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Virtual Marketing
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1. Role ofthe Internet : technological development,development ofe-Commerce,
different commercial models, diverse roles ofwebsites.
2. Internet strategy : virtual value chaindis-intermediation, cybermediaries
3. Business toBusiness : Intranets and Extranets; communication , recruitment
andprocurement , exchanges.
4. Consumer behavior : flow theory; Hoffmans Many to- Many model; Internetbranding and loyalty ; Internet communities ; how the Internet is changing
consumer behavior.
5. Internet market research : secondary research, online focus groups, MEGS ,
web surveys , Email surveys.
6. Internet retailing : reducing role oflocation , online shopping.
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7. Internet promotion : advertising : types , measurement, effectiveness ,
integration ; affiliation marketing , PR; word-on-line ; direct marketing.
8. Website design : website design guidelines , best practice , building traffic.
Convergence and future development : interactive TV , mobile internet ,
PDA , groupware , SMS , interactive appliances.
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Role OfInternet
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Role of Internet
With the use ofinternet, it is possible to transmit/receive
information containing images, graphics, sound and videos. ISP
industry can offer services as:
Linking consumers and businesses via internet.
Monitoring/maintaining customer's Web sites.Networkmanagement/systems integration.
Backbone access services forother ISP's.
Managing onlinepurchase and payment systems.The internet is designed to be indefinitely extendible and
the reliability ofinternetprimarily depends on the quality ofthe
serviceproviders' equipments.
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Benefits of Internet:
Doing fast business.
Trying out new ideas.
Gathering opinions.
Allowing the business to appear alongside other established
businesses.Improving the standards ofcustomer service/support resource.
Supporting managerial functions.
Limitations:
Security
Privacy
Threats: Hackers, viruses etc.
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Managing in the Virtual World - Market Space
What is Market Place
Physical World ofResources to createproducts/ services
What is Marketspace
Virtual World ofInfo. that complements/ substitutes the physical
world
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Business have been looking for ways to increase theirprofits and
market share . The search formore efficient ways ofdoing business
has been driving another revolution in the conduct ofbusiness .This
revolution is known as electronic commerce which is any
purchasing or selling through an electronic communications
medium.Business planners in institutions and organizations now
see technology not only as a supportive cofactor, but as a key
strategic tool. They see electronic commerce as a wave offuture.
Information technology has revolutionized and digitalized economic
activity , and made it a truly globalphenomenon .One ofthe most
visible icons ofthe IT Revolution is the internet the world wise
web. Which is a gigantic anarchic networkofcomputers world wide, which is essentially used for communicating , interaction ,
interactive long distance computing and exchange ofinformation
giving rise to a host ofapplications frommilitary and government to
business , education and entertainment.
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E-commerce exists because ofinternet. It has been born on the net
and is growing with the net . It involves carrying business on and
through the net .
E-commerce is a product ofthe digital economy. It is a source ofa
paradigm shift , in redefining technology, individual and global
societies , as well as national and global economies.
Electronic commerce is a symbolic integration ofcommunications, data management , and security capabilities to allow business
applications within different organizations to automatically
exchange information related to the sale ifgoods and services .
Communication services support the transferofinformation from
the originator to the recipient. Data management services definethe exchange format of the information.Security mechanisms
authenticate the source ofinformation, guarantee the integrity of
the information received , prevent disclosure ofinformation to
inappropriate users , and document that the information was
received by the intended recipient.
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Prior to the development ofe-commerce, the process ofmarketing
and selling goods was a mass-marketing and sales-force driven
process . Customers were viewed as passive targets ofadvertising
campaigns .Selling was conducted in well-insulated channels
.Consumers were trapped by geographical and social boundaries,
unable to search widely for the best price and quality .
E-commerce has challenged much ofthis traditional business
thinking.
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E-Commerce Defined :
The use of internet and the WEB to transact business .
More formally , digitally enabled commercial transactions
between and among organizations and individuals.
Electronic commerce is commerce via any electronicmedia , such as TV,fax, and online networks.Internet-
based commerce makes use of any Internet facility and
service. Web-based commerce focuses on the opportunity
of the World Wide Web apparatus , in particular , itsubiquity and its ease of use .
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Global Reach : E-commerce technologypermits commercial
transactions to cross cultural and national boundaries farmore
conveniently and cost effectively than is true in traditional
commerce.As a result, the potential market size for e-commerce
merchants is roughly equal to the size ofthe worlds online
population.The total numberofusers or customers an e-commerce
business can obtain is a measure ofits reach.
Universal Standards : The technical standards for conducting e-commerce , are universal standards they are shared by all nations
around the world. The universal technical standards ofe-commerce
greatly lower the market entry costs - the cost merchants must pay
just to bring their goods tomarket. At the same time , for consumers, universal standards , reducesearch cost the effort required tofind
a suitableproducts.
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Richness : Information richness refers to the complexity and
content ofa message.
Interactivity : E-commerce technologies are interactive , meaningthey allow for two-way communication between merchant and
consumer.It allows an online merchant to engage a consumer in
ways similar to a face-toface experience , but on a much more
massive , global scale.
Information Density : the internet and the Web vastly increase
information densitythe total amount and quality of information
available to all market participants , consumers, and merchants
alike.E-commerce technologies reduce information collection,
storage , processing , and communication costs .At the sale time,these technologies increase greatly, the accuracy and timeliness
ofinformation-making information more useful and important
than ever.As a result information becomes more plentiful,cheaper
and ofhigher quality.
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Personalization/Customization : E-commerce technologiespermit
personalizationmerchants can target theirmarketing messages to
specific individuals by adjusting the message to a persons
name,interests , and past purchases.The technology alsopermits
customization changing the deliveredproduct or service based on a
users preference orprior behavior.Given the interactive nature ofe-
commerce technology, a great deal ofinformation about the
consumer can be gathered in the marketplace at the moment ofpurchase.With the increase in information density , a great deal of
information about the consumerspast purchases and behavior can
be stored and used by online merchants.The result is increase in the
level ofpersonalization and customization.
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Types ofE-Commerce :
There are different types ofe-commerce and many different ways to
characterize these types .
The five major types ofe-commerce are :
1. B2C
2. B2B
3. C2C
4. P2P
5. M-Commerce
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B2C : (Business-to-Consumer)
The most commonly discussed type ofe-commerce is Business-to-Consumer (B2C) e-commerce, in which online business attempt to
reach individual consumers is done .It has grown exponentially since
1995, and is the type ofe-commerce that most consumers are likely
to encounter. Within the B2C category there are many different
types ofbusiness models: portals , online retailers , contentproviders
, transaction brokers , market creators , service providers , and
communityproviders.
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B2B : (Business-to-Business)
In this type ofe-commerce , one business focuses on selling toother business .It is the largest formofe-commerce.The ultimate
size ofB2B e-commerce could be huge . At first, B2B e-commerce
primarily involved inter-business exchanges , but a numberofother
B2B business models have developed, including e-distribution ,B2B service providers , matchmakers , and info-mediaries that are
widening the use ofe-commerce.
