E-Commerce Digital Markets, Digital Goods

Management Information Systems Chapter 10 E-Commerce: Digital Markets, Digital Goods 1) What event marked the beginning of e-commerce? A) The first product sold online. B) The first domain name registered. C) The first e-mail sent. D) The first paid advertisements placed on a Web site. E) The first product advertised online. Answer: D Page Ref: 384 Difficulty: Difficult AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 2) Based on your reading of the chapter, e-commerce is A) still in a revolutionary phase. B) widely accepted by consumers, although technology is still quickly changing. C) not yet fully accepted by consumers, although much of its driving technology is firmly in place. D) well entrenched as a form of modern commerce. E) declining as users lose interest. Answer: A Page Ref: 384-394 Difficulty: Moderate AACSB: Analytical thinking CASE: Evaluation in terms of assess 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) net marketplace. Answer: B Page Ref: 387 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 1 4) Recent developments in e-commerce include all of the following except A) small businesses continue to flood the e-commerce marketplace. B) social networking sites become a new platform for e-commerce. C) Internet-based models of computing, such as smartphone apps. D) the online demographic of shoppers broadens to match that of ordinary shoppers. E) social sharing e-commerce sites extend the market creator business model. Answer: C Page Ref: 386 Difficulty: Difficult AACSB: Analytical thinking CASE: Analysis in terms of examine LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 5) What standards are referred to when discussing universal standards as a unique feature of ecommerce? A) Internet technology standards B) common spoken and written languages C) universal measuring standards D) universal advertising and media format standards E) EDI standards Answer: B Page Ref: 388 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 6) All of the following are unique features of e-commerce technology, except A) personalization/customization. B) interactivity. C) universality. D) richness. E) global reach. Answer: C Page Ref: 388 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 2 7) The act of engaging consumers in a dialog that dynamically adjusts the experience to the individual describes which dimension of e-commerce technology? A) ubiquity B) personalization/customization C) richness D) interactivity E) information density Answer: D Page Ref: 389 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 8) The integration of video, audio, and text marketing messages into a single marketing message and consumer experience describes which dimension of e-commerce technology? A) ubiquity B) personalization/customization C) richness D) interactivity E) social technology Answer: C Page Ref: 389 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 9) The lowered costs of information storage, processing, and communication, along with the improvement of data quality, has resulted in which unique quality of e-commerce? A) information density B) richness C) customization D) interactivity E) global reach Answer: A Page Ref: 389 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 3 10) The effort required to locate a suitable product is called A) price discrimination. B) search costs. C) menu costs. D) shopping costs. E) location costs. Answer: B Page Ref: 389 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 11) 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) amount of physical storage space needed to store data about a specific entity, such as a product or consumer. Answer: C Page Ref: 389 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 12) Selling the same goods to different targeted groups at different prices is called A) cost customization. B) cost optimization. C) price gouging. D) cost personalization. E) price discrimination. Answer: E Page Ref: 389 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 4 13) 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 Answer: B Page Ref: 389 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 14) 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) customized Answer: C Page Ref: 391 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 15) Reducing the business process layers in a distribution channel is called A) disintermediation. B) BPR. C) market segmentation. D) network effects. E) market transparency. Answer: A Page Ref: 391 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 5 16) Digital goods are goods that are A) produced digitally. B) sold over digital networks. C) delivered digitally. D) used with digital equipment. E) created with software. Answer: C Page Ref: 392 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 17) Compared to digital markets, traditional markets have A) lower search costs. B) stronger network effects. C) higher delayed gratification effects. D) reduced asymmetry. E) higher transaction costs. Answer: E Page Ref: 392 Difficulty: Difficult AACSB: Analytical thinking CASE: Analysis in terms of compare LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 18) Compared to traditional goods, digital goods have A) greater pricing flexibility. B) lower marketing costs. C) higher production costs. D) higher inventory costs. E) lower menu costs. Answer: A Page Ref: 392 Difficulty: Difficult AACSB: Analytical thinking CASE: Analysis in terms of compare LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 6 19) Compared to traditional goods, digital goods incur A) lower