CHAPTER 3 MARKETING IN THE INTERNET AGE MULTIPLE CHOICE QUESTIONS 1. All of the following would be considered to be specific forces that underlie the new Internet age EXCEPT: a. digitalization and connectivity. b. the explosion of the Internet. c. customization and customerization. d. increasing affluence and income in the United States. Answer: (d) Difficulty: (2) Page: 78 2. Which of the following best characterizes digital information? a. a stream of zeros and ones, or bits b. something made possible by high speed printers and color reproduction c. information in virtual space d. three-dimensional space containing compacted data Answer: (a) Difficulty: (1) Page: 78 3. Today a growing number of appliances and systems operate on digital information. For bits to flow from one appliance or location to another requires ___________, a telecommunications network. a. customization b. customerization c. connectivity d. concentration Answer: (c) Difficulty: (2) Page: 78, 79 4. ____________ are networks that connect people within a company to each other and to the company network. a. Internets b. Intranets c. Extranets d. Compunets Answer: (b) Difficulty: (1) Page: 79
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5. A network that connects a company with its suppliers and distributors is called a(n): a. Internet. b. Intranet. c. Extranet. d. Compunet. Answer: (c) Difficulty: (2) Page: 79 6. The Johnson Company is seeking to expand its business onto the “information highway” made possible by recent advances in technology. To do this, the Johnson Company would most likely choose the: a. Internet. b. Intranet. c. Extranet. d. Compunet. Answer: (a) Difficulty: (1) Page: 79 7. By early 2001, Internet penetration in the United States had reached close to: a. 100 percent. b. 90 percent. c. 75 percent. d. 60 percent. Answer: (d) Difficulty: (3) Page: 79 8. The explosive worldwide growth in ___________ usage forms the heart of the so-called New Economy. a. population b. cell-technology c. Internet d. Intranet Answer: (c) Difficulty: (1) Page: 79 9. Established store-based retailers of all kinds began to doubt their futures as competitors sprung up selling their products and services via the Internet. They feared being _______________ by the new e-tailers. a. upstaged b. technologically intermediated c. disintermediated d. contaminated Answer: (c) Difficulty: (3) Page: 80
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10. If brick-and-mortar firms such as Barnes & Noble or Wal-Mart start their own online sales channels, they would become a ______________ firm. a. click-only b. click-and-mortar c. disintermediated d. bits-and-mortar Answer: (b) Difficulty: (1) Page: 80 11. The Old Economy revolved around ____________ companies that mainly focused on standardizing their production, products, and business processes. a. service b. information c. entrepreneurial d. manufacturing Answer: (d) Difficulty: (2) Page: 80 12. In the Old Economy, companies felt that a key to managing their assets would be to set up command-and-control systems that would run their businesses like: a. customers would run them. b. service firms ran. c. machines. d. monopolies. Answer: (c) Difficulty: (2) Page: 80 13. In _______________, the company leaves it to individual customers to design the offering. a. customization b. customerization c. differentiation d. standardization Answer: (b) Difficulty: (2) Page: 80 14. ______________ includes all electronics-based information exchanges within or between companies and customers. a. E-commerce b. E-marketing c. E-communication d. E-business Answer: (d) Difficulty: (2) Page: 82
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15. ___________________ involves buying and selling processes supported by electronic means, primarily the Internet. a. E-commerce b. E-marketing c. E-communication d. E-business Answer: (a) Difficulty: (2) Page: 82 16. Within e-markets, marketplaces have become: a. market regions. b. market zones. c. marketspaces. d. marketdynamos. Answer: (c) Difficulty: (1) Page: 82 17. The flip side of e-marketing is: a. e-advertising. b. e-selling. c. e-commerce. d. e-purchasing. Answer: (d) Difficulty: (1) Page: 82 18. All of the following could be listed as benefits to buyers should they choose to buy via the Internet EXCEPT: a. it can be convenient. b. it always provides buyers with the lowest competitive prices. c. it can provide buyers with greater product access and selection. d. it can provide buyers with access to a wealth of comparative information. Answer: (b) Difficulty: (2) Page: 82 19. Buyers can often use the seller’s Web site to create exactly the configuration of information, products, or services they desire. Which of the following buyer benefits would most appropriately match the above phrase? a. The Internet can be convenient. b. The Internet is interactive and immediate. c. The Internet can provide buyers with greater product access and selection. d. The Internet can always provide the lowest prices on merchandise. Answer: (b) Difficulty: (2) Page: 82, 83