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C2C : Consumer-to-Consumer
C2C e-commerce provides a way for consumers to sell to eachother , with the helpofan online market maker such as the auction
site .In C2C e-commerce , the consumerprepares the product for
market , places the product for auction or sale, and relies on the
market maker toprovide catalog , search engine ,and transactionclearing capabilities so that products can be easily displayed ,
discovered , and paid for.
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P2P : (Peer-to-Peer)
Peer-to-Peer technology enables Internet users to share files and
computer resources directly without having to go through a
central Web server. In peer-to-peerspurest form, no
intermediary is required . Entrepreneurs and venture capitalists
have attempted to adapt various aspects ofpeer-to-peer (P2P) e-
commerce.
E.g. Napster.com established to aid internet users in finding and
sharing music files (mp3 files). It is partiallypeer-to-peer
because it relies on a central database to show which users are
sharing music files.
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M-commerce :
Mobile commerce orm-commerce , refers to the use ofwirelessdigital devices to enable transactions on the Web . These devices
utilize wireless networks to connect cellphones and handheld
devices to the Web. Once connected , mobile consumers can
conduct many types oftransactions , including stock trades,
banking, travel reservations , and more.
***B2G : Business to Government
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E-Commerce Business Models :
A business model is a set ofplanned activities (sometimes referred
to as business process) designed to result in a profit in amarketplace. The business model is at the centerofthe business
plan.
A business plan is a document that describes a firms business
model .
An e-commerce business model aims to use and leverage the
unique qualities ofthe internet and the World Wide Web.
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There are Eight Key Ingredients ofa Business Model :
1. Valueproposition : It defines how a companys product or
service fulfils the needs ofthe customers.To develop and/oranalyze a proposition, the following questions need to be
answered :
- Why will customers choose to business with yourfirm
instead ofanother company ?
- What will yourfirmprovide that otherfirms do not and
cannot ?
From the consumerpoint ofview , successful e-commerce
valuepropositions include : personalization and
customization ofproduct offerings, reduction ofproduct
search costs, reduction ofprice discovery costs, and
facilitation oftransactions by managingproduct delivery.
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2.Revenue model :
The firms revenue model describes how the firm will earn revenue ,
generateprofits,andproduce a superior return on investedcapital.The function ofbusiness organizations is both to generate
profits and toproduce returns on invested capital that exceed
alternative investments.
* The advertising model :
A website that offers its users content, services , and/orproducts
alsoprovides a forumfor advertisements and receives fees from
advertisers. Those websites that are able to attract the greatest
viewer ship and are able to retain user attention are able to chargehigher advertising rates.
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* Subscription Revenue Model :
In the subscription revenue model , a Web site that offers its users
content or services charges a subscription fee for access to some orall ofits offerings .
* Transaction fee revenue model :
In this model a company receives a fee for enabling or executing a
transaction. (e.g. Online auction websites taking some commissionfrom buyer as well as the seller).
* Sales Revenue Model :
In the sales revenue model , a companies derive revenue by sellinggoods, information , or services to customers .
E.g. amazon.com
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* Affiliate Revenue model :
In the affiliate revenue model , sites that steer business to anaffiliate receive a referral fee orpercentage ofthe revenue from
any resulting sales.
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3.Market Opportunity :
The termmarket opportunity refers to the companys intended
marketplace and the overallpotential financial opportunitiesavailable to the firm in that marketplace . The market
opportunity is usually divided into smallermarket niches. The
realistic market opportunity is defined by the revenuepotential in
each ofthe market niches .
4. Competitive Environment :
The firms competitive environment refers to the other companies
operating in the same marketplace selling similarproducts . The
competitive environment for a company is influenced by severalfactors : how many competitors are active, how large their
operations are , what the market share ofeach competitor is ,
howprofitable these firms are , and how they price their
products.
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5.Competitive Advantage :
Firms achieve a competitive advantage when they can produce a
superiorproduct a superiorproduct and/or bring the product tomarket at lower than most, or all, oftheir competitors . Firms also
compete on scope .Some firms can develop global markets while
otherfirms can only develop a national or regional market .Firms
that can provide superiorproducts at lowest cost on global basis
are truly advantaged.
6. Market strategy :
Market strategy is the plan the company put together that details
exactly how the company intend to enter the market and attractnew customers.
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7.Organizational Development :
Describes how the company will organize the work that needs to be
accomplished.
8. Management Team :
Employees ofthe company responsible formaking the business
model work.
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Categorizing
E-Commerce
Business Models
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MajorB2C business models :
There are a numberofdifferent models being used in the B2C e-
commerce arena . The majormodels include the following :
Portal :-Offers powerful search tools plus an integratedpackage of
content services ;typically utilizes a combined
subscription/advertising revenue/transaction fee model ;may be
general or specialized.
E-tailer :- Online version oftraditional retailer; includes virtual
merchants (online retail stores) , clicks and mortar e-tailers (online
distribution channel for a company that also has a physical
store);catalog merchants (online version ofdirect mail catalog);online malls (online version ofmall);manufacturers selling directly
over the Web.
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Content Provider :- Information and entertainment companies that
provide digital content over the Web; typically utilizes an
advertising , subscription ,or affiliate referral fee revenue model.
Transaction broker :- Process online sales transactions; typically
utilizes a transaction fee revenue model.
Market creator :- Uses Internet technology to create markets that
bring buyers and sellers together ; typically utilizes a transaction feerevenue model.
Serviceprovider :- Offers services online.
Community provider :- Provides an online community oflike-
minded individuals for networking and information sharing ;revenue is generated by referral fees , advertising , and subscription.
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MajorB2B business models :
The major business models used to date in B2B arena include :
Hub, also known as marketplace/exchange electronic marketplace where suppliers and commercial purchasers can conduct
transactions ; may be general (a horizontal marketplace ) or
specialized (a vertical marketplace) .
E-distributor :- Supplies products directly to individual businesses.
B2B serviceprovider :- Sells business services tootherfirms.
Matchmaker :- Link business together , changes transaction on
usage fees.Infomediary :- Gathers information and sells it to business .
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Major C2C business models :
A variety ofbusiness models can be found in the customer-to-
customer e-commerce , peer-to-peer e-commerce, and m-
commerce areas :
C2C business models connect consumers with other consumers
.The most successful has been the market creator business model
used by eBay.com.
P2P business models enable consumers to share files and services
via Web without common servers. A challenge has been finding a
revenue model that works.
M-commerce business models take traditional e-commerce
models and leverage emerging wireless technologies topermit
mobile access to the Web.
E-commerce enablers business models focus on providing the
infrastructure necessary for e-commerce companies to exist, grow,
and prosper.