distribution costs. B) higher marginal costs per unit. C) equivalent copying costs. D) similar inventory costs. E) less disintermediation. Answer: A Page Ref: 392 Difficulty: Difficult AACSB: Analytical thinking CASE: Analysis in terms of compare LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 20) What is the primary benefit to consumers of disintermediation? A) faster service B) lower costs C) higher quality D) greater choices E) None, disintermediation primarily benefits manufacturers. Answer: B Page Ref: 391 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 21) E-commerce refers simply to the use of the Internet and the Web to transact business. Answer: TRUE Page Ref: 384 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 22) Retail consumer e-commerce is growing at single-digit rates. Answer: FALSE Page Ref: 383 Difficulty: Difficult AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 7 23) The Internet shrinks information asymmetry. Answer: TRUE Page Ref: 390 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 24) 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. Answer: TRUE Page Ref: 390 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 25) Disintermediation provides major benefits to the distributor. Answer: FALSE Page Ref: 391 Difficulty: Moderate AACSB: Analytical thinking CASE: Evaluation in terms of assess LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 26) In general, for digital goods, the marginal cost of producing another unit is about zero. Answer: TRUE Page Ref: 392 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 27) Intellectual property refers to all forms of human expression, both tangible and intangible. Answer: FALSE Page Ref: 392 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 8 28) Traditional online marketing, such as display ads, is still the majority of all online marketing. Answer: TRUE Page Ref: 387 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 29) Information asymmetry exists when there is more information about one product than there is about a similar product. Answer: FALSE Page Ref: 390 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension 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. Answer: FALSE Page Ref: 389 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 31) Switching costs are the merchants' costs of changing prices. Answer: FALSE Page Ref: 391 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 9 32) What is the most profound way in which e-commerce and the Internet have changed the relationship between companies and their customers? Support your answer. Answer: Student answers will vary. A sample answer is: The most profound way in which ecommerce and the Internet have changed this relationship is in the shrinking of 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 Web sites 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. Page Ref: 383-418 Difficulty: Moderate AACSB: Written and oral communication CASE: Evaluation in terms of assess LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 33) "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. Answer: 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 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. Page Ref: 383-418 Difficulty: Difficult AACSB: Written and oral communication CASE: Synthesis in terms of bringing information together LO: 10.1: What are the unique features of e-commerce, digital markets, and digital goods? 10 34) Which of the following Internet business models does Amazon.com use? A) vontent provider B) portal C) market creator D) e-tailer E) transaction brokder Answer: D Page Ref: 395 Difficulty: Moderate AACSB: Analytical thinking CASE: Analysis in terms of categorize LO: 10.2: What are the principal e-commerce business and revenue models? 35) eBay is an example of A) C2C e-commerce. B) B2B e-commerce. C) B2C e-commerce. D) M-commerce. E) P2P-commerce. Answer: A Page Ref: 394 Difficulty: Moderate AACSB: Analytical thinking CASE: Analysis in terms of categorize LO: 10.2: What are the principal e-commerce business and revenue models? 36) ________ refers to businesses selling goods and services electronically to individuals. A) B2C e-commerce B) Social e-commerce C) C2C e-commerce D) Disintermediation E) M-commerce Answer: A Page Ref: 394 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.2: What are the principal e-commerce business and revenue models? 11 37) ________ uses the community provider Internet business model. A) iTunes B) Yahoo C) eBay D) Google E) Twitter Answer: E Page Ref: 395 Difficulty: Moderate AACSB: Analytical thinking CASE: Analysis in terms of categorize LO: 10.2: What are the principal e-commerce business and revenue models? 38) 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) provide online meeting places where people with similar interests can communicate. Answer: B Page Ref: 395 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.2: What are the principal e-commerce business and revenue models? 39) In which of the following Internet business models does a merchant create 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) portal Answer: A Page Ref: 395 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.2: What are the principal e-commerce business and revenue models? 12 40) 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) generate revenue from advertising or from directing buyers to sellers. Answer: B Page Ref: 395 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.2: What are the principal e-commerce business and revenue models? 