Chapter 2
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
1
Chapter 2
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
True-False Questions
1.
The functions and efficiency of an e-market are the same as that of a physical marketplace.
Answer: False
Difficulty: East
Page Reference: 44
AACSB: Reflective thinking skills
2.
The emergence of electronic marketplaces has resulted in lower information search costs for
buyers and lower transaction and distribution costs for sellers.
Answer: True
Difficulty: Medium
Page Reference: 44, 45
AACSB: Reflective thinking skills
3.
Although both marketplaces and marketspaces can sell physical products, the marketspace
also can sell digital products, which are goods that can be transformed to digital format and
delivered instantly over the Internet.
Answer: True
Difficulty: Medium
Page Reference: 45
AACSB: Use of information technology
4.
Front end refers to the activities that support online order fulfillment, inventory management,
purchasing from suppliers, payment processing, packaging, and delivery.
Answer: False
Difficulty: Medium
Page Reference: 45
AACSB: Use of information technology
5.
In marketing, an intermediary is a third party that operates between sellers and buyers.
Intermediaries of all kinds offer their services on the Web.
Answer: True
Difficulty: Medium
AACSB: Use of information technology
Page Reference: 45
2
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
6.
WebMD, which is the largest U.S. medical services company, is known mainly for its
webmd.com consumer portal, but its core business is being an e-intermediary.
Answer: True
Difficulty: Easy
Page Reference: 46
AACSB: Use of information technology
7.
The major B2B e-marketplaces are electronic storefronts, Internet malls, and exchanges.
Answer: False
Difficulty: Easy
Page Reference: 47
AACSB: Use of information technology
8.
A portal is an information gateway that attempts to address information overload by enabling
people to search and access relevant information from disparate IT systems and the Internet,
using advanced search and indexing techniques, such as Google’s desktop.
Answer: True
Difficulty: Medium
Page Reference: 49
AACSB: Use of information technology
9.
Intermediaries are human or electronic agents that play an important role in EC by providing
value-added services such as making payment arrangements to buyers and sellers.
Answer: True
Difficulty: Medium
Page Reference: 51
AACSB: Use of information technology
10.
Travelers using airline Web sites to book their flights directly without the use of travel agents
is resulting in the reintermediation of travel agents.
Answer: False
Difficulty: Hard
Page Reference: 53
AACSB: Reflective thinking skills
11.
Search engines not only “search and match,” but also have capabilities that can be used to
perform routine tasks that require intelligence.
Answer: False
Difficulty: Easy
AACSB: Use of information technology
Page Reference: 57
Chapter 2
12.
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
3
An electronic shopping cart is an order-processing technology that allows customers to
accumulate items they wish to buy while they continue to shop.
Answer: True
Difficulty: Easy
Page Reference: 58
AACSB: Use of information technology
13.
Shopping carts for B2B are fairly simple, but a shopping cart for B2C may be more complex.
Answer: False
Difficulty: Medium
Page Reference: 59
AACSB: Use of information technology
14.
An auction is a competitive process and market mechanism that uses a competitive process
by which a seller solicits consecutive bids from buyers or a buyer solicits bids from sellers.
Answer: True
Difficulty: Easy
Page Reference: 59
AACSB: Use of information technology
15.
Negotiation and bargaining are two types of auctions where prices are not fixed, but rather
are allowed to fluctuate as market supply and demand change.
Answer: False
Difficulty: Medium
Page Reference: 60
AACSB: Use of information technology
16.
Reverse auctions are bidding or tendering systems in which the buyer places an item for bid
on a request for quote (RFQ) system; then potential suppliers bid on the job, with the price
reducing sequentially, and the lowest bid wins.
Answer: True
Difficulty: Medium
Page Reference: 61
AACSB: Use of information technology
17.
E-auctions are becoming less important selling and buying channels for companies and
individuals.
Answer: False
Difficulty: Easy
AACSB: Reflective thinking skills
Page Reference: 62
4
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
18.
The major limitations of e-auctions are insufficient security, risk of fraud, and a limited pool
of participants.
Answer: True
Difficulty: Medium
Page Reference: 62
AACSB: Reflective thinking skills
19.
A limitation of e-bartering for businesses is that excess capacity items such as office space,
storage, factory space; idle facilities; and labor cannot be bartered.