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20. All of the following could be listed as benefits to sellers should they choose to sell via the Internet EXCEPT: a. the Internet is a powerful tool for customer relationship building. b. the Internet is a more secure place to conduct transactions than in a retail environment. c. the Internet reduces costs and increases speed and efficiency. d. the Internet offers truly global commerce. Answer: (b) Difficulty: (2) Page: 83, 84 21. One author concludes that Web customers are often very loyal, and the Internet promotes this loyalty. This would be an example of which of the following benefits to sellers for using the Internet to conduct commerce? a. The Internet is a powerful tool for customer relationship building. b. The Internet is a more secure place to conduct transactions than in a retail environment. c. The Internet reduces costs and increases speed and efficiency. d. The Internet offers truly global commerce. Answer: (a) Difficulty: (2) Page: 83, 84 22. Which of the following would not be considered to be among the major Internet domains? a. B2C (business-to-consumer) b. B2B (business-to-business) c. G2C (government-to-consumer) d. C2C (consumer-to-consumer) Answer: (c) Difficulty: (1) Page: 84 23. Which of the following most accurately describes a transaction wherein online selling of goods and services goes to final consumers? a. B2C b. B2B c. C2B d. C2C Answer: (a) Difficulty: (2) Page: 84 24. Although Internet users are still younger on average than the population as a whole, consumers aged 50 and older make up: a. almost 10 percent. b. almost 20 percent. c. almost 30 percent. d. almost 40 percent.
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Answer: (b) Difficulty: (2) Page: 85 25. With respect to Internet usage, Americans at the lower end of the socioeconomic ladder are more likely to view the Internet as: a. a way to accelerate their knowledge acquisition and as a means to step up the ladder. b. a technological roadblock that holds them down. c. a kind of home entertainment center for fun and games. d. a mechanism to correct social injustice and enhance income. Answer: (c) Difficulty: (3) Page: 87, Marketing at Work 3-1 26. With respect to the dollar volume for transactions, which of the following Internet domains is expected to reach more than three trillion by 2003? a. B2C b. B2B c. C2B d. C2C Answer: (b) Difficulty: (1) Page: 89 27. Much of B2B e-commerce takes place in ____________, which are huge e-marketspaces in which buyers and sellers find each other online, share information, and complete transactions efficiently. a. global networks b. private trading networks c. open trading networks d. Oracle trading networks Answer: (c) Difficulty: (2) Page: 89 28. B2B trading networks that link a particular seller with its own trading partners are called: a. global networks. b. private trading networks. c. open trading networks. d. Oracle trading networks. Answer: (b) Difficulty: (2) Page: 90
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29. Josh Nielsen has decided to sell demonstration ski equipment that he has obtained from a Head Ski salesperson via eBay using its auction feature. Which of the following Internet domains would most accurately describe the form of business Josh is using? a. B2C b. B2B c. C2B d. C2C Answer: (d) Difficulty: (2) Page: 91 30. Sheryl Scott checked in to her favorite “chat room.” In her chat room, she was able use library features, exchange information with online acquaintances in real time, and make new friends with whom she can air her views on a variety of subjects. Which of the following terms would be an appropriate description of Ms. Scott’s chat room? a. an open trading network b. a private trading network c. a forum d. a private channel Answer: (c) Difficulty: (2) Page: 91 31. _____________ is the Internet version of forums. However, such groups are limited to people posting and reading messages on a specified topic, rather than managing libraries or conferencing. a. An open trading network b. A private trading network c. A private channel d. A newsgroup Answer: (d) Difficulty: (3) Page: 92 32. Using Priceline.com, would-be buyers bid for airline tickets, hotel rooms, rental cars, and even home mortgages, leaving the sellers to decide whether to accept their offers. Which of the following Internet domains best matches the above example? a. B2C b. B2B c. C2B d. C2C Answer: (c) Difficulty: (3) Page: 92
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33. If an e-marketing distribution channel consisted of a seller, brick-and-mortar store channels, and consumers, which of the following most accurately describes this method of marketing? a. brick-and-mortar (brick-only) marketers b. click-only marketers c. click-and-mortar marketers d. click-and-service marketers Answer: (a) Difficulty: (1) Page: 92, Figure 3-3 34. If an e-marketing distribution channel consisted of a seller, brick-and-mortar store channels, e-commerce channels (and interaction between the brick-and-mortar store and e-commerce channels), and consumers, which of the following most accurately describes this method of marketing? a. brick-and-mortar (brick-only) marketers b. click-only marketers c. click-and-mortar marketers d. click-and-service marketers Answer: (c) Difficulty: (3) Page: 92, Figure 3-3 35. Which of the following would be the most appropriate example of a transaction site? a. Amazon.com b. Yahoo c. AOL d. eBay Answer: (d) Difficulty: (3) Page: 93 36. Which of the following would be the most appropriate example of a search engine/portal? a. Amazon.com b. Yahoo c. AOL d. eBay Answer: (b) Difficulty: (1) Page: 93 37. Dot-coms failed for a variety of reasons. Which of the following would be one of the chief reasons for this failure? a. Companies were unable to secure recognizable Web addresses. b. Companies had poor technological advice and had great technical difficulties. c. Companies tended to devote too much effort to acquiring new customers instead of building loyalty and purchase frequency among current customers. d. Companies tended to have inflated prices which discouraged purchase.