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Key business concepts and strategies applicable to e-commerce :
Industry structure : The nature ofplayers in an industry and their
relative bargainingpower by changing the basis ofcompetitionamong rivals , the barriers to entry , the threat ofnew substitute
products , the strength ofsuppliers , and the bargainingpowerof
buyers.
Industry value chains : The set ofactivitiesperformed in anindustry by suppliers , manufacturers , transporters , distributors and
retailers that transforms raw inputs intofinal products and services
by reducing the cost ofinformation and other transaction costs.
Firm value chains : The set ofactivitiesperformed within an
individual firm to create final products from raw inputs by
increasing operational efficiency .
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Technology Infrastructure for
E-Commerce
The Internet and World Wide Web E-
Commerce Infrastructure
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The Internet : Technology Background
The Internet is an interconnected networkofthousands of
networks and millions ofcomputers (sometimes called as host
computers or just hosts) linking business , educational institutions, government agencies , and individuals together.The internet
provides services such as e-mail, news-groups, shopping, research
, instant messaging , music videos and news . Noone organization
controls the Internet or how it functions , nor it is owned by
anybody , yet it has provided the infrastructure for a
transformation in commerce, scientific research, and culture .The
word internet is derived from the word internetworkor the
connecting togetheroftwoormore computer networks.The World
Wide Web is one ofthe internets most popular services,providingaccess tooverone billion Web pages , which are documents
created in a programming language called HTML and which can
contain text , graphics , audio, video, and otherobjects, as well as
hyperlinks that permit a user to jumpfromonepage to another.
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The Internet : Key Technology Concepts;
Based in the definition , the internet means a network that uses the
IP (Internet Protocol) addressing scheme, supports theTransmission Control Protocol (TCP), and ,makes services
available to users much like a telephone systemmakes voice and
data services available to the public.
Behind this formal definition are three extremely importantconcepts that are the basis for understanding the Internet : packet
switching , the TCP/IP communicationsprotocol , and client/server
computing .Although the Internet has evolved and changed
dramatically, these three concepts are at the core ofhow the
Internet functions today and are the foundation for Internet.
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Packet Switching : It is a method ofslicing digital messages intoparcels called
packets sending the packets along different communication paths as they
become available , and then reassembling the packets once they arrive at their
destination .Prior to the development ofpacket switching , early computer
networks used leased , dedicated telephone circuits to communicate with terminalsand other computers.
Inpacket-switched networks , messages are first broken down into
packets.Appended to each packet are digital codes that indicate a source
address(the originationpoint) and the destination address, as well as sequencing
information and error-control information for thepacket.Rather than being sentdirectly to the destination , in a packet network , thepackets travel from computer
to computer until they reach their destination. The computers are called Routers .
Routers are special purpose computers that interconnect thousands ofdifferent
computer networks that make up the internet and routepackets along to their
ultimate destination as they travel.To ensure that packets take the best availablepath towards their destination, the routers use computerprograms called routing
algorithms.
Packet switching makes full use ofalmost all available communication lines and
capacity.Ifsome lines are disabled or too busy , the packets can be sent on any
available line that eventually leads to the destinationpoint.
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TCP/IP :
TCP refers to the Transmission Control Protocol . IP refers to the
Internet Protocol. Aprotocol is a set ofrules forformatting ,ordering , compressing , and error checking messages.It may also
specify the speed oftransmission and means by which devices on
the network will indicate they have stopped sending and/or
receiving messages. Protocols can be implemented in either
hardware or software .TCP/IP is implemented in Web softwarecalled server software .It is the agreed upon protocol for
transmitting datapackets over the Web.TCP establishes connections
among sending and receiving Web computers , handles the
assembly ofpackets at the point oftransmission , and their
reassembly at the receiving end.
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IP addresses :TCP handles the packetizing and routing of Internet
messages . IPprovides the Internets addressing scheme .Every
computer connected to the Internet must be assigned an address otherwise it cannot send or receive TCPpackets .When a user
signs onto the Internet using a dial-up telephone modem, the
computer is assigned a temporary address by the Internet service
provider.
Internet addresses known as IP addresses , are 32-bit numbers that
appear as a series offour separate numbers marked offby periods
such as 201.61.186.227. Each ofthe four numbers can range from
0-255. This dotted quad addressing scheme contains up to4
billion addresses ofthe computer ( 2 to the 32nd power).Theleftmost number typically indicates the network address ofthe
computer , while remaining numbers help to identify the specific
computer within the group that is sending (or receiving) messages.
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Domain Names and URLs : Most people cannot remember 32-bit
numbers .IP addresses can be represented by a natural language
convention called domain names.The domain name system (DNS)
allows expressions to stand for numeric IP addresses.
UniformResource Locators (URLs ) are addresses used by Web
browsers to identify the location ofcontent on the web, also use
domain names as a part ofthe URL.A typical URL contains the
protocol to be used when accessing the address, followed by its
location. The protocol used is HTTP (Hypertext Transfer
Protocol).A URL can have more than one paths.
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Client/Server computing :
It is a model ofcomputing in which very powerfulpersonal
computers called Clients are connected together in a networktogether with one ormore server computers.These clients are
sufficientlypowerful to accomplish complex tasks such as
displaying rich graphics , storing large files, and processing
graphics and sound files , all on a local desktopor hand held
device. Servers are networked computers dedicated to commonfunctions that their client machines on the network need. Such as
storing files , software applications, utility programs such as Web
connections , and printers.
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Other Internet Protocols :
SMTP :Simple mail transferprotocol
POP : Post Office Protocol
IMAP : Internet message accessprotocol
FTP : File Transfer Protocol for transferring files
SSL : Secure Socket Layers for Security
For Sending
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E-Commerce SecurityEnvironment
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It is difficult to estimate the actual amount ofe-commerce crime
for a variety ofreasons . In many instances , e-commerce crimes
are not reported because companies earoflosing the trust of
legitimate customers. And even when crimes are reported , it maybe hard to quantify the losses incurred .The most serious losses
involved theft ofproprietary information and financial
fraud.Online credit card fraud is perhaps the most high profile
formofe-commerce crime. In some cases , the criminals aim tojust deface , vandalize and/or disrupt a Web site, rather than steal
goods or services . The cost ofsuch an attack includes not only the
time and effort tomake repairs to the site but also damage done to
the sites reputation and image as well as revenues lost as a result
of the attack. Estimates ofthe overall cost ofthe various forms ofcyber vandalism range into billions.
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Security Threats in the E-Commerce Environment :
From the technologyperspective , there are three key points ofvulnerability when dealing with e-commerce : the client, the server
and the communicationpipeline.
Malicious Code
It includes a variety ofthreats such as viruses , worms , Trojanhorses , and bad applets . A virus is a computerprogram that has
the ability to replicate ormake copies ofitself, and spread toother
files. In addition to the ability to replicate , most computer viruses
deliver a payload(destroying files,reformatting the computers
hard drive or causingprograms to rum improperly.
