VIRTUAL MARKETING

(FOR PRIVATE CIRCULATION ONLY)

2022

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 PROGRAMME COORDINATOR
Dr. Padmapriya Irabatti

COURSE DESIGN AND REVIEW COMMITTEE

Dr. Rashmi Hebbalkar Dr. Shailesh Kasande
Prof. Abhay Karde Prof. Sanjeev Pathak
Prof. Sunil Kumar Prof. Safia Farooqui
Dr. Narendra Parchure Prof. Sudeep Limaye

COURSE WRITERS
Kirti Dang Gulati Kamakshaiah Musunuru
Mahesh Gadekar S. M. Jadhav

EDITOR
Mr. Yogesh Bhosle

Published by Symbiosis Centre for Distance Learning (SCDL), Pune

July, 2006 (Revision 03, 2022)

Copyright © 2022 Symbiosis Open Education Society

All rights reserved. No part of this book may be reproduced, transmitted or utilised in any form or by any
means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval
system without written permission from the publisher.

Acknowledgement
Every attempt has been made to trace the copyright holders of materials reproduced in this book. Should any
infringement have occurred, SCDL apologises for the same and will be pleased to make necessary corrections
in future editions of this book.

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 PREFACE

If you are using internet and have been on web, mostly business websites, you may have noticed many
changes taking place in the corporate world. Personalized advertising, online marketing, customized
products and services, cashless billing, web based surveys and highly interactive media are some of the
indications of changes in marketing domain of new era. At the same time, traditional disciplines such
as segmentation, new product development, pricing, seven Ps of Marketing are gaining importance.

Virtual Marketing has gained importance in the last two decades due to the internet revolution that
radically changed our lifestyles. Organizations around the world appreciated the importance of virtual
world and its supplementary role in empowering the customers through the provisions of new values
creation. While structuring the unit, efforts are made to help students understand various facets of virtual
marketing in terms of marketplace and market space, mirroring capability, the network economy, and
also the importance of various laws. Different factors like demographic, psychographic, geographic and
other factors are discussed under consumer behavior in context of e-marketing. Various motivations
required by the consumers for shopping on the net are also discussed. Attributes for online shoppers
are also explained in the manner that students can relate to and understand.

The main topics that are covered in this SLM are the combination of traditional elements of marketing
with the emerging technology and trends used today. It provides understanding of different concepts
and technologies emerging in the field of Internet Marketing, which has given a new look to marketing
and helps to improve customer relationship. Different legal issues related with internet marketing are
also covered. With the advent of internet technology, online business flourished because of convenience
to customers. Earlier online marketing mix incorporated promotional strategies like placing banner
or advertisement on the webpage. However, in the recent past, internet marketing has changed in its
online presentation of products/services. Good online marketing mix can promote product/service to
prospective customer and retain existing customer.

We finally thank everyone who put their efforts to bring this SLM into reality for the betterment of
open and distance learners in specific and all learners in general.

Kirti Dang Gulati

Kamakshaiah Musunuru
Mahesh Gadekar
S. M. Jadhav

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 ABOUT THE AUTHORS

Kirti Dang Gulati has completed her double MBA in Marketing and Human Resource from University
of Pune. She has also done her MPhil in Management. She has over 10 years of experience in corporate,
academics and research. She has presented many research papers at National and International
Conferences. She also regularly conducts corporate training and personality development programmes
across India. She is a member of the Sangamner Medical Association, and former Vice President of
the Leo Club of Sangamner.

Kamakshaiah Musunuru did his Masters from University of Madras in 1998, and passed UGCNET
in 2005. He has 15 plus years of experience in academics, teaching various subjects in both General
and Marketing Management. He has worked in Axum University, Ethiopia in North East Africa. Apart
from doing research and writing papers in healthcare marketing and agricultural marketing, he also
acts as a market analyst cum evangelist of open source software. He is also a member of the Advisory
Editorial Board of International Journal of Electronics Communication and Computer Technology.

Mahesh Gadekar has completed his Masters in Economics and Masters in Business Administration
(Marketing) from the University of Pune. He has also cleared the UGCNET examination and was
awarded the Junior Research Fellowship in Economics by the University Grants Commission. He has
ten years of teaching experience in the domain of Marketing and Economics. He is a PhD Scholar at
University of Pune in the domain of Marketing Management.

S. M. Jadhav has M.Sc. (Chemistry), M.B.A in Marketing and Human Resource Management
to his credit. He has rich experience in both pharmaceutical and dairy industry. He has invented
new techniques for marketing of milk and milk products and has conducted research in packaging,
designing, distribution channels, advertising methods in these products. He is a consultant for training
of salespersons in FMCG organisations and had trained many executives across India. He has worked
as Director In-charge for Mandke Institute of Management & Research Pune for four years.

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 CONTENTS
Unit No. Title Page No.
1 E-Business Fundamentals 1 – 24
1.1 Introduction
1.2 Internet Basics
1.2.1 Role of Information in Society
1.2.2 Internet
1.2.3 Intranet
1.2.4 Extranet
1.2.5 Portals
1.2.6 Wireless Technologies
1.3 E-Commerce and E-Business Concepts
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
2 The Virtual Value Chain 25 – 38
2.1 Introduction
2.2 Marketplace vs. Marketspace
2.3 The Network Economy
2.4 Four Technology Laws for the Future
2.5 E-Marketplaces and Economic Impacts
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Unit No. Title Page No.
3 Consumer Behaviour on the Internet 39 – 48
3.1 Introduction
3.2 Demographic, Geographic, Psychographic and Behavioural Factors
Important to E-Marketing
3.3 Motivations for Shopping on the Net
3.4 Attributes of Online Shopping
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
4 Information for Competitive Marketing Advantage 49 – 68
4.1 Introduction
4.2 Marketing Research on the Net
4.2.1 Role of Internet in Marketing Research (Online Marketing
Research)
4.2.2 Ethics in Online Research
4.3 Using Data Tools to enhance Performance
4.4 Research Methods for Virtual Markets
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Unit No. Title Page No.
5 The Internet Marketing Mix 69 – 88
5.1 Introduction
5.2 Product in the Internet Marketing Mix
5.3 Presenting Product Online
5.4 Brand Building
5.5 Price in the Internet Marketing Mix
5.6 Importance of Price Competitiveness to E-Business
5.7 Place in the Internet Marketing Mix
5.8 Internet Transactions and Physical Logistics
5.9 Promotion in the Internet Marketing Mix
5.10 Reaching the Consumer
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
6 Customer Experience on the Web 89 – 100
6.1 Introduction
6.2 Organisational Learning
6.3 Interactive Communication with Customers
6.3.1 Service Capabilities
6.4 Convenience
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Unit No. Title Page No.
7 E-Customer Relationship Management 101 – 112
7.1 Introduction
7.2 Economics of E-Loyalty
7.3 Importance of Trust and focusing on the “Right” Customer
7.4 Upselling and Cross-Selling
7.5 Relationship Capital
7.6 E-CRM and Internet Strategies facilitating CRM
7.7 Data Warehousing and Data Mining
7.8 Operational, Collaborative and Analytical CRM
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
8 Virtual Communities 113 – 124
8.1 Introduction
8.2 The Community Concept
8.3 Building Partnership through Community
8.4 User-Generated Content
8.5 Blogs
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Unit No. Title Page No.
9 Legal and Ethical Issues 125 – 142
9.1 Introduction
9.2 Privacy Legislation
9.3 Security
9.3.1 Types of Security Threats
9.4 Electronic Payment System
9.5 Modes of Payment
9.6 Electronic Money/Electronic Cash (E-Cash)
9.7 Electronic Cheques (E-Cheques)
9.8 E-Security
9.9 Firewalls
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
10 Risk Mitigation and Consumer Rights 143 – 154
10.1 Introduction
10.2 What is Risk
10.3 Information Security and Reliability
10.4 Technology in Security
10.5 Assessment of Risk
10.6 Consumers’ Role in Virtual Market
10.7 Consumers’ Rights and Law
10.7.1 The Sale of Goods Act
10.7.2 Information Technology Act, 2000
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Unit No. Title Page No.
11 Business Models for Virtual Enterprises 155 – 172
11.1 Introduction
11.2 Internet Business Models
11.3 Models for Internet-Based E-Commerce
11.4 Best Practices for Online Business Models
11.5 Models for the Music Industry
11.6 Models for the Software Industry
11.7 Models for the Telecom Industry
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 E-Business Fundamentals
UNIT

1
Structure:

1.1 Introduction
1.2 Internet Basics
1.2.1 Role of Information in Society
1.2.2 Internet
1.2.3 Intranet
1.2.4 Extranet
1.2.5 Portals
1.2.6 Wireless Technologies
1.3 E-Commerce and E-Business Concepts
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• List the characteristics, advantages and disadvantages of Internet
----------------------
• Analyse various technical and social aspects related to Internet
---------------------- • Define intranet
---------------------- • Explain extranet and its relationship with Internet and intranet

---------------------- • Describe portal and its types

• Discuss wireless technologies and its importance
----------------------
• Explain various models of virtual marketing
----------------------

----------------------
1.1 INTRODUCTION

---------------------- The advent of computer brought enormous changes in human life. Even
though the idea of computation is old, the invention of computer as a machine
---------------------- can be attributed to Blaise Pascal, who built the first digital computer in 1642.
It was not exactly akin to modern computer, it was a small device which could
---------------------- assist binary operations partially. In 1694, Leibniz developed a device which was
---------------------- able to do at least full binary operations. Charles Babbage has accredited huge
popularity in this area as he is known as the “father of modern computer”. He was
---------------------- the first person to create a machine which could perform full mathematical tables,
which he used to call a “difference engine”. It was primarily working upon steam
---------------------- and also could print calculations. The history of computers is a very long journey
---------------------- finally ending with very advanced computing systems like artificial intelligence
and Very Large Scale Integration (VLSI), where millions of transistors are
---------------------- embedded in a chip which again scales not more than a square centimetre.

---------------------- The computer plays enormous role in human life. Nowadays information
technology is not just permitted to desktop or laptop but it is rampant in all
---------------------- dimensions of human life in different forms, for instance, like an ATM which
minimises the effort of withdrawal, smartcard at gas stations, smart utensils
---------------------- like washing machines with intuitive control systems, intelligent systems at
---------------------- automatic assembly stations, etc.
It is needless to talk about the importance of computer and related
----------------------
technologies in business and corporate world. Computers and IT became an
---------------------- imperative object in most of the work life, and an icon of sumptuous work
nature. It is pervious in almost all fields of business, i.e., from laborious
---------------------- industries like food and breweries to much automated industries producing
through advanced technologies. Alligator in India is one such company offering
----------------------
automated assembly line solutions across diverse manufacturing industries.
---------------------- Elite engineering in Rochester, near Detroit in the USA is another company
which offers full-service assembly management software solutions to all
---------------------- manufacturing industries.

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 Along with the computer came Internet; as the computing needs increased, Notes
people felt subsequent need of its dissemination and use because the whole
development of information technology is not a one-man idea, indeed, it is the ----------------------
brainchild of society, which means craving to do everything at speed. Resultantly,
Internet has become one of the important needs to public in the modern era, ----------------------
the world is experiencing drastic changes with respect to information and its ----------------------
influence in the lives of people in particular and the globe in general. It is hardly
possible that any one can live without information nowa-days. The passage of ----------------------
information from one place to another has become imperative for individual as
well as business growth. ----------------------

There are both pros and cons to society by virtue of Internet. But, it is the ----------------------
individual responsibility to use it for productive aspects. The pervasive cyber
----------------------
crimes, hyper exposure to porn, information pilferage, corporate data security
and related threats are to name a few at the negative side of the Internet. At ----------------------
positive side, it can improve human lives by shrinking the whole world like a
village; the phrase “global village” is indeed the result of Internet and related ----------------------
technologies, which is also platitude of the field. Perhaps, Internet is most
----------------------
exciting to the common world and cynosure of the corporate world in the 21st
century. ----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 1.1: Topography of Internet
----------------------
The above figure depicts as to how the whole Internet works. Internet
Service Provider, in short ISP, is a company which provides Internet or ----------------------
web services. A world ISP is merely a collection of regional ISPs, which in
----------------------
turn is a collection of local ISPs. Local ISP is getting connected to several
workstations or computers via local area network (LAN). In the above figure, ----------------------
this LAN mechanism has been shown in the subfigure, where two computers
are connected to the Internet through router and modem. ----------------------

----------------------
1.2 INTERNET BASICS
The Internet plays many roles in modern society. It can be compared to ----------------------
the inter-state expressway road network as both are designed to ensure ease of ----------------------

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 Notes connectivity with high speed. The intent of this unit is to assist you in having a
more successful journey.
----------------------
1.2.1 Role of Information in Society
---------------------- Sharing one’s thoughts and urge for communication is a natural impulse,
not an artefact. It is by instinct that every human being will feel to share or
----------------------
convey his thought with his fellow social beings. Quality of information and its
---------------------- dissemination is imperative to every society to sustain its esteem. In a research
done by A. Haider on contribution of Internet to a democratic society, the
---------------------- researcher asserts that “equitable information access and freedom of expression
are viewed as essential aspects of a truly democratic society, whereby all
----------------------
citizens are kept informed and enlightened”. He also affirms the role of Internet
---------------------- in societal development in various aspects.
Indeed, the very civilisation of a land depends on traditions and culture,
----------------------
which in turn depends on forking over knowledge treasures to their progeny.
---------------------- Hence, the real wealth of the nation is not the material richness but being rich
in knowledge and wisdom. Knowledge and wisdom very much depend on
---------------------- accumulation of information. Now, accumulation alone is not vital to any society
to flourish, but also its dissemination. In ancient times, people used different
----------------------
types of dissemination methods. All those methods can summarily typify into
---------------------- two methods, verbal and non-verbal. Non-verbal part of dissemination is very
abstract, and it depends upon experience of the individuals, but for verbal,
---------------------- most of the knowledge is preserved, which can be easily forked out to later
generations.
----------------------
Kotler rightly stated in his famous book Marketing Management that,
---------------------- “the collecting, packing, distributing, and selling information will be one of the
---------------------- great industries in the 21st century”. Even for that matter, one of the informative
industries like research and consultancy is a successful business in the 21st
---------------------- century.

---------------------- 1.2.2 Internet

Internet is a global system which connects billions of people around the
---------------------- globe with certain individual networks which pass or communicate with each
---------------------- other with the help of certain Internet protocol technologies. Generally, Internet
is referred to as the “network of networks,” since, it encompasses different
---------------------- networks like government, business, private, public, etc.
---------------------- The history of Internet antedates to late 1950s, the Russian space efforts
spurred the US to invent Advanced Research Project Agency (ARPA), later
---------------------- renamed to DARPA (Defense Advanced Research Project Agency) in 1972.
The efforts were to develop interconnections among communication systems
----------------------
of various defense laboratories in the United States. DARPA founded an office
---------------------- called Information Processing Technology Office (IPTO) and established Semi-
Automatic Ground Environment (SAGE) system to enhance work. Even though
---------------------- the project was headed by J. C. R. Licklider, much of the work was carried out by
Lawrence Roberts of MIT Lincoln Laboratory. Roberts used pocket switching
----------------------

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 instead of circuit switching, which was one of the much touted technological Notes
changes in those days pertaining to electronics and telecommunications,
propounded by Paul Baran of RAND Corporation, US and Donald Davis of ----------------------
NPL, UK.
----------------------
In terms of technology, it consists of both hardware and software parts
of the system. Hardware takes care of the physical work like linkages across ----------------------
different systems and carrying the data in the form of signals, whereas, software
takes care of recognising this hardware and establishing connections for smooth ----------------------
passage of data. The whole network operated based on Internet protocol suites ----------------------
is called IP in short. There are two important versions of IP at present in the
world known as IPv4 and IPv6. The whole operation is very simple, IP Suite ----------------------
is a model structure whereby it operates in different layer protocols known as
application layer, transport layer, Internet layer and link layer. ----------------------
As far as governance is concerned, there is no central governing body ----------------------
to Internet or World Wide Web. The Internet Corporation for Assigned Names
and Numbers (ICANN) headquartered in California is the authority which ----------------------
coordinates assigning domain names, IP addresses, port numbers, transport ----------------------
protocols, etc. However, the World Summit on Information Society in 2005 held
in Tunis could establish Internet Governance Forum (IGF) for all discussions ----------------------
on Internet.
----------------------
Definitions
There are many definitions as many sources exist on this topic. The ----------------------
following are some of the definitions of Internet.
----------------------
As per Dictionary.com, “Internet can be defined as a vast computer
network linking smaller computer networks world wide. The Internet includes ----------------------
commercial, educational, governmental, and other networks, all of which use
----------------------
same set of communication protocols.”
As per Computer Dictionary, “the Internet is the largest network in the ----------------------
world. It is indeed, three level hierarchies composed of backbone networks,
----------------------
mid-level networks, and stub networks. These include commercial (.com or
.co), university (.ac or .edu), research networks (.org, .net) military networks ----------------------
(.mil) and spans many different other physical networks around the world with
various protocols, chiefly Internet protocols.” ----------------------
As per Merriam-Webster Dictionary, “Internet is an electronic ----------------------
communications network that connects computer networks and organisational
computer facilities around the world.” ----------------------
As per Science Dictionary, “Internet is a system connecting computers ----------------------
around the world using TCP/IP, which stands for Transmission Control Protocol/
Internet Protocol, a set of standards for transmitting or receiving digital data. ----------------------
The Internet consists of primarily the collection of billions of interconnected
web pages that are transferred using Hyper Text Transfer Protocol (HTTP) and ----------------------
they are collectively known as the World Wide Web. The Internet also uses File ----------------------
Transfer Protocol (FTP) to transfer files, and Simple Mail Transfer Protocol
(SMTP) to transfer e-mail.” ----------------------