41) 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) Epinions receives a fee after steering a customer to a participating Web site where he or she makes a purchase. C) Flickr provides basic services for free, but charges a premium for advanced services. D) Apple accepts micropayments for single music track downloads. E) Netflix charges customers a monthly fee for access to its library of movies. Answer: D Page Ref: 398 Difficulty: Moderate AACSB: Analytical thinking CASE: Analysis in terms of categorize LO: 10.2: What are the principal e-commerce business and revenue models? 42) 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) Epinions receives a fee after steering a customer to a participating Web site where he or she makes a purchase. C) Flickr provides basic services for free, but charges a premium for advanced services. D) Apple accepts micropayments for single music track downloads. E) Netflix charges customers a monthly fee for access to its library of movies. Answer: B Page Ref: 399 Difficulty: Moderate AACSB: Analytical thinking CASE: Analysis in terms of categorize LO: 10.2: What are the principal e-commerce business and revenue models? 13 43) 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) Epinions receives a fee after steering a customer to a participating Web site where he or she makes a purchase. C) Flickr provides basic services for free, but charges a premium for advanced services. D) Apple accepts micropayments for single music track downloads. E) Netflix charges customers a monthly fee for access to its library of movies. Answer: A Page Ref: 399 Difficulty: Moderate AACSB: Analytical thinking CASE: Analysis in terms of categorize LO: 10.2: What are the principal e-commerce business and revenue models? 44) In the ________ revenue models, a firm offers some services for free but charges a subscription fee for premium services. A) free/freemium B) subscription C) transaction fee D) affiliate E) sales Answer: A Page Ref: 399 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.2: What are the principal e-commerce business and revenue models? 45) 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) affiliate revenue Answer: D Page Ref: 398 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.2: What are the principal e-commerce business and revenue models? 14 46) An example of the market creator business model is eBay, a C2C auction site. Answer: TRUE Page Ref: 395 Difficulty: Moderate AACSB: Analytical thinking CASE: Analysis in terms of categorize LO: 10.2: What are the principal e-commerce business and revenue models? 47) An example of the portal business model is Facebook. Answer: FALSE Page Ref: 395 Difficulty: Easy AACSB: Analytical thinking CASE: Analysis in terms of categorize LO: 10.2: What are the principal e-commerce business and revenue models? 48) Web personalization is used primarily as a major marketing tool. Answer: TRUE Page Ref: 404 Difficulty: Moderate AACSB: Analytical thinking CASE: Analysis in terms of appraise LO: 10.2: What are the principal e-commerce business and revenue models? 49) Podcasting allows subscribers to listen to live, streaming radio and other audio content. Answer: FALSE Page Ref: 396 Difficulty: Easy AACSB: Analytical thinking CASE: Analysis in terms of examine LO: 10.2: What are the principal e-commerce business and revenue models? 50) In the affiliate revenue model, firms derive revenue by selling information or services through partner e-commerce sites. Answer: FALSE Page Ref: 399 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.2: What are the principal e-commerce business and revenue models? 15 51) 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. 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. Page Ref: 394-397 Difficulty: Easy AACSB: Written and oral communication CASE: Evaluation in terms of assess LO: 10.2: What are the principal e-commerce business and revenue models? 52) 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. 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.) Page Ref: 394 Difficulty: Moderate AACSB: Written and oral communication CASE: Evaluation in terms of assess LO: 10.2: What are the principal e-commerce business and revenue models? 53) What methods could a portal use to generate revenue? Which do you think might be most successful, and why? Answer: 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. Page Ref: 394-395 Difficulty: Moderate AACSB: Written and oral communication CASE: Evaluation in terms of assess LO: 10.2: What are the principal e-commerce business and revenue models? 16 54) 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? Answer: 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. Page Ref: 383-418 Difficulty: Difficult AACSB: Written and oral communication CASE: Synthesis in terms of bringing information together LO: 10.2: What are the principal e-commerce business and revenue models? 55) ________ describes the concept that a large group of people is better at making good decisions than a single person. A) The wisdom of crowds B) Outsourcing C) Crowdsourcing D) Social graphing E) Social search Answer: A Page Ref: 407 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 56) 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) social shopping. E) crowdsourcing. Answer: E Page Ref: 408 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 17 57) Exposing an individual to ads that are chosen and based on the recorded and analyzed online behavior of the individual is referred to as A) clickstream advertising. B) behavioral targeting. C) online profiling. D) long tail marketing. E) crowdsourcing. Answer: B Page Ref: 402 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 58) 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) all of the relationships in an online community Answer: C Page Ref: 405 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 59) Which of the following marketing formats is sales oriented, rather than branding oriented or a mix? A) lead generation B) search engine C) rich media D) display ads E) video Answer: B Page Ref: 402 Difficulty: Difficult AACSB: Analytical thinking CASE: Evaluation in terms of assess LO: 10.3: How has e-commerce transformed marketing? 