Online Consumer Behavior, Market Research, and Advertisement
As you read
the textbook and go through this lesson, think about the following questions:
·
Who are the players in the consumer
decision process?
·
What is customer loyalty? What
impact has the Internet had on it?
·
What factors influence customer
satisfaction online?
·
How is market research done online?
·
What are some methods or strategies
for web advertising?
·
What is viral marketing?
·
What is social network marketing?
·
What is electronic customer relationship
management?
Learning Objectives
Upon completion of
this chapter, you will be able to:
1. Describe the factors that influence consumer
behavior online.
2. Understand the decision-making process of
consumer purchasing online.
3. Describe how companies are building
one-to-one relationships with customers.
4. Explain how personalization is accomplished
online.
5. Discuss the issues of e-loyalty and e-trust
in EC.
6. Describe consumer market research in EC.
7. Describe Internet marketing in B2B, including
organizational buyer behavior.
8.
Describe the objectives of Web advertising and its
characteristics.
9.
Describe the major advertising methods used on the Web.
10.
Describe
various online advertising strategies and types of promotions.
11.
Describe
permission marketing, ad management, localization, and other
advertising-related issues.
12.
Understand
the role of intelligent agents in consumer issues and advertising applications.
4.1 Section Review Questions
1. Describe
the major components and structure of the consumer online purchasing behavior
model.
The EC consumer
behavior model is based in the following characteristics: personal
characteristics, environmental characteristics, stimuli, the systems used by
the vendor and the buyer's decisions.
2. List some major personal characteristics
that influence consumer behavior.
There are a number
of personal characteristics that affect buying behavior. Some of these characteristics include age,
gender, ethnicity, education, lifestyle, psychology, knowledge, values and
personality.
3. List the major environmental variables of
the purchasing environment.
The variables of
the purchasing environment include social variables, cultural/community
variables and other variables.
4. List
and describe the major vendor-controlled variables.
Pricing – the
price of a good or service
Advertising/promotions/branding
- the marketing surrounding a good or service
Physical
environment – the store or sales environment of a good or service
Logistics/technical
support – support for a good or service
Customer service -
support for the purchaser of a good or service
5. Define
the process model of consumer behavior online.
This is a model
that describes the steps of customer’s purchase process.
4.2 Section Review Question
1. List the roles people play in purchasing.
Consumers can play
one or several of the following roles in the consumer decision-making process:
initiator, influencer, decider, buyer and user.
2. List the five stages in the generic
purchasing-decision model.
The five stages in
the generic purchasing-decision model are: need identification; information
search; evaluation of alternatives; purchase and delivery; and after-purchase
evaluation.
3. Describe the Web-based
purchasing-decision model.
This model is used
to show that each of the five stages in the generic purchasing-decision model
can be supported through the Internet.
It is called the Consumer Decision Support System (CDSS).
4. Describe the architecture of the online
buyer decision support model.
This model is
divided into three parts. The first part
examines the three stages of buyer behavior: identify and mange buying
criteria; search for products and merchants; and compare alternatives. The second part examines price, shipping, and
finance; while the third part examines personalization, preferences and
customer help.
4.3 Section Review Questions
1. Define mass marketing.
Mass marketing
directs advertisements to a large, undifferentiated group of potential
customers.
2. Define market segmentation.
Market
segmentation is the dividing of potential customers by type. The goal is to create a subgroup that is more
likely to be interested in the product than the whole.
3. Define one-to-one marketing.
One-to-one
marketing uses special marketing techniques that treat each customer in a
unique way. Internet technologies
greatly facilitate the ease of one-to-one marketing.
4. Describe the marketing relationship
process.
This is the
process of gathering relevant information about a potential customer to more
effectively customize marketing to meet particular needs.
4.4 Section Review Questions
1. Explain how personalization (matching
people with goods/services) is done.
Personalization of
goods and services for unique individuals requires information from the
individual and the ability to match that information to appropriate
products. There are several different
ways to obtain information from individuals.
These methods include soliciting the information from the individual
directly, using cookies or other methods to observe online behavior, performing
market research or extrapolating from previous purchasing patterns. Once a firm has information about an
individual’s preferences, they can then use a software system to match those
preferences to available products and services.
2. Define loyalty and describe e-loyalty.
Customer loyalty
is the degree to which a consumer will stay with a specific vendor or
brand. E-loyalty is a measure of a
customer's commitment to an online retailer.