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A Trojan horse does something other than expected . The Trojan
horse is not itselfa virus because it does not replicate , but is often a
way for viruses orothermalicious code to be introduced into acomputer system.
Bad applets also referred to as malicious mobile code , are expected
to become an increasingproblem as java and Active X controls
become more commonplace.Malicious code is a threat to the systems integrity and continued
operation, often changing how a systemfunctions or altering
documents created on the system . In many cases the user is
unaware ofthe attack until it affects the system and the data on thesystem.
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Hacking and Cyber vandalism :
A hacker is an individual who intends to gain unauthorized access
to a computer system. Within the hacking community , the termcracker is typically used to denote a hacker with criminal intent
although in the publicpress , the terms hacker and cracker are
used interchangeably. Hackers and crackers get unauthorized
access by finding weaknesses in the security procedures ofWeb
sites and computer system , often taking advantages ofvarious
features ofinternet that make it an open system that is easy to use.
Cyber vandalism is intentionally disrupting,defacing , or even
destroying the site.
Groupofhackers called as tiger teams are used by corporate
security departments to test theirown security measures.By hiring
hackers to break into the systemfromoutside , the company can
identify weaknesses in the computer systems.
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Credit Card Frauds
The fear that the credit card information will be stolen frequently
prevents the users frommaking onlinepurchases . In e-commercethe greatest threat to the consumer is that the merchants server with
which the customer is transacting will lose the credit information
topermit it to be diverted for a criminal purpose.Credit card files
are the major targets ofWeb site hackers.
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Dimensions ofE-Commerce security :
There are six dimensions to e-commerce security :
1. Integrity
2. No repudiation
3. Authenticity
4. Confidentiality
5. Privacy
6. Availabilty
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Integrity refers to the ability to ensure that information being
displayed on a Web site , or transmitted or received over the
internet , has not been altered in any way by an unauthorized
party.e.g. an unauthorizedperson intercepts and changes the
contents ofan online communication , such as by redirecting a
blank wire transfer into a different account , the integrity ofthe
message has been compromised because the communication no
longer represents what the original sender intended .
Non repudiation refers to the ability to ensure that e-commerce
participants do not deny (I.e. repudiate) theironline actions.
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Authenticity refers to the ability to identify the identity ofa
person or entity with whom you are dealing on the internet. How
does the customer know that the Web site operator is who it
claims to be ? How can the merchant be assured that the
customer is really who he/she say he/she is ? Someone who
claims to be someone they are not is spoofing or
misinterpreting themselves.
Confidentiality refers to the ability to ensure that messages anddata are available only to those who are to view them.
Confidentiality is something confused with privacy , which refers
to the ability to control the use ofinformation a customer
provides about himselfor herselfto an e-commerce merchant.Availability refers to the ability to ensure that an e-commerce site
continues tofunction as intended .
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E-Commerce security is designed toprotect these sixdimensions.When any one ofthem is compromised , it is a security
issue.
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Security ofData During Transmission :
Business with computers containing confidential data connected
to the Internet do not want the public to have unauthorized access
to specificparts oftheirfiles; at the same time they might want
thepublic to have access to specific parts oftheir information
base.Business that offer services that require payment by methods
including credit card transactions need to be cautious .Ifthesetransactions are not secured, hackers can access the users account
information.
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Internet Strategy
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What is Value Chain?
Value chain is a high-level model of how businesses
receive raw materials as input, add value to the rawmaterials through various processes, and sell finishedproducts to customers.
Today's Challenges
Old-fashioned command-and-control companies were
merely trying tomanage the "white space" in theirorganizational
charts. Today's companies must manage the white space in entire
value chains.
A critical pre-requisite for success in digital economyis the implementation of an integrated value chain thatextends across - and beyond - the enterprise.
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In an information society the value ofinformation has become
significant. Every business has an information component in
itsproduct/services and operations. For example, a firmmay
have an information product (eg: newspaper) or an
information intensive operations (eg: insurance). The
proportion ofinformation content varies from industry to
industry. In some industries informationplays a core role
while in others it plays a peripheral role. Significanttransformations can be expected in industries where
informationplays a core role. For example, industries such as
publishing, music,financial services, entertainment, etc.,
where informationplays a core role are undergoing significant
transformation while in other industries such as manufacturingthe transformation is more limited.
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Traditionally there has been a trade offbetween reach and
richness.Reach refers to breadth ofaudience and richness
refers to the quality ofinformation in terms ofdelivery mode,
media choice, information content and amount, relevance etc.
New technologies are changing the tradeoffs causing changes
in industry structure. For example, we have always used
standard information in a broadcast mode (eg: TV) for
reaching a broad audience. However, with the internet we havethepossibility ofproviding customized information in an
interactive mode to a broad audience.
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Some companies operate in marketplace, some in market-
space, and others in both. Managers have to create value in
bothphysical and virtual world to sustain the competitive
advantage. Value is created by gathering, organizing,
selecting, synthesizing, and distributing information. The
ability to create value with information may bring in
competitors fromoutside the industry who have expertise withhandling information. A few examples are online travel agents,
stock brokers, online auto dealers, online retailers etc.
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Virtual Value Chain
Create value with information in the Marketspace
It may mirror the physical value chain or have totally new
products
It will require a change in way ofthinking
Seniormanagers need to understand about virtual value chainand how to exploit it
Marketing managers have to learn tomarket in marketspace
Value created by gathering, organzing, selecting,synthesizing, and distributing info
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Stages ofTransformation fromMarketplace toMarketspace
Firms go through various stages oftransformation in the useofIT. They start using IT as a control system tomonitor
performance (visibility stage) andprogress into exploiting the
information in the value chain. Finally, they tend tofind new value
in the information to create newproducts/services or add value toexistingproduct.
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Visibility
Info. Systems are considered as control systems
Improve efficiency thro' bettermonitoring
Reduce cost
Mirroring Capability
substitute virtual activities forphysical activities
createparallel value in market space
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New CustomerRelationships
add value toproducts/ services
draw on info. in virtual value chain to deliver value to
customers
Exploit the value matrix
gather
organize
select
synthesize
Distribute
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Value for a product is dependent on:
Information Content
Context - the way it ispresented
Infrastructure - to distribute the information.
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Dis-intermediation
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Disintermediation is giving the user or the consumer
direct access to information that otherwise would require
a mediator, such as a salesperson, a librarian, or a
lawyer. Observers of the Internet and the World Wide
Web note that these new technologies give users the
power to look up medical, legal information, travel, orcomparative product data directly, in some cases
removing the need for the mediator (doctor, lawyer,
salesperson) or at the very least changing the
relationship between the user and the product or service
provider.
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In economics, disintermediation is the removal of
intermediaries in a supply chain: cutting out the middlemen".Instead ofgoing through traditional distribution channels, which
had some type ofintermediate (such as a distributor, wholesaler,
broker, or agent), companies may now deal with every customer
directly, for example via the Internet. One important factor is a
drop in the cost ofservicing customers directly.