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Answer: (c) Difficulty: (2) Page: 93 38. According to information found in the text, all of the following would be potential sources of e-commerce revenue EXCEPT: a. patent royalties. b. product and service sales income. c. profile income. d. market research and information fees. Answer: (a) Difficulty: (3) Page: 95, Table 3-1 39. Many Web sites have built elaborate databases based on customer information. If the Web site were to sell this information and use the database as a means of generating revenue for the firm, this would be an illustration of which of the following? a. referral income b. product and service sales income c. profile income d. market research and information fees Answer: (c) Difficulty: (2) Page: 95, Table 3-1 40. eBay puts buyers in touch with sellers and takes from a 1.25 percent to a 5 percent commission on each sale. This would be an illustration of which of the following sources of e-commerce revenue? a. referral income b. product and service sales income c. profile income d. transaction commissions and fees Answer: (d) Difficulty: (2) Page: 95, Table 3-1 41. Click-and-mortar companies are becoming more popular. Of the top 50 retail Web sites, ranked by the number of unique visitors, __________ were click-and-mortar retailers versus their Internet-only retailing counterparts. a. 45 percent b. 56 percent c. 68 percent d. 75 percent Answer: (b) Difficulty: (3) Page: 96
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42. A(n) ________________ is a Web site designed to build customer goodwill and to supplement other sales channels rather than to sell the company’s products directly. a. e-mail and Webcasting site b. corporate Web site c. online advertising or promotion Web site d. Web community site Answer: (b) Difficulty: (2) Page: 97, Figure 3-4 43. A company provides information about its history, its mission and philosophy, and the products and services that it offers on its: a. e-mail and Webcasting site. b. corporate Web site. c. online advertising or promotion Web site. d. Web community site. Answer: (b) Difficulty: (2) Page: 98 44. A Web site that engages consumers in interactions that will move them closer to a direct purchase or other marketing outcome is called a(n): a. e-mail and Webcasting site. b. online advertising or promotion Web site. c. marketing Web site. d. Web community site. Answer: (c) Difficulty: (2) Page: 98 45. The key to designing an attractive Web site is to: a. create enough value and excitement to get customers to come to the site, stick around, and come back again. b. have cutting edge graphics that demonstrate the technology available to the Web marketer. c. have a least $2 million in design funds which provide for the interactivity demanded by today’s Web savvy consumer. d. be willing beg, borrow, or steal ideas from the top Web page designers and incorporate these ideas into the firm’s own site. Answer: (a) Difficulty: (2) Page: 99 46. For low-interest Web sites, such as one for dental floss, a company should create a corporate Web site to do all of the following EXCEPT: a. answer customer questions. b. build goodwill and excitement. c. become the primary selling channel because of the reach of the Internet. d. collect customer feedback.