3. Describe the issue of trust in EC and how
to increase it.
Trust is very
important in EC because of the lack of direct human interaction between the
customer and the merchant. Merchants are
able to increase the amount of trust their customers have through brand
recognition, security mechanisms and business transparency.
4. What influences customer satisfaction
online? Why do companies need to monitor it?
Many things
influence online customer satisfaction including customer service. This is important to monitor as decreased
satisfaction could lead to decreased sales.
5. How can trust be increased in EC?
Trust can be
increased by the endorsement of a third party or buy establishing a history of
trustworthiness.
4.5 Section Review Question
1. Describe the objectives of market
research.
The objective of
market research is to find information that describes the relationships between
customers, products, marketing methods and marketers. Market research assists a firm in both their
marketing and product mix decisions.
2. Define and describe segmentation.
Market
segmentation is the process of dividing a customer market into logical groups
for conducting market research, advertising, and sales. Markets are segmented so that they can be
more easily managed and so marketing strategies can be applied to specific
subsets of the population.
3. Describe how market research is done
online and the major market research
methods.
Online market
research is very similar to the research that would be done off-line. Online marketing research is conducted
online, and the Internet can make the process quicker and easier. Researchers go through the same steps online
in determining what needs to be researched and validating results. Researchers can gain access to a large variety
of secondary research available online. The major methods include Web surveys,
focus groups, direct feedback, customer scenarios, customer tracking, and
analysis of clickstream data.
4. Describe the role of Web logs and
clickstream data.
These methods can be
used to track a user’s movements through the Web. This data can help marketers to understand
usage patterns to improve Web sites or target advertising.
5. Describe how biometrics and cell phones
can improve market research and advertising.
These methods allow better tracking and data collection
from distinct individuals as opposed to computer which may be used by multiple
users.
6. Relate cookies, Web bugs, and spyware to
market research.
These are all methods that can be used to track customer
movements. This information can be
helpful in several areas of marketing, but can have ethical considerations.
7. Describe the limitations of online market
research.
The major
limitation of online market research is the sample and characteristics of Web
users. These Web users may not typify
the population at large, so marketers must ensure that they are aware of the
demographics of those they are researching.
4.6
Section Review Questions
1. Distinguish
between organizational buyers and individual consumers.
Organizational buyers are puchasing for
their organization while individual customers are purchasing for their own use.
2. Describe
B2B marketing and advertising methods.
B2B uses a variety of marketing methods
online and off-line. Online they may use
directory services or try to target specific customers. Off-line they may make sales calls or attend
events.
3. Explain how affiliate programs and data
mining work in B2B.
Affiliate
marketing uses another merchant to assist in promoting or selling goods for a
commission. Data mining is the use of a
variety of data sources to better understand customer behavior and preferences.
Section 4.7 Review Questions
1. Define Web advertising and the major
terms associated with it.
Web advertising is the
use of the World Wide Web to advertise to customers. Some important terms in Internet advertising
include: ad views (the number of times users call-up the page that has a banner
on it), button (a small banner link to a Web site), page (an HTML document),
click (a tally of each time a visitor clicks on an advertising banner), CPM
(the cost per thousand impressions), hit (a request for data from a Web page or
file), and visit (a series of requests during one navigation of the Web site).
2. Describe the reasons for the growth in
Web advertising.
Advertisers are looking
to the Web because it is a viable advertising medium. Individuals may be moving away from other
advertising mediums and to the Internet.
Additionally, the demographics of individuals who use the Internet are
generally more affluent then the population as a whole, making an attractive
population to advertise to. Web ads also
have the benefit of lower cost, increased richness of format and the ability to
personalize.
3. List the major characteristics of Web
advertising.
Web advertising can be
characterized by its use of Internet technologies to advertise to groups. Web advertising can be more complex and
personalized then off-line advertising.
4. Explain the role of ad networks in Web
advertising.
Advertising
networks are specialized firms that offer customized Web advertising, such as
brokering ads and targeting ads to select groups of consumers.
Section 4.8 Review Questions
1. Define banner ads and describe their
benefits and limitations.
Banner ads are graphic
advertisements displayed on Web pages that link to the advertiser’s Web
site. Banner ads are limited by their
cost, space for information and customer indifference.