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Disintermediation initiated by consumers is often the
result ofhigh market transparency, in that buyers are aware of
supplyprices direct from the manufacturer.Buyers bypass the
middlemen (wholesalers and retailers) in order to buy directly
from the manufacturer and therebypay less.Buyers can
alternatively elect topurchase from wholesalers. Often, a B2Cintermediary functions as the bridge between buyer and
manufacturer.
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To illustrate, a typical B2C supply chain is composed offour
orfive entities (in order):
Supplier
Manufacturer
Wholesaler
Retailer
Buyer
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In the past, traditional channels ofdistribution have alwayshad a place for the middleman. It was through these third party
channelpartners that many companies could bring theirproducts
or services tomarket in the most economical mannerpossible.
Middlemen have handled not only the sale ofproduct, but also a
numberofotherfunctions including, lead generation, specification
ofequipment, assistance with credit approval, warehousing and
aftermarket support.
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A middleman can take a numberofdifferent forms. He or she
could be a wholesaler, distributor, retailer, sales agent or a
manufacturer's representative. Their sole purpose is to unite theproducer with the customer. Their value is in the ability tofind
the customer, define the customer's needs, close the sale and
support the manufacturer.
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However, as a result ofadvancing technologies and theproper application ofInternet strategies, it is no longer business as
usual for the middleman. The Internet changes all the rules. For
some established businesses these changes, such as reverse
auctions, marketplaces, industry portals and virtual buying groups,
represent a clear threat to the status quo enjoyed by manyperforming middleman functions. This threat is continuing to lend
credence to the feared concept ofdis-intermediation.
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New methods and new technologies are being developedeveryday that make it possible to drop the third party middlemen
and reduce transactional costs. When the middleman is deleted
from the process or dis-intermediated, he or she is notparty to the
profitspreviously generated in the transaction. The end result is
their ultimate demise.
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The Destruction of the Middleman
The Internet has changed all the rules and has posed a threat formany established distribution channels. At risk are the agents and
distributors that man these channels. New business models such
as reverse auctions, industryportals and virtual buying groups
have emerged lending credence to the feared concept ofdis-
intermediation.
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e-Commercepundits have long predicted the demise of
these middlemen as a result ofgoing direct. In some cases these
predictions have become realities. Travel agents have alreadyexperienced the shortening ofsupply chains as airlines encourage
their customers topurchase tickets directly from their web site.
Many airlines haveprovided lucrative incentives for customers
that bookon-line rather than through travel agents. The reason for
this onlinepush is simple: Airlines save an estimated $15 - $25per transaction when travelers use their Web sites.
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The manufacturers own web site can pose a threat to the
middleman as well. Leads generated here can be handled directly
by the principal and eliminate the need for the middleman.Aftermarketparts are especially vulnerable to this occurrence.
Most consumers refer to the nameplate on equipment they are
dealing with then contact the web site ofthe manufacturer when
they have a need for service orparts replacement. The middleman
is completely circumvented in this instance and that dramaticallyaffects his revenue.
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This may also be the case when a purchaser has the need for
either a replacement unit or an exact match to sit beside an
existingpiece ofequipment. The middleman could have sold
the original equipment and be completely bypassed when the
customer refers to a manufacturer's web site.
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Online Market
Research
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Several tools are available to the market
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Several tools are available to the market
researchere.g., mail questionnaires, phone surveys,
observation, and focus groups.
Surveys are useful for getting a great deal of
specific information. Surveys can contain open-ended
questions (e.g., In which city and state were you born?
____________) or closed-ended, where the respondent is
asked to select answers from a brief list (e.g., __Male___ Female. Open ended questions have the advantage
that the respondent is not limited to the options listed,
and that the respondent is not being influenced by seeing
a list of responses. However, open-ended questions are
often skipped by respondents, and coding them can bequite a challenge. In general, for surveys to yield
meaningful responses, sample sizes of over 100 are
usually required because precision is essential.
Surveys come in several different forms Mail
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Surveys come in several different forms. Mail
surveys are relatively inexpensive, but response rates are
typically quite lowtypically from 5-20%. Phone-surveys
get somewhat higher response rates, but not manyquestions can be asked because many answer options have
to be repeated and few people are willing to stay on the
phone for more than five minutes.
Surveys, as any kind of research, are vulnerable tobias. The wording of a question can influence the outcome
a great deal.
Focus groups are useful when the marketer wants to
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Focus groups are useful when the marketer wants to
launch a new product or modify an existing one. A focus
group usually involves having some 8-12 people come
together in a room to discuss their consumptionpreferences and experiences. The group is usually led by
a moderator, who will start out talking broadly about
topics related broadly to the product without
mentioning the product itself.
Focus groups are well suited for some purposes, but
poorly suited for others. In general, focus groups are
very good for getting breadthi.e., finding out what
kinds of issues are important for consumers in a given
product category.
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Personal interviews involve in-depth questioning of anindividual about his or her interest in or experiences with a product.
The benefit here is that we can get really into depth (when the
respondent says something interesting, we can ask him or her toelaborate), but this method of research is costly and can be extremely
vulnerable to interviewer bias.
Projective techniques are used when a consumer may feelembarrassed to admit to certain opinions, feelings, or preferences. For
example, many older executives may not be comfortable admitting tobeing intimidated by computers. It has been found that in such cases,
people will tend to respond more openly about someone else. Thus,
we may ask them to explain reasons why a friend has not yet bought a
computer, or to tell a story about a person in a picture who is or is not
using a product. The main problem with this method is that it is
difficult to analyze responses.
Observation of consumers is often a powerful tool
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Observationofconsumers is often a powerful tool.
Looking at how consumers select products may yield
insights into how they make decisions and what they look
for. For example, some American manufacturers wereconcerned about low sales of their products in Japan.
Observing Japanese consumers, it was found that many of
these Japanese consumers scrutinized packages looking for
a name of a major manufacturerthe product specific-
brands that are common in the U.S. (e.g., Tide) were not
impressive to the Japanese, who wanted a name of a major
firm like Mitsubishi or Proctor & Gamble. Observation may
help us determine how much time consumers spend
comparing prices, or whether nutritional labels are beingconsulted.
Physiological measures are occasionally used to
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Physiological measures are occasionally used to
examine consumer response. For example, advertisers may
want to measure a consumers level of arousal during
various parts of an advertisement.
Some cautions should be heeded in marketing
research. First, in general, research should only be
commissioned when it is worth the cost.
Secondly, marketing research can be, and often is,
abused. Managers frequently have their own agendas
(e.g., they either would like a product to be launched or
would prefer that it not be launched so that the firm will
have more resources left over to tackle their favoriteproducts). Often, a way to get your way is to demonstrate
through objective research that your opinions make
economic sense.