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Answer: (c) Difficulty: (2) Page: 99 47. All of the following would be among the 7Cs for effective Web site design EXCEPT: a. context. b. content. c. community. d. conceptualization. Answer: (d) Difficulty: (3) Page: 100 48. With respect to the 7Cs of effective Web site design, ___________ refers to a site’s layout and design. a. context b. content c. community d. customization Answer: (a) Difficulty: (2) Page: 100 49. All of the following are characteristics of effective Web sites EXCEPT: a. the lowest prices within an industry group. b. deep and useful information. c. changing promotional features. d. links to other related sites. Answer: (a) Difficulty: (2) Page: 100 50. Advertising that appears while consumers are surfing the Web, including banner and tickler ads, interstitials, skyscrapers, and other forms is called: a. specialty advertising. b. portal promotion. c. online advertising. d. virtual advertising. Answer: (c) Difficulty: (1) Page: 101 51. Sam Harrison is reviewing a Web site for tennis shoes. He notices several advertisements that move across the screen announcing special discount travel offers if he purchases Nike tennis shoes. These crawling advertisements are called: a. interstitials. b. content sponsorships. c. banner ads. d. microsites. Answer: (c) Difficulty: (1) Page: 101
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52. __________ are online ads that pop up between changes on a Web site. a. Interstitials b. Content sponsorships c. Banner ads d. Browser ads Answer: (a) Difficulty: (3) Page: 101 53. If Coca-Cola were to pay Web surfers a small fee to watch their ads, these ads would be called: a. interstitials. b. content sponsorships. c. banner ads. d. browser ads. Answer: (d) Difficulty: (2) Page: 101 54. Which of the following marketing practices would be about the same thing as the Internet practice of viral marketing? a. coupon clipping b. word-of-mouth marketing c. disintermediation d. tele-marketing Answer: (b) Difficulty: (3) Page: 102 55. Which of the following Web sites is the best illustration of a Web community? a. Ben & Jerry’s Ice Cream—www.benjerry.com. b. Nike—www.nike.com. c. Hallmark Greeting Cards—www.hallmark.com. d. iVillage—www.ivillage.com. Answer: (d) Difficulty: (2) Page: 104 56. Jack Strong would like to receive up-to-date financial information so he can carefully manage his financial portfolio. He decides to use Internet Financial Network’s Infogate to supply financial news, market data, and real-time stock quotes to his PC. Internet Financial Network is supplying Mr. Strong with a ____________ service. a. portal b. corporate Web site c. Webcasting d. Interstitial Answer: (c) Difficulty: (2) Page: 105
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57. Webcasting is also known as _____________, as it affords an attractive channel through which online marketers can deliver their Internet advertising or other information content. a. pull programming b. push programming c. customized programming d. viral programming Answer: (b) Difficulty: (3) Page: 107 58. Along with its considerable promise, e-commerce faces many challenges. All of the following, according to the text, would be among those challenges EXCEPT: a. poor revenue potential. b. limited consumer exposure and buying. c. skewed user demographics and psychographics. d. chaos and clutter. Answer: (a) Difficulty: (2) Page: 108 59. Online users still tend to be somewhat more upscale and more technology-oriented than the general population. Which of the following e-commerce challenges most appropriately corresponds with this statement? a. ethical concerns b. limited consumer exposure and buying c. skewed user demographics and psychographics d. chaos and clutter Answer: (c) Difficulty: (2) Page: 108 60. One study found that a Web site must capture a Web surfer’s attention within eight seconds or lose them to another site. Which of the following e-commerce challenges most appropriately corresponds with this statement? a. ethical concerns b. security c. skewed user demographics and psychographics d. chaos and clutter Answer: (d) Difficulty: (3) Page: 108 TRUE/FALSE QUESTIONS 61. According to information provided in the text, Charles Schwab now runs the world’s largest e-commerce site.
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Answer: (True) Difficulty: (2) Page: 78 62. New types of intermediaries are among the four specific forces underlying the new Internet age. Answer: (True) Difficulty: (2) Page: 78, Figure 3-1 63. The increasing age factor of U.S. consumers is among the four specific forces underlying the new Internet age. Answer: (False) Difficulty: (2) Page: 78, Figure 3-1 64. Digital information, which operates a growing number of appliances and systems, comes in streams of Xs and 0s. Answer: (False) Difficulty: (1) Page: 78 65. Extranets are networks that connect a company with its suppliers and distributors. Answer: (True) Difficulty: (1) Page: 79 66. By early 2001, Internet penetration in the United States had reached close to 80 percent. Answer: (False) Difficulty: (3) Page: 79 67. The Old Economy revolved around advertising and promotion that mainly focused on the idea of sell, sell, sell. Answer: (False) Difficulty: (2) Page: 80 68. In customerization, the company leaves it to individual customers to design the offering. Answer: (True) Difficulty: (1) Page: 80 69. The text defines e-business as buying and selling processes supported by electronic means, primarily the Intranet. Answer: (False) Difficulty: (2) Page: 82 70. E-markets have physical marketplaces just like traditional commerce. Answer: (False) Difficulty: (1) Page: 82 71. B2C e-commerce is the online selling of goods and services to final consumers.