2. Describe banner swapping and banner exchanges.
Banner swapping is an
agreement between two companies to display the other’s banner ad on its Web
site. Banner exchanges are markets in
which companies can trade or exchange placement of banner ads on each other's Web
sites.
3. Describe the issues surrounding pop ups
and similar ads.
These ads can be highly
effective for advertisers, but many users consider them annoying and intrusive.
4. Explain how e-mail is used for
advertising.
It is possible for
advertisers to send out large volumes of advertisements contained inside e-mail
messages. This is an effective method of
advertising to large groups. If the
advertiser sends a large number of unrequested e-mail solicitations, it is
considered spamming, which is considered by some to be illegal/rude.
5. Describe advertising via classified
ads.
These ads use a
consistent and familiar format that can be used in several locations.
6. Discuss advertising via URLs and in
chat rooms.
URLs are an excellent method of
advertising by providing an easily remembered “home” for a merchant. Chat room advertising can be beneficial if a
merchant is supporting or sponsoring a room.
Advertising or promoting in a room without permission can be considered
spamming.
7. Discuss advertising in blogs and social
networks.
This advertising method places ads
in blogs and other social networking sites based on the type and volume of
traffic they generate.
8. Describe the search engine ad strategy.
This system places ads in search
engine results. The ads attempt to
relate to the user’s search.
9. Describe Google’s AdWords and AdSense.
Google’s AdWords system places ads
with similar topics in user’s search results.
AdSense is an affiliate program that dynamically places ads on a website
based on the site’s content.
10. Define advergaming and describe how it
works.
Advergaming is the placing of
advertisements in games. The games are
provided for free, but the user must watch the placed ads.
Section 4.8 Review Questions
1. Discuss the process and value of affiliate
marketing.
Affiliate marketing uses
another entity to advertise and sell products or services for a
commission. The system is most effective
in generating a user base for a new site.
2. How does the ads-as-a-commodity
strategy work?
With
this advertising approach, customers are paid to read ads by the advertisers.
3. Describe viral marketing.
Viral marketing is
word-of-mouth marketing by which consumers promote a product or service by
telling others about it.
4. How are ads customized?
Advertisements are
customized by comparing users’ preferences to available products or
services. Products or services that fit
a user’s preference are then used as the ad is displayed/sent.
5. List some typical Internet promotions.
There is a large
variety of Internet promotion ideas.
Some of the most popular Internet promotions are give-aways and
discounts.
6. Define admediaries and describe their
roles.
Admediaries are
third-party vendors that conduct promotions, especially large scale ones.
Section 4.10 Review Questions
1. Describe permission advertising.
Permission advertising
is a strategy in which customers agree to accept advertising materials.
2. What is localization? What are the
major issues in localizing Web pages?
Localization is the process
of converting media products developed in one country to a form culturally and
linguistically acceptable in countries outside of the original target
market. The major issue with
localization is the ability to perform it correctly.
3. How is wireless advertising practiced?
Wireless advertising
uses m-commerce and l-commerce technologies to advertise to people using mobile
devices.
4. What
is the importance of ad content?
Ad content can have a large effect on customer’s
response and their interest in whatever is being advertised.
Section 4.11 Review Questions
1. List the major types of software
(intelligent) agents used in customer-related and advertising applications.
There are several types
of intelligent agents that are used including agents that support need
identification, product brokering, merchant brokering and comparison,
buyer-seller negotiation, purchase and delivery, and after-sale service and
evaluation.
2. What role do software agents play in
need identification?
Software agents can be
used to help customers recognize their need for a product by providing product
stimuli and information.
3. How do software agents support product
brokering and merchant brokering?
Agents can support
product brokering by identifying specific products that will meet a customer’s
defined need. In the same way, agents
can be used to identify different merchants that can supply the specific
products.
4. What are avatars and chatterbots? Why
are they used on Web sites?
An avatar is a computer-animated
character that exhibits human-like movements and behaviors. A chatterbot is a talking animated
character. These agents are used on Web
sites to provide a friendly interface and communication method with the
merchant.
EC Application Case 4.1: Internet Market Research Expedites Time-To-Market at Proctor & Gamble
1. How
did P&G reduce time-to-market?
The company used its Web site to sell new
products to select groups and gathered their feedback.
2. What
was data mining used for?
Data mining was used to determine the
profiles of visitors to the website.
3. What
research methods were used?
P&G used data mining, online
questionnaires and opinion polls.