18 60) Which of the following social commerce features allows social network sites to gather and distribute to others information about which products a user likes and dislikes? A) social sign-on B) collaborative shopping C) network notification D) social search E) newsfeed Answer: C Page Ref: 407 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 61) Which of the following is a marketing format that uses banner ads and pop-ups with interactive features? A) search engine ads B) video ads C) rich media ads D) e-mail ads E) display ads Answer: E Page Ref: 402 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 62) The Internet enables ________ marketing, by leveraging the fact that there is always some demand, however small, for a product. A) long-tail B) behavioral C) crowdsource D) prediction E) lead generation Answer: A Page Ref: 401 Difficulty: Difficult AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 19 63) ________ is a peer-to-peer market in which participants bet on the outcomes of current events, business, or social trends. A) Crowdsourcing B) A net marketplace C) A prediction market D) A futures auction E) A private exchange Answer: C Page Ref: 408 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 64) What is the difference between personalization and customization, as applied to e-commerce technologies? A) Customization is any type of adjustment made to a product by the user; personalization refers to a business changing a product or service for the user. B) Personalization is any type of adjustment made to a product by the user; customization refers to a business changing a product or service for the user. C) Customization refers to adjusting marketing messages for a consumer; personalization refers to adjusting a product or service based on a user's preferences. D) Personalization refers to adjusting marketing messages for a consumer; customization refers to adjusting a product or service based on a user's preferences. E) There is no difference, both terms refer to changing a product or communication for the consumer. Answer: D Page Ref: 389-390 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 65) Rich media advertisements are a sales-oriented marketing format. Answer: FALSE Page Ref: 402 Difficulty: Moderate AACSB: Analytical thinking CASE: Analysis in terms of appraise LO: 10.3: How has e-commerce transformed marketing? 20 66) Behavioral targeting occurs at two levels: individual Web sites and through ISPs. Answer: FALSE Page Ref: 403 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 67) Advertising networks track a user's behavior at thousands of Web sites. Answer: TRUE Page Ref: 403 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 68) Viral marketing is like traditional word-of-mouth marketing except that it is spread via online communities. Answer: TRUE Page Ref: 407 Difficulty: Difficult AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 69) The behavioral targeting of ads results in consumers responding ten times more frequently than when delivered ads randomly. Answer: TRUE Page Ref: 404 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.3: How has e-commerce transformed marketing? 21 70) Describe the use of personalization and customization in e-commerce. What business value do these techniques have? Answer: 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 Web sites, 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. Page Ref: 389-390 Difficulty: Moderate AACSB: Written and oral communication CASE: Evaluation in terms of assess LO: 10.3: How has e-commerce transformed marketing? 71) 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? Answer: 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 Web site. 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. Page Ref: 399-408 Difficulty: Difficult AACSB: Written and oral communication CASE: Synthesis in terms of bringing information together LO: 10.3: How has e-commerce transformed marketing? 22 72) Web site tracking software can log the path a customer took through the Web site, 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. Answer: Student answers will vary, but should include an understanding that customer OS and browser interact technologically with a Web site 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 Web site 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. Page Ref: 402-405 Difficulty: Moderate AACSB: Written and oral communication CASE: Evaluation in terms of assess LO: 10.3: How has e-commerce transformed marketing? 