O li M k t R h T h i
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Online Market Research Techniques:
Market research involves gathering information that will help a
firm identifypotentialproducts and customers .There are twogeneral types ofmarket research .
Primary research involves gathering first-hand information using
techniques such as surveys , personal interviews and focusgroups.This type ofresearch is typically used to gain feedbackon
brands,products , or new marketing campaigns where noprevious
study has been done.
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Secondary research relies on existing , published information as the
basis for analyzing the market .
Bothprimary and secondary research can be completed onlinemore efficiently , less expensively , and more accurately than
offline.In addition to two different approaches tomarket research ,
there are two types ofdata to be studied .Quantitative data is data
that can be expressed as a number , such as percentage .Quantitative data can be analyzed using statistical programs that
identify relationship between certain variables , orfactors that
affect how someone responds.Qualitative data is data that cannot
be easily quantified , such as opinions , survey questions that yield
qualitative responses are analyzed by grouping responses intosimilar sub segments based on the answer given . One type of
analysis is content analysis , which tries to identify the major
categories ofresponses given.
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Feedback forms which ask users to provide input regarding a sites
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Feedbackforms, which ask users toprovide input regarding a site s
operations in a set format , are another type ofinline survey.
Requesting regular input from site visitors may provide more
qualitative data , which is more difficult to analyze , but the
resulting information can assist in improving and enhancing site
performance.
Personal interviews are anotherprimary research tool . The
interview is generally guided by a set ofquestions very similar tosurvey instrument. Although it is more difficult to incorporate
personal interviews within Web sites , it is possible to conduct
research online via live chat or e-mail , with trained researcher
interacting with the study participants .Personal interviews offer anopportunity to gathermore in-depth information on a topic.In some
cases , personal interviews are used as second phase ofa research
project , following initial information gathering by survey.
Secondary Research : It involves gathering information using WEB
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Secondary Research : It involves gathering information using WEB
sites as the information source.
The Key to being efficient and effective as a researcher isidentifying the WEB sites most likely toprovide answers to the
questionsposed in the research .By establishing and agreeing on
the key question to be answered through market research , as well
as why that information will be useful , researchers can zero in on
their information needs. Understanding how the information willimpact other decisions also helps tofurther refine information
collection.
Some popular secondary research tools ( Web Sites)
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Some popular secondary research tools ( Web Sites)
1. Factiva.com
2. Businesswire.com
3. Hoovers.com
4. Localeyes.com
5. Thomasregister.com
6. Corporateinformation.com
7. sec.gov
8. Aol.com (America Online)
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Online Marketing
Technologies that support Online Marketing :
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Technologies that support Online Marketing :
Web transaction logs : Records that document user activity at the
Web site .Transaction logs : Coupled with data from the registration
forms and shopping cart database , these represent a treasure trove
ofmarketing information for both individual sites and the online
industry as a whole.Cookies : A small text file that Web sites place on
visitors /client computers every time they visit , and during the
visit , as specificpages visited . Cookiesprovide Web marketers
with a very quickmeans ofidentifying the customer andunderstanding his or herprior behavior at the site.
Web bugs : Tiny graphic files hidden in marketing e-mail
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Web bugs : Tiny graphic files hidden in marketing e-mail
messages and on Web sites . Web bugs are used to automatically
transmit information about the user and the page being viewed to a
monitoring server.
Databases , data warehouses, data mining , and profiling
:Technologies that allow marketers to identify exactly who the
online customer is and what they want , and then topresent the
customer with exactly what they want, when they want it, for therightprice.
Advertising networks : best known for their ability topresent users
with banner advertisements based on a database ofuser behavioral
data . Specialized ad servers are used to store and send users theappropriate banner ad.
CRM systems : A repository of customer information that records
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CRM systems : A repository ofcustomer information that records
all ofthe contacts that a customer has with a firm and generates a
customerprofile available to everyone in the firm who has a need
to know the customer.
IT enabled marketing and branding strategies :
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IT enabled marketing and branding strategies :
Online marketing techniques toonline customers include
permission marketing , affiliate marketing , viral marketing , andbrand leveraging.
Online techniques for strengthening customer relationships include
one-to-one marketing ; customization , transactive content ; and
customer service (CRMs,FAQs,live chat , intelligent agents , andautomated response system).
Online pricing strategies include offering products and services for
free ,versioning , bundling , and dynamic pricing.
Strategies to handle the possibility ofchannel conflict.
Direct E-mail marketing :
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g
E-mail marketing messages sent directly to interested users (direct
e-mail marketing) has proven to be one ofthe most effective forms
ofmarketing communications. The key to effective direct e-mail
marketing is interested users. Direct e-mail marketing is not
spam. SPAM involves sending unsolicited e-mail to a mass
audience ofInternet users who have expressed no interest in the
product . Instead , direct e-mail marketing messages are sent to anopt in audience ofInternet users who have expressed at one time
or another an interest in receiving messages from the advertiser.By
sending e-mail to an opt-in audience , advertisers are targeting
interested customers.Because ofthe comparatively high response
rates and low cost, direct e-mail marketing is the fastest growing
formofonline marketing.
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Theprimary cost ofe-mail marketing is for the purchase ofthe list
ofnames to which the e-mail will be sent .
Due to the cost savings possible with e-mail , the short time to
market , and high response rates , companies are expected to
increasingly use e-mail to communicate directly with customers.
Online Catalogs :
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Online Catalogs :
Online Catalogs are the equivalent ofpaper-based catalog. The
basic function ofa catalog is to display the merchants wares. Theelectronic version typically contains a color image ofeach available
product , a description ofthe item , as well as size , color, material
composition , and pricing information . While simple catalogs are ,
technically , hard coded HTMLpages and graphics displaying
softwares , most sites with more than 15-20products generate
catalogpages from a product andprice database that be easily
changed . Simply by clicking on an order button at the site ,
customers can make a purchase instantly.
Public Relations :
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Public Relations :
Anothermarketing communications tool used to increase
awareness ofa site , and potentially boost traffic , is publicrelations. Public Relations (PR) involves communicating with
target audiences,prpublics , using methods other than advertising .
Some ofthese methods includepublicity (media coverage), special
events , such as a grand opening celebration orpress conference ;
and publications , such as newsletters and customer bulletins.
Public Relations firms can also support a Web site by creating
promotional strategies , developing relationships with reporters and
producers ofinterest to the client company , proposing articles and
TVprogram subjects , and generally keeping the press aware ofany good news regarding an online company. Some firms
specialize in dot-coms or have an online media specialty .The
major advantage of public relations is the low cost relative toother
media exposure.
Online Marketing Metrics :
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1. Impression
2. Clickthrough Rate (CTR)
3. Hits
4. Page Views
5. Stickness (Duration)
6. Unique visitors
7. Loyalty
8. Reach
Continued
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1. Impressions are the numberoftimes an ad is served .
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p
2. Clickthrough rate (CTR) measures the percentage ofpeople
exposed to an online advertisement who actually clickon theadvertisment.