EC Application Case 4.2: Fujitsu Agents for Targeted Advertising in Japan
1. Why
would customers agree to have a personal profile built on them?
Customers are paid for their participation in
this advertising model.
2. What
is the role of the software agent in this case?
The software agent in this case matches
merchants and products to individual customers.
Discussion Questions
1. What
would you tell an executive officer of the bank about the critical success
factors for increasing loyalty of banking customers by using the Internet?
Customer loyalty
is going to be increased through positive customer service. A bank can provide positive customer service
by providing additional services to the user through the use of the
Internet. This can include such things
as online banking and online bill paying.
2. Why
is data mining becoming an important element in EC? How is it used to learn about customer
behavior? How can it be used to
facilitate customer service?
Data mining is
becoming an important part of EC because it allows merchants and others to
access information about individual users and then personalize advertising and
marketing towards them. Data mining
allows a firm to examine customer information and to aggregate that information
into a profile of that consumer’s behavior.
Since data mining can be used to create personalization for users, it is
often used in customer service to customize the user’s experience.
3. Explain
why online trust is more difficult to achieve than off-line trust.
Student answers
will vary, but will be focused around the difficulty in creating a rapport with
customers without being together in the same physical location.
4.
Discuss
the similarities and differences between data mining and Web mining. (Hint: To
answer this question, you’ll need to read Appendix W4A.)
The difference is centered around the
location of the data and its application.
Data mining uses a huge variety of datasets as the basis for analysis
while Web mining concentrates on information obtained for Web sites and
customers’ interactions with them.
5. How can research on satisfaction and
dissatisfaction help online sellers?
It can provide them valuable information on
what customers value most. They can then
concentrate on fulfilling those needs.
6.
Discuss
why B2C marketing and advertising methods may not fit B2B.
Student answers will vary. B2C methods are meant to target a large
market of individual consumers. B2B
methods generally target a smaller group of customers purchasing a large amount
for their firm.
7. Relate
banner swapping with a banner exchange.
With banner swapping there is generally an
arrangement between two firms for the reciprocal display of banners. With a banner exchange, a third-party firm
acts as a broker for banner swapping for a large number of firms and Web sites.
8. Discuss
why banners are popular in Internet advertising.
Banners are popular in Internet advertising
because they provide several advantages to advertisers. Banner ads are clearly displayed on Web sites
and are seen often by Internet users.
Additionally, banner ads provide a richness of media that is not
available off-line.
9. Explain
how Google generates ads for its customers.
Google generates ads for customers based on
what they are searching for. The company
uses complex programs to match ads to the users’ search queries.
10. Discuss
the relationship between market research and advertisement (see Atlas DMT,
atlasdmt.com, for a start).
Student answers will vary. Market research should help determine how to
advertise. Advertising results can also
be used to infer information about a particular market.
11. Discuss the advantages and limitations of listing a company’s URL
with various search engines.
Listing a URL with various search engines is
an important part of Web advertising because it allows the firm's site to be
found through a Web-based search.
However, the large number of current Web sites makes searching more
difficult.
12. How
might a chat room be used for advertising?
It is possible that marketers may send
advertisements to a chat room or participate in the chat room with the
intention of marketing the products to the members of a group.
13. Is
it ethical for a vendor to enter a chat room operated by a competitor and pose
queries?
Student answers on this qualitative question
will vary. Some students will argue that it is unethical because an assumed
name is being used. Some students will
argue that it is ethical because the information requested is publicly
available.
14. Explain
why online ad management is critical.
Because placement of the ad and the ad itself
are often very flexible, it is important to monitor an ad’s success and adjust
the ad to optimize its use.
15. Examine some Web avatars and try to interact with them. Discuss
the potential benefits and drawbacks of using avatars as an advertising media.
Student responses will vary. Some avatars work well while others
don’t. The debate may focus around their
usefulness given the present state of their development.
16. Explain
the advantages of using chatterbots. Are there any disadvantages?
Chatterbots can help provide personalization
and guide users. They could potentially
be annoying to users as well.
17. Discuss
the benefits of using software agents in marketing and advertising.
Student answers will vary.
18. How
can avatars increase trust?
Avatars can increase trust because they
better represent a human element for interaction with a site.
19. Enter sric-bi.com/VALS. View their activities and discuss how
they can facilitate online market segmentation.