73) All of the following are activities related to establishing a Web presence except for A) search. B) affiliates. C) apps. D) newsletters. E) display. Answer: D Page Ref: 417 Difficulty: Difficult AACSB: Application of knowledge CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 74) EDI is A) the use of Internet technologies for electronic data transactions. B) the exchange between two organizations of standard transactions through a network. C) electronic data invoicing. D) electronic delivery infrastructure. E) slowly becoming the norm for B2B communications. Answer: B Page Ref: 409 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 23 75) The process of sourcing goods and materials, negotiating with suppliers, paying for goods, and making delivery arrangements is called A) e-procurement. B) SCM. C) procurement. D) sourcing. E) production. Answer: C Page Ref: 410 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 76) A secure Web site 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. Answer: D Page Ref: 410 Difficulty: Moderate AACSB: Information technology CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 77) Net marketplaces A) focus on continuous business process coordination between companies for supply chain management. B) are industry owned or operate as independent intermediaries between buyers and sellers. C) are geared towards short-term spot purchasing. D) are more relationship oriented than private industrial networks. E) typically consist of a large firm linking to its suppliers and partners. Answer: B Page Ref: 411 Difficulty: Difficult AACSB: Analytical thinking CASE: Evaluation in terms of assess LO: 10.4: How has e-commerce affected business-to-business transactions? 24 78) A third-party Net marketplace that connects many buyers and suppliers for spot purchasing is called a(n) A) exchange. B) vertical market. C) private exchange. D) e-hub. E) private industrial network. Answer: A Page Ref: 411 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 79) Goods that are involved in the actual production process are referred to as A) raw materials. B) direct goods. C) purchasing goods. D) indirect goods. E) products. Answer: B Page Ref: 411 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 80) Which of the following statements about m-commerce is not true? A) In 2014, m-commerce represented about 19 percent of all e-commerce. B) M-commerce is the fastest growing form of e-commerce. C) In 2014, mobile advertising is up over 80% from the previous year. D) Fifty-five percent of online retailers have m-commerce Web sites. E) In 2014, the main areas of growth are in online banking and location-based services. Answer: E Page Ref: 412 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 25 81) EDI standards that take advantage of network communications have yet to be fully implemented at the industry level. Answer: FALSE Page Ref: 409 Difficulty: Moderate AACSB: Information technology CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 82) Net marketplaces may either support contractual purchasing based on long-term relationships with designated suppliers or short-term spot purchasing. Answer: TRUE Page Ref: 411 Difficulty: Difficult AACSB: Application of knowledge CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 83) Exchanges have become one of the most popular types of Net marketplace because they encourage competitive bidding that drives prices down. Answer: FALSE Page Ref: 412 Difficulty: Difficult AACSB: Application of knowledge CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 84) Indirect goods are not involved firsthand in the production process. Answer: TRUE Page Ref: 411 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.4: How has e-commerce affected business-to-business transactions? 26 85) A new social mobile app you are developing allows users to find friends who are logged in and within a 10-mile radius. This would be categorized as a ________ service. A) geosocial B) geoinformation C) geoadvertising D) geomapping E) geolocating Answer: B Page Ref: 413 Difficulty: Easy AACSB: Analytical thinking CASE: Analysis in terms of appraise LO: 10.5: What is the role of m-commerce in business and what are the most important mcommerce applications? 86) Geoadvertising sends ads to users based on their A) GPS locations. B) home addresses. C) shopping preferences. D) web site behaviors. E) Google Maps settings. Answer: A Page Ref: 413 Difficulty: Moderate AACSB: Application of knowledge CASE: Comprehension LO: 10.5: What is the role of m-commerce in business and what are the most important mcommerce applications? 87) 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? Answer: 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. Page Ref: 412-413 Difficulty: Moderate AACSB: Written and oral communication CASE: Analysis in terms of summarize LO: 10.5: What is the role of m-commerce in business and what are the most important mcommerce applications? 27 88) Which of the following is a milestone for the Web site development phase of building an ecommerce presence? A) Web mission statement B) social media plan C) Web site plan D) Web presence map E) functional Web site Answer: C Page Ref: 418 Difficulty: Difficult AACSB: Application of knowledge CASE: Comprehension LO: 10.6: What issues must be addressed when building an e-commerce presence? 89) In planning a robust e-commerce presence, you will want to consider the blog platform as part of your ________ presence. A) social media B) e-mail C) community D) Web site E) offline media Answer: A Page Ref: 417 Difficulty: Moderate AACSB: Analytical thinking CASE: Evaluation in terms of appraise, assess LO: 10.6: What issues must be addressed when building an e-commerce presence? 90) Which of the following is not one of four types of presence to be considered when building an E-commerce presence? A) offline media B) Web sites C) social media D) corporate E) e-mail Answer: D Page Ref: 417 Difficulty: Easy AACSB: Application of knowledge CASE: Comprehension LO: 10.6: What issues must be addressed when building an e-commerce presence? 28