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Answer: (True) Difficulty: (1) Page: 84 72. Trading networks, auction sites, spot exchanges, barter sites, and online product catalogs would all be examples of B2B e-commerce. Answer: (True) Difficulty: (2) Page: 89 73. Private trading networks (PTNs) are huge e-marketspaces in which B2B buyers and sellers find each other online, share information, and complete transactions efficiently. Answer: (False) Difficulty: (2) Page: 89 74. Buyers using Priceline.com to place bids on airline tickets would be an example of C2C e-commerce. Answer: (False) Difficulty: (2) Page: 92 75. Click-only marketers use e-commerce channels to connect to consumers. Answer: (True) Difficulty: (1) Page: 92, Figure 3-3 76. One of the sources of e-commerce revenue cited by a table in the text is that of endorsement fees. Answer: (False) Difficulty: (3) Page: 95, Table 3-1 77. A corporate Web site is designed to build sales without regard to practices of any brick-and-mortar counterpart. Answer: (False) Difficulty: (2) Page: 97, Figure 3-4 78. The C (of the 7Cs of effective Web site design) that concerns itself with Web site layout and design is Context. Answer: (True) Difficulty: (2) Page: 100 79. The C (of the 7Cs of effective Web site design) that concerns itself with a Web site’s ability to tailor itself to different users or to allow users to personalize the site is Connection. Answer: (False) Difficulty: (2) Page: 100 80. New online ad formats include skyscrapers, which are online ads that pop up between changes on a Web site.
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Answer: (False) Difficulty: (3) Page: 101 81. Sam gets an e-mail from Microsoft describing a new feature on Windows 2000. Sam then uses his e-mail to tell Bart about the new feature. This would be an example of viral marketing. Answer: (True) Difficulty: (2) Page: 102 82. Viral marketing is the automatic downloading of customized information of interest to recipient’s PCs. Answer: (False) Difficulty: (3) Page: 102, 105 83. One of the major challenges facing online marketers is the inability to ensure privacy. Answer: (True) Difficulty: (1) Page: 108 ESSAY QUESTIONS 84. List and briefly discuss the four specific forces that underlie the new Internet age. Answer: The four specific forces referred to in the text are: a). Digitalization and connectivity—much of today’s business operates on digital information, which flows through connected networks. b). The explosion of the Internet—the Internet has grown explosively to become the revolutionary technology of the new millennium, empowering consumers and businesses alike with the blessings of connectivity. c). New types of intermediaries—new Internet marketers and channel relationships have arisen to replace some types of traditional marketers. Marketing offers can be tailored. d). Customization and customerization—the New Economy is blurring the boundaries between industries, allowing companies to pursue opportunities that lie at the convergence of two or more industries. Difficulty: (2) Page: 78-81 85. Discuss the difference between customization and customerization. Use examples to illustrate the difference. Answer: Customization involves taking the initiative to customize the market offering. For example, a Levi-Strauss salesperson takes a person’s measurements, and the company customizes the jeans at a factory.
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In customerization, the company leaves it to the individual customers to design the offering. For example, jeans customers take their own measurements and add specific features that they may want in their jeans, such as colorful patches. Difficulty: (1) Page: 80 86. State the definitions of e-business, e-commerce, and e-marketing. Discuss the differences between the concepts. Answer: a). E-business—the use of electronic platforms (intranets, extranets, and the Internet) to conduct a company’s business. b). E-commerce—buying and selling processes supported by electronic means, primarily the Internet. c). E-marketing—the “e-selling” side of e-commerce--the company’s efforts to communicate about, promote, and sell products and services over the Internet. E-business focuses on the platforms for delivery of business activities. E-commerce focuses on the processes for bringing goods and services to consumers via the Internet. E-marketing is the e-selling side of e-commerce (using the promotional mix components over the Internet). Difficulty: (2) Page: 82 87. E-commerce and the Internet bring many benefits to both buyers and sellers. List and briefly describe the major benefits to (a) buyers and (b) sellers. Answer: Benefits to buyers: a). It can be convenient. Customers do not have to battle traffic, find parking spaces, and trek through stores and aisles to find and examine products. b). Buying is easy and private. Customers encounter fewer buying hassles and don’t have to face salespeople or open themselves up to persuasion and emotional pitches. c). The Internet often provides buyers with greater product access and selection. The sky is the limit on the Web. d). Buyers have access to a wealth of comparative information—information about companies, products and competitors. e). Online buying is interactive and immediate. Consumers have a greater measure of control. Benefits to sellers: a). The Internet is a powerful tool for customer relationship building. b). The Internet and other electronic channels can reduce costs and increase speed and efficiency. E-marketers avoid the expense of maintaining a store and the accompanying costs of rent, insurance, and utilities. Communication costs are less.