Student answers will vary. The VALS system
uses personality traits to segment markets.
20. When you buy a banner ad, you actually lease space for a specific
time period. In milliondollarhomepage.com you buy the space forever. Compare and discuss.
Student answers will vary. The risk is on the
continued relevance and value of the eternal ad versus the cost of more
specific placements.
Internet Exercises
(Note: URLs may change over time; please
check the Internet Exercises on the Turban Web site for possible updates:
www.prenhall.com/turban.)
1. Enter
netflix.com/Affiliates?hnjr=3. Describe
the value of the program as a marketing channel.
Student opinions
on the program will vary.
2. Surf
the Home Depot Web site (homedepot.com)
and check whether (and how) the company provides service to customers with
different skill levels. Particularly,
check the “kitchen and bath design center” and other self-configuration
assistance. Relate this to market research.
Home Depot
provides a variety of services for different types of customers. For home users, they provide an array of
services including information on products and projects that a homeowner may
want to complete. For contractors they
provide a different set of services including commercial credit and links to
contractor specific information.
3. Examine
a market research Web site (such as acnielsen.com
or claritas.com). Discuss what might motivate a consumer to provide answers
to market research questions.
While there is no
direct confirmation on the Nielsen Web site, for the vast majority of consumers
the benefits to providing customer information to third-party marketing and
advertising agencies is the promise of compensation. This compensation can take many forms, but is
usually some sort of payment in goods or services.
4. Enter
mysimon.com and share your
experiences about how the information you provide might be used by the company
for marketing in a specific industry (e.g., the clothing market).
The information
provided on this site would help any particular industry because it provides
specific information about a customer’s likes and dislikes. In that way it would help a company with
market research by indicating which items are sought out by customers. Additionally, the information could be used
to help create a specific dossier on individual customers.
5. Enter
marketingterms.com and conduct a search by key words as well as by
category. Check the definitions of 10 key terms in this chapter.
Student answers will vary.
6.
Enter
2020research.com, infosurv.com and marketingsherpa.com, and identify areas for
market research about customers.
Student answers will vary. All sites provide a wide array of information
that has been/can be captured about customers.
The particular information chosen would be a function of the
product/service type.
7. Enter
nielsenmedia.com and view the demos on e-market research. Then go to clickz.com
and find their offerings. Summarize your findings.
Student answers
will vary.
8. Enter selfpromotion.com and find
some interesting promotion ideas for the Web.
Student
responses will vary.
9. Enter the Web sites of ipro.com and selfpromotion.com.
What Internet traffic management, Web results, and auditing services are
provided? What are the benefits of each service? Find at least one competitor
in each category (e.g., netratings.com; observe the "demo"). Compare
the services provided and the prices.
Both companies provide a comprehensive suite
of Web site traffic reports and high capabilities. Additionally, their applications allow for
Web mining to create user subsets for advertisers. Both firms have a complete set of products
that appear somewhat similar. Neither
firm lists product pricing. Student
reports will vary.
10. Enter hotwired.com and espn.com. Identify all of
the advertising methods used on each site. Can you find those that are targeted
advertisements? What revenue sources can you find on the ESPN site? (Try to
find at least seven.)
Student reports will vary.
11. Compare the advertisements and promotions
at thestreet.com and marketwatch.com. Write a report.
Student reports will vary.
12. Enter adweek.com, newroads.com, wdfm.com, ad-tech.com, iab.com, and adage.com and find new developments in
Internet advertisement. Write a report based on your findings.
Student reports will vary.
13. Enter clairol.com to determine your best hair color. You can
upload your own photo to the studio and see how different shades look on you.
You can try different hairstyles. It is also for men. How can these activities
increase branding? How can they increase sales?
Student reports will vary.
14. Enter paf.bcentral.com (part of Microsoft’s “bCentral”) and ask the
Position Agent to rank your Web site or a site with which you are familiar.
Assess the benefits versus the costs.
Student reports will vary.
15. What resources do you find to be most
useful at targetonline.com, clickz.com, admedia.org, i-m.com, and wdfm.com?
Student reports will vary.
16. Enter doubleclick.com and examine all of the company’s products.
Prepare a report.
Student reports will vary.
17. Enter sitepal.com and check out each of the
chatterbots listed under “reasons for using SitePal.” In your opinion, which of
these bots best accomplished the goal of the site? Why?
Student reports will vary.
