are services that use GPS mapping services available on smartphones to deliver value-added services. They include geosocial services, geoadvertising, and geoinformation services. A geosocial service can tell you where your friends are meeting. Geoadvertising services can tell you where to find the nearest Italian restaurant, and geoinformation services can tell you the price of a house you are looking at, or about special exhibits at a museum you are passing. Student answers as to the most valuable of these services will vary; an example is: I feel that geoadvertising services have the most potential for profit, as it is based on a profit-making mechanism: advertising. Geosocial services and geoinformation services, by themselves, are more content- and communication-oriented.
2: Moderate AACSB: Analytical Thinking LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 27) In general, for digital goods, the marginal cost of producing another unit is about zero.
TRUE
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 29) Advertising networks track a user's behavior at thousands of websites.
TRUE
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 25) All previous mass media in modern history, including the printing press, use a broadcast model where content is created in a central location by experts.
TRUE
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 28) About 75 percent of all U.S. households have broadband access to the Internet in 2015.
TRUE
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 31) Menu costs are the merchants' costs of changing prices.
TRUE
2: Moderate AACSB: Application of Knowledge; Written and Oral Communication LO: 10.3: How has e-commerce transformed marketing? 74) Website tracking software can log the path a customer takes through the website, the time spent on the site, and what geographic area, in general, the customer is from, all of which can help in customer analysis. It can also log the customer's operating system and which browser the customer is using. How could these last two data items be of interest to a company? Give examples.
Student answers will vary, but should include an understanding that the customer's operating system and browser interact technologically with a website and might be relevant in data analysis. An example is: Customer OSs and browsers could help a company determine what technical functionalities could be used in the site. For example, if it found out that a significant percentage of its users are using mobile browsers, they might want to make sure that the website is easily used by various mobile devices. Secondly, this data might be relevant in data mining or other analysis. For example, a retail clothing company might find that a significant portion of their most valued customers use an Apple operating system, and from other data analysis know that Apple users are more likely to purchase cashmere sweaters. Then the company may want to place a greater emphasis on selling the cashmere sweaters.
2: Moderate AACSB: Application of Knowledge LO: 10.4: How has e-commerce affected business-to-business transactions? 89) You have been hired as a marketing consultant by a law firm in Los Angeles that specializes in juvenile justice. What ways can you use the Internet as a marketing tool and to advertise the firm's services?
Student answers will vary. A sample answer is: For marketing research, you could advertise on search engines. You could pay for marketing research at relevant portals. You could also collect customer information from the company's website. You could monitor relevant blogs to see what issues are of concern in juvenile justice, so as to address these concerns in your advertising campaigns. To advertise, you could advertise on search engine results and at relevant portals or legal information content providers. If it were feasible, you could create a juvenile justice portal and blog for the company in order to attract users from whom you could gather market research as well as promote your services. You might also want to investigate social network marketing - assuming that your clients might be the best leads for other clients.
2: Moderate AACSB: Application of Knowledge; Written and Oral Communication LO: 10.2: What are the principal e-commerce business and revenue models? 60) You are consulting for Lucky's, a chain of gas stations. What types of e-commerce opportunities, if any, are relevant to Lucky's? Could Lucky's make use of any Internet business models for this opportunity?
Student answers will vary. A sample answer is: In terms of B2B e-commerce, Lucky's might be able to procure goods over the Internet, use a private industrial network to coordinate their supply chain with suppliers and manage inventory. Depending on the structure of the gasoline retail business, industry net marketplaces and exchanges might be of use. In terms of B2C e-commerce, there are not many opportunities, as it is inefficient to sell gasoline over the Internet. Lucky's could make sure that its stations are listed in popular location-based mobile services that help drivers find nearby gas stations.
2: Moderate AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 32) "Knowledge increases exponentially" is a phrase with which we are all familiar. How does this concept apply to electronic business and the emergence of the digital firm? Support your contentions.