3. Hits are the numberofhttp requests received by a firms server
.Hits can be misleading as a measure ofsite activity because a
hit does not equal a page : a single page may account forseveral hits ifthe page contains multiple images or graphics.A
single site visitor can generate hundreds ofhits .
4. Page views are the numberofpages requested by visitors. A
singlepage that has three frames will generate three page views.
5. Stickiness (Duration) is the average length oftime visitors
remain at a site .The longer amount oftime a visitor spends at a
site , the greater the probability ofpurchase.
6. Unique visitors counts the numberofdistinct, unique visitors to
i dl f h h i
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a site , regardless ofhow many pages they view.
7. Loyalty measures the percentage ofusers who return in a year.
This can be good indicatorofthe trust shoppersplace in site.
8.Reach is typically a percentage ofthe total numberof
consumers in market who visit a site.
9.Recency like loyalty, measures the powerofsite toproducerepeat visits and is generally measured as the average number
ofdays elapsed between shopperor customer visits.
10.Acquisition rate measures ofthe percentage ofvisitors who
registeror visit productpages (indicating interest in theproduct)
11.Conversion rate measures the percentage ofvisitors who
actuallypurchase something.
12. Attrition rate measures the percentage ofcustomers who
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purchase once , but never return within a year.
13.Abandonment rate measures the percentage ofshoppers who
begin a shopping cart form but then fail to complete the form
and leave the site.
14.Retention rate indicates the percentage ofexisting customers
who continue to buy on a regular basis.
Online Advertisement : It is the most common and familiar
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Online Advertisement : It is the most common and familiar
marketing communications tool .The advantages ofonline
marketing are the ability to target ads to narrow segments and to
trackperformance ofadvertisements in almost real time. Online
advertisements alsoprovide greateropportunities for interactivity
two way communication between advertiser and the potential
customer.
Different forms ofonline advertisements include :
Banner and rich media ads
Paid search engine illusion and placement
Sponsorships , and
Affiliate relationships
Direct E-mail marketing
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Advertising
Metrics
click-through
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Definition
click-through
The process of clicking through an online advertisement to theadvertiser's destination.
Information
While the click-through is often the most immediate response to anadvertisement, it is not the only interaction. Visitors may choose totype a company's URL directly into the browser bar, or type thecompany's name into a search engine box. This assumes, ofcourse, that the company's name and/or URL appears in itsadvertisements.
Accurate counting of click-throughs involves excluding "robot clicks"and duplicate clicks. This takes on added importance when click-throughs are used as the measurement on which payment isbased.
click-through rate (CTR)
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Definition
click-through rate (CTR)
The average number of click-throughs per hundred ad impressions,expressed as a percentage.
Information
It is important to distinguish what a click-through rate does and does
notmeasure. The CTR measures what percentage of people clickedon the adto arrive at the destination site; it does not include thepeople who failed to click, yet arrived at the site later as a result ofseeing the ad.
As such, the CTR may be seen as a measure of the immediate
response to an ad, but not the overallresponse to an ad. Theexception involves ads that display no identifiable information aboutthe destination site; in these cases the click rate equals the overallrate.
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Merely getting visitors to a site had value when Web
site traffic was generally accepted as a measure of success.The trend towards profitability, along with better trackingtools, has resulted in less interest in click-through rates andmore interest in conversion rates.
A high click-through rate does not assure a good conversion
rate, and the two rates may even share an inverse relationship. An
advertisement geared towards curiosity clicks will result in fewer
sales,percentage-wise, than an advertisement geared towards
qualified clicks.
conversion rate
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Definition
conversion rate
The percentage of visitors who take a desired action.
Information
The desired action can take many forms, varying from site tosite. Examples include sales of products, membership registrations,newsletter subscriptions, software downloads, or just about any activitybeyond simple page browsing.
A high conversion rate depends on several factors, all of whichmust be satisfactory to yield the desired results -- the interest level ofthe visitor, the attractiveness of the offer, and the ease of the process.
The interest level of the visitor is maximized by matching theright visitor, the right place, and the right time.
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The attractiveness of the offer includes the value
proposition and how well it is presented. It is worth notingthat small, impulse items typically have a higher conversionrate than large, shopping items.
The visitor's ease of completing the desired action is
dependent on site usability which includes intuitivenavigation and fast loading pages.
cost-per-action (CPA)
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Online advertising payment model in which payment is based solely onqualifying actions such as sales or registrations.
Information
The actions defined in a cost-per-action agreement relatedirectly to some type of conversion, with sales and registrations amongthe most common. This does not include deals based solely on solely
clicks, which are referred to specifically as cost-per-click or CPC.The cost-per-action (CPA) model is at the other end of the
spectrum from the cost-per-impressions model (CPM), with the cost-per-click (CPC) model somewhere in the middle. In a CPAmodel, thepublisher is taking most of the advertising risk, as their commissions are
dependant on good conversion rates from the advertiser's creative unitsand Web site.
Marketers looking for cost-per-action deals have
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Marketers looking for cost per action deals haveseveral options. Publishers with considerable excess
inventory may be willing to consider nonstandard offers.Sites specializing in incentive programs are in a positionto offer CPA pricing on various types of leads, althoughthe usual caveats concerning incentivized traffic still apply.Perhaps the most widespread use of performance-based
pricing is affiliate marketing, wherebymerchants/advertisers determine what actions they wantto reward and how much they are willing to pay.
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The total price paid in a CPM deal is calculated by multiplying the
CPM rate by the number of CPM units. For example, one millionimpressions at $10 CPM equals a $10,000 total price.
1,000,000 /1,000 = 1,000 units
1,000 units X$10 CPM = $10,000 total price
The amount paid per impression is calculated by dividing the
CPM by 1000. For example, a $10 CPM equals $.01 per impression.
$10 CPM /1000 impressions = $.01 per impression
cost-per-click (CPC)
Definition
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Definition
cost-per-click (CPC)
The cost or cost-equivalent paid per click-through.
Information
The terms pay-per-click (PPC) and cost-per-click (CPC) are sometimesused interchangeably, sometimes as distinct terms. When used as
distinct terms, PPC indicatespaymentbased on click-throughs, whileCPC indicates measurementof cost on a per-click basis for contractsnot based on click-throughs.
For example, consider a campaign where payment is based onimpressions, not clicks. Impressions are sold for $10 CPM with a click-
through rate (CTR) of 2%.
1000 impressions x 2% CTR = 20 click-throughs
$10 CPM / 20 click-throughs = $.50 per click
customer acquisition cost
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Definition
customer acquisition cost
The cost associated with acquiring a new customer.
Information
Customer acquisition cost is calculated by dividing totalacquisition expenses by total new customers. However, there are
different opinions as to what constitutes an acquisition expense. Forexample, rebates and special discounts do not represent an actual cashoutlay, yet they have an impact on cash (and, presumably, on thecustomer).