Answer: False
Difficulty: Medium
Page Reference: 64
AACSB: Reflective thinking skills
20.
Online negotiation can be facilitated by computer technology for the negotiation process and
software agents for searches and comparisons.
Answer: True
Difficulty: Easy
Page Reference: 64
AACSB: Use of information technology
21.
Due to the lack of hurdles, the adoption and growth of m-commerce has been widespread.
Answer: False
Difficulty: Medium
Page Reference: 66
AACSB: Use of information technology
22.
The Internet economy’s low barriers to entry are both an opportunity and a threat to
businesses.
Answer: True
Difficulty: Easy
Page Reference: 68
AACSB: Reflective thinking skills
23.
Strong competition for commodity-type products, such as toys and CDs, was a major
contributor to the collapse of many dot-com companies, which suggests that a company
needs to use innovative strategies to survive and prosper in the Internet economy.
Answer: True
AACSB: Analytic skills
Difficulty: Medium
Page Reference: 68
Chapter 2
24.
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
5
Because the strength of each of Porter’s five forces varies considerably from industry to
industry, it would be a mistake to draw general conclusions about the impact of the Internet
on long-term industry profitability.
Answer: True
Difficulty: Medium
Page Reference: 70
AACSB: Reflective thinking skills
25.
Because of intense competition on the Web, new companies cannot establish good corporate
images quickly as Amazon.com had done when it had few online competitors.
Answer: False
Difficulty: Medium
Page Reference: 73
AACSB: Reflective thinking skills
Multiple Choice Questions
26.
Fundamentally, the success of the pure-play jewelry e-tailer Blue Nile was due to the
company’s use of Internet technologies to:
a.
b.
c.
d.
go public
provide quality ratings
eliminate intermediaries
offer lower prices than competitors
Answer: D
Difficulty: Medium
Page Reference:
43
AACSB:
27.
Traditional and electronic markets have three main functions, which include each of the
following EXCEPT:
a. transforming raw materials into finished products.
b. matching buyers and sellers.
c. facilitating the exchange of information, goods, services, and payments associated with
market transactions.
d. providing an institutional infrastructure, such as a legal and regulatory framework that
enables the efficient functioning of the market.
Answer: A
Difficulty: Easy
AACSB: Reflective thinking skills
Page Reference: 44
6
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
28.
Digital products have different cost curves than those of regular products because:
a.
b.
c.
d.
in digitization, most of the costs are variable and fixed costs are low.
in digitization, most of the costs are fixed, and variable costs are very low.
in digitization, most of the costs are fixed, but variable costs are high.
in digitization, all of the costs are variable.
Answer: B
Difficulty: Hard
Page Reference: 45
AACSB: Analytic skills
29.
The portion of an e-seller’s business processes through which customers interact, including
the seller’s portal, electronic catalogs, a shopping cart, a search engine, and a payment
gateway is referred to as the _____________ of the business.
a.
b.
c.
d.
front end
back end
infrastructure
intermediary
Answer: A
Difficulty: Medium
Page Reference: 45
AACSB:
30.
All the activities that are related to order aggregation and fulfillment, inventory management,
purchasing from suppliers, accounting and finance, insurance, payment processing,
packaging, and delivery are done in what is termed the_______ of the business.
a.
b.
c.
d.
front end
back end
infrastructure
intermediary
Answer: B
Difficulty: Medium
Page Reference: 45
AACSB:
31.
The major __________ e-marketplaces are storefronts and Internet malls.
a.
b.
c.
d.
B2B
C2B
B2B2C
B2C
Answer: D
AACSB:
Difficulty: Medium
Page Reference: 47
Chapter 2
32.
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
7
An electronic storefront includes several mechanisms that are necessary for conducting the
sale. The most common mechanisms include each of the following EXCEPT:
a.
b.
c.
d.
an electronic catalog;
a search engine
a supply chain
a payment gateway
Answer: C
Difficulty: Easy
Page Reference: 47
AACSB:
33.
_______________ are online markets owned and operated by a single company and may be
either sell-side or buy-side.
a.
b.
c.
d.
Private e-marketplaces
Commercial portals
E-malls
B2B marketplaces
Answer: A
Difficulty: Easy
Page Reference: 48
AACSB:
34.