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 Notes Characteristics of Internet
1. It is the largest electronic communications network of computers in the
----------------------
world. It also consists of a collection of billions of interconnected web
---------------------- pages that are shared via certain transferred protocols.
2. It consists of different types of networks namely, governmental,
----------------------
educational, commercial, etc.
---------------------- 3. Mostly, all networks that are interconnected use similar set of
communication protocols.
----------------------
4. It is organised in three level hierarchy composed of backbone networks,
---------------------- mid-level networks and stub networks.
---------------------- 5. It works based on a set of standards for transmitting and receiving data.
---------------------- Advantages of Internet
Internet became a part of almost everybody’s life; the whole society is
----------------------
under a paradigm shift due to this intervention in the 20th and 21st century. For
---------------------- instance, in India Internet usage is growing enormously. On an average more
than 30% of growth is witnessed in urban India which can be attributed highly
---------------------- to youth and office goers, whereas it is 40% in rural India. The numbers are
constantly rising, as one of the research reports jointly conducted by IMRB and
----------------------
IAMAI, over Internet usage in India claims as follows:
---------------------- ●● There were 46.21 crores of claimed Internet users as of July, 2016. There
were 1.21 crores of active Internet users as of December, 2010.
----------------------
●● Approximately 40% of users use Internet for downloading/watching
---------------------- movies, videos or photos.
---------------------- ●● Approximately 39% prefer to use Internet for email or chat.
●● Approximately 38% or 37.5 lakh of claimed Internet users used services
---------------------- of Common Service Centres (CSCs) or cyber cafés, 59% of which charge
---------------------- Rs. 11-20 per hour.
This rising Internet usage can be attributed to wholehearted efforts of
---------------------- Government of India through various schemes like National eGovernance Plan
---------------------- (NeGP), State Wide Area Network (SWAN), and Common Service Centres
(CSCs), which are facilitated by the Department of Information Technology
---------------------- (DIT). Apart from these direct efforts, there are other indirect schemes like
Sarva Shiksha Abhiyan (SSA) and National Rural Employment Guarantee Act
---------------------- (NREGA). The efforts of Government through SSA is very much commendable
---------------------- as it has played enormous role in getting rural school children getting educated
in computer. NREGA promoted Internet usage among rural adults as they can
---------------------- also do certain online financial transactions like e-payments.
---------------------- Apart from Government efforts, several private corporate firms had
participated in this Internet proliferation. The corporate giants like Google,
---------------------- ITC, HUL and Microsoft did path breaking efforts devising various strategies
like Internet Bus, e-Choupal, Project Sakshi and Project Shiksha respectively.
----------------------
For instance, ITC can reach approximately 4 million farmers over 0.4 crore

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 villages through 6500 kiosks in India. Another example is Hindustan Unilever’s Notes
effort through Project Sakshi. The company is promoting entrepreneurship
skills among rural women via its iSakshi community portal. ----------------------
Apart from the above social advantages, Internet also offers certain ----------------------
general and individual uses, which are as follows:
----------------------
●● Online communications like e-mail and chat
●● Ease in getting common and general information like addresses, numbers ----------------------
and news
----------------------
●● Educational information like e-books, research articles, other openly
accessible knowledge ----------------------
●● Information about financial products, online banking and insurance ----------------------
●● Travel information and booking facilities
----------------------
●● Information on latest scientific, innovative aspects related to specific domain
●● Weather forecast ----------------------
●● Jobs and consultancies ----------------------
●● Music, videos and photos
----------------------
The above uses are not totally exhaustive but exclusive; first, as
pertaining to online communication, gone are the days of passive e-mail and ----------------------
chat techniques, but the public is in jitters of social networking, even some
of the universities and corporate firms are actively engaging and using these ----------------------
modern technological trends. Corporate firms like Nokia, Coke, P&G, etc,
----------------------
are increasingly vesting their energies in social networking sites, as one of
the directors of these companies stated that, “social media has the power to ----------------------
transform a campaign into a religion”. Second, Internet is also a panacea for
software and media specialist, as there is an ever-growing demand for open ----------------------
source software, collaborative development and cloud computing to name a
----------------------
few in this domain.
Disadvantages of Internet ----------------------
Internet brought enormous individual and societal change. There are ----------------------
potential advantages as well as disadvantages. The major disadvantages
associated with Internet are disadvantages with respect to three categories: they ----------------------
are falsified, harmful, and those which results in loss as follows: ----------------------
●● False information: Often information retrieved from Web contains lot of
false data. Unfortunately the absence of right tools to measure correctness ----------------------
of data results in skewed information. ----------------------
●● Information overload: Abundance often brings irrelevant, unclear,
inaccurate data. This in turn causes anxiety, increased processing and ----------------------
problem solving efforts, less efficient and poor decision-making. ----------------------
●● Harmful communication: Internet brought the culture of unwanted
information and harassment to public. Often, conversations and dialogues ----------------------
on Internet contain inflammatory, disrespectful, hurtful content besides ----------------------
being trivial and vulgar.

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 Notes ●● Harmful information: At times the data retrieved from the Web consists
of harmful information like libelous information, extremist ideologies,
---------------------- extreme forms of pornography, etc.
---------------------- ●● Harmful effects on social relations.
●● Harmful effects on production and commerce: Business over Internet is
---------------------- vulnerable to risk, theft, etc. Industries like publication and music had
---------------------- been badly hit by plagiarism and piracy.
●● Harmful effects on community and social organisations: Emergency
---------------------- and increased participation in virtual communities often hurt offline
---------------------- relationships.
●● Harmful effects on learning and cognitive development.
----------------------
●● Harmful effects on identity formation and psychological development.
---------------------- ●● Cultural fragmentation.
---------------------- ●● Loss of privacy.
●● Loss of the sense of reality.
----------------------
●● Loss of public-private boundaries: The life is typically under decreasing
---------------------- or narrowing boundaries in between public and private domains of
individual life. The psyches of individual are changing gradually under
---------------------- the influence of modernity. People behave overt where they ought to be
---------------------- clandestine and vis-à-vis.
●● Valuable virtual properties were destroyed by hackers. Hacking is
---------------------- gangrenous all over the Net.
---------------------- ●● Continuous increase of pornographic content and its exposure to youth
and children is another threat to society.
----------------------
1.2.3 Intranet
---------------------- Although not officially noted, the very common early adopters of this
---------------------- approach were universities and technology corporations in 1992. In fact, this
term became popular somewhere in 1996 to 1997 in the form of company
---------------------- websites or homepages. In very simple terms, intranet is a small computer
network operated by Internet protocols (see Figure 1.2) technology to collaborate
---------------------- and share information across a group of users or nodes within the organisation.
---------------------- Sometimes, it refers to only company’s website but at times it is also addressed
encompassing the whole information infrastructure. An intranet can be a single
---------------------- website or it can also be a host of multiple websites grouped for a particular
service or business task. Different stakeholders of a business like customers,
---------------------- suppliers, middlemen can collaborate with each other across this website to
---------------------- exchange services mutually. With respect to technology, almost all components
like SMTP (used for e-mail), FTP (used for file transfer protocol) and HTTP
---------------------- (used for web services) are commonly found akin to Internet.

----------------------

----------------------

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 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 1.2: Internet Protocol Connections ----------------------
Definitions
----------------------
The following are some of the definitions of extranet:
----------------------
As per Dictionary.com, “intranet is known as a computer network
with restricted access, as within a company, that uses software and protocols ----------------------
developed for the Internet.”
----------------------
As per Science Dictionary, “intranet is a privately maintained computer
network that only authorised persons can access. Many corporations and ----------------------
institutions, for example, communicate with employees or members through
the use of a private Internet.” ----------------------
As per Computing Dictionary, “intranet is any network which provides ----------------------
similar services within an organisation to those provided by the Internet
outside it but which is not necessarily connected to the Internet.” ----------------------

As per Merriam Webster dictionary, “intranet is a network operating ----------------------

like the World Wide Web but having access restricted to a limited group of
authorised users.” ----------------------

As per Marketing Dictionary, “intranet is a private network inside an ----------------------

organisation that conforms to the same standards as Internet but that is only for
----------------------
use inside the organisation.”
Characteristics of Intranet ----------------------
The following are the characteristics of intranet: ----------------------
●● It is generally a computer network with restricted access. ----------------------
●● It is internal to the company unlike to Internet but uses all technology
alike to Internet. ----------------------

----------------------

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 Notes ●● It is a privately maintained computer network only meant for authorised
persons.
---------------------- ●● It is primarily used for communicating to employees or members through
---------------------- private Internet.
●● Intranet provides services similar to Internet, and it may not be necessarily
---------------------- connected to Internet.
---------------------- ●● Usually, the access is restricted to limited group of authorised users.
Uses of Intranet
----------------------
The following are the potential uses of intranet:
---------------------- ●● Intranets can be used as a platform to change organisational culture.
●● Intranets are mainly used to share tools and applications. For example,
----------------------
collaborations like teleconferencing and net-meetings, sales and CRM
---------------------- tools, productivity modules, etc.
●● It promotes workplace productivity; it can assist users or employees to
----------------------
access data faster at different parts of the organisation.
---------------------- ●● Intranet is flexible as per the needs of any organisation to stretch it to
make an extranet, by partly making it accessible to outside stakeholders.
---------------------- But companies must be able to maintain security to encrypt/decrypt data.
---------------------- ●● Communication is other strategic advantage to firms.
●● It saves much time, employees can access the data on need. Employees
----------------------
will be having sufficient latitude to use their skill with utmost confidence.
---------------------- ●● It can be integrated with other information systems of the organisation
seamlessly.
----------------------
●● Through intranet, hypermedia and web technologies can enable a company
---------------------- to make any cumbersome knowledge accessible by web publishing.
●● Intranets facilitate business operations and management.
----------------------
1.2.4 Extranet
----------------------
An extension to intranet can be termed as extranet. Usually, when an
---------------------- intranet is extended to limited uses of outside users of business, it is known as
extranet. Often, it makes necessary that certain outside stakeholders of business
---------------------- need to utilise company resources as to deliver effective and efficient services.
In that case, the company can make part of its computer network accessible to
----------------------
such stakeholders.
---------------------- In precise, an extranet can be understood as an intranet which is accessible
to a narrow group of people but not to entire public. Extranet connections and
----------------------
relationships are over shared networks but not on dedicated lines. As per RFC
---------------------- 4364, if all the sites over VPN are shared by the same enterprise, then it is
referred to as corporate network; if VPN is shared by different enterprises, then
---------------------- it is referred to as extranet. But in both cases it is regarded as VPN, in which
case, there won’t be much difference between intranet and extranet.
----------------------

----------------------

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 As per RFC 4364, the term “site” refers to a separate network environment. Notes
In this case, any two sites are connected with each other by public Internet with
a spine, which is called VPN. So any company can have Internet internally but ----------------------
for VPN, the company needs to hose its network to public Internet.
----------------------
Hence, in the above sense, an extranet is a small set of organisation that
might have collaborated for mutual exchange of services by a network which ----------------------
grants access by mere authentication but not by tunnelling or hosing their
----------------------
network to outside streams. In very simple terms, it is accessing a website by
registered users authenticating and logging. ----------------------
Definitions
----------------------
There are several definitions for extranet, but for simplicity we refer the
following definitions: ----------------------
As per American Heritage Dictionary, “extranet can be defined as ----------------------
an extension of institution’s intranet, especially over the World Wide Web,
enabling communication between the institution and people it deals with, often ----------------------
by providing limited access to its intranet.” ----------------------
As per Barron’s Accounting Dictionary, “extranet is a private network that
uses the Internet protocols and public telecommunication systems to securely ----------------------
share a part of business’s information or operations with suppliers, vendors, ----------------------
partners, customers, or other businesses. An extranet can be viewed as part of a
company’s intranet that is extended to users outside the company.” ----------------------
Characteristics ----------------------
The following are some of the characteristics of extranets:
----------------------
●● It is an extension to institutions intranet.
----------------------
●● It uses World Wide Web for background services.
●● It provides communication medium to institution and people or firms it ----------------------
deals with.
----------------------
●● Extranet also uses Internet protocols and telecommunication systems for
secure sharing of information. ----------------------
●● It serves seamlessly for all dynamic uses of key stakeholders like suppliers, ----------------------
vendors, customers and other businesses.
Pros and Cons of Extranet ----------------------

The following are the pros and cons of extranets: ----------------------

●● Through EDI an extranet can exchange huge chunks of data. ----------------------
●● A company can develop efforts and fulfil needs jointly by collaborating
----------------------
or tying across extranet.
●● It gives increased awareness to various parties who actively engage. ----------------------
●● It gives feasibility to access or share applications. ----------------------
●● It enables parties to exercise enhanced joint decision-making.
----------------------

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 Notes 1.2.5 Portals
The term “portal” is employed in different domains with different
----------------------
meanings. This term is much being used in architecture and in general, a portal
---------------------- means a large important and main entrance to a building. It is also used in fiction
literature to denote a door which leads to other mystical worlds. Apart from
---------------------- this, this term is vividly employed in many diverse fields like entertainment,
geography, music, computing, etc. As our study is related to Internet and
----------------------
other online technologies, it needs description with respect to computer domain
---------------------- or field.
Mainly portals can be classified into three important types: (1) Web
---------------------- portals, (2) Intranet portals, (3) Enterprise portals.
---------------------- 1. Web portal: In computer sciences, portal refers to a web portal. A web
portal is either a web link or a web page which directs a user from one
---------------------- place to other. A web portal not only serves as a page but offers abundant
---------------------- services, such as e-mails with customised inbox, database, news, stock
prices, entertainment, etc. Yahoo! is an example for a web portal, where
---------------------- plethora of services is being offered to users apart from email service.
One can store photos in Flickr, chat through Y! Messenger, find people
---------------------- and share one’s views through Y! Pulse; find solutions across diverse
---------------------- educational areas through Y! Education, there is Y! Finance for share
and investments, Y! Movies, Y! Cricket are to name a very few from
---------------------- the portal. Other examples of portals are Netvibes, MSN, Excite, AOL,
iGoogle, etc.
----------------------
Types of web portals
---------------------- There are two types of web portals:
---------------------- ●● Horizontal portals are those which cover many areas, which may also
serve as a platform for several firms in the same manufacturing industry
---------------------- or service. As per Business Dictionary, a horizontal portal is a specialised
---------------------- website (portal) that serves as an entry point to several firms in the
same industry or to the same types of suppliers. For example, www.
---------------------- mantraonline.com, www.indiatimes.com.

---------------------- ●● Vertical portals (vortals) are those which divulge information related to
any specific or specialised area where users can get information specific
---------------------- to any market, interest or subject. As per Business Dictionary, a vortal is
any specialised website that serves as an entry point to a specific market or
---------------------- industry niche, subject area or interest. Examples are www.nuptialknots.
---------------------- com, www.magicbricks.com.
2. Intranet portals: Intranet portal is otherwise known as enterprise portal
---------------------- that is actually a focal point for all connections and applications, which
---------------------- unifies request from various nodes and renders services accordingly. It is
a more simplified way for any company to manage or discharge services,
---------------------- application, data and information easily and dynamically. At times, firms
can develop customised and legacy solutions to the requirements and
---------------------- requests of users, who might be connecting to these portals.

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 The very best example for intranet portal is the Microsoft community Notes
website CodePlex. CodePlex is an idea of Microsoft which hosts so much
community developed software, which comes absolutely with no warranty. ----------------------
Users can connect, browse, download, participate in communication
forums, and also develop products, but any service that is hosted by this ----------------------
portal will not bring any liability to Microsoft. ----------------------
3. Enterprise portals: An enterprise portal also known as corporate portal
----------------------
or enterprise information portal is a system to unify request, processes
and people across the boundaries of an organisation. Enterprise portals ----------------------
usually collate and customise information by using application-specific
portlets. A portlet is any part of a portal which can render a customised ----------------------
service to target users; in simple terms, it is a pluggable user interface
----------------------
software component. For instance, a portlet can be a discussion forum,
email or about weather, like in Yahoo home. ----------------------
Features of enterprise portals
----------------------
The following are the features of enterprise portals:
----------------------
●● A user can search any information related to the firm or company.
●● It is very dynamic in accessibility of information to users, for instance, ----------------------
a company can decide proportionally about proprietary and open ----------------------
information.
●● It offers enormous personalisation and customisation services to end- ----------------------
users. Personalisation is all about using the rules to match the content or
----------------------
service to the needs of the user, to some extent it is related to content of
the site. In contrast, customisation is the flexibility to change the look, ----------------------
style and feel of user’s interface environment on the portal.
----------------------
●● Information can be integrated with the help of certain technologies like
Web Services for Remote Portlets (WSRP). This technology is remote ----------------------
protocol standard used to communicate to remote portlets, which is
approved by Organisation for the Advancement of Structured Information ----------------------
Standards (OASIS) located in the USA.
----------------------
●● Users will be having a single sign-on capability across multiple portlets.
----------------------
1.2.6 Wireless Technologies
Wireless technologies are closely connected to Internet and e-commerce ----------------------
technology. Most of the development in e-business can be attributed to these
----------------------
technologies. Emergence of wireless electronics and associated technologies
brought enormous change in human life. This phrase is closely related to ----------------------
telecommunications, since they work without having physical connection
in between any two communication ports or nodes. Wireless operates from ----------------------
very minute distance like remote control to longest distances like radio
----------------------
communications. Nowadays, all wireless gadgets, such as mobile phones,
Personal Digital Assistants (PDAs), FM radios, wireless networking and cellular ----------------------
telephones are part of our life. Wireless is meant for long-range communications
where direct communication through wires may not be possible. ----------------------

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 Notes Some are examples of wireless technologies are,Enhanced 4G network,
5G Network, Millimeter waves, satellite Phone, V2X, Global Positioning
---------------------- System (GPS), Bluetooth, WiFi,
---------------------- Every wireless technology needs some electrical equipment for
communication. Some of the following are examples of wireless equipment
---------------------- which are in use:

---------------------- ●● Global Positioning System (GPS), which allows people to navigate the
entire globe. Used in transportation and military.
---------------------- ●● Cordless Computer Peripherals (CCP) are growing in use. Most of the
computer peripherals like mouse, keyboard and printers can be operated
----------------------
without being connected by wires.
---------------------- ●● Limited range devises like cordless telephones.
●● There is increased use in DTH in every country. Sometimes it is also
----------------------
referred to digital television, works based on satellite transmission
---------------------- technology based on spectrum. Normally, 6 MHz of spectrum can
transmit or broadcast approximately 6 to 10 channels with high quality
---------------------- audio-visuals.
---------------------- ●● Cellular and mobile phones.
●● Air band and radio navigation.
----------------------
●● The amateur radio service (Ham radio).
---------------------- ●● Professional land mobile radio and specialised mobile radio used by
business, industry and in public safety.
----------------------
●● Ultrasound and infrared remote controls.
---------------------- ●● Telemetry and traffic control systems.
----------------------
Check your Progress 1
----------------------

---------------------- Fill in the blanks.

