Lesson 11 - Questions Flashcards
(9 cards)
Question 1: What do social networks, auctions, and portals have in common?
Social networks, auctions, and portals are all based on feelings of shared interest and self-identification, in other words, a sense of community. Social networks and online communities explicitly attract people with shared affinities (e.g., ethnicity, gender, religion, political views), or shared interests (e.g., hobbies, sports, vacation activities). The auction site eBay started as a community of people interested in trading unwanted but functional items for which there was no ready commercial market. That community turned out to be huge—much larger than anyone expected. Portals also contain strong elements of community by providing access to community-fostering technologies such as email, chat groups, bulletin boards, and discussion forums.
Question 4: What are three mobile social networks?
While individual answer5s will vary, several of the largest newer social networks like Instagram, Snapchat, and Vine are almost entirely mobile.
Question 7: What is an affinity community, and what is its business model?
In an affinity community, members can participate in focused discussions with others who share the same affinity, or group identification, such as religion, ethnicity, gender, sexual orientation, or political beliefs. The business model is a mixture of subscription revenue from premium content and services, as well as advertising, tenancy/sponsorships, and distribution agreements.
Question 11: List and briefly explain three of the benefits of auction markets.
Liquidity: Sellers and buyers are connected in a global marketplace.
Price discovery: Even difficult-to-price items can be competitively priced based on supply and demand.
Price transparency: Everyone in the world can see the asking and bidding prices for items, although prices can vary from auction site to auction site.
Market efficiency: Consumers are offered access to a selection of goods that would be impossible to access physically, and consumer welfare is often increased due to reduced prices.
Lower transaction costs: Merchants and consumers both benefit from the reduced costs of selling and purchasing goods compared to the physical marketplace.
Consumer aggregation: A large number of consumers who are motivated to buy are amassed in one marketplace—a great convenience to the seller.
Network effects: The larger an auction site becomes, in both number of users and products, the greater all of the above benefits become and therefore the more valuable it is as a marketplace.
Market maker benefits: Auction sites have no inventory carrying costs or shipping costs, making them perhaps the ideal online business in that their main function is the transfer of information.
Question 12: What are the four major costs to consumers of participating in an auction?
Delayed consumption: Auctions can go on for days and the product must then be shipped to the buyer. Buyers will typically want to pay less for an item they cannot obtain immediately.
Monitoring costs: Buyers must spend time monitoring the bidding.
Equipment costs: Buyers must purchase, or have already purchased, computer systems and Internet service, and learn how to operate these systems.
Trust risks: Consumers face an increased risk of experiencing a loss as online auctions are the largest source of Internet fraud.
Fulfillment costs: Buyers must pay for packing, shipping, and insurance, and will factor this cost into their bid price.
Question 15: Name and describe five types of possible abuses and frauds that may occur with auctions.
Bid rigging: Agreeing offline to limit bids or using shills to submit false bids that drive prices up.
Price matching: Agreeing informally or formally to set floor prices on auction items below which sellers will not sell in open markets.
Shill feedback, defensive (offensive): Using secondary IDs or other auction members to inflate (deflate) ratings.
Feedback extortion: Threatening negative feedback in return for a benefit.
Transaction interference: Emailing buyers to warn them away from a seller.
Bid manipulation: Using the retraction option to make high bids, discovering the maximum bid of the current high bidder, and then retracting the bid.
Non-payment after winning: Blocking legitimate buyers by bidding high, then not paying.
Shill bidding: Using secondary user IDs or other auction members to artificially raise the price of an item.
Transaction non-performance: Accepting payment and failing to deliver.
Non-selling seller: Refusing payment or failing to deliver after a successful auction.
Bid siphoning: Emailing another seller’s bidders and offering the same product for less.
Question 16: What types of products are well suited for an auction market? At what points in the product life cycle can auction markets prove beneficial for marketers?
Rare and unique products where prices are difficult to discover and where there may have been no market are well-suited for an auction. Examples include perishable items such as airline tickets, hotel rooms, car rentals, or tickets to plays, concerts, and sporting events. Traditionally, auctions have been used by businesses to generate a higher profit on items at the end of their life cycle than they would receive from product liquidation sales. However, auctions are now more frequently used at the beginning of a product’s life cycle to generate premium prices from highly motivated early adopters, for example: early releases of music, books, movies, video games, and digital appliances.
Question 17: What three characteristics define a portal site today?
The characteristics that define a portal site today are navigation of the Web, providing content, and serving as the starting point for pursuing commerce. Web portals are gateways to the more than 4 billion Web pages on the Internet. Originally, the primary purpose of portals was to help users find information on the Web, but they have evolved into destination sites that provide a wide range of content from news to entertainment.
Question 18: What are the two main types of vertical market portals, and how are they distinguished from one another?
The two main types of vertical market portals are affinity group portals and focused content portals. Affinity group portals seek to attract statistical aggregates of people who identify themselves by their attitudes, values, beliefs, and behaviour. They exist to serve broad constituencies such as those who identify with a shared cultural or ethnic background, or sexual orientation, as well as more focused constituencies such as union members, religious groups, or families interested in alternative schooling options. Focused content portals contain in-depth information on a particular topic in which all members are interested. They can provide content on such broad topics as sports, news, weather, entertainment, finance, and business, or they can appeal to a more focused interest group such as boating or video game enthusiasts.