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c). E-marketing offers greater flexibility. Marketers are allowed to make ongoing adjustments to offers and programs. d). The Internet is a truly global medium that allows buyers and sellers to click from one country to another in seconds. Difficulty: (2) Page: 82-84 88. There are four major Internet domains through which e-commerce can be conducted. List and briefly describe each. Answer: a). B2C (business-to-consumer) e-commerce—the online selling of goods and services to final consumers. This form is targeted to consumers and is initiated by businesses. b). B2B (business-to-business) e-commerce—using B2B trading networks, auction sites, spot exchanges, online product catalogs, barter sites, and other online resources to reach new customers more effectively, and obtain buying efficiencies and better prices. This form is targeted to businesses and is initiated by businesses. c). C2C (consumer-to-consumer) e-commerce—online exchanges of goods and information between final consumers. This form is targeted to consumers and is initiated by consumers. d). C2B (consumer-to-business) e-commerce—online exchanges in which consumers search out sellers, learn about their offers, and initiate purchases, sometimes even driving transaction terms. This form is targeted to businesses and is initiated by consumers. Difficulty: (3) Page: 84-92, Figure 3-2 89. Define and then discuss the differences between open trading networks and private trading networks. Answer: a). Open trading networks—huge e-marketers in which B2B buyers and sellers find each other online, share information, and complete transactions efficiently. However, only about 7 percent of all B2B transactions use this form. Example: PlasticsNet.com. b). Private trading networks (PTNs)—B2B trading networks that link a particular seller with its own trading partners. Account for 93 percent of all B2B transactions. PTNs give sellers greater control over product presentation (instead of just completing transactions) and allow them to build deeper relationships with buyers and sellers by providing valueadded services. Difficulty: (2) Page: 89, 90 90. Examine the three types of e-marketers, characterize each, and describe the channels each uses to reach consumers.
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Answer: a). Brick-and-mortar (brick-only) marketers—these marketers would be considered the types of marketers present before the Internet revolution and the advent of the New Economy. In this form, a seller would sell through brick-and-mortar store channels (intermediaries) to consumers. b). Click-only marketers—the so-called dot-coms, which only operate online without any brick-and-mortar market presence. In this form, a seller uses e-commerce channels to reach consumers. c). Click-and-mortar marketers—this is a hybrid form. It is a traditional brick-andmortar company that has added e-marketing to its operations. In this form, a seller uses a combination of brick-and-mortar and e-commerce channels to reach consumers. Difficulty: (2) Page: 92-97, Figure 3-3 91. List and briefly characterize the four methods for setting up an e-marketing presence. Answer: a). Corporate Web site—a Web site designed to build customer goodwill and supplement other sales channels, rather than to sell the company’s products directly. This is the most basic type of e-marketing presence. These sites generally provide information about the company’s history, its mission and philosophy, and the products and services that it offers. b). Marketing Web site—a Web site that engages consumers in interactions that will move them closer to a direct purchase or other marketing outcome. Such sites might include a catalog, shopping tips, and promotional features. c). Online advertising and promotion—advertising that appears while consumers are surfing the Web, including banner and ticker ads, interstitials, skyscrapers, and other forms. d). Web communities—Web sites upon which members can congregate online and exchange views on issues of common interest. These communities are the online equivalent of a coffeehouse (a place where everybody knows your e-mail address). Web communities can either be social or work-related. Difficulty: (3) Page: 97-105, Figure 3-4 92. List and briefly characterize the 7Cs of effective Web site design. Answer: The 7Cs are: a). Context—site’s layout and design b). Content—text, pictures, sound, and video that the Web site contains c). Community—the ways that the site enables user-to-user communication d). Customization—site’s ability to tailor itself to different users, or allow users to personalize the site e). Communication—the ways the site enables site-to-user, user-to-site, or two-way communication