1. _____________ in India is one such company offering automated
---------------------- assembly line solutions across diverse manufacturing industries.
---------------------- 2. A _____________ is merely collection of regional ISPs, which in
turn is a collection of local ISPs.
----------------------
Multiple Choice Single Response.
----------------------
1. The statement, “the collecting, packing, distributing, and selling
---------------------- information will be one of the great industries in 21st century,” is
stated by:
----------------------
i. Phillip Kotler
---------------------- ii. Sigmund Freud
---------------------- iii. Peter Drucker
---------------------- iv. Adam Smith

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 2. There are two important versions of IP in the world at present and Notes
they are known as: ----------------------
i. IPv1 and IPv2
ii. IPv3 and IPv4 ----------------------
iii. IPv4 and IPv6 ----------------------
iv. IPv7 and IPv8
----------------------
Multiple Choice Multiple Response.
1. Some of the characteristics of Internet are: ----------------------
i. Largest electronic communications network ----------------------
ii. Consists of different types of networks
iii. It works based on set of standards for transmitting and ----------------------
receiving data ----------------------
iv. Networks are interconnected with dissimilar communication
protocols ----------------------
2. Disadvantages of Internet can be typified with respect to: ----------------------
i. Falsification
----------------------
ii. Harm
iii. Loss ----------------------
iv. Destruction ----------------------

----------------------
Activity 1
----------------------
1. Ask 10 people around you as what they do with Internet, and write ----------------------
them with percentage analysis. (Explain respective uses of respondents
in terms of percentage.) ----------------------
2. Start your web browser and write your observations regarding the ----------------------
role of: (a) web browser, (b) web pages, (c) host and server (with
respect to web browser), (d) languages used to develop web pages. ----------------------
3. Name some of the companies (other than those mentioned in this unit) ----------------------
which use extranet for their business operations, and also explain
benefits accrued as a result of using extranet. ----------------------

----------------------
1.3 E-COMMERCE AND E-BUSINESS CONCEPTS ----------------------
E-commerce in recent times has been growing rapidly a cross the world. ----------------------
According to Report of Digital –Commerce, IAMAI -IMRB (2013), e-commerce ----------------------
industry in India has witnessed a growth of US$ 3.8 billion in the year 2009
to US$ 9.5 billion in 2012. By 2013, the market is expected to reach US$12.6 ----------------------
billion, showing year to year growth of 34%.
----------------------

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 Notes According to a report by the Interactive Media in Retail Group (IMRG),
a U.K. online retail trade organization, Global business –to - consumer
---------------------- e-commerce sales will pass the US$ 1,250 billion mark by 2013, and the total
number of Internet users will increase to approximately 3.5 billion.
----------------------
Around 90% of the global e-commerce transactions are in the nature of
---------------------- B2B, leaving meagre 10% as B2C e-commerce.
---------------------- Industry sources indicate that this growth can be sustained over a longer period
of time as e-commerce will continue to reach new geographies and encompass new
---------------------- markets. E-commerce means sale or purchase of goods and services conducted over
network of computers or TV channels by methods specifically designed for the
----------------------
purpose.
---------------------- Even though goods and services are ordered electronically, payments
or delivery of goods and services need not be conducted online. E-commerce
----------------------
transaction can be between businesses, households, individuals, governments
---------------------- and other public or private organizations. There are numerous types of
e-commerce transactions that occur online ranging from sale of clothes, shoes,
---------------------- books etc. to services such as airline tickets or making hotel bookings etc.
---------------------- There are terms aplenty which start with ‘e’, such as e-business, e-commerce,
e-markets, e-mails, e-meetings, e-banking, etc. In fact, in the 21st century, anything
---------------------- which starts with e-prefix is considered trendy and tech-savvy. Emergence, as we
---------------------- learned in previous sections, Internet and associated technologies brought huge
revolution in the world. E-business or e-commerce are some such trends brought
---------------------- by the same. Internet is very handy to solve the problems of today, a customer can
order and buy goods online, design and evaluate construction designs online, consult
---------------------- doctors or health consultant and get prescription online. Hence, it is not extraneous
---------------------- to proclaim that e-commerce or e-business is a panacea for the 21st century.
In this section, we will look up on three most important concepts of this
---------------------- course, namely, e-commerce, e-business, and e-marketing.
---------------------- 1. E-Commerce: In simple terms, e-commerce means business conducted via
Internet. In little detail, it is merchandising online or over Internet. When we
---------------------- carry any merchandising activities online it is also known as e-merchandising.
---------------------- Even though merchandising is referred to more selling, buying also can be
included in merchandising. In e-commerce, the letter “e” stands for electronic
---------------------- and commerce for commercial activity of any business.
---------------------- As per Business Dictionary.com, “electronic means any device of
technology associated with or employing low voltage current and solid
---------------------- state integrated circuits or components, usually for transmission and/or
processing of analog or digital data.” And “commerce means exchange of
----------------------
goods and services for money or in kind, usually on a sale large enough to
---------------------- require transportation from place or across city, state or national boundaries.”
Hence, in short we can infer that e-commerce is essentially any device or
----------------------
technology (Internet) that which may transmit and process digital signals
---------------------- (requests or transactions) and which in turn results exchange of goods or
services by transporting from one place to another.
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 The primary nature of e-commerce is to sell online. It enables any two or Notes
more parties engaging in trade to exchange and fulfil their needs online. This
includes searching goods and services online through e-catalogues, analysing ----------------------
and evaluating by consultation through online forums, paying and exchanging
money through e-payments and finally delivering goods and services by physical ----------------------
logistics. Perhaps, to some extent, retailing and distribution also can be done ----------------------
online by e-retailing and e-logistics.
----------------------
E-commerce also can be viewed as any business relationship and also
selling commodities, services, information or other physical goods by computer ----------------------
telecommunication technology. Indeed, e-commerce cannot be treated light-
mindedly as it is commanding very gigantic economies to small and tiny in the ----------------------
world.
----------------------
Scope of e-commerce in India
----------------------
There is tremendous growth in India of e-commerce. For instance,
indiamart.com is a leading B2B marketplace which assists manufacturers, ----------------------
suppliers and traders in reliable and transparent services with 0.758 million
average visits per day with an average daily revenue of $2,642. Tradeindia.com ----------------------
is another site for which alexa rank (global) is 2,851, with 0.4 million visits per
----------------------
day and $1183 of average ad revenue. The other interesting fact is that online
travel market is expected to reach more than USD 10 billion by 2015 in India, ----------------------
which was only USD 2 to 3 billion in 2008. In 2008, revenues of major Online
Travel Agencies (OTAs) are as follows: ----------------------
Table 1.1 Revenues of Major Online Travel Agencies ----------------------
OTA Revenues (USD in Millions) ----------------------
Makemytrip 15 to 20
Yatra 5 to 10 ----------------------
Cleartrip 5
Travelguru 0 to 5 ----------------------
Source: Natasha, Gagan, Online Travel Industry in India, Research on India ----------------------
Report 2008 by Netscribes (India) Pvt. Ltd.
----------------------
2. E-Business: Mostly e-commerce and e-business are taken interchangeably;
but in fact, they are different. These two concepts can be distinguished ----------------------
with respect to Information and Communication Technology (ICT). In
e-commerce, ICT is used as a facilitator across organisations or businesses, ----------------------
which means, ICT is used for inter-business or inter-organisational ----------------------
transactions, and hence the transactions are business- to-consumer (B2C)
in nature. ----------------------
In e-business, ICT is used only within the organisation or intra- ----------------------
organisational transactions. It encompasses all activities that are processed
with the help of computer enabled networks or technologies. Hence, we can ----------------------
define e-business as: “The transformation of organisational processes to deliver
additional customer value through the application of technologies and related ----------------------
philosophies. It is indeed, a new computer paradigm of new economy.” ----------------------

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 Notes E-business can be used with enhanced functionalities. The following
points can describe it:
----------------------
●● Internal management processes: Office management, selection and
---------------------- recruitment, performance appraisal, new product developments, etc.
●● Customer focused processes: Proactive marketing, online sales,
---------------------- promotions and ad campaigns, sales force automation, etc.
---------------------- ●● Production processes: Assembly designing, line balancing, inventory
management, production design, quality controls, etc.
----------------------
Types of e-commerce (models)
---------------------- There are different types or models of e-commerce. A model is something
---------------------- which paves a bridge from the raw thought to practice. Concisely, it is an iconic
representation of some physical aspect (can be an object) which might help
---------------------- someone in understanding of that very aspect or object itself. That is why, in
general terms; it is anything used in anyway to represent something. In the
---------------------- context of e-commerce, a model is a more generalised representation of online
---------------------- technologies that which may assist in doing business.
Companies like IBM, Microsoft and Sun Microsystems always might compete
----------------------
in finding best business model for success. These companies are beyond any pretty
---------------------- marketing changes and influences for they can set trends instead of following trends.
For instance, Apple’s time-to-time innovations are trendsetters rather than trend
---------------------- followers. Apple taught the world the very way of living with consumer electronics.
---------------------- Figure 1.3 describes about a business model which usually consists of two
important parts, value proposition and operating model. The operating model is
---------------------- the key element, it elucidates as to what is being offered to whom? The second
element answers as to how we can profitably deliver this offering? Both these
----------------------
elements blend to form a business model to any business. Again in each element,
---------------------- there will be three sub-elements, viz., value proposition: (1) target segments, (2)
product or service offering, (3) revenue model. Operating model consists of (1)
---------------------- value chain, (2) cost model, (3) organisation.
---------------------- The following figure briefs the entire mechanism of business model.

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 1.3: Business Model
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 As far as e-commerce is concerned, essentially there are (as on today), Notes
seven models to understand e-commerce. These models are exhaustive but only
exclusive, namely, (1) business-to-business (B2B), (2) business-to-consumer ----------------------
(B2C), (3) business-to-government (B2G), (4) consumer-to-consumer (C2C),
(5) consumer-to-business (C2B), (6) mobile commerce and (7) collaborative ----------------------
commerce. ----------------------
i. Business-to-business (B2B): B2B model of e-commerce prescribes
----------------------
as to how e-commerce can be carried in between any two businesses.
Otherwise, it precisely describes the way any online technology could ----------------------
be used to do and develop transactions in between any two firms. Almost
80% of e-commerce is of this type. In fact, the term e-market has arisen ----------------------
out of this model, which is a mere website where buyers and seller meet
----------------------
each other and exchange their needs virtually.
ii. Business-to-consumer (B2C): As the name implies, it describes business ----------------------
transactions between a company and its consumer. Usually, as per this
----------------------
model, consumers search for goods online, obtain information, evaluate
products in contrast to their needs, and finally buy them online. Goods ----------------------
can be either electronic or physical. There are very efficient logistic
models available to these business formats. But the idea of e-logistics is ----------------------
still vague. Ales Groznik defines e-logistics in precise terms as he quotes,
----------------------
“e-logistics simply means processes necessary to transfer the goods sold
over the Internet to the customers.” ----------------------
iii. Business-to-government (B2G): In simple terms, it is using Internet
----------------------
technologies for commerce between companies and government. There
are varieties of ways government involve in commercial transactions ----------------------
with businesses. For instance, e-procurement is one such aspect, where
government orders for material online. If the transactions are between ----------------------
government and citizens, then it is referred to e-governance. There are
----------------------
several models for e-governance, namely, Government-to-Citizens (G2C),
Government-to-Business (G2B), Government-to-Employees (G2E) and ----------------------
Government-to- Government (G2G). In fact, it is not extraneous to note
that B2G is part of e-government. ----------------------
iv. Customer-to-customer (C2C): This is a new idea of e-commerce that ----------------------
arises out of group of consumers. This is highly characterised by online
auctions and the ever- growing concept of marketing space and meta- ----------------------
markets. This type of e-commerce may arise at least in three ways; ----------------------
a. Interactive online market space where negotiations of buyers and
sellers takes place. ----------------------

b. In form of Napster model (peer-to-peer distribution of services); ----------------------

first transaction takes place as file exchange after money exchange.
----------------------
c. Auction takes place at a portal, which may allow real-time bidding
and selling on the Web. ----------------------

----------------------

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 Notes v. Consumer-to-business (C2B): At times, e-commerce also takes place
in reverse direction, i.e., from consumers to business. For example, in
---------------------- airline industry, consumers actively seek to engage in transactions than
the company.
----------------------
vi. Mobile commerce (m-commerce): The mobile usage is 10 times than
---------------------- PC usage, and is expected to rise to 1 billion by 2014 in India. Global
m-commerce spending will be $119 billion by 2015, which is 8% of
----------------------
overall e-commerce activity. Tiwari and Buse defines m-commerce as,
---------------------- “any transformation, involving the transfer of ownership or rights to use
goods and services, which is initiated and/or completed by using mobile
---------------------- access to computer-mediated networks with the help of an electronic
device.”
----------------------
The phrase mobile commerce was first coined by Kevin Duffey of Logica
---------------------- in February, 2007. The first mobile use in commerce was done in 1997 by Coca
Cola for their vending machines in Finland, where payments used to be done
----------------------
with mobile phones via SMS text messages. The first mobile banking service
---------------------- was launched by Merita Bank of Finland in 1997.
Another important aspect about m-commerce is the interesting distinction
----------------------
among e-business, e-commerce, m-business and m-commerce. Observe the
---------------------- following figure.

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 1.4: Relationship between Different Forms of Electronic Business
---------------------- Source: White paper on Future of M-Commerce by Binary Mantra Systems,
---------------------- UK, 2008.
The above figure describes the interlocking relationships among mobile
---------------------- business, electronic business, electronic commerce and mobile commerce. All
---------------------- these phrases are different but interdependent. Precisely, mobile commerce
is a subset of mobile business; electronic commerce is a subset of electronic
---------------------- business. But, there is an area which is an intersection of all these four models
which perhaps can be termed as critical technologies. The most critical aspect
---------------------- of these models can be online or Internet technologies.

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 Features of mobile commerce Notes
The following are some of the most important features:
----------------------
●● Simple authentication
----------------------
●● Instant connectivity
●● Localisation ----------------------
●● Immediacy ----------------------
●● Ubiquity
----------------------
vii. Collaborative commerce (c-commerce): This is a relatively new emerging
concept in the e-business domain. Nowadays, business formats are ----------------------
dynamically changing without conforming to any conventional activities.
It means, the businesses are rapidly getting synergised by synchronising ----------------------
operations with suppliers, customers and other business partners. This type ----------------------
of phenomenon of e-business is referred to as collaborative commerce.
Many of the leading companies like Dell computers, Wal-Mart, Nestle and ----------------------
others have launched collaborative commerce successfully. In one of the
research efforts of NerveWire in 2002, it was found that the collaborative ----------------------
commerce can impact business. An extensive survey on 162 North ----------------------
American companies proved that companies operating collaborative
commerce increased their revenue by 40%, reduced cost by 37%, and ----------------------
boosted customer retention by 37%.
----------------------
Check your Progress 2 ----------------------

----------------------
State True or False.
1. Horizontal portals are those which cover many areas, which may also ----------------------
serve as a platform for several firms in the same manufacturing industry or
----------------------
service.
2. The primary nature of e-commerce is to sell online. ----------------------
Match the following. ----------------------
i. DARPA a. A company which provides Internet ----------------------
ii. ISP b. Found by US government to develop
interconnections among communication ----------------------
systems
iii. IPv4 or 6 c. Internet protocol version ----------------------
iv. GPS d. Allows to navigate entire globe ----------------------

----------------------
Summary
----------------------
●● The advent of computer brought huge change in human as well as
corporate environments. Internet and associated technologies are scientific ----------------------
inventions which accelerated human development in general and social in ----------------------

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 Notes particular. Internet and ICT have permeated into the society in such a way
that almost it is difficult for anybody to do without it.
---------------------- ●● Internet is prevailing in every business sector, viz., education, health,
---------------------- construction, aerospace, etc., developments like ATMs, online payments,
open access to knowledge and education, online collaborations, open
---------------------- technologies, cloud computing, etc., to name a few.
---------------------- ●● In very simple terms, an Internet is a group of computer interconnected
together for mutual sharing of services. Technically, the Internet is
---------------------- the largest network in the world. It is indeed, three level hierarchies
composed of backbone networks, mid-level networks, and stub networks.
---------------------- These include commercial (.com or .co), university (.ac or .edu), research
---------------------- networks (.org, .net and etc), military networks (.mil) and spans many
different other physical networks around the world with various protocols
---------------------- chiefly Internet protocols.