18. Enter zoomwerang.com and learn how it
facilitates online surveys. Examine the various product, including those that
supplement the surveys. Write a report.
Student reports will vary.
19. Enter pewinternet.org and
pewreasearch.org. What research do they
conduct that is relevant to B2C? To B2B? Write a report.
Student reports will vary.
20. Enter loomia.com. Describe their recommendation engines.
Student reports will vary.
Answers to End-of-Chapter Real-World Case Questions:
1-800-FLOWERS.COM Uses Data Mining to Foster Relationship Management
1. Why is being number one in operation
efficiency not enough to keep 1-800-Flowers.com at the top of its industry?
More is needed because all other competitors offer
similar efficiencies.
2. How was the transformation to a
customer-intimate business accomplished?
The company uses extensive SAS decision support and data
mining software.
3. What is the role of data mining?
It allows the firm
to anticipate customer needs.
4. Why must the online presence and the
telephone system be integrated?
So that all data
constantly and consistently enters the system.
5. How is the one-to-one relationship
achieved?
By understanding a
customer’s preferences and needs based on past transactions.
Practice Quiz
4.1 True/False
1) Finding and retaining customers is a major critical
success factor for most offline and online businesses.
Answer: TRUE
2) One of the keys to building effective customer
relationships is an understanding of intelligent agents.
Answer: FALSE
3) When Chaplin's auto lease is about to expire, he
decides it is time to buy a new car. This imbalance between a desired state and
an actual state is called need identification.
Answer: TRUE
4) When making a purchasing decision, deciding what
product to buy is referred to as product brokering.
Answer: TRUE
5) In the consumer decision-making process, the buyer
is the person who ultimately makes the buying decision.
Answer: FALSE
6) In the purchase decision-making process, blogs and
search engines support the evaluation, negotiation, and selection step.
Answer: FALSE
7) The first step in the purchase decision-making
process is product evaluation and comparison.
Answer: FALSE
8) Personalization matches services, products, and
advertising content with large groups of customer segments.
Answer: FALSE
9) A user profile defines customer preferences,
behaviors, and demographics and can be generated by observing what the user
does online.
Answer: TRUE
10) Customer loyalty is a deep commitment to rebuy or
repatronize a preferred product or service consistently in the future, thereby
causing repetitive same-brand purchasing.
Answer: TRUE
11) Customer loyalty leads to enhanced resistance to
competitors, a decrease in price sensitivity, and an increase in favorable
word-of-mouth.
Answer:
TRUE
12) Attracting and retaining loyal customers is the
most important issue for e-tailers because customer loyalty can lower marketing
and advertising costs, transaction costs, customer turnover expenses, and
failure costs such as warranty claims.
Answer: TRUE
13) E-loyalty is customer loyalty to an e-tailer or
loyalty programs delivered online or supported electronically.
Answer: TRUE
14) The aim of market research is to discover
marketing opportunities and issues, to establish marketing and advertising
plans, to better understand the purchasing process, and to evaluate marketing
performance.
Answer: TRUE
15) Spyware is tiny graphics files embedded in e-mail
messages and in Web sites that transmit information about users and their
movements to a Web server.
Answer: FALSE
4.2 Multiple Choice
1) A ________ is someone whose advice or view carries
some weight in making a final purchasing decision.
A) initiator
B) influencer
C) decider
D) buyer
Answer: B
2) Banner
advertising on Web sites helps trigger a realization that there is a gap
between reality and a desired state, which occurs in the ________ stage of the
EC purchase decision-making process.
A) need
identification
B) information
search
C) evaluation
D) product
brokering
Answer: A
3) EC
businesses generate user profiles in each of the following ways except by:
A) asking users to
fill in a questionnaire.
B) using cookies,
spyware, or Web bugs to observe what people are doing online.
C) using customer
segmentation to identify customers' preferences.
D) basing them on
what customers have purchased online before.
Answer: C
4) The use of
cookies
A) is one of the
most controversial issues in EC.
B) has not helped
Internet marketers target their ads.
C) is a widely
used method for mass marketing.
D) is being
replaced by adware and spyware programs.
Answer: A
5) Key factors
limiting the use of personalization include
A) matching
profiles with product offerings and delivering those offerings.
B) communication
costs and filtering costs.
C) privacy and
trust issues.
D) lack of
customer loyalty and service customization costs.