Student answers will vary. A sample answer is: The exponential increases of knowledge refer to shared information. For example, once the concept of a wheel is established, inheritors of that knowledge do not have to "reinvent the wheel." The Internet is a tool similar to the wheel: it is based on shared standards and universal tools. The Internet and shared networking technologies are allowing new techniques for attracting customers and selling to customers to be developed and adapted very quickly. For example, although early Internet retailers had difficulty setting up secure credit card transactions and payment systems, today there are many systems in place as vendors step in to create shared tools for doing this. The Internet is fostering shared knowledge and, as such, propagating ever greater increases in that knowledge.
2: Moderate AACSB: Application of Knowledge LO: 10.3: How has e-commerce transformed marketing? 73) What is the most profound way in which e-commerce and the Internet has changed the relationship between companies and their customers? Support your answer.
Student answers will vary. A sample answer is: The most profound way in which e-commerce and the Internet has changed this relationship is by shrinking information asymmetry. An information asymmetry exists when one party in a transaction has more information that is important for the transaction than the other party. That information helps determine their relative bargaining power. In digital markets, consumers and suppliers can "see" the prices being charged for goods and, in that sense, digital markets are said to be more "transparent" than traditional markets. For example, until auto retailing sites appeared on the web, there was a pronounced information asymmetry between auto dealers and customers. Only the auto dealers knew the manufacturers' prices and it was difficult for consumers to shop around for the best price. Auto dealers' profit margins depended on this asymmetry of information. Today's consumers have access to a legion of websites providing competitive pricing information and three-fourths of U.S. auto buyers use the Internet to shop around for the best deal. Thus, the web has reduced the information asymmetry surrounding an auto purchase. The Internet has also helped businesses seeking to purchase from other businesses reduce information asymmetries and locate better prices and terms.
1: Easy AACSB: Analytical Thinking LO: 10.2: What are the principal e-commerce business and revenue models? 55) Uber uses a form of dynamic pricing.
TRUE
1: Easy AACSB: Analytical Thinking LO: 10.3: How has e-commerce transformed marketing? 69) Web personalization is used primarily as a marketing tool.
TRUE
1: Easy AACSB: Analytical Thinking LO: 10.4: How has e-commerce affected business-to-business transactions? 88) Indirect goods are not involved firsthand in the production process.
TRUE
1: Easy AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 52) Photobucket is an example of the service provider business model.
TRUE
1: Easy AACSB: Application of Knowledge LO: 10.3: How has e-commerce transformed marketing? 72) The behavioral targeting of ads results in consumers responding ten times more frequently than when delivered ads randomly.
TRUE
2: Moderate AACSB: Application of Knowledge LO: 10.2: What are the principal e-commerce business and revenue models? 56) In the free/freemium revenue model, firms offer basic services for free and charge a fee for special features.
TRUE
2: Moderate AACSB: Application of Knowledge LO: 10.3: How has e-commerce transformed marketing? 71) Viral marketing is like traditional word-of-mouth marketing except that it is spread via online communities.
TRUE
2: Moderate AACSB: Information Technology LO: 10.4: How has e-commerce affected business-to-business transactions? 85) Net marketplaces may either support contractual purchasing based on long-term relationships with designated suppliers, or short-term spot purchasing.
TRUE
3: Challenging AACSB: Application of Knowledge LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 24) The Internet shrinks information asymmetry.
TRUE
3: Challenging AACSB: Application of Knowledge LO: 10.4: How has e-commerce affected business-to-business transactions? 87) Automobile manufacturing is an example of a vertical market.
TRUE
3: Challenging AACSB: Application of Knowledge; Written and Oral Communication LO: 10.2: What are the principal e-commerce business and revenue models? 61) List and describe the top five methods of online marketing and advertising formats in terms of 2014 revenue?
The top five methods of online advertising are search engine marketing, which employs text ads targeted at precisely what the customer is looking for at the moment of shopping and purchase ($23 billion); display ads, which are banner ads with interactive features that increasingly are behaviorally targeted to individual web activity ($22.2 billion); video ads, which are the fastest-growing format, and use engaging, entertaining, interactive video that are also often behaviorally targeted ($5.8 billion); rich media ads, which use interactive, targeted, entertaining animations, games and/or puzzles ($3.7 billion); and online classified, such as job, real estate, and services ads ($3.02 billion).