---------------------- ●● Intranet is known as a computer network with restricted access, as within

a company, that uses software and protocols developed for the Internet.
---------------------- Whereas, extranet is a private network that uses the Internet protocols and
public telecommunication systems to securely share a part of business’s
---------------------- information or operations with suppliers, vendors, partners, customers
---------------------- or other businesses. An extranet can be viewed as part of a company’s
intranet that is extended to users outside the company.
---------------------- ●● A web portal is either a web link or a web page which directs a user
from one place to other. There are two important types of portals, namely,
----------------------
horizontal and vertical (vortals).
---------------------- ●● Serially, the waves of Internet brought new trends that were named
contextually as e-commerce, e-business, e-markets, etc. E-commerce is
---------------------- essentially any device or technology (Internet) that which may transmit
---------------------- and process digital signals (requests or transactions) and which in turn
results in exchange of goods or services by transporting from one place
---------------------- to another. E-business is the transformation of organisational processes to
deliver additional customer value through the application of technologies
---------------------- and related philosophies. It is indeed, a new computer paradigm of new
---------------------- economy.

---------------------- Keyword
---------------------- ●● Internet: The largest system of connected computers around the world.
---------------------- ●● Intranet: A system of connected computers which works like the Internet
and which allows people within an organisation to communicate with
---------------------- each other and share information.
---------------------- ●● Internet protocols: One of the two most important protocols (written
together as TCP/IP) that makes Internet possible.
---------------------- ●● Router: Software/hardware device that (like a telephone exchange)
---------------------- directs data traffic between two or more networks.

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 ●● Host: Main or controlling computer connected to other computers or Notes
terminals to which it provides data or computing services via a network.
●● Application: Complete, self-contained computer program (usually ----------------------
a commercially produced, shrink-wrapped software) that performs a
----------------------
specific useful task, other than system maintenance functions (which are
performed by utility programs). ----------------------
●● Link: Interconnection between any two computers.
----------------------
●● Ethernet: Most popular family of Local Area Network (LAN) protocols
and cabling schemes for connecting computers, printers, modems, ----------------------
terminals, etc.
----------------------
●● Virtual private network: A secure, resilient, scalable voice and/or data
network created over present circuits using tunnelling technique. ----------------------
●● Electronic data interchange: A predecessor to Internet and e-commerce,
where computers are interconnected by a narrow group of companies to ----------------------
facilitate transactions among them. ----------------------
●● Global positioning system: A system of 21 US satellites orbiting the
earth twice a day, any navigation system on earth can get signals by which ----------------------
it can visualise any place as close as one meter to the ground.
----------------------

Self-Assessment Questions ----------------------

1. Explain the characteristics of internet. Also give the advantages and ----------------------
disadvantages of the internet. ----------------------
2. Distinguish between internet and intranet.
----------------------
3. Explain the term portals. Write a note on different types of portals.
----------------------
4. Write a note on e-commerce in India.
----------------------
Answers to Check your Progress
----------------------
Check your Progress 1
----------------------
Fill in the blanks.
----------------------
1. Allegators in India is one such company offering automated assembly
line solutions across diverse manufacturing industries. ----------------------
2. A world ISP is merely a collection of regional ISPs, which in turn is a ----------------------
collection of local ISPs.
Multiple Choice Single Response. ----------------------

1. The statement, “the collecting, packing, distributing, and selling ----------------------

information will be one of the great industries in 21st century,” is stated
by: ----------------------

i. Phillip Kotler ----------------------

----------------------

E-Business Fundamentals 23

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 Notes 2. There are two important versions of IP in the world at present and they are
known as:
----------------------
iv. IPv7 and IPv8
---------------------- Multiple Choice Multiple Response.
---------------------- 1. Some of the characteristics of Internet are:

---------------------- i. Largest electronic communications network

ii. Consists of different types of networks
----------------------
iii. It works based on set of standards for transmitting and receiving
---------------------- data
---------------------- 2. Disadvantages of Internet can be typified with respect to:
i. Falsification
----------------------
ii. Harm
----------------------
iii. Loss
---------------------- Check your Progress 2
---------------------- State True or False.
---------------------- 1. True
2. True
----------------------
Match the following.
----------------------
i. – b.
---------------------- ii. – a.
---------------------- iii. – c.

---------------------- iv. – d.

----------------------
Suggested Reading
----------------------
1. Bajaj, Kamlesh K. and Debjani Nag. 2005. E-Commerce. New Delhi:
---------------------- Tata McGraw- Hill.
---------------------- 2. Haider, Abrar. 2009. “Contribution of Internet to a Democratic Society.”
ECIS 2009 Proceedings.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 The Virtual Value Chain
UNIT

2
Structure:

2.1 Introduction
2.2 Marketplace vs. Marketspace
2.3 The Network Economy
2.4 Four Technology Laws for the Future
2.5 E-Marketplaces and Economic Impacts
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Know the meaning of physical world of resources and the virtual world
---------------------- of information
---------------------- • Discuss virtual value chain
• Explain the various models (laws of technology) to understand the
----------------------
efficacy and rising importance of virtual technologies
---------------------- • Analyse the development of parallel value chain in marketplace
---------------------- • Explain how top line growth can be increased for the companies with
the development of virtual value chain
----------------------

----------------------
2.1 INTRODUCTION

---------------------- The concept of virtual value chain was first created by John Sviokla
and Jeffrey Rayport. The virtual value chain is a business model which explains
---------------------- the spreading of value-generating information services throughout an extended
enterprise.
----------------------
This virtual value chain starts with the information supplied by the provider,
---------------------- which is then circulated and sustained by the information infrastructure, based
on which the context provider supplies actual customer interaction.
----------------------
The virtual value chain supports the physical value chain as given by
---------------------- Michal Porter.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

---------------------- Fig.2.1: Physical and Virtual Value Chain Delivery

---------------------- We can explain the distinction between the two value chains by the

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 following example: when consumers use answering machines to leave a Notes
message, they are using an object that is both made and sold in the physical
world. However, when they buy electronic answering services from the phone ----------------------
company, they are using the marketspace—a virtual realm where products and
services are digital information and are delivered through information-based ----------------------
channels. ----------------------
Many businesses employ both value chains, including banks, which
----------------------
provide services to customers in the physical world at their branch offices
and virtually online. The value chain is separated into two chains because ----------------------
the marketplace (physical) and the marketspace (virtual) need to be managed
in different ways to be effective and efficient. The linkage between the two is ----------------------
critical for effective supply chain.
----------------------
2.2 MARKETPLACE VS. MARKETSPACE ----------------------

The organisations around us compete with each other while serving the ----------------------
needs of the customers. While competing with others, an organisation utilises
resources which are present in physical forms and also information which is ----------------------
available or accessible in virtual world. With the advent of globalisation and ----------------------
Internet revolution in the last decades, the organisations around the globe
are exploiting resources which are tangible in nature, i.e., it can be seen and ----------------------
touched; and resources which are intangible in nature such as virtual world. The
virtual world has now become the new centre of value creation. Jeffery Rayport ----------------------
and John Sviokla had introduced a new word “marketspace” to distinguish it ----------------------
from marketplace which is the physical world (“Managing in the Marketspace,”
HBR, November–December, 1994). ----------------------
Let us illustrate this with an example – a pizza purchased at the outlet ----------------------
occurs through a marketplace and getting it ordered through online medium
is its marketspace. Similarly, we can cite examples of various products and ----------------------
services which are present in the marketplace and also in marketspace such as
----------------------
the insurance, mobile recharge, banking services, etc.
The marketplace and the marketspace are used by the organisations to ----------------------
create values to their customers; however, the processes for creating values in
----------------------
marketplace and marketspace are not same. It is therefore essential to understand
the value-adding processes in the marketplace and marketspace. The ability in ----------------------
understanding the relationship of various elements in the value processes in the
same product category will provide the organisations mastery in creating and ----------------------
extracting values. Organisations which desire to be in both the worlds, i.e., the
----------------------
physical and virtual world must build and exploit the value chain.
It is observed that values must be produced in the physical world through ----------------------
the creation of value chain. The value chain is a model which is synchronised
----------------------
between the firms’ supply side and the demand side so as to provide added
benefits to its customers. Efficiency and effectiveness of such products and ----------------------
services with extra attributes or benefits can be assured through the value
chain model. The interesting observation is that managers may come across ----------------------

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 Notes certain information based resources (visibility) which is rarely used in value
chain model. For example, the pizza outlet may have database of customers
---------------------- which might have been captured through home delivery mode. The bank may
have database of customers and their respective transaction behaviours. The
---------------------- tourist resort may have database of customers with reference to the payment
---------------------- modes, purchases made and other preferences. Such information is available
with number of organisations and it is the ability of the managers to use such
---------------------- information from marketspace to create value in the value chain. Thus, the
creation of virtual value chain will assure more efficiency and effectiveness.
----------------------
There are five activities which assure creation of value in virtual value chain.
----------------------

----------------------

----------------------
Fig. 2.2: Activities in Value Creation in a Virtual Value Chain (Combined
---------------------- Value Chain)
---------------------- (Adapted from Jeffery Rayport and John Sviokla, 1995.)

---------------------- Visibility, Mirroring Capability and New Customer Relationships

The value-adding information process consists of three stages:
----------------------
• Visibility is observing the physical processes more minutely through
---------------------- information-based resources. The organisations use advanced information
technology to coordinate various activities in the physical world which in
---------------------- turn lays the premises for virtual value chain.
---------------------- • In the second stage, the organisations use mirroring capability for the
value information process. Mirroring capability is a process where the
----------------------
organisations try to create virtual value chain for the physical one. In other
---------------------- words, there is a parallel virtual chain created. Offering goods and services
through virtual value chain exhibits firm’s strategic capability compared
---------------------- to competitors. For example, UPS success story in the US is a very good
example, where it could enslave its competitors by virtue of technological
----------------------
advancements. UPS turned competitors as customer, whereby avoiding
---------------------- any competitive threats. UPS could use virtual technologies successfully
to render delightful parcel services to customers. Hence, virtual value
---------------------- chains give extra mileage to firm over its competitors.
---------------------- • In the third and final stage, the organisations deliver value to their customers
based on the information of virtual value chain. The value that is delivered
---------------------- to the customers helps the organisations to establish new customer
relationship. Virtual value chains not only help in delivering goods and
----------------------
services but also in finding and establishing potential relationships with
---------------------- customers.
To add more or for instance, a distance education institute may use Virtual
----------------------
Learning Management Systems (VLMS) to deliver value to learners. In fact,
---------------------- there are universities that are imparting education totally being virtual. In Asia,

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 there are virtual universities like BITs Virtual University, Nalanda Virtual Notes
University, Tamil Virtual University in India, VUP in Pakistan, etc. imparting
education through virtual technologies. Creation of virtual world is more ----------------------
desirable and is more efficient. Thus, the educational institute has provided
critical value addition by using virtual value chain rather than physical value ----------------------
chain. ----------------------
Organisations around the world are moving into the virtual value chain
----------------------
and extracting the values. The managers through the visibility process moves
on to the process of creating parallel virtual value chain. The values should ----------------------
be extracted for developing new customer relationship. It is not about only
creating virtual value chain through its parallel set up, rather it is more linking ----------------------
with customers and their aspirations. An educational institute that started
----------------------
distance education courses and established virtual value chain may also benefit
students in their placement assistance, career guidance or support to its alumni ----------------------
and continued educational assistance through the life of the student. The new
customer relationship pronounces more of the values which are produced from ----------------------
the virtual value chain and are phenomenally radical as compared to the physical
----------------------
value chain.
A car dealer may offer services through website which might establish ----------------------
virtual value chain that may assist the customers to discuss various issues with
----------------------
the salesperson online and also arrange for a test drive at his convenient time.
It is the innovative way of using or leveraging the virtual value chain that will ----------------------
differentiate customer relationship. Thus, the new customer relationship is one
of the interesting aspects that gets reflected through the virtual value chain vs. ----------------------
the physical value chain.
----------------------

Check your Progress 1 ----------------------

----------------------
Multiple Choice Single Response.
1. The term marketspace was introduced by: ----------------------

i. C. K. Prahlad ----------------------
ii. Michael Porter ----------------------
iii. Jeffery Rayport and John Sviokla
----------------------
iv. Philip Kotler
----------------------
Fill in the blanks.
----------------------
1. The value-adding information process consists of ____ stages.
2. The virtual value chain ________ the physical value chain. ----------------------

----------------------

----------------------

----------------------

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 Notes
Activity 1
----------------------

---------------------- List down or capture information-based resources of the following product/

service categories:
----------------------
Product/Service Category Information-based resource observed
---------------------- 1. Banking services ________________________________
---------------------- 2. Car service station ________________________________

---------------------- 3. Airline services ________________________________

4. Maternity hospital ________________________________
----------------------

----------------------
2.3 THE NETWORK ECONOMY
----------------------
The relationships that develop between the organisation and the customer
---------------------- emerge from pattern of value opportunities. A new product or service can emerge
through the extracts of virtual value chains. Each stage of virtual value chain
----------------------
is a mirror of physical value chain that further helps the managers to extract at
---------------------- multiple levels which thereby assists in identifying customer requirement. An
insurance company while providing insurance service to its customers may also
---------------------- realise that it can also provide financial products or services to its customers.
Similarly, home loan unit of a bank may also think of providing insurance
----------------------
protection to its borrowers.
---------------------- Managers need to think logically the ways to integrate the physical and virtual
world, i.e., marketplace and marketspace. The approaches adopted by the managers
----------------------
will help in its effectiveness towards addressing the needs of the customers. It will
---------------------- reinvent the organisations’ business models for enhancing its capability.
Within the network the market functions. The network economy is an
----------------------
arrangement which has evolved with the introduction of the virtual world. It is
---------------------- said that the value of network is exponential as the number of members increase.
Through the network economy, the innovation has gathered more momentum
---------------------- as compared to the earlier period. The network economy is defined by some as
the organic behaviour in a technological matrix. The new slogan of the network
----------------------
economy is to strengthen relationship.
---------------------- Kevin Kelly (1997) has proposed 12 principles of the network economy:
---------------------- 1. The law of connection

---------------------- 2. The law of plenitude

3. The law of exponential value
----------------------
4. The law of tipping points
----------------------
5. The law of increasing returns
---------------------- 6. The law of inverse pricing

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 7. The law of generosity Notes
8. The law of allegiance
----------------------
9. The law of devolution
----------------------
10. The law of displacement
11. The law of churn ----------------------

12. The law of inefficiencies ----------------------

The 12 principles try to provide new rules to the Internet age. They also ----------------------
help the organisation to understand the importance of virtual world in the new
century. The marketspace gets widened with the support from the network ----------------------
economy.
----------------------
2.4 FOUR TECHNOLOGY LAWS FOR THE FUTURE ----------------------

Moore’s Law and Gilder’s Law are first two important laws among the ----------------------
famous four technology laws. The four laws emphasise the changes that take
place in the future, especially with respect to ICT. The first two laws state about ----------------------
processors and bandwidth respectively, whereas the third law is only about ----------------------
Ethernet. That is why, the first two laws are talked about much due to their
portability and comprehensiveness. The four technology laws are: ----------------------
1. Moore’s Law: Gordon Moore was the co-founder of Intel. He found that ----------------------
the microprocessor power was doubling by every 18 months. It meant
that all the digital equipment become more efficient in more or less every ----------------------
one and half years. In other words, the computing power was doubling
every 18 months. Moore made his famous observation in 1965, just four ----------------------
years after the first IC was discovered. According to experts, the trend ----------------------
will continue till 2020. It implies that the penetration of digital stuffs will
be on the rise. The organisations will therefore need to strategise further ----------------------
towards this development. The importance of virtual world will increase
to a new extent. The law will be an important tool for the managers for ----------------------
value extractions. ----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

Fig. 2.3: Gordon Moore’s Curve ----------------------

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 Notes The above figure illustrates how transistor count varies by time. The
y-axis shows transistor count in thousands and x-axis shows time. There
---------------------- is perfect and positive correlation in between processor speed and time.
---------------------- 2. Gilder’s Law: George Gilder observed a phenomenon which was stated
as Gilder’s Law. The law states that the total bandwidth of communication
---------------------- systems triples every 12 months. Nowa-days, data is travelling with a
lightning speed unlike olden days of telephone modem connections.
----------------------
The traditional telephone modems are replaced by DSL and cable
---------------------- connections, which in turn are replaced by optical fibres and now 3G.
These technological changes in telecommunications and Internet were
---------------------- clearly envisioned by George Gilder in the 1960s.
---------------------- 3. Metcalf’s Law: Transferring motion pictures and TV signals through
Internet is common these days, but was not so in the 1970s. Robert
---------------------- Metcalf invented Ethernet, when he was working in Xerox PARK; he left
PARK and invented 3COM. He formulated a law which states that the
----------------------
value of communications system grows as approximately the square of
---------------------- the number of users of the system (N2).