Acquisition costs vary across industries and mediums. When
acquisition data is available, try to determine if you are comparing applesto apples, so to speak. This is not always easy, as customer acquisitiondata can be scarce, and the methodology is often sketchy.
Hit
D fi iti
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Definition
Hit
Request of a file from a Web server.
Information
The term "hit" is perhaps the most misused term in online marketing,mistakenly used to mean unique visitors, visits, page views, or all of the
above.
A hit is merely a request for a file from a Web server.A request for a Webpage counts as a hit, but so does a request for a graphicon a Web page.Since the number of graphics per page can vary considerably, hits meanvery little for comparison purposes.
hybrid model
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Definition
hybrid model
A combination of two or more online marketing payment models.
Information
A hybrid campaign might be a mix of impression-based (CPM)and performance-based (CPC or CPA), or a mix of two performance-based models. Hybrid deals are sometimes seen as a way to further splitthe risk between publishers and advertisers.
Advertising campaigns sometimes bundle CPM and CPC in ahybrid buy, and sometimes even CPA.
Affiliate programs have been known to offer a few cents per-clickin addition to paying for a sale, lead, download, or other conversionactivity.
impression
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Definition
impressionA single instance of an online advertisement being displayed.*
Information
* This definition may be an over-simplification, as there is no
standard way to count impressions.All of the differences can add up tovery large discrepancies, yet people make purchases based onimpression every day.
So... what is the definition?
Currently, whatever a buyer and seller agree on.
page view
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p g
Definition
page view
Request to load a single HTML page.
Information
Page views are only important to the degree they play a part in a site's
revenue model. If a site earns much of its revenue from advertising,then page views are important because of their contribution to adinventory. If a site only earns revenue on sales, then page views are nota key statistic. Page views without corresponding sales may even beviewed as an expense.
pay perclick
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Definition
pay per click
Online advertising payment model in which payment is based solely onqualifying click-throughs.
Information
In a PPC agreement, the advertiser only pays for qualifying clicks to thedestination site based on a prearranged per-click rate. Popular PPCadvertising options include per-click advertising networks, searchengines, and affiliate programs.
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Paying per click is sometimes seen by some as a middle
ground between paying per impression and paying per action. Whenpaying per impression, the advertiser assumes the risk of low-qualitytraffic generated by the publisher. When getting paid for actions, thepublisher assumes the risk of low-converting offers by the advertiser. Inthe PPC model, the publisher does not have to worry about the sales
conversion rate of the target site, and the advertiser does not have toworry about how many impressions it takes to attract the specifiednumber of clicks.
pay per lead
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pay per lead
Definition
pay per lead
Online advertising payment model in which payment is based solelybased on qualifying leads.
Information
In a pay per lead agreement, the advertiseronlypays for leadsgenerated at their destination site. No payment is made for visitors whodon't sign up.
f
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A lead is generally a signup involving contact information andperhaps some demographic information; it is typically a non-cash
conversion event.A lead may consist of as little as an email address, orit may involve a detailed form covering multiple pages.
One risk to the advertiser is the potential for fraudulent activityby incentivized 3rd-parties or marketing partners. Some false leads areeasy to spot. Nonetheless, it is advisable to make a regular audit of the
results.
pay per sale
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Definition
pay per saleOnline advertising payment model in which payment is based
solely based on qualifying sales.
Information
In a pay per sale agreement, the advertiseronlypays for salesgenerated by the destination site based on an agreed upon commissionrate.
Paying per sale is often seen as the payment model mostfavorable to advertisers and least favorable to publishers. In such an
agreement, the publisher must not only be concerned with the quality andquantity of his or her audience, but also the quality of the advertiser'screative units and destination site.
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If possible, many publishers avoid sales-based agreements,
preferring to stick to the CPM model. However, some publishers, facingweak ad sales, have little choice but to accept sales-based agreementsto utilize remnant space.
For advertisers, pay per sale has some unique advantagescompared to pay per click and pay per lead. There are fewer concerns
about whether conversions are legitimate, and whether traffic isincentivized or of low quality.
stickiness
D fi iti
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Definition
stickiness
The amount of time spent at a site over a given time period.
Information
Stickiness is often measured in the average minutes per monthvisitors spend at a site or network. Sometimes stickiness is measured interms of page views.
When defined as minutes per month, site stickiness is a functionof number of visits (repeat usage) and time spent per visit (sessionstickiness).
unique visitors
Definition
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Definition
unique visitors
Individuals who have visited a Web site (or network) at least once in afixed time frame, typically a 30 day period.
Information
Most measurements of unique visitors are estimates.
Sites often calculate unique visitors based on the IP address informationfound in the log files, and sometimes through cookies. However, manyfactors may skew the results.
Traffic rating companies typically calculate unique visitors by monitoring
actual usage of a group of volunteers, then applying the results to to theInternet population. Results fluctuate considerably for small sites due totheir small sample sizes.
Web site traffic
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Web site traffic
Definition
Web site traffic
The amount of visitors and visits a Web site receives.
Information
Web site traffic was initially viewed as an all-important metricfor gauging success on the Web. This assumption was due in part tothe lack of other business metrics to explain the .com phenomenon.Now much of the focus has shifted back to profitability, and Web sitetraffic is only part of the equation.
Web site traffic x conversion = resultsWeb site traffic is still important, as you can't have conversions
without visitors, but it is becoming less important as a standalonemetric.
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ConsumerBehavior
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Sources of influence onthe consumer. The
f f fl Of
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consumer faces numerous sources of influence. Often, we
take cultural influences for granted, but they are
significant. An American will usually not bargain with a
store owner. This, however, is a common practice in much
of the World. Physical factors also influence our behavior.
We are more likely to buy a soft drink when we are
thirsty, for example, and food manufacturers have foundthat it is more effective to advertise their products on the
radio in the late afternoon when people are getting
hungry. A persons self-image will also tend to influence
what he or she will buyan upwardly mobile manager may
buy a flashy car to project an image of success.
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Consumer choices are often influenced dramatically
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y
by values. Some consumers, for example, seek to fit in
with the crowd and would like to own a car as similar aspossible to that of the neighbor. Others, on the other
hand, want to stand out. In the consumption context,
then, a consumer may choose to spend a great deal of
money on buying and maintaining neat and professional
attire, not because he or she is particularly interested inthat appearance for its own sake, but rather because this
will help the consumer be successful in his or her career.
One way to look at social influence is though
reference groupspeople against which one compares
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oneself. Thus, a consumer may notice that all his friends
are wearing a special kind of jeans and may expect to beostracized if he or she chooses to wear a different brand.
Interestingly, however, one may also hold dissociative
reference groupspeople that one would not want to be
compared to.
Family may influence the consumers choices a great
deal. Research has shown, for example, that there is a
tendency for adult children to use the same brands that
their parents used over time. In many cases, these brand
choices are made without much conscious thought.