Answer: C
6) By
increasing customer loyalty, EC companies achieve each of the following
benefits except
A) lower marketing
and advertising costs.
B) lower click
through rates.
C) lower
transaction costs.
D) lower customer
turnover expenses.
Answer: B
7) The introduction of EC has
A) decreased
customer loyalty because customers can more easily shop, compare, and switch to
different vendors.
B) increased
customer loyalty because customers do not have time to shop around.
C) increased the
cost of acquiring and retaining customers.
D) decreased
advertising and promotion costs.
Answer: A
8) The psychological status of willingness to depend
on another person or organization best defines
A) e-shopping.
B) trust.
C) satisfaction.
D) e-sugging.
Answer: B
9) Finding information and knowledge that describe the
relationships among consumers, products, marketing methods, and marketers is
the goal of
A) market
segmentation.
B) e-tailing.
C) market
research.
D) collaborative
filtering.
Answer: C
10) The tiny
graphics files embedded in e-mail messages and in Web sites that transmit
information about users and their movements to a Web server are
A) cookies.
B) shopbots.
C) chatterbots.
D) Web bugs.
Answer: D
11) Once a company knows a consumer's preferences, the
company can predict, without asking the consumer directly, what other products
or services that consumer might enjoy through
A) active Web
bugs.
B) spyware.
C) collaborative
filtering.
D)
personalization.
Answer: C
12) The key problem that biometric marketing is
intended to solve is
A) knowing the
identity of the actual shopper.
B) improving the
accuracy of the shopper's data.
C) increasing the
speed of order processing.
D) creating a
loyalty program.
Answer: A
13) The ethical issue raised by collaborative
filtering is
A) spamming.
B) invasion of
privacy.
C) theft of
intellectual property.
D) security.
Answer: B
14) Banner ads that appear when a predetermined word
is queried from a search engine are
A) personalized
banners.
B) random banners.
C) keyword
banners.
D) stylized
banners.
Answer: C
15) An ad that appears underneath the current browser
window, so when the user closes the active window the ad is still on the screen
describes
A) random ad.
B) pop-up ad.
C) ad spawning.
D) pop-under ad.
Answer: D
4.3 Fill in the Blank
1) ________ treats each customer in a unique way to
fit marketing and advertising with the customer's profile and needs.
Answer: One-to-one marketing
2) ________ matches services, products, and
advertising content with individuals and their preferences.
Answer: Personalization
3) A ________ is a data file that is placed on a
user's hard drive by a remote Web server, frequently without disclosure or the
user's consent that collects information about the user's activities at a
site.
Answer: cookie
4) ________ is a deep commitment to rebuy or
repatronize a preferred product or service consistently in the future, thereby
causing repetitive same-brand purchasing.
Answer: Customer loyalty
5) ________ is the psychological status of willingness
to depend on another person or organization.
Answer: Trust
6) ________ are tiny graphics files embedded in e-mail
messages and in Web sites that transmit information about users and their
movements to a Web server.
Answer: Web bugs
7) ________ are data that occur inside the Web
environment, and they provide a trail of the user's activities in the Web
site.
Answer: Clickstream data
8) ________ is online marketing, facilitated by the
Internet, by which marketers and advertisers can interact directly with
customers, and consumers can interact with advertisers or vendors.
Answer: Interactive marketing
9) ________ is online advertising that focuses on
social networking sites.
Answer: Social network advertising
10) ________ is a marketing arrangement by which an
organization refers consumers to the selling company's Web site.
Answer: Affiliate marketing
4.4
Essay
1) List and briefly discuss the five major roles that
people play in the decision-making process.
Answer: The major roles are initiator, influencer,
decider, buyer, and user. The initiator is the person who first suggests or
thinks of the idea of buying a particular product or service. The influencer is
the person whose advice or view carries some weight in making a final
purchasing decision. The decider is the person who ultimately makes a buying
decision or part of it, such as whether to buy, what to buy, how to buy, or
where to buy. The buyer is the person who makes the actual purchase. The user
is the person who consumes or uses the product or service.
2) List four reasons why Web advertising is growing
rapidly.