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 2.4: Metcalfe’s Law: Growing Network Value
----------------------
The above figure illustrates Metcalf’s law about growing network value.
---------------------- As it shows, there is a strong positive relationship in between number of
network users and value. When the number of Internet users grow, so does
---------------------- the net value accrued to each user. A single user with a computer might
be insignificant to an office, but when the number of users increase along
----------------------
with computers, then the value is subjected to grow at an exponential rate.
---------------------- 4. Shannon’s Law: The name Shannon is much popular in the information
---------------------- and communications domain. Many theories and formulas are connected
to this name in this field. Among them, the most significant contribution
---------------------- of Shannon is his law of channel bandwidth, which is C = W log2 (1 +
P/N) bits/second, where C is channels capacity to support bandwidth, W
---------------------- is proportionality to bandwidth, S is signal power and P is noise power.
---------------------- Shannon’s Law describes proportionality among signal, bandwidth and

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 noise. The implications of the law are: first, bandwidth sets as to how fast Notes
symbols can be over the channel. Second, the signal-to-noise ratio (P/N)
determines how much information each symbol can represent. The signal ----------------------
and noise power levels are, of course, expected to be measured at the
receiver’s end of the channel. ----------------------

Thus, the power level is a function both of transmitted power and the attenuation ----------------------
of the signal over the transmission medium (channel). The other observation is
----------------------
that given a channel with information capacity C and information transmitted
at a rate R, then if R ≤ C, there exists a coding technique which allows the ----------------------
probability of error at the receiver to be made arbitrarily small. This means
that, theoretically, it is possible to transmit information without error up to a ----------------------
limit, C. The converse is also important. If R > C, the probability of error at
----------------------
the receiver increases without bound. This implies that no useful information
can be transmitted beyond the channel capacity. ----------------------
In a nutshell, all these laws can be described as below:
----------------------
Application Law
Computing power Moore’s Law ----------------------
Bandwidth Gilder’s Law
----------------------
Network value Metcalf’s Law
Shannon’s Law ----------------------

Check your Progress 2 ----------------------

----------------------
Fill in the blanks.
----------------------
1. The network economy is defined by some as the organic behaviour in
a _____________________. ----------------------
2. Kevin Kelly has proposed ____ principles of the network economy. ----------------------
3. The Guilder law states that the total bandwidth of communication
----------------------
systems triples every ______ months.
----------------------

Activity 2 ----------------------

----------------------
With the help of Moore’s Law and Gilder’s Law, identify the benefits to be
derived by private sector banks. ----------------------

----------------------
2.5 E-MARKETPLACES AND ECONOMIC IMPACTS ----------------------
According to researchers, physical value chain is composed of linear ----------------------
sequence of activities and virtual value chain is composed of non-linear
sequence of activities. Linear sequence of activities implies defined points of ----------------------
input and output and non-linear sequence of activities implies that the matrix
----------------------
of potential inputs and outputs can be assessed and distributed through a wide

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 Notes variety of channels. In simple words, under e-marketplaces, the consumers’
needs are fulfilled whenever they are developed. It is due to the system that gets
---------------------- established, in the virtual world, which assures extractions of values at multiple
levels.
----------------------
In order to achieve accomplishment, the managers need to understand
---------------------- the new economic environment, i.e., the meaning of value creation and value
extraction. According to Jeffery Rayport and John Sviokla, there are five
----------------------
principles that will help a manager to understand the new economic environment.
---------------------- The economic impacts refer to the impacts in terms of digital assets created via
virtual world, benefits derived due to the expansion of activities (economies of
---------------------- scale), benefits derived due to the presence in correlated production activities
which thereby reduces the cost, etc. The economic impacts also refer to financial
----------------------
benefits which are derived through the optimum utilisation of resources. Let us
---------------------- understand these five principles.
1. The Law of Digital Assets: The assets provide usage to the user
----------------------
through its consumption. For example, a farmer has dug a well in his farm and
---------------------- he gets benefits through its consumption. Now the game changer proposition
will be the limit of consumption that the well will allow the farmer to use the
---------------------- well water. The main difference between the physical assets and digital assets
is of the limit of consumption or the number of transactions that the assets will
----------------------
allow. The physical assets have limitations in terms of their consumption limit
---------------------- like the well, petrol in the fuel tank of your car, your debit card, etc. However,
in case of digital assets, things are a bit interesting where the user gets assessed
---------------------- for infinite number of transactions. Such potential of the digital assets makes it
possible for the cost to come down. In other words, the variable cost (it refers to
----------------------
that cost which is incurred on variable factors like raw material, labour, etc. that
---------------------- changes with the change in the level of production) becomes zero or is nearer to
zero. It thereby helps the organisation to aggressively price their products and
---------------------- challenge its competitors.
---------------------- 2. New Economies of Scale: Economies of scale refers to the ability
of organisation to witness a decline in its costs as it expands its scale of
---------------------- production. In simple words, it refers to anything that helps the organisation
to reduce its cost. The e-marketplace has provided the organisation accessed
----------------------
to reduce its cost as the scale of production is increased. For example, when a
---------------------- bank provides Internet banking facilities to its customers, it creates virtual bank
for its customers and the customer can access his account online anywhere in
---------------------- the world. Similarly, we can illustrate for a courier service with its presence on
the Web. The new economy of scale is a terminology used in the context of the
----------------------
benefits provided by the virtual world to the organisation in terms of its costs.
---------------------- 3. New Economies of Scope: It is concerned with organisation that
---------------------- produces more than one product. It is observed in reality that organisations
are producing more than one product. Such practices reduce the costs for the
---------------------- organisation if the products are produced separately. With the new economies of
scope, the organisations could use its digital assets for providing values across
---------------------- various markets. In other words, it is more of coordination in more markets and

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 provision of more value-oriented products and services. Notes
4. Transaction – Cost Compression: Success in the e-marketplace is
----------------------
largely determined by the ability to control and track information. It relies more
on the value extraction process. The importance of controlling and tracking of ----------------------
information is thus vital to the organisation. However, there is a cost incurred
while controlling and tracking information in the virtual world. This cost is ----------------------
called transaction cost. The interesting thing to note about the transaction cost
----------------------
in the virtual world is that it goes on compressing, i.e., it decreases with the
introduction of new technology. It is said that in the 1960s, it cost about $1 to ----------------------
keep information about an individual customer. Today it costs less than 1%
per customer (Jeffery Rayport and John Sviokla, HBR, 1995). Thus, as the ----------------------
transaction cost gets compressed, the organisation starts experiencing economic
----------------------
benefits.
5. Rebalancing Supply and Demand: Traditionally, there has been ----------------------
two schools of thoughts in the world of economics – the supply side and demand
----------------------
side. Milton Friedman and John Maynard Keynes were two stalwarts in the
past century who represented the supply side and demand side, respectively. ----------------------
The organisations are, nowadays, more concerned about the demand side. C.K.
Prahlad and Ramaswamy proposed the concept of co-creation, wherein the ----------------------
producer and consumer come together in developing a product or service. A
----------------------
new word “prosumer” was coined.
It is observed that as organisations start devoting their time and energy ----------------------
into the virtual world, they start experiencing a unique opportunity of sensing
----------------------
the customer need and responding to them rather than simply buying and selling
products and services (Stephan Haeckel and Richard Nolan, HBR, 1993). It is ----------------------
observed that the post Industrial Revolution phase has created the problem of
overcapacity. The globalised era has intensified the phenomena of overcapacity. ----------------------
Organisations are now eager to understand customers’ demand and then adjust
----------------------
to its source of supply.
----------------------
Check your Progress 3
----------------------

Match the following. ----------------------

i. Supply side economics a. Concept of co-creation ----------------------
ii. Demand side economics b. J. M. Keynes
----------------------
iii. C. K. Prahlad c. Milton Friedman
----------------------

----------------------
Activity 3
----------------------
List down examples for the above five economic impacts on a tourist resort. ----------------------

----------------------

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 Notes Summary
---------------------- • The virtual world has now become the centre of value creation. A new
word called “marketspace” is introduced to distinguish from the physical
----------------------
world (marketplace).
---------------------- • The processes to create values in both the world, i.e., physical world and
---------------------- virtual world are not the same and hence it is necessary to understand the
value understanding processes. In simple words, there is a need to exploit
---------------------- the value chain.

---------------------- • The first thing to observe minutely is the physical processes through
information-based resources. Further, it is to create a parallel value chain
---------------------- of virtual world for the physical world, that is called mirroring capability.
Finally, the organisations use information to establish new customer
---------------------- relationship.
----------------------
Keywords
----------------------
• Marketplace: The physical world of resources that are tangible in nature.
----------------------
• Marketspace: The virtual world of information that organisations cannot
---------------------- see or touch.
---------------------- • Value chain: A model which is synchronised between the firms’ supply
side and the demand side so as to provide added benefits to its customers.
----------------------
• Visibility: Observing the physical processes more minutely through
---------------------- information-based resources.

---------------------- • Mirroring capability: A process where the organisations try to create

virtual value chain for the physical one.
----------------------
• Network economy: An arrangement which has evolved with the
---------------------- introduction of the virtual world.
• Economies of scale: Anything that helps the organisation to reduce its
----------------------
cost.
---------------------- • Economies of scope: It exists when it is economical for the firm to
produce multiple products jointly rather than producing them separately.
----------------------

---------------------- Self-Assessment Questions

----------------------
1. What is the difference between marketplace and marketspace? Illustrate
---------------------- your answer with suitable examples.
2. Write about the importance of the concept of visibility and mirroring
----------------------
capability.
---------------------- 3. Discuss the economic impacts of the e-marketspace.
----------------------

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 Answers to Check your Progress Notes
Check your Progress 1 ----------------------
Multiple Choice Single Response. ----------------------
1. The term marketspace was introduced by:
----------------------
iii. Jeffery Rayport and John Sviokla
----------------------
Fill in the blanks.
1. The value-adding information process consists of three stages. ----------------------
2. The virtual value chain supports the physical value chain. ----------------------
Check your Progress 2 ----------------------
Fill in the blanks.
----------------------
1. The network economy is defined by some as the organic behaviour in a
technological matrix. ----------------------
2. Kevin Kelly has proposed 12 principles of the network economy. ----------------------
3. The Guilder law states that the total bandwidth of communication systems ----------------------
triples every 12 months.
Check your Progress 3 ----------------------

Match the following. ----------------------

i. – c. ----------------------
ii. – b.
----------------------
iii. – a.
----------------------
Suggested Reading ----------------------

1. Porter, Michael E. 1998. Competitive Advantage: Creating and Sustaining ----------------------

Superior Performance. Free Press.
----------------------
2. Porter, Michael E. 1979. “How Competitive Forces shape
Strategy.” Harvard Business Review. ----------------------
3. Rayport, Jeffrey F and John J. Sviokla. 1995. Exploiting the Virtual Value ----------------------
Chain. Harvard Business Review.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 Consumer Behaviour on the Internet
UNIT

3
Structure:

3.1 Introduction
3.2 Demographic, Geographic, Psychographic and Behavioural Factors
Important to E-Marketing
3.3 Motivations for Shopping on the Net
3.4 Attributes of Online Shopping
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Discuss the importance of various facets of consumer behaviour to
---------------------- e-marketing
---------------------- • Explain the motivations for shopping on the Internet
• Learn the various attributes of online shopping
----------------------

---------------------- 3.1 INTRODUCTION

---------------------- The accessibility of the Internet and lower costs of doing transaction has
given rise to consumer badgering and increase in competition at a global scale.
----------------------
Although the Internet has great potential, consumer value reports indicate that
---------------------- consumers vary in their levels of Internet adoption. Among the factors is the
perceived risk associated with online transactions. This unit tries to explore the
---------------------- roles of perceived risk and user’s experience level in determining consumers’
adoption level.
----------------------
Meanwhile, customers’ behaviours vary depending on several factors,
---------------------- such as demographics, technology literacy and experience level and so
---------------------- forth, which will then influence their assessment of service quality entailing
brand loyalty. Based on the belief that marketing to well-defined segments
---------------------- of customers would improve the quality of services offered affording higher
retention rates and at the same time increase firms’ profitability in the long run,
---------------------- many companies have opted to implement Customer Relationship Management
---------------------- (CRM) programmes. This unit also aims to understand the consumer online
shopping behaviour.
----------------------
3.2 DEMOGRAPHIC, GEOGRAPHIC, PSYCHOGRAPHIC
----------------------
AND BEHAVIOURAL FACTORS IMPORTANT TO
---------------------- E-MARKETING
---------------------- The use of Internet to support marketing activities is on the rise since the
last two decades. The forces of globalisation have assisted the use of Internet
----------------------
in the marketing activities for various organisations. The term “e-marketing” is
---------------------- an alternative word to Internet marketing. The latter is narrow in its scope as it
explains more on how Internet can be used in conjunction with traditional tools
---------------------- of marketing. E-marketing or electronic marketing is broader in its meaning and
is more comprehensive in its approach. It refers to digital media such as Web,
----------------------
email and wireless media and also includes management of digital customer
---------------------- data and electronic customer relationship management systems. According to
Smith & Chaffey, e-marketing can be used to support following objectives:
----------------------
• Identifying – use of Internet to understand customers’ needs and wants.
---------------------- • Anticipating – use of Internet in providing an additional channel through

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 which customers can access information and make purchases. Notes
• Satisfying – customers’ satisfaction can be achieved through the electronic
----------------------
channel.
One of the most fundamental aspects in the marketing practice is to ----------------------
understand the customers’ requirement. With the change in social, economic
----------------------
and political set-up throughout the world, there has been a paradigm shift
in the consumer behaviour. The Internet revolution has also emphasised the ----------------------
need to understand the consumers’ characteristics. Factors like demographic,
psychographic, geographic and behavioural influence consumer behaviour. It ----------------------
is, therefore, necessary to understand the importance of the above factors in the
----------------------
context of e-marketing.
Demographic factors refer to the demographic characteristics, such ----------------------
as sex, age and social class or income class of the consumers. As per MORI
----------------------
Technology Tracker in the UK, around 52% male and 49% female are Internet
users; 19% Internet users are between the age group of 15 to 24, 21% Internet ----------------------
users are between the age group 25 to 34, 23% Internet users are between 35 to
44, and 17% Internet users are between the age group 45 to 54, 13% Internet ----------------------
users are between the age group 55 to 64 and only 6% Internet users are above
----------------------
the age group of 65.
Geographic factors are the location factors, such as consumers from ----------------------
different regions. For example, Internet access is much higher in urban cities. ----------------------
Thus, there will be a variation across consumer behaviour though consumers
belong to the same country. In a recent study by Internet & Mobile Association ----------------------
of India (IAMAI) and Indian Market Research Bureau (IMRB), it was found
that Internet use in rural India is also rising steadily. Some of the excerpts of this ----------------------
joint report are: the metros and urban cities have a high growth of Internet use ----------------------
since the year 2000. On an average, there has been more than 30% of year-on-
year increase in the Internet adoption by urban population, in a stark contrast, ----------------------
rural population of the country are slowly rousing to this interactive medium.
----------------------
Psychographic factors refer to attitudes, interest and opinions of the
consumers. Market research firm British Market Research Bureau (BMRB), has ----------------------
segmented consumers based on its attitude towards online purchase as below:
----------------------
1. Realistic enthusiasts
----------------------
2. Confident brand shoppers
3. Carefree spenders ----------------------
4. Cautious shoppers ----------------------
5. Bargain hunters ----------------------
6. Unfulfilled
----------------------
Consumer buying behaviour has been extensively studied by researchers.
It is evident from their research that different groups of people used Internet ----------------------
differently. They have identified five different types of Internet users.
----------------------

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 Notes • Directed information seeker – do not intend to purchase online, are
using Internet to seek information.
---------------------- • Undirected information seeker – basically are surfers who mainly like
---------------------- to browse and follow other hyperlinks.
• Directed buyers – intend to shop online after comparing features and
---------------------- other aspects of the products.
---------------------- • Bargain hunters – are mainly interested to understand various offers and
promotion.
---------------------- • Entertainment seekers – are interested in interacting with the online
---------------------- world by participating in various online events.
Similarly, Styler has explained four consumer buying behaviours:
----------------------
1. Brand focused
---------------------- 2. Price-sensitive
---------------------- 3. Feature savvy
4. Advice led
---------------------- Let us see the following process to understand how Internet can be used
---------------------- to support the different stages in the buying process.
According to Berthon et al, Internet can be used to support the different
---------------------- stages in buying process. The following flow chart can explain how Internet can
---------------------- impact buying process of a new purchaser.

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 3.1: Internet Marketing Techniques to support Consumer buying
---------------------- Process
---------------------- (Adapted from Internet Marketing, Dave Chaffey et al, Pearson Education)

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 Notes
Check your Progress 1
----------------------
Fill in the blanks. ----------------------
1. E-marketing is more ________ in its approach.
----------------------
2. E-marketing includes management of digital customer data and
____________. ----------------------
Multiple Choice Multiple Response. ----------------------
1. E-marketing refers to digital media, such as: ----------------------
i. Web
----------------------
ii. E-mail
----------------------
iii. Wireless media
iv. Newspapers ----------------------
----------------------
Activity 1 ----------------------

1. List down the various digital media with their importance that comes ----------------------
under e-marketing. ----------------------
2. With the help of Internet, list down few product categories with
reference to e-marketing and the impact of psychographic factors on ----------------------
the above product categories.
----------------------

----------------------
3.3 MOTIVATIONS FOR SHOPPING ON THE NET
----------------------
Internet revolution has provided arrays of benefits to the consumers. One
of the benefits is shopping on the Net or using Web world to purchase product ----------------------
and services. The consumers have increased the usage of Internet in many
developing world as Internet penetration has increased. In India too, there has ----------------------
been a phenomenal increase in the Internet penetration. However, shopping on ----------------------
the Net is not so popular in India. There is a positive development in this regard
in the past few years. Let us try to understand various motivational factors for ----------------------
consumers for shopping on the Net. According to Mary Wolfinbarger et al,
consumers evaluate the satisfaction derived from online and offline shopping ----------------------
experience by two dimensions: goal fulfilment and experience related outcomes. ----------------------
Following are the important factors under goal-directed buying and
experiential buying: ----------------------

Goal-directed Buying ----------------------

• Accessibility/Convenience ----------------------
• Selection
• Information availability ----------------------

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 Notes • Control of sociality
• Commitment to goal
----------------------
Experiential Buying
---------------------- • Ambiance/Atmosphere
• Positive sociality
----------------------
• Positive surprise
---------------------- • Commitment to experience
---------------------- It was observed that online buyers engage in experiential browsing for
three reasons (Mary Wolfinbarger et al, 2000):
---------------------- 1. Auction activities
---------------------- 2. Ongoing hobby-type search
3. Bargain hunting
----------------------
Also the consumers are experiencing power that they have not experienced
---------------------- in the past. Bargaining power is one of the theories that adduces the consumer
power, for which George Akerlof and Joseph Stiglitz have been awarded the
---------------------- Nobel Prize in Economics in 1998. It is observed that in the marketplace when
---------------------- the buyer and seller interact with each other, equilibrium is determined and
price is also determined. However, there is some limitation which is observed
---------------------- by number of economists in terms of information availability. It is called
information asymmetry.
----------------------
There is prevalence of information asymmetry in number of interaction
---------------------- between buyers and sellers. For example, when you are purchasing vegetables
at your doorstep, you may not be aware of the profitability enjoyed by the sellers
----------------------
as vegetables are purchased at low price from the farmers. Let us make it more
---------------------- interesting, if the buyers happen to understand the price at which farmers have
sold the vegetables and other costs involved, then the buyers will be in a position
---------------------- to bargain for the vegetables as information asymmetry no longer exists.
---------------------- Similarly, Internet has given power to the consumer in terms of evaluation
of products and comparing price of the products. Also, the purchases of some
---------------------- products were never thought of as commodities in the past. In the Web world,
such products have become more price-sensitive. This process is called
----------------------
commoditisation.
---------------------- Increase in customer power – Internet bestowed power to customers which
---------------------- was not experienced in the past. One of the interesting examples is of buyer-
controlled sites. This is the arrangement where the buyers take initiatives in
---------------------- market making. Here the purchasers specify their requirement and communicate
to the registered suppliers and wait for the offer. General Electric Trading Post
---------------------- Network was the first to set up this type of arrangement.
----------------------
3.4 ATTRIBUTES OF ONLINE SHOPPING
----------------------
With the rise in the number of consumers around the world for shopping
---------------------- online, it is now essential to understand the attributes of online shopping.