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f). Connection—degree that the site is linked to other sites g). Commerce—site’s capabilities to enable commercial transactions Difficulty: (3) Page: 100 93. Briefly describe the following online advertising formats—banner ads, tickers, interstitials, skyscrapers, browser ads, and rectangles. Answer: a). Banner ads—an ad that flashes information to the consumer while visiting a Web page b). Tickers—banner ads that move across the screen c). Interstitials—online ads that pop up between changes on a Web site d). Skyscrapers—tall, skinny ads at the side of a Web page e). Browser ads—pay viewers to watch them f). Rectangles—boxes that are much larger that a banner Difficulty: (1) Page: 101 94. Describe what happens in “Webcasting.” Provide a descriptive example. Answer: Webcasting is the automatic downloading of customized information of interest to recipients’ PCs, affording an attractive channel for delivering Internet advertising or other information content. An example would be Internet Financial Network’s Infogate, which sends up-to-date financial news, market data, and real-time stock quotes to subscribers in the financial services industry for a fee. Difficulty: (1) Page: 105 95. Many believe that e-commerce has a bright future. However, e-commerce will also face many challenges in the next decade. List and briefly describe the five major challenges discussed in the text. Be specific in your comments and descriptions. Answer: The major challenges are: a). Limited consumer exposure and buying—although rapidly expanding, online marketing still only reaches a limited marketspace. Market buying has not yet caught up with browsing. b). Skewed user demographics and psychographics—the audience is becoming more mainstream, however, online users still tend to be somewhat more upscale and more technology oriented than the general population. Mainstream products have a difficult time being accepted. c). Chaos and clutter—there are millions of Web sites and a staggering volume of information. Navigating the Internet can be frustrating, confusing, and time-consuming for consumers.
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d). Security—snooping on online transactions and interception of credit card numbers are fears on the part of consumers. Poorer consumers have less access to the Internet. e). Ethical concerns—privacy is a real issue. Information abuse and monitoring consumer movements occurs frequently. Difficulty: (3) Page: 108 APPLICATION QUESTION 96. Jason Smith has just created his own Internet business. Jason sells skis and ski accessories via the Web. In order to have a low-cost source of supply, he has formed an alliance with a manufacturer’s representative for a national ski line. The manufacturer’s rep sells demo models of skis to Jason for cost once the demo’s useful life has expired. In general, a good set of skis costs him 50 percent less than what it could be sold for in a retail store. This allows for a good markup and a profit averaging about 20 percent. However, Jason is looking to make more money from his operation. A friend tells him that one of the ways to increase his income is to consider the following alternative ways of generating revenue through his Web site: advertising income, alliance income, profile income, and referral income. Consider yourself to be a consultant. Give Jason Smith advice on how he might expand his revenue flow using all of the four forms mentioned above. Be specific in your suggestions to him. Answer: According to the information found in Table 3-1, there are numerous ways e-commerce merchants can expand their revenue. With respect to Mr. Smith’s opportunities, consider the following: a). Advertising income—sales of online advertising space can provide a major source of revenue. Those that would like to reach Jason’s ski buyers could provide advertisements for related products and services and have this information carried on Jason’s Web site. For example, information on a ski resort or air fares to ski areas. b). Alliance income—online companies can invite business partners to share costs in setting up a Web site and offer them free advertising on the site. Jason could expand his Web site or make it more attractive and interactive by using revenue from alliances. As an example, a ski resort could enter into a partnership with Jason, and Jason would provide a separate Web page where consumers could register online with the facility or ski conditions could be posted. c). Profile income—Web sites that have built databases containing the profiles of particular target groups may be able to sell these profiles if they get permission first. Jason could provide information to clothing manufacturers, other extreme sports companies, resorts, airlines, or travel tours. This form of income would be a primary consideration for Jason. d). Referral income—Companies can collect revenue by referring customers to others. Jason might be able to collect “finder’s fees” for providing clients to ski resorts, extreme sports companies, airlines, et cetera. This would mean that a method would have to be devised to conduct this form of marketing.
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Allow students to be creative with these answers. This could be given as an at-home assignment. Difficulty: (2) Page: 95, Table 3-1
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