A(n) _____________ is a single point of access through a Web browser to help users find
relevant and accurate business information and reduce information overload.
a.
b.
c.
d.
intermediary
search engine
information portal
browser
Answer: C
Difficulty: Easy
Page Reference: 49
AACSB:
35.
Finding relevant and accurate information is often time-consuming and requires access to
multiple systems causing organizations to lose a lot of productive employee time. One
solution to this problem is the use of:
a.
b.
c.
d.
portals.
intermediaries.
browsers.
intranets.
Answer: A
AACSB:
Difficulty: Medium
Page Reference: 49
8
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
36.
A type of broker that helps consumers compare different stores is a:
a.
b.
c.
d.
virtual mall.
search agent.
shopping facilitator.
metamediary.
Answer: C
Difficulty: Medium
Page Reference: 52
AACSB:
37.
Human or electronic intermediaries attempt to address each of the following limitations of
direct interaction EXCEPT:
a.
b.
c.
d.
search costs.
lack of privacy for those wanting to remain anonymous.
contract risk.
product distribution.
Answer: D
Difficulty: Medium
Page Reference: 52
AACSB:
38.
The elimination of various types of agents that mediate between buyers and sellers, such as
travel and insurance agents, is referred to as:
a.
b.
c.
d.
remediation
disintermediation
e-distribution
automation
Answer: B
Difficulty: Medium
Page Reference: 53
AACSB:
39.
A mode is purchasing where prices are negotiated or discounted is ________________, which
refers to nonfixed prices, such as those in auctions or stock markets.
a.
b.
c.
d.
dynamic pricing
commodity pricing
pre-shopping
negotiation
Answer: A
AACSB:
Difficulty: Medium
Page Reference: 54
Chapter 2
40.
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
9
Although used occasionally in B2C commerce, customized catalogs are especially useful in
B2B e-commerce for each of the following reasons EXCEPT:
a. e-catalogs can show only the items that the employees in a specific organization are
allowed to purchase.
b. Intranets, in particular, can deliver customized catalogs to different business customers.
c. e-catalogs can show the buyer’s ID number for the item, model, or SKU number rather than
the seller’s ID numbers.
d. E-catalogs can be customized to show the same item to different customers at different prices,
reflecting discounts or purchase-contract agreements.
Answer: B
Difficulty: Medium
Page Reference: 56
AACSB:
41.
To be successful and useful, large e-catalogs need a(n) __________________.
a.
b.
c.
d.
search engine
directory
data mining technology
enhanced viewing capability
Answer: A
Difficulty: Medium
Page Reference: 57
AACSB:
42.
A ____________ has capabilities that can be used to perform routine tasks that require
intelligence such as providing customers with assistance based on their movements on a Web
site.
a.
b.
c.
d.
search engine
intelligent engine
software agent
software engine
Answer: C
Difficulty: Medium
Page Reference: 58
AACSB:
43.
Popular search engines include all of the following EXCEPT:
a.
b.
c.
d.
Google
MSN
AltaVista
Lycos
Answer: B
AACSB:
Difficulty: Easy
Page Reference: 58
10
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
44.
A(n) ____________ is an order-processing technology that allows customers to accumulate
items they wish to buy while they continue to shop.
a.
b.
c.
d.
intelligent agent
e-fulfillment agent
electronic shopping cart
merchant server
Answer: C
Difficulty: Medium
Page Reference: 58
AACSB:
45.
The most common and traditional form of auctions in which one seller entertains bids from
many buyers is referred to as:
a.
b.
c.
d.
forward auctions
reverse auctions.
double auction.
e-auctions.
Answer: A
Difficulty: Medium
Page Reference: 61
AACSB:
46.
An auction in which there is one buyer and many potential sellers; or in which a buyer places
an item for bid on an RFQ system and the lowest bid wins is referred to as all of the
following EXCEPT:
a.
b.
c.
d.
reverse auctions.
forward auctions.
bidding system.
tendering system.
Answer: B
Difficulty: Medium
Page Reference: 61
AACSB:
47.
What is a benefit of e-auctions to sellers?
a.
b.
c.
d.
Convenience since the bidding can occur anywhere and any time.
High stickiness to the Web site.
Anonymity.
The optimal price is determined by the market.
Answer: D
Difficulty: Hard
AACSB: Reflective thinking skills
Page Reference: 62
Chapter 2
48.