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 In other words, organisations are interested in how the user experience can Notes
be maximised. According to Hong-Youl Ha, attribute-level evaluations and
satisfaction for the customers is dynamic and changes over time. He further ----------------------
added that changed attributes (particularly convenience and site design) might
signal an opportunity to capture the dynamics of attribute-level evaluations ----------------------
over time. ----------------------
A pleasant experience is influenced by various factors such as ease in
----------------------
finding relevant information. It is also influenced by the intangible factors
including the design and the layout of the site. While designing the site, the ----------------------
organisation should have proper interface with the customers. With the help of
timely reviews and feedback, the design can be effective with the pace of time. ----------------------
Other factors such as quality of content is also important.
----------------------
While developing customer-oriented content, organisation should
consider following issues: ----------------------
• Who are the important users? ----------------------
• What is their purpose for accessing the site?
----------------------
• How frequently will they visit the site?
----------------------
• What experience and expertise do they have?
• What nationality are they? Can they read your language? ----------------------
• What type of information are they looking for? ----------------------
• How will they want to use the information: read it on the screen, print it
----------------------
or download it?
• What type of browsers will they use? How fast will their communication ----------------------
links be?
----------------------
• How large a screen or window will they use, with how many colours?
----------------------
Fogg et al had done an interesting study wherein they asked students to
review sites of different suppliers. The top three factors that students considered ----------------------
were:
----------------------
• Design look
• Information design/structure ----------------------

• Informative focus ----------------------

Thus, the user experience can be modified favourably towards the ----------------------
company by:
----------------------
• Developing customer-oriented content.
• Evaluating designs – it deals with a test of effective design. ----------------------
• Marketing-led site design – it deals with marketing objectives and tactics. ----------------------
• Elements of site design – it deals with human-computer interface. ----------------------
• Site design and structure – it deals with some basic factors that determine
----------------------
the effectiveness of a site.

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 Notes • Graphic design – it deals with various aspects of graphic designs such as
the speed of downloading graphics, the screen.
----------------------
• Site organisation – it deals with different approaches used in organising
---------------------- the site.
• Site navigation schemes – it deals with devising a site that is easy to use.
----------------------
• Page design – it deals with creating an appropriate layout for each page.
----------------------
• Content design – it deals with the essentials and the way they are presented.
---------------------- The attributes of online shopping should be considered by the organisations
---------------------- as it helps in delighting consumers.

---------------------- Check your Progress 2

----------------------
Multiple Choice Single Response.
----------------------
1. A pleasant online shopping experience is influenced by factors like:
---------------------- i. Ease in finding relevant experience
---------------------- ii. Weather conditions
---------------------- iii. Age of the buyer
iv. Gender of the buyer
----------------------
Multiple Choice Multiple Response.
----------------------
1. As per research done by Fogg et al, students were asked to review sites
---------------------- of different suppliers. The top three factors that students considered
were:
----------------------
i. Design look
---------------------- ii. Information design/structure
---------------------- iii. Informative focus
---------------------- iv. Name of the site
Fill in the blanks.
----------------------
1. While designing the site, the organisation should have proper
---------------------- ________ with the customers.
---------------------- 2. According to Mary Wolfinbarger et al, consumers evaluate the
satisfaction derived from online and offline shopping experience by
---------------------- two dimensions: goal fulfilment and _______________.
----------------------

----------------------

----------------------

----------------------

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 Summary Notes

• The use of Internet to support marketing activities is on the rise since the ----------------------
last two decades.
----------------------
• The term “e-marketing” is an alternative word to Internet marketing.
----------------------
• E-marketing or electronic marketing is broader in its meaning and is
more comprehensive in its approach. It refers to digital media such as ----------------------
Web, email and wireless media and also includes management of digital
customer data and electronic customer relationship management systems. ----------------------

• Factors like demographic, psychographic, geographic and behavioural ----------------------

factors influence consumer behaviour. Demographic factors refer to the
demographic characteristics such as sex, age and social class or income ----------------------
class of the consumers. Geographic factors are the location factors. ----------------------
Psychographic factors refer to attitudes, interest and opinions of the
consumers. Since the consumers have increased the usage of Internet, it ----------------------
is essential to understand the motivation for shopping on the Net.
----------------------
• Consumers evaluate the satisfaction derived from online and offline
shopping experience by two dimensions: goal fulfilment and experience- ----------------------
related outcomes.
----------------------
• Organisations are interested in how the user experience can be maximised.
Attributes like convenience and intangible factors including the design ----------------------
and the layout of the site play an important role in maximising customers’
----------------------
satisfaction.
----------------------
Keywords ----------------------
• E-marketing: Digital media such as Web, email and wireless media ----------------------
and also includes management of digital customer data and electronic
customer relationship management systems. ----------------------
• Demographic factors: Demographic characteristics such as sex, age and ----------------------
social class or income class of the consumers.
----------------------
• Psychographic factors: Attitudes, interest and opinions of the consumers.
----------------------
Self-Assessment Questions ----------------------
1. Bring out the importance of demographic, geographic, psychographic ----------------------
and behavioural factors in e-marketing.
2. Explain the various motivational factors for the consumers for shopping ----------------------
online. ----------------------
3. What are the attributes of online shopping? Illustrate your answer with
----------------------
examples.
----------------------

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 Notes Answers to Check your Progress
---------------------- Check your Progress 1
Fill in the blanks.
----------------------
1. E-marketing is more comprehensive in its approach.
----------------------
2. E-marketing includes management of digital customer data and electronic
---------------------- CRM.
Multiple Choice Multiple Response.
----------------------
1. E-marketing refers to digital media, such as:
---------------------- i. Web
---------------------- ii. E-mail

---------------------- iii. Wireless media

Check your Progress 2
----------------------
Multiple Choice Single Response.
---------------------- 1. A pleasant online shopping experience is influenced by factors like:
---------------------- i. Ease in finding relevant experience
Multiple Choice Multiple Response.
----------------------
1. As per research done by Fogg et al, students were asked to review sites of
---------------------- different suppliers. The top three factors that students considered were:
---------------------- i. Design look
ii. Information design/structure
----------------------
iii. Informative focus
---------------------- Fill in the blanks.
---------------------- 1. While designing the site, the organisation should have proper interface
with the customers.
----------------------
2. According to Mary Wolfinbarger et al, consumers evaluate the satisfaction
---------------------- derived from online and offline shopping experience by two dimensions:
goal fulfilment and experience related outcomes.
----------------------

---------------------- Suggested Reading

---------------------- 1. Hawkins, Del I, Roger J. Best and Kenneth A. Coney. 1997. Consumer
Behavior. Richard D Irwin.
----------------------
2. Loudon, David and Albert J. Della Bitta. 1988. Consumer Behaviour.
---------------------- McGraw-Hill.

---------------------- 3. Schiffman, Leon and Leslie Lazar Kanuk. 1997. Consumer Behavior.
Prentice Hall.
---------------------- 4. Sheth, Jagdish N. and Banwari Mittal. 2004. Customer Behavior: A
---------------------- Managerial Perspective. Thomson/South-Western.

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 Information for Competitive Marketing Advantage
UNIT

4
Structure:

4.1 Introduction
4.2 Marketing Research on the Net
4.2.1 Role of Internet in Marketing Research (Online Marketing Research)
4.2.2 Ethics in Online Research
4.3 Using Data Tools to enhance Performance
4.4 Research Methods for Virtual Markets
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Explain virtual marketing research and how it is different from
---------------------- conventional marketing research
---------------------- • Identify the role of Internet in marketing research and the change it has
brought in this area
----------------------
• State the requirements for virtual marketing research
---------------------- • List the skills required for virtual marketing research
---------------------- • Explain the research process for virtual markets and understand each
step with respect to virtual markets
----------------------

---------------------- 4.1 INTRODUCTION

---------------------- As James T. Costigan wrote in Doing Internet Research, “I am not sure
---------------------- that I know what the Internet is; I am not sure that anyone does……but I know
about its use, how it is used, and how I use it. Most importantly I know about
---------------------- it from market and social perspectives.” What Costigan said is not only about
him, but implies to most of us. We might not know about what Internet is and its
---------------------- technology, but we at least know how to use it in our individual lives. Internet
---------------------- brought drastic changes in individual life in various ways. It is widely used by
everyone right from philosopher to philanthropist.
---------------------- In marketing research, the virtual environment consists of two types of
---------------------- abilities; the first is the ability to search and access data from data repositories
or stores, the second is the ability to use communication skills of researcher to
---------------------- find, contact and establish a connection so as to elicit required data. There are
abundant tools and techniques those may be handy to any researcher to design
---------------------- and do the research. Especially these skills or abilities are very much required
---------------------- to someone who is engaging in management or social science research.
Broadly, marketing research in virtual set-ups could be done in two ways;
---------------------- they are ontological and epistemological. The first is about inquiry of physical
---------------------- properties of any aspect, where properties, characteristics, dimensions, etc.
can be studied. The second is about knowledge, where the research is done on
---------------------- conceptual, empirical levels. But indeed, what is expected in marketing research
is the combined approach.
----------------------
A combined approach to virtual marketing research could be helpful to
---------------------- marketing managers to devise and use certain marketing strategies to sell their
goods and services or attract and retain customers via Internet. Of course, doing
----------------------
marketing research over Internet is not an easy task, as assumed by most, it
---------------------- requires lot of skills in finding, filtering, analysing and concluding a problem.
Internet is prettily referred to as virtual world, which summarily means a
----------------------
mirror of the real world. In fact, it is the image of the real world, whereby every

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 individual can find his own place there. The changing trends in technology brought Notes
huge changes in every field; the field of research is also one among them. Despite
being criticised by researchers that Internet has corrupted the quality of research, ----------------------
Internet has relieved most of the researcher’s effort in gathering information and
capitalising upon it. Unlike olden days, it is now up to the researcher to use ----------------------
the repertoire of information and knowledge which is freely available over the ----------------------
Internet to enhance the quality and quantity of research. Nowadays, it is common
that everyone uses Internet for every small or hard problem. ----------------------
Precisely to note, research is meant for solving problems, if there is no problem, ----------------------
there will be at least some dilemma to be resolved in every business. There is no
meaning in carrying research without any problem in hand. In fact, every research ----------------------
starts with some problem/dilemma in hand. In this unit, apart from studying about
----------------------
research and related methods, we also concentrate on virtual marketing research,
the best methods to do it and how Internet can be used to do research. ----------------------

4.2 MARKETING RESEARCH ON THE NET ----------------------

Before we study about marketing research, let us know as to what is ----------------------

business research. Zikmund in his book Business Research Methods defines it ----------------------
as: “The application of the scientific methods in searching for the truth about
business phenomena. These activities include defining business opportunities ----------------------
and problems, generating and evaluating ideas, monitoring performance, and
understanding the business processes.” ----------------------

This is one of the classical definitions in business literature for it explains ----------------------
the very object of business research, which is not only finding a problem but
----------------------
searching for the truth.
The most important activities in business research are: ----------------------
●● Defining business opportunities and problems ----------------------
●● Generating and evaluating ideas
----------------------
●● Monitoring performance
----------------------
●● Understanding the business process
But to do this, one needs to have a model or methodology, which may ----------------------
describe the whole course of action and also can help as blueprint for the whole
research activity. Even though there is nothing unscientific about research, ----------------------
every researcher is expected to be duteous of employing scientific method. In ----------------------
general scenes, scientific method involves asking a question and answering with
appropriate reasons. In the broad sense, scientific method can be a systematic ----------------------
approach to inquire and find solution by observation and experimenting. In
other words, scientific methodology is a set of techniques to investigate a ----------------------
phenomenon, acquire new knowledge and correct old knowledge. ----------------------
There are about five steps in every scientific approach to research; they
----------------------
are: (1) ask a question, (2) do background study, (3) construct a hypothesis,
(4) test the hypothesis by doing an experiment, (4) analyse data and draw ----------------------

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 Notes conclusion, (5) report results. The detailed description to these steps is provided
in the following sections.
----------------------
Business research is bifurcated into basic business research and applied
---------------------- business research. The research which could not be scientific, does not address
issues of a specific area of organisation, does not solve any problem, but only
---------------------- serves to promote knowledge is known as basic business research. The research
which is conducted to solve a specific business decision for any specific firm or
----------------------
organisation is known as applied business research.
---------------------- Now let us look into what is marketing research and how it is different
from business research. In fact, these two concepts are as different as the words
----------------------
business and marketing. A business is a wholesome entity, whereas marketing
---------------------- is only one of the functions, but most significant and important as much as a
line authority. Hence, it is obvious that every marketing research is business
---------------------- research, for marketing is meant for business.
---------------------- According to the European Society for Opinion and Marketing Research
(ESOMAR),
----------------------
“Marketing research is a key element within the total field of marketing
---------------------- information. It links the consumers and public to the marketer through
information which is used to identify and define marketing opportunities and
---------------------- problems; to generate, refine and evaluate marketing actions; and to improve
---------------------- understanding of marketing as a process and of the ways in which specific
marketing activities can be made more effective.”
---------------------- From the above definition, it is very clear that:
---------------------- ●● Marketing research is a key element in the field of marketing intelligence.
---------------------- ●● It serves as an information link between customers (public) to marketers,
thereby facilitating marketers to study problems (needs) and convert them
---------------------- into profitable opportunities.
---------------------- ●● It also assists in generating, refining and evaluating various marketing
actions, which are in the form of strategies and tactics.
---------------------- ●● It gives improved understanding upon marketing as a process, whereby
---------------------- marketers can find more effective and efficient activities to reach and
fulfill consumer needs.
---------------------- 4.2.1 Role of Internet in Marketing Research (Online Marketing Research)
---------------------- We came to know what research is in terms of both market and business.
Now it is imperative to know and understand about online marketing research.
---------------------- Marketing research primarily serves as an important and special tool for
---------------------- business organisations to address problems. Indeed, research is the cog which
turns problems into potential profitable opportunities to firms. The Internet
---------------------- boom in the 19th century brought revolution in the marketing research arena.
Internet is known for its fast and immediate access and when research is done
---------------------- online, it leads to instantaneous solutions. The use of Internet in doing research
---------------------- engendered a new term “e-research” or “world wide research”.

