Chapter 4 Study Guide

Chapter 4 Study Guide

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 customers 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.


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.


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 individuals 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 users 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.


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.


1. Define banner ads and describe their benefits and limitations.

Banner ads are graphic advertisements displayed on Web pages that link to the advertisers 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 others 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 users search.

9. Describe Googles AdWords and AdSense.

Googles AdWords system places ads with similar topics in users search results. AdSense is an affiliate program that dynamically places ads on a website based on the sites 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.


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 users 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.


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 customers response and their interest in whatever is being advertised.


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

customers 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 consumers behavior. Since data mining can be used to create personalization for users, it is often used in customer service to customize the users 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, youll 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 companys 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 ads 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 dont. 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 customers 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.


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.


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.


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.


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?


14. Enter paf.bcentral.com (part of Microsofts 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.


15. What resources do you find to be most useful at targetonline.com, clickz.com,

admedia.org, i-m.com, and wdfm.com?


16. Enter doubleclick.com and examine all of the companys products. Prepare a report.


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?


18. Enter zoomwerang.com and learn how it facilitates online surveys. Examine the various

product, including those that supplement the surveys. Write a report.


19. Enter pewinternet.org and pewreasearch.org. What research do they conduct that is

relevant to B2C? To B2B? Write a report.


20. Enter loomia.com. Describe their recommendation engines.


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 customers preferences and needs based on past transactions.

Practice Test

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.

21. A characteristic that describes customer loyalty to a site that eventually results in higher revenue best defines:

A. retention.

B. acquisition.

C. stickiness.

D. attachment.

22. The main uses of social networks include:

A. reducing the number of suppliers.

B. encouraging purchases.

C. learning useful business intelligence.

D. driving traffic to online Web properties.

23. Which of the following uses computer graphic displays to present the impact of decisions?

A. visual interactive simulation.

B. FAQ.

C. progressive dashboard.

D. information portal.

24. Portals that store data and enable users to navigate and query these data are:

A. collaborative portals.

B. information portals.

C. mobile portals.

D. MRO portals.

Chapter 4 Study Guide

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