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
11
Organizations are embracing mobilized computing technologies for several reasons
EXCEPT:
a.
b.
c.
d.
It improves the productivity of workers in the field.
Wireless telecom support for mobility is growing quickly.
Wireless security problems have been solved with encryption.
The prices of notebook computers, wireless handhelds, and smart phones continue to fall
and their capabilities continue to increase.
Answer: C
Difficulty: Medium
Page Reference: 65
AACSB:
49.
EC competition is very intense because online transactions enable each of the following
EXCEPT:
a. For buyer, e-markets reduce the cost of searching for product information; e.g., sellers,
models, prices, frequently to zero.
b. Higher prices because of a greater number of potential buyers.
c. Setting up a Web site is relatively easy and inexpensive, and doing so reduces the need
for a sales force and brick-and-mortar stores.
d. Product or service differentiation and personalization.
Answer: B
Difficulty: Medium
Page Reference: 68
AACSB: Reflective thinking skills
50.
Which of the following statements about differentiation and personalization is not correct?
a. Products must be differentiated for perfect competition.
b. Consumers like differentiation and personalization and are frequently willing to pay more
for them.
c. Differentiation reduces the substitutability between products, benefiting sellers who use
this strategy.
d. Price cutting in differentiated markets does not impact market share very much:
Answer: A
AACSB:
Difficulty: Medium
Page Reference: 68
12
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
51.
It can be said that competition between companies is being replaced by competition between
___________ .
a.
b.
c.
d.
industries
digital products and services
differentiated products and services
networks
Answer: D
Difficulty: Medium
Page Reference: 69
AACSB:
52.
The Internet has influenced industry structures in each of the following ways EXCEPT:
a. A flood of new entrants has come into many industries because of reduced barriers to
entry.
b. Increases differences among competitors whose offerings are kept proprietary.
c. There has been a shift in bargaining and buyer power to end users.
d. Industries are more efficient overall.
Answer: B
Difficulty: Medium
Page Reference: 70
AACSB: Reflective thinking skills
53.
Impacts of e-marketplaces on B2C direct marketing include all of the following EXCEPT:
a. The existence of e-marketplaces has increased the promotion of products and services
through direct marketing.
b. The administrative work related to physical delivery, especially across international
borders, can be reduced significantly, cutting the cycle time by more than 90 percent.
c. Brand images for new companies have become more difficult to establish.
d. EC enables customization of products and services, which is changing marketing and
sales activities both in B2C and in B2B.
Answer: C
Difficulty: Medium
Page Reference: 73
AACSB: Reflective thinking skills
54.
One of the major benefits of e-markets is the improvement in supply chains with the creation
of a(n) _____________________.
a.
b.
c.
d.
hub-based chain
customized chain
support chain
logistics chain
Answer: A
AACSB:
Difficulty: Medium
Page Reference: 76
Chapter 2
55.
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
13
______________ provides customers with exactly what they want, when and where they want it.
Effective communication between the supply chain and the factory floor is needed to make it
happen
a.
b.
c.
d.
Virtual manufacturing
Demand-driven manufacturing
Build-to-order manufacturing
Real-time manufacturing
Answer: B
Difficulty: Medium
Page Reference: 78
AACSB:
Fill In the Blanks
56.
An e-marketplace is a virtual marketplace in which sellers and buyers meet and conduct
different types of transactions.
Difficulty: Easy
Page Reference: 44
AACSB:
57.
A marketspace is a marketplace in which sellers and buyers exchange goods and services for
money or for other goods and services, but do so electronically.
Difficulty: Medium
Page Reference: 45
AACSB:
58.
All the activities that are related to order aggregation and fulfillment, inventory management,
purchasing from suppliers, accounting and finance, insurance, payment processing,
packaging, and delivery are done in what is termed the back end of the business.
Difficulty: Medium
Page Reference: 45
AACSB:
59.
In marketing, an intermediary is typically a third party that operates between sellers and
buyers.
Difficulty: Easy
AACSB:
Page Reference: 45
14
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
60.
The front end is the portion of an e-seller’s business processes through which customers
interact, including the seller’s portal, electronic catalogs, a shopping cart, a search engine,
and a payment gateway.
Difficulty: Medium
Page Reference: 45
AACSB:
61.