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 For long, Internet was viewed as a repertoire of excerpts on hasty politics, Notes
pornography and obscenity, ravings of idlers, etc. The Internet is almost flooded
with useless web pages with meandering rants. Even if someone finds useful ----------------------
information, it is after huge amount of search and clearing in paths. Apart from
this, it is hard to believe the authenticity of the document or information. That ----------------------
is why, for many years Internet was a very bad option for information search or ----------------------
research by conventional researchers.
----------------------
4.2.2 Ethics in Online Research
Even though the methodological issues remain same, the other side ----------------------
of Internet offers many services to marketing research. The use of Internet
----------------------
in marketing research is a subject of debate among researchers, industries,
academics and other experts of the field. One of the arguments is that the Internet ----------------------
has diluted the area of research; it is highly perceived as cheap in quality. The
other arguments beef up the notion that Internet is revolutionising information ----------------------
trends in the research field. Both the arguments are quite right in some sense.
----------------------
The purists of research field bemoan on dilution in research ethics, as most
of the research done in virtual markets are second hand with lot of plagiarism. ----------------------
Plagiarism emanates out of dishonesty, breach of literary ethics. In fact, plagiarism
----------------------
is the mainspring of Internet. Hence, purist of the field outcry upon duplication,
imitation, unauthenticated claiming upon someone’s work as some other work. As ----------------------
such, it never meant that every work done out of Internet is only imitation and
duplication. There are appropriate research methodologies to do research online. ----------------------
High quality research can be generated, which might be on par with any ----------------------
other research. Internet in general offers immediate solution besides helping
formulation of initial idea. For instance, Market Research Society (MRS) of ----------------------
US enunciates the advantages of online marketing research in many ways; the ----------------------
following are some of the advantages of online marketing research:
●● Researcher can pick large number of respondents and all these samples ----------------------
are contemporaneous. ----------------------
●● Feasibility of geographical proximities, a researcher can get any type of
information of any continent by a click. ----------------------
●● Cost-effective budget allocation is one of the obstacles to research. ----------------------
Internet can reduce research expenditure.
----------------------
●● Rapid turnaround, research can be delivered as expected by the client
within stipulated timeframes unlike in olden days. ----------------------
The rules and guidelines for offline (marketing) research are well laid
----------------------
down by various authorities in the world, whereas, there is hardly anything for
online research. Internationally, an array of authoritative bodies like Australian ----------------------
Research Council, The Economic and Social Research Council (ESRC), Social
Research Association (SRA), etc. are involving to establish guidelines to do ----------------------
research online, whereas, in India there are renowned research authorities. The
----------------------
Indian Council of Medical Research (ICMR), Indian Council of Agricultural
Research (ICAR), Indian Council of Social Science Research (ICSSR), Science ----------------------

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 Notes and Engineering Research Council (SERC) are to name a few, that are working
relentlessly in developing research in India.
----------------------
The role of ethics in research antedates to 1949’s Nuremberg Code, a
---------------------- historical breakthrough in the field of research. Nuremberg Code is a legal
document drafted by the then enthroned German government in the 1940s
---------------------- to protest unethical experimentations on human subjects in medical research
during Nazi rule.
----------------------
The document clearly states that the aim of such research is that it should
---------------------- yield something good for society that is unprocurable by other methods or
means of research. It also states that such research should also agree to certain
----------------------
principles like: (1) the voluntary consent of human subjects, (2) the role of
---------------------- individuals in ensuring quality of content, (3) the outcome of the research, (4)
other properties and constraints such as methods, physical and mental suffering,
---------------------- degree of risk, preparations for experimentation, qualifications of conductors
and liberty and individual rights of subjects.
----------------------
---------------------- Check your Progress 1
----------------------
Fill in the blanks.
---------------------- 1. The research which is not scientific, does not address issues of a specific
---------------------- area of an organisation, does not solve any problem, but only serves
to promote knowledge is known as _______________________.
----------------------
2. The research which is conducted to solve a specific business
---------------------- decision for any specific firm or organisation is known as
_______________________.
----------------------
Multiple Choice Multiple Response.
---------------------- 1. As per Nuremberg code, the research should comply with certain
---------------------- principles like:
i. Voluntary consent of human subjects
----------------------
ii. Role of individuals in ensuring quality of consent
----------------------
iii. Outcome of the research
---------------------- iv. Monetary returns to subjects
----------------------

---------------------- Activity 1
----------------------
Find any one FMCG product which is not doing well in the market and
---------------------- discuss the problem.

----------------------

----------------------

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 4.3 USING DATA TOOLS TO ENHANCE PERFORMANCE Notes
This section briefly narrates as to how various tools can enhance ----------------------
performance to do better research. There are certain tools which may keep
the researcher in good stead to fulfill requirements to achieve his/her research ----------------------
objectives. Most of the work is concerned with obtaining, assorting, analysing
----------------------
and reporting, so it needs sufficient and efficient instruments (tools) to analyse
and report data. ----------------------
There are two ways to understand the word tool; 1. a tool is any instrument ----------------------
or equipment that is used by hands to make or repair something. 2. something
that helps to do a particular activity. ----------------------
The second view is valuable in research area. Since marketing research ----------------------
is an activity, it needs something (might be physical or abstract) to do by a
researcher. Most of these tools are there to process the data, hence they are also ----------------------
known as data tools. Since these research tools are technical, a researcher is
expected to hone his or her technical skills in order to achieve mastery in the ----------------------
research field. ----------------------
Hence, for research there are importantly two types of requirements/tools;
----------------------
they are physical and conceptual. Abstract requirements are those a researcher
must know to use these aforesaid physical tools. ----------------------
Following are some of the tools required to do online marketing research:
----------------------
1. Physical
----------------------
a. Local set-up
b. Memory ----------------------

c. Office suites and PDF readers ----------------------

d. Email ----------------------
2. Conceptual
----------------------
a. File systems
----------------------
b. Organising data
1. Physical ----------------------

Physical requirements are essential in order to process the data. In other ----------------------
words, they are instruments by which a researcher works or uses labour to do
----------------------
research. As most of the online marketing researches are done with Internet and
computer, sometimes, these tools are also known as utilities. ----------------------
a. Local set-up: There are two types of online marketing research; they are
----------------------
voluntary research and commercial research. The voluntary research is a
research activity done out of an individual’s/institution’s wish, where it ----------------------
might be for literature publications, career advancements, contribution
to knowledge advancements or also for pleasure and inquisition. The ----------------------
commercial research is mainly a funded research, where there exists
----------------------
two parties, one funds or spends on research, and the other is funded

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 Notes by the former. A local set-up, here, basically is a computer with Internet
connection with sufficient bandwidth. This tends to differ from context
---------------------- to context. In general, a scholar in any university or college might not be
having sufficient facilities compared to a turnkey research firm, which
---------------------- may offer research services on contract. But after all, a computer with
---------------------- Internet connection which may moderately support browsing is expected
to do online marketing research.
----------------------
b. Memory: Memory is another important resource very much needed by
---------------------- the researcher. Indeed, it is costly, perhaps most unconsidered while doing
research budget. Since, it is online marketing research, all the processes of
---------------------- research is done on computer. Hence, a computer must be able to engulf
as much data as possible. The size of the memory is one of the severe
----------------------
shortcomings of online research besides being costly. Researcher must be
---------------------- able to determine the size of the memory. But unfortunately there are no
metrics exactly to determine memory size. Most of the researchers’ play
---------------------- it safe, which may end-up in hazardous endeavour.
---------------------- Although, there are no strict scientific models or metrics to determine
memory size, there are certain laws which may guide a researcher to
---------------------- estimate memory size. The following are some of the laws:
---------------------- ●● Bradford’s Law (Samuel C. Bradford, 1934): The law states that if
journals in a field are sorted by number of articles into three groups, each
---------------------- with about 1/3rd of all articles, then the number of journals in each group
will be proportional to 1:n:n2. In other words, if a researcher gets 12
----------------------
articles from 5 journals, then for further 12 articles he needs to refer to 10
---------------------- articles, here (Bradford multiplier) bm=2.
●● Zipf’s Law (linguist George Kingsley Zipf, 1935): Zipf’s law states
----------------------
that given some corpus of natural language utterances, the frequency
---------------------- of any word is inversely proportional to its rank in the frequency table.
For example, if the word ‘the’ occurs some n times, and ‘if’ occurs in m
---------------------- times, then ‘the’ is number one, and ‘if’ is number two. Now imagine
that another word occurs some k times, now the rank of ‘the’ turns three
----------------------
disrespect to its serial, so when frequency increases, rank decreases. There
---------------------- are shortcomings to this law. One of the important shortcomings is it does
not consider ordinal value of frequency over numerical value.
----------------------
Apart from the above two laws, there are others namely, Lotka’s Law
---------------------- and Gibrat’s Law, which are highly related to research quality rather than
requirements. Hence, the value of these laws is uncertain to determine the
---------------------- memory size.
---------------------- Apart from the data point of view, a researcher also must know technicalities
involved in determining the size of the memory. Computer memory is measured
---------------------- in terms of bytes. A byte is a fundamental unit of digital information which is
stored or carried and most commonly consists of eight bits. A byte is a number
----------------------
of bits used to encode a character in computer. The following table gives
---------------------- approximate number of bytes and its notations in the industry.

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 Table 4.1 Computer Memory Notations Notes
Prefixes for Bit and Byte Multiples
----------------------
Decimal Binary
Value SI Value IEC JEDEC ----------------------
1000 K kilo 1024 Ki kibi K Kilo
10002 M mega 10242 Mi mebi M Mega ----------------------
10003 G giga 10243 Gi gibi G Giga
1000 4
T tera 10244 Ti tebi ----------------------
10005 P peta 10245 Pi pebi ----------------------
1000 6
E exa 10246 Ei exbi
10007 Z zetta 10247 Zi zebi ----------------------
1000 8
Y yotta 10248 Yi yobi
----------------------
c. Office suites and Pdf readers: Research is all about identification,
collation, analysis and reporting. Hence, most of the work is literary in ----------------------
nature. To identify data, a research needs to dive into the World Wide Web,
but apart from blogs and websites, this data might be available either in ----------------------
word format or pdf (portable document format). Hence, it is imperative to
----------------------
have any of the word processors (usually with other office components in
bundle) along with a pdf reader. ----------------------
Lot of work is expected to be done with the help of office or productivity
----------------------
suites. There are abundant of office suites in the market, some of them are
proprietary and others are open source. It is up to the researcher to choose ----------------------
and use these office suites. Primarily, research needs a word processor with
spreadsheets. Reporting needs lot of writing (typing); hence, a very user- ----------------------
friendly and cost-effective word processor will be a must-to-have along with
----------------------
the computer. Typically, every office/productivity suite comes up with certain
components like word processor, spreadsheet, presentation, database, project ----------------------
management, etc. in bundle. Generally, these suites can be classified into free,
open source and proprietary. ----------------------
The following are some of the suites available for online marketing ----------------------
research:
----------------------
Table 4.2 Office Suites for Online Research
----------------------
Multi-platform Microsoft Windows Linux Mac OS X
Free ware suites ----------------------
IBM Lotus Symphony P P P
SoftMaker Office P P ----------------------
Kingsoft Office P - -
----------------------
Open Source Office Suites
Caligra Suite P P P ----------------------
Koffice P P P
Libre Office P P P ----------------------
OpenOffice.org P P P ----------------------
Proprietary Suites
MS Office P P - ----------------------

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 Notes Kingsoft Office P - -
SoftMaker Office P - -
---------------------- Star Office P P P
---------------------- Pdf readers: There are quite a few number of pdf readers. Adobe acrobat
reader is most popular among them. Adobe was founded in December, 1982 by
---------------------- John Warnock and Charles Geschke, ex-employees of Xerox to sell PostScript
---------------------- Page Description language. The real desktop publishing revolution started
in 1985 when Apple Computers licensed PostScript for its use. After many
---------------------- milestones, within a span of a decade, i.e., in 1993 Adobe systems launched
Portable Document Format (PDF) with Adobe acrobat and reader software.
---------------------- PDF is now an international standard for documentation. But, due to its ill-
---------------------- cited vision, Adobe lost DTP market to its much touted counterpart MS Office,
which is leading in DTP market with 94% market share and is followed by
---------------------- OpenOffice.org with 21%.
---------------------- There are other PDF readers which are freely available for researchers
online. For instance, Foxit reader (a US company) is gaining importance
---------------------- after Adobe acrobat reader. At present there are 100 million users worldwide
partnering with famous companies like Samsung and Asus. Moreover, Foxit
----------------------
reader is completely free complying with open source standards.
---------------------- There is another PDF reader called Sumatra PDF reader simply called
Sumatra, which is a lightweight PDF, DjVu, XPS, CBZ and CBR reader for
----------------------
Microsoft Windows. It is completely free complying to open source standards.
---------------------- d. Emails: Getting a good email client is a must for doing online marketing
research. Email does a lot of service in collecting information required
----------------------
for research. It is always advisable to get the data directly from the
---------------------- respondents (if it is a survey done through questionnaire), rather than
simply copy-paste. When the researcher gets data from the respondents, it
---------------------- might be of equal value to any normal (offline) survey research, whereby
ensuring the precision, reliability and correctness of the research.
----------------------
Getting a good email package is little tricky, for there are umpteen
---------------------- number of email clients, some are part of OS (offline) and others are online.
---------------------- For example, in MS Windows, Microsoft Outlook Express is provided along
with office suites which will take care of all email needs of the researcher. In
---------------------- Linux, Evolution is a good software which comes along with any GNU/Linux
distribution (like Ubuntu). The offline email software has certain advantages
---------------------- which could not be available from online email clients like Gmail, Yahoo, etc.
---------------------- as most offline email clients could use local memory for saving and retrieving
data.
---------------------- All email software offer certain common services like sending, receiving
---------------------- and storing data (offline/online) either in local or virtual memory. Sufficient
knowledge to work with emails is an important prerequisite to do online
---------------------- marketing research.
----------------------

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 2. Conceptual Notes
a. File systems: Though it is not very much required, often a researcher
----------------------
must know why and how a computer works in a given fashion. Usually,
a computer stores every data when any program (application) gets ----------------------
terminated. This information must be stored somewhere in the computer
to access for future use. Different operating systems tend to possess ----------------------
different file systems in order to safeguard its uniqueness and individuality
----------------------
compared to others. For example, MS Windows uses either FAT32 or
NTFS file systems, whereas in Linux ext system is used. A researcher ----------------------
most importantly knows the differences among these file systems for easy
and safe transfer of data. Sometimes the speed of OS also depends on the ----------------------
type of file system it uses. Apart from these systems, a researcher also
----------------------
must know different file formats. There are varieties of file formats for
documentation. Awareness of these formats keeps research at a good and ----------------------
steady pace.
----------------------
b. Organising data: The concept of organising data is another important
skill of doing virtual marketing research. The data once collated will grow ----------------------
into a mighty forest. Once having been identified, the researcher needs to
be very conscientious in managing it. There are different techniques in ----------------------
organising the data into different directories and folders, where researcher
----------------------
needs to know about various data manipulation techniques, like copy,
mass copy, and multiple copy pasting, special paste techniques with ----------------------
respect to data types. Generally, when data is obtained, it is named as per
the author’s wishes, sometimes the name may or may not coincide with ----------------------
either the title or content of the document or file. Hence, it needs to have
----------------------
certain skills in managing the data for easy access.
One important technique is organising documents in title and page. Once ----------------------
the researcher decides about the destination directory or file, obtained document
----------------------
from the web will be saved with the title it possesses internally. Sometimes,
there might not be a title or title might have been in different breaks, in that ----------------------
instance, the researcher will have to use his tricks to phrase the title for his easy
remembrance and access. When the document is finally ready with title, then ----------------------
the researcher needs to know the number of pages, and these pages will be kept
----------------------
in the title within parenthesis.
The below figure depicts a window in MS Windows operating system. ----------------------
The window is named as RESEARCH (a directory created for all research ----------------------
documents) in which there are two documents; the first one is obtained from an
URL as it is, which is titled by the author in numbers, i.e., 3296498; adjacent to ----------------------
this there is another document titled ‘meta analysis in psychological research
(13)’ (the same document titled differently) titled as that given in the very ----------------------
document itself; the number within parenthesis is about the number of pages of ----------------------
that document.
----------------------

----------------------

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 Notes
Check your Progress 2
----------------------

---------------------- Multiple Choice Single Response.

1. If journals in a field are sorted by number of articles into three groups,
----------------------
each with about 1/3rd of all articles, then the number of journals in
---------------------- each group will be proportional to 1:n:n2. This law is known as:
i. Bradford’s law
----------------------
ii. Zipf’s Law
----------------------
iii. Lotka’s Law
---------------------- iv. Gibrat’s Law
---------------------- Multiple Choice Multiple Response.
---------------------- 1. Some of the following are important requirements to virtual marketing
research:
----------------------
i. Local set-up
---------------------- ii. Memory
---------------------- iii. Office suites and Pdf readers
---------------------- iv. Money

----------------------

---------------------- Activity 2
----------------------
1. Suppose you are to submit a project for your academic programme
---------------------- and your instructor has asked you to do research online on consumer
perception towards web-ads across websites, how would you describe
----------------------
requirements to this research?
---------------------- 2. Suppose one of your friends has joined a research consultancy.
---------------------- Suggest a computer brand that would be suitable for him and explain
its importance to do research with suitable configuration parameters.
----------------------

---------------------- 4.4 RESEARCH METHODS FOR VIRTUAL MARKETS

---------------------- In the beginning of this unit, we studied as to what marketing research
---------------------- is. Every research usually starts with problems in hand. This eventually leads
to searching for information and culminates in finding a solution. If there is no
---------------------- problem, at least there will be a dilemma, management dilemma. A dilemma
might be an opportunity, an obstacle, a threat, or at least an unclear policy.
---------------------- Sometimes an issue for revamping and reengineering also can be the starting
---------------------- point for research.