Answer: Seven reasons are mentioned in the textbook
and include cost, richness of format, personalization, timeliness,
location-basis, linking, and digital branding. Referencing cost, online ads are
sometimes cheaper than those in other media. In addition, ads can be updated at
any time with minimal cost. In terms of format richness, Web ads effectively
use the convergence of text, audio, graphics, and animation. In addition,
games, entertainment, and promotions can be easily combined in online
advertisements. When using personalization, Web ads can be interactive and
targeted to specific interest groups or individuals, and the Web is a much more
focused medium. In the area of timeliness, Internet ads can be fresh and
up-to-the-minute. Web advertising can be location based; Internet ads can be sent
to consumers whenever they are in a specific time and location. With linking,
it is easy to link from an online ad to a storefront. In the area of digital
branding, even the most price-conscious online shoppers are willing to pay
premiums for brands they trust.
Chapter Quiz
1.
An ad that appears
underneath the current browser window, so when the user closes the active
window the ad is still on the screen describes:
A.
pop-under ad.
B.
pop-up
ad.
C.
ad
spawning.
D.
random
ad.
2.
Which of the
following major factors is the most important predictor of online buying
behavior?
A.
gender
B.
number
of orders made
C.
product information requested
D.
number
of related e-mails
3.
Word-of-mouth
marketing by which customers promote a product or service by telling others
about it is referred to as
A.
affiliate
marketing.
B.
search
engine marketing.
C.
viral marketing.
D.
target
marketing.
4.
Finding
information and knowledge that describe the relationships among consumers,
products, marketing methods, and marketers is the goal of
A.
market research.
B.
market
segmentation.
C.
e-tailing.
D.
collaborative
filtering.
5.
Data collection
methods in the Web 2.0 environment include each of the following except
A.
branding.
B.
polling.
C.
chatting.
D.
folksonomy.
6.
As the volume of
customers, products, vendors, and information increases, it becomes
uneconomical, or even impossible, for customers to consider all relevant
information and available products and services. The practical solution to
handling such information overload is to
A.
design
Web sites with minimal content.
B.
use
permission marketing.
C.
increase
the use of ad agencies.
D.
use software or intelligent agents.
7.
By increasing
customer loyalty, EC companies achieve each of the following benefits except
A.
lower
marketing and advertising costs.
B.
lower
customer turnover expenses.
C.
lower
transaction costs.
D.
lower click through rates.
8.
Attracting
and retaining loyal customers is the most important issue for e-tailers because
customer loyalty can lower marketing and advertising costs, transaction costs,
customer turnover expenses, and failure costs such as warranty claims.
A.
True
B.
False
9. One of the keys to building effective
customer relationships is an understanding of intelligent agents.
A.
True
B.
False
10. Finding and retaining customers is a major critical
success factor for most offline and online businesses.
A.
True
B.
False
11. Banner ads that appear when a predetermined word is
queried from a search engine are
A.
stylized
banners.
B.
keyword banners.
C.
random
banners.
D.
personalized
banners.
12. Web site content is especially important to increase
stickiness because
A.
Web
sites are expensive to maintain.
B.
customers are expensive to acquire.
C.
of
Internet-accessible mobile devices.
D.
competitors
are always attempting to steal away customers.
13. One of the major challenges of one-to-one advertising
is ________, or the flooding of users with junk e-mail, banners, and pop-ups.
A.
permission
marketing
B.
interstitial
C.
behavioral
targeting
D.
spamming
14. The use of cookies
A.
has
not helped Internet marketers target their ads.
B.
is one of the most controversial issues
in EC.
C.
is
being replaced by adware and spyware programs.
D.
is
a widely used method for mass marketing.
15. In the consumer decision process, which of the
following roles ultimately makes the buying decision or any part of it?
A.
influencer
B.
decider
C.
initiator
D.
buyer
16. Finding information and knowledge that describe the
relationships among consumers, products, marketing methods, and marketers is
the goal of
A.
market research.
B.
market
segmentation.
C.
e-tailing.
D.
collaborative
filtering.
17. The first step in the purchase decision-making process
is product evaluation and comparison.
A.
True
B.
False
18. One problem with Web analytics, Web mining, and
clickstream data is that we observe and follow a computer, not knowing who is
actually moving the mouse.
A.
True
B.
False
19.
Virtual
catalogs and links to external sources support the information search step in
the purchase decision-making process.
A.
True
B.
False
20. Once a company knows a consumer's preferences, the
company can predict, without asking the consumer directly, what other products
or services that consumer might enjoy through
A.
active
Web bugs.
B.
spyware.
C.
collaborative filtering.
D.
personalization.