An electronic or Web storefront refers to a single company’s Web site where products and
services are sold.
Difficulty: Easy
Page Reference: 47
AACSB:
62.
To attract users to shopping malls, vendors use rich media called virtual reality to relate the
content via digital representation to potential buyers.
Difficulty: Medium
Page Reference: 47
AACSB:
63.
Private e-marketplaces are online markets owned and operated by a single company.
Difficulty: Easy
Page Reference: 48
AACSB:
64.
An information portal is a single point of access through a Web browser to critical business
information located inside and outside of an organization.
Difficulty: Medium
Page Reference: 49
AACSB:
65.
Commercial (public) portals are portals that offer fairly routine content for broad audiences
and are the most popular portals on the Internet; e.g., yahoo.com, aol.com, and msn.com.
Difficulty: Medium
Page Reference: 49
AACSB:
66.
E-marketplaces, especially for B2B and mega B2C such as Amazon.com may be plagued by
information overload.
Difficulty: Medium
AACSB:
Page Reference:50
Chapter 2
67.
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
15
In cyberspace, there are intermediaries that provide and/or control information flow. These
electronic intermediaries are known as infomediaries.
Difficulty: Medium
Page Reference: 51, 52
AACSB:
68.
A broker is a company that facilitates transactions between buyers and sellers.
Difficulty: Easy
Page Reference: 51
AACSB:
69.
A special type of intermediary in e-commerce is the B2B e-distributor which connect
manufacturers with business buyers, such as retailers or resellers in the computer industry.
Difficulty: Medium
Page Reference: 53
AACSB:
70.
Disintermediation is the elimination of intermediaries between sellers and buyers.
Difficulty: Medium
Page Reference: 53
AACSB:
71.
A search engine is a computer program that can access databases of Internet resources,
search for specific information or keywords, and report the results.
Difficulty: Easy
Page Reference: 57
AACSB:
72.
An electronic shopping cart is an order-processing technology that allows customers to
accumulate items they wish to buy while they continue to shop.
Difficulty: Medium
Page Reference: 59
AACSB:
73.
Dynamic pricing refers to prices that are not fixed, but that are allowed to fluctuate as supply
and demand in a market change.
Difficulty: Easy
AACSB:
Page Reference: 60
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E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
74.
Priceline.com pioneered the name-your-own-price model. In this C2B model, a potential
buyer specifies the price or other terms that he or she is willing to pay to any willing and able
seller.
Difficulty: Medium
Page Reference: 61
AACSB:
75.
Mobile commerce refers to the conduct of e-commerce via wireless devices or from portable
devices.
Difficulty: Easy
Page Reference: 64
AACSB:
76.
Location-based commerce is an m-commerce application targeted to a customer whose
preferences and needs and location (e.g., using GPS) are known in real time.
Difficulty: Medium
Page Reference: 65
AACSB:
77.
Because of these interrelationships, the business model of the Internet economy has been
called the Internet ecosystem.
Difficulty: Medium
Page Reference: 67
AACSB:
78.
Differentiation involves providing a product or service that is unique and not available
elsewhere.
Difficulty: Medium
Page Reference: 68
AACSB:
79.
The competitive forces model is a model devised by Porter that says that five major forces of
competition determine industry structure and how economic value is divided among the
industry players in an industry; analysis of these forces helps companies develop their
competitive strategy.
Difficulty: Medium
AACSB:
Page Reference: 69
Chapter 2
80.
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
17
E-learning systems offer two-way video, on-the-fly interaction, and application sharing.
Such systems provide for interactive remote instruction systems, which link sites over a highspeed intranet.
Difficulty: Medium
Page Reference: 79
AACSB:
Essay Questions
81.
Briefly describe how electronic marketplaces have changed the processes used in trading
and supply chains.
Greater information richness of the transactional and relational environment.
Lower information search costs for buyers.
Diminished information asymmetry between sellers and buyers.
Greater temporal separation between time of purchase and time of possession of physical products
purchased in the e-marketplace.
Greater temporal proximity between time of purchase and time of possession of digital products
purchased in the e-marketplace.
The ability of buyers and sellers to be in different locations.
Difficulty: Hard
82.
Page Reference: 44
What are information portals? List and identify 3 major types of portals.