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 Phillip Kotler depicts research process as below in his book Marketing Notes
Management.
----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 4.1: Online Research Process
----------------------
Define the problem and research objectives
Virtual markets do have umpteen number of problems. Some of them could ----------------------
be related to website design, strategies to attract a consumer to a website, content ----------------------
of the website, processing mechanism if any consumer chooses to buy products
from a website, payment options, etc. Research could also be on issues like ----------------------
consumer’s attitude, perception, affordability, and other psychological factors.
In marketing context, research could be done on four broad areas of virtual ----------------------
marketing, viz., demographics, geographic, socio-cultural and technological. ----------------------
Once the problem is found out, then it must be factored to proceed to the next
step. Factoring is a simple technique of breaking the problem into small pieces ----------------------
so as to find the symptoms, which later turns out to be the base for formulation
of objectives. These objectives will become sound basement for the whole ----------------------
construction of research. For instance, if the research issue is attractiveness of a ----------------------
website, then after factoring, a researcher could come up with certain attributes
like colour, text, site layout, images and animations, number of web pages, ----------------------
sequence web pages, site columns, etc. Now each attribute can be a potential
objective for the study. A typical objective can be to find user’s perception ----------------------
towards website colour, which may later turn out to be a base for formulation ----------------------
of hypothesis. Once the problem is factored and objectives are formulated, then
the researcher forwards to the second step to develop research plan. ----------------------
Developing research plan ----------------------
This is the most crucial and heart of the research process. Research plan is
----------------------
a blueprint which determines the real course of action, what to do and what not
to do, in research. In fact, it requires great study and skill in designing research. ----------------------
One needs to master or gain expertise over both research and statistical sciences.
----------------------
In virtual marketing research, it is difficult to design research, owing to
many factors. The foremost among them is data. Following are some of the ----------------------
steps involved in research design, which needs concert decisions.
----------------------
●● Type of research
●● Data requirements and gathering ----------------------
●● Review of literature ----------------------
●● Formulation of hypothesis
----------------------

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 Notes ●● Data analysis
●● Reporting
----------------------
There are about 16 types of research, among which the following are
---------------------- important:

---------------------- ●● Exploratory
●● Descriptive
----------------------
●● Causal
---------------------- Type of research
---------------------- Most of the virtual marketing research is exploratory in nature. There is
abundant of ambiguity and uncertainty in online operations. This ambiguity or
---------------------- uncertainty can be measured with certain methods. Suppose, a conventional
---------------------- grocery shop can plan for e-groceries, but venturing into such a trendy model
is subject to high risk. The entire procurement and delivery process must be
---------------------- revamped in order to establish such an online business. The proprietor may
undertake an exploratory study so as to find how many existing customers
---------------------- would be interested to buy groceries online. That is why it is called research
---------------------- which searches answers for questions like what, when, where, why and it is
exploratory. Why and how can be answered by exploratory research. Once
---------------------- the customer’s willingness is found, one can think as to how willingness of
customers will impact his returns either positively or negatively. If it is negative,
---------------------- what are the factors and why are those negatively influencing business? When
---------------------- research is done in this level, it is known as descriptive research. The how part
of the research is taken care of by causal research. Suppose, now the grocer
---------------------- finds that there are two factors those are likely to decelerate his business, they
are consumer reticence and lack of affordability. Research could do little more
---------------------- by delving associations in between these two potential factors. Here causal
---------------------- research can not only find nature of association but also degree to which these
two factors are strictly binding together.
---------------------- Data requirements and gathering
---------------------- Perhaps, the most critical among all steps is deciding about data. There
are two types of data: primary and secondary. Primary data is first-hand data,
----------------------
which might be collected afresh for the problem in hand. Secondary data is
---------------------- second-hand data, which might have been collected already by other researcher
for their needs. Here researcher must be conscientious to decide about which
---------------------- data he needs for his research. Mostly every research tends to depend on both
these types. Often the data which is used for other research, when not tightly
----------------------
connected to objectives of the present research in hand could also serve as
---------------------- primary data. Most of the data in virtual marketing research is garnered from
Internet, which is why, the ability of the researcher is to plan online data search.
---------------------- There are number of techniques and tools available to do this.
---------------------- There are certain steps that are needed to be observed while preparing
for gathering data. Information is doubling every few months, but searching
---------------------- information yet is a difficult task over the Web. There are two types of search

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 processes; they are bibliographic search and Web search. Notes
The most important and critical task of data gathering is online survey.
----------------------
In spite of research challenges, the Internet survey method is revolutionary and
most innovative change in the field of research. There are ample number of ----------------------
websites by which a researcher can gather primary data, some are paid whereas
others are free. There are two types of sampling methods; they are probability ----------------------
and non-probability. The difference between these two methods is randomness,
----------------------
in other words, equal chance of preference. Both the methods can be employed
as conventional research, but the difference lies in the medium of contact. In ----------------------
conventional research, a researcher contacts either directly or indirectly with
the help of contact of instrument (probably a questionnaire), whereas in virtual ----------------------
research, a researcher only gets response through e-mail, web postings, etc.
----------------------
There are two types of online surveys with respect to websites: (1) free online
survey tools, (2) paid online survey tools. Following are some of the online ----------------------
survey website tools.
----------------------
Table 4.3 Websites for Free Online Surveys
Sr. No. Website ----------------------
1 www.surveymonkey.com
----------------------
2 www.freeonlinesurveys.com
3 www.kwiksurveys.com ----------------------
4 www.yellowsurveys.com
5 www.4qsurvey.com ----------------------
Apart from the above, there are paid surveys and these surveys tend ----------------------
to be operable for both surveyor and respondent. Usually, these surveys are
required by business firms of certain size, who shell out whole expenditure of ----------------------
the research. www.whichsurveys.com is one of the online paid survey portals,
----------------------
which boasts that surveys are directly paid by clients but not by third parties.
For example, www.commissionmonster.com hosts various surveys where ----------------------
individuals can respond by clicking on a web-banner. The screenshot given
below shows how these paid surveys are being hosted at the website. ----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 4.2: A sample Screenshot of Online Survey Ad
----------------------

Review of literature ----------------------

Review of literature is very essential for all virtual marketing research. ----------------------
Review of literature helps in two important ways, i.e., authenticity of the
research and formulation of an idea about the problem. It essentially gives a ----------------------
comprehensive idea about the research in hand, thereby facilitating to move
----------------------

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 Notes more specifically to realise objectives of the research. For example, Syed and et
al, affirms that young consumers in Malaysia are more prone to online shopping
---------------------- in their research ‘Young consumers online shopping: An empirical study’; this
can be one of the entries in literature review if someone is doing research related
---------------------- to age-wise perception towards online shopping. Apart from being useful for
---------------------- research need, it also shows how strong or feeble a specific research can be. A
researcher can find shortcomings or information gaps in the respective field of
---------------------- research in hand.
---------------------- Formulation of hypothesis
Formulation of hypothesis is one of the crucial issues to virtual marketing
----------------------
research. Indeed, it is one of the subjects sought after by researchers, which
---------------------- is difficult and needs special skill in statistics. The idea of hypothesis gives
scientific tinge to research, since it is one of the important requirements of
---------------------- scientific research. A hypothesis is a tentative proposition which is put forward
for test. Usually, in research there are two types of hypothesis – null hypothesis
----------------------
and alternative hypothesis. Very concisely, a null hypothesis can be an utmost
---------------------- unbiased statement upon the observation of the study in hand. The challenge
of any research is to either prove or disprove null hypothesis. In our previous
---------------------- example, a researcher can formulate hypothesis as under:
---------------------- Null Hypothesis = Ho = There is no significant difference among age
groups with respect to online shopping.
----------------------
Alternative hypothesis = H1 = There is significant difference among age
---------------------- groups with respect to online shopping.

---------------------- And while in the process of proving hypothesis, a researcher encounters

two types of errors. They are: (1) Type I error, (2) Type II error. Type I error is
---------------------- all about rejecting null hypothesis, when it is actually true; the contrary to this
is Type II. In other words, rejection of true null could be explained analogously
---------------------- like convicting an innocent person, contrary to this is setting guilty person
---------------------- free. The value at which we reject true null hypothesis is known as the level of
significance.
---------------------- Data analysis
---------------------- There are number of techniques to analyse the data, they are known
as quantitative techniques. These techniques range from very minimal
----------------------
computations like central tendency to gigantic exercises like simulations. In
---------------------- social sciences, based on the number of variables in hand, the data analysis can
be done in three ways:
----------------------
●● Univariate: Carries simple calculations like average, variance, etc.
---------------------- ●● Bivariate: Carries moderate techniques like correlation, regression, etc.
---------------------- ●● Multivariate: Carries advanced techniques like factor analysis,
discriminant analysis, hierarchical multi-factor cluster analysis, etc.
---------------------- Fortunately, nowadays there are novel software which could save time and
---------------------- effort of the researcher while carrying these exercises, even then a right insight

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 and acumen of researcher is a must while taking a decision upon these tools. It Notes
is necessary to know all these techniques to find and do right analysis in order to
realise the objectives. All the steps in research methodology are intertwined to ----------------------
realise the objectives, so decisions of data analysis can be decided beforehand
while designing the methodology. ----------------------

Finally at reporting stage, a researcher is expected to have abundant of ----------------------

psychological stamina to render a nice description to all research questions.
----------------------
A researcher is expected to answer the following questions before preparing a
report: ----------------------
●● What kind of study is this?
----------------------
●● What was the general purpose of the study?
●● How does answering the research question(s) add something new to what ----------------------
is already known? ----------------------
●● Who or what was studied?
----------------------
●● What were the major steps in performing the study?
●● What data were recorded and used for analysis? ----------------------
●● What kind(s) of data analysis was used? ----------------------
●● What were the results?
----------------------
●● What did the author conclude?
●● What particularly interesting or valuable things did you learn from reading ----------------------
the report?
----------------------
Check your Progress 3 ----------------------

----------------------
Multiple Choice Single Response.
1. The most important and critical task of data gathering is: ----------------------
i. Online survey ----------------------
ii. Identification of data source ----------------------
iii. Sampling
----------------------
iv. Questionnaire
----------------------

Activity 3 ----------------------

----------------------
Suppose a fast food centre in Pune would like to venture into online marketing
of its food products, but the owner does not know if the consumers would ----------------------
be interested in buying his products. How would you design a research ----------------------
methodology to know about the market’s response?
----------------------

----------------------

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 Notes Summary
---------------------- ●● Virtual marketing research is not exactly akin to conventional research.
Conventional research here means a research without intervention of
----------------------
Internet. Internet brought a lot of change on individual, organisational
---------------------- and societal level. The area of research has also changed drastically due
to Internet intervention for the past two decades. Although, methodology
---------------------- has remained subjective, Internet has brought huge change in searching,
identifying and gathering data which is essential to realise objectives of
----------------------
the research.
---------------------- ●● Doing research on virtual markets in not a simple task, it needs enormous
skills in Internet. Primarily, Internet is useful in doing two types of research
---------------------- – ontological and epistemological. While ontological research explores
---------------------- the data about being and existence of virtual markets, epistemological
research can unravel certain intricacies in knowledge and theory related
---------------------- to virtual markets.
---------------------- ●● The typical steps in virtual marketing research are: identification of
problem, objectives formulation, research methodology (which might
---------------------- include data requirements, sampling methods, survey, etc.), data analysis,
reporting. Internet is very handy for surveying and analysing data. There
---------------------- are very effective online tools for designing surveys and publishing them
---------------------- online.
●● In the final stage, a researcher is supposed to prepare a report, which will
---------------------- address the research questions. Realisation of objectives is the primary
focus in reporting.
----------------------

---------------------- Keywords
---------------------- ●● Virtual research: Research done using Internet.
---------------------- ●● Ontology: A scientific or metaphysical study which investigates the
principles of causes of being (nature of being and existence).
----------------------
●● Epistemology: The theory or science of the method or grounds of
---------------------- knowledge.
●● E-research: Research done online.
----------------------
●● Plagiarism: A piece of writing that has been copied from someone else
---------------------- and is presented as being your own work.
---------------------- ●● Memory: A device in the computer from where the data is retrieved.
●● Office suite: A set of DTP application programs useful in drafting office
---------------------- documents.
---------------------- ●● File system: A system for organising directories and files, generally in
terms of how it is implemented in the disk operating system.
----------------------
●● Email: Electronic mail, which is a service that sends messages on
---------------------- computers via local or global networks.

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 ●● Bit: The smallest unit of information a computer can hold. Notes
●● Byte: The amount of memory space used to store one character, which is
usually 8 bits. ----------------------
●● PDF: A file format and also a file which Adobe Reader can open. ----------------------
●● FAT: A file system, which contains a table of file allocation addresses ----------------------
associated with the disk.
●● NTFS: NT File System, the native file system for WindowsNT. ----------------------
●● URL: Uniform Resource Locator, the global address of documents and ----------------------
other resources on the World Wide Web.
----------------------
●● Hypothesis: A tentative proposition put forward for test, the veracity of
which is in question. ----------------------

----------------------
Self-Assessment Questions
----------------------
1. What is virtual marketing research? Discuss how it is different from the
conventional marketing research. ----------------------
2. Distinguish between business research and marketing research. ----------------------
3. What is research process? Write a brief note on each step.
----------------------
4. Write a short note on the essential skills required by a researcher.
----------------------
Answers to Check your Progress ----------------------
Check your Progress 1 ----------------------
Fill in the blanks.
----------------------
1. The research which is not scientific, does not address issues of a specific
area of an organisation, does not solve any problem, but only serves to ----------------------
promote knowledge is known as basic business research.
2. The research which is conducted to solve a specific business decision for ----------------------
any specific firm or organisation is known as applied business research. ----------------------
Multiple Choice Multiple Response.
1. As per Nuremberg code, the research should comply with certain ----------------------
principles like: ----------------------
i. Voluntary consent of human subjects
----------------------
ii. Role of individuals in ensuring quality of consent
iii. Outcome of the research ----------------------
Check your Progress 2
----------------------
Multiple Choice Single Response.
1. If journals in a field are sorted by number of articles into three groups, ----------------------
each with about 1/3rd of all articles, then the number of journals in each
----------------------
group will be proportional to 1:n:n2. This law is known as:
i. Bradford’s law ----------------------

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 Notes Multiple Choice Multiple Response.
1. Some of the following are important requirements to virtual marketing
---------------------- research:
---------------------- i. Local set-up
ii. Memory
----------------------
iii. Office suites and Pdf readers
---------------------- Check your Progress 3
Multiple Choice Single Response.
----------------------
1. The most important and critical task of data gathering is:
---------------------- i. Online survey
----------------------
Suggested Reading
----------------------
1. Bryman, Alan and Emma Bell. 2011. Business Research Methods. Oxford
----------------------
University Press.
---------------------- 2. Cooper, Donald and Pamela Schindler. 2005. Business Research
Methods. Tata McGraw-Hill Irwin.
----------------------
3. Kothari, C.R. 2004. Research Methodology. New Age International.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 The Internet Marketing Mix
UNIT

5
Structure:

5.1 Introduction
5.2 Product in the Internet Marketing Mix
5.3 Presenting Product Online
5.4 Brand Building
5.5 Price in the Internet Marketing Mix
5.6 Importance of Price Competitiveness to E-Business
5.7 Place in the Internet Marketing Mix
5.8 Internet Transactions and Physical Logistics
5.9 Promotion in the Internet Marketing Mix
5.10 Reaching the Consumer
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Explain the concept of Internet marketing
----------------------
• Discuss Internet marketing mix
---------------------- • Identify the various strategies of Internet marketing mix
---------------------- • Analyse online brand building

---------------------- • Explain promotion on the Internet

---------------------- 5.1 INTRODUCTION

----------------------
Marketing on the Internet can bring advantages to every business.
---------------------- Organisations must have a definite strategy to take advantage of this ever-
changing dynamic market. Marketing on the Internet brings many new
---------------------- opportunities for the businesses. The following are some of them:
---------------------- ●● Global reach.
●● 24-hours a day/365 days a year opening.
----------------------
●● Self-service.
---------------------- ●● Multimedia interaction.
---------------------- ●● Instant customer feedback.
---------------------- ●● Small and medium-size companies can compete with larger organisations
●● Reduction in cost like store cost, staff cost, location, etc.
----------------------
●● Speed of transactions.
---------------------- ●● Easy payment facility.
---------------------- Following are the advantages generally accrued to business organisation
by virtue of WWW:
----------------------
●● Reaching new customers who are geographically dispersed.
---------------------- ●● Improved speed of business transaction.
---------------------- ●● Reduced transaction per cost
●● New platform for entirely new products and services.
----------------------
●● Improved and expanded offline services.
---------------------- ●● Tracking departure and destination of products.
---------------------- ●● Information to customer at no cost, and be available 24 hours.

---------------------- The 14 Ps of Internet Marketing Mix

The conventional marketing mix (four Ps) is insufficient to fulfil marketing
---------------------- objectives of a firm. Since, virtual markets are projections of normal markets,
---------------------- they need to have an insight that surpasses this conventional outlook. Hence,

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 the conventional marketing mix theory cannot suffice, whereby it becomes Notes
necessary to stretch marketing mix theory by adding few more Ps to the
conventional four Ps theory. The following is the modern theory of marketing ----------------------
mix which suits business needs; they are also explained with respect to virtual
markets. ----------------------

1. Product: Various products can be launched in almost all parts of the ----------------------
world by mentioning product features, technical specifications, uses,
----------------------
installation procedures, prices, etc.
2. Price: Prices can be lowered as compared to traditional marketing. There ----------------------
are opportunities for organisations to adjust their prices according to
----------------------
supply and demand.
3. Promotion: Instead of glossy, costly print of product/service literature, ----------------------
design good website content in effective way at much more lower cost
----------------------
than traditional ways.
4. Place: The place is cyberspace. ----------------------

5. Positioning: With positioning, you can claim distinctive niche in the ----------------------
marketplace. Design your website distinctively from other billions of
websites. ----------------------

6. Packaging: Determine what to offer online. It may be simply a promotional ----------------------

package that specifies a physical product. The main objective of packaging
----------------------
is to make it easier to sell and distribute with minimum marketing cost.
7. Portals: A portal is a one-stop shop for information. It contains ----------------------
news, reference material, indexes, navigation tools, search facilities,
----------------------
personalisation tools, etc.
8. Pathways: Correct pathways to provide right direction to guide customer. ----------------------
Main dictionary and other things should be linked properly.
----------------------
9. Pages: Pages of website should be good enough to maintain customers’
interest in your website. It should not be too short or long so that customer ----------------------
can stay for a longer time. ----------------------
10. Personalisation: It is the ability of the user to personalise the layout of
home page. ----------------------

11. Progression: Progression is the art of guiding a user through information ----------------------
as how to pay for goods or services.
----------------------
12. Payments: Payment through various modes like credit cards and Internet
banking, etc. ----------------------
13. Processes: Customer must be satisfied before, during, and after sale. ----------------------
14. Performance: Performance in terms of online experience and satisfaction,
----------------------
business in terms of service delivered, revenue and profit.
----------------------

----------------------

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 Notes 5.2 PRODUCT IN THE INTERNET MARKETING MIX
---------------------- In case of traditional marketing, a marketer can show product physically
where there is a high degree of tangibility. Customer can see, touch and access
---------------------- the product/service. In online mode, this immediate tangibility disappears. In
---------