An information portal is a single point of access through a Web browser to critical business
information located inside and outside of an organization. Many information portals can be
personalized for the users.
Commercial (public) portals. These portals offer content for diverse communities and are the most
popular portals on the Internet. Although they can be customized by the user, they are still intended for
broad audiences and offer fairly routine content, some in real time
Corporate portals. Corporate portals provide organized access to rich content within relatively narrow
corporate and partners’ communities.
Publishing portals. These portals are intended for communities with specific interests. These portals
involve relatively little customization of content, but they provide extensive online search features and
some interactive capabilities.
Mobile portals are portals that are accessible from mobile devices
Knowledge portals. Knowledge portals enable access to knowledge by knowledge workers and
facilitate collaboration.
Difficulty: Medium
Page Reference: 49
18
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
83.
Identify and briefly discuss the roles and value of intermediaries in e-marketplaces.
Intermediaries (brokers) play an important role in commerce by providing value-added activities and
services to buyers and sellers. Web sites that gather and organize large amounts of data and act as
intermediaries between those who want the information and those who supply the information are one
type of infomediary. One type offers consumers a place to gather information about specific products
and companies before they make purchasing decisions. It is a third-party provider of unbiased
information; it does not promote or try to sell specific products in preference over other products or act
on behalf of any vendors
There are many types of intermediaries. In cyberspace, there are intermediaries that provide and/or
control information flow. These electronic intermediaries are known as infomediaries. The
information flows to and from buyers and sellers via infomediaries. Frequently, intermediaries
aggregate information and sell it to others. Online intermediaries are companies that facilitate
transactions between buyers and sellers and receive a percentage of the transaction’s value.
Difficulty: Medium
84.
Page Reference: 51
List and briefly discuss three reasons why EC competition is extremely intense.
Lower search costs for buyers. E-markets reduce the cost of searching for product information (e.g.,
sellers, models, prices, etc.), frequently to zero. This can significantly impact competition, enabling
customers to find cheaper (or better) products and forcing sellers, in turn, to reduce prices and/or
improve customer service. Sellers that provide information to buyers can exploit the Internet to gain a
considerably larger market share.
Speedy comparisons. Not only can customers find inexpensive products online, but they also can find
them quickly. For example, a customer does not have to go to several bookstores to find the best price
for a particular book.
Lower prices. Companies can offer low prices due to their low costs of operation (no physical
facilities, minimum inventories, etc.).
Customer service. Such service is an extremely important competitive factor.
Barriers to entry are reduced. Setting up a Web site is relatively easy and inexpensive, and doing so
reduces the need for a sales force and brick-and-mortar stores.
Virtual partnerships multiply. With access to a Web of expertise and the ability to share production
and sales information easily, the ability of a firm to create a virtual team to exploit an EC opportunity
increases dramatically. The Internet reducing interaction costs, the time and money expended when
people and companies exchange goods, services, and idea.
Difficulty: Easy
Page Reference: 68
Chapter 2
85.
E-Marketplaces: Structure, Mechanisms, Economics, and Impacts
19
List and discuss four impacts of e-marketplaces on B2C direct marketing:
Product promotion. The existence of e-marketplaces has increased the promotion of products and
services through direct marketing.
New sales channel. Because of the direct reach to customers and the bidirectional nature of
communications in EC, a new distribution channel for existing products has been created.
Direct savings. The cost of delivering information to customers over the Internet results in substantial
savings to senders of messages. Major savings are realized in delivering digitized products such as
music and software rather than physical ones.
Reduced cycle time. The delivery time of digitized products and services can be reduced to seconds.
Cycle time can be reduced through improvements along the supply chain by using RFID.
Improved customer service. Customer service can be greatly enhanced by enabling customers to find
detailed information online.
Brand or corporate image. On the Web, newcomers can establish corporate images very quickly. A
good corporate image facilitates trust, which is necessary for direct sales.
Customization. EC enables customization of products and services.. If done properly, a company can
achieve mass customization that provides a competitive advantage and increases the overall demand
for certain products and services.
Advertising. Direct advertising creates a fundamental change in the manner in which advertising is
conducted, not only for online transactions but also for products and services that are ordered and
shipped in traditional ways.
Accessibility. The ability to access a market anytime from any place, especially with wireless
devices, enhances direct e-marketing.
Difficulty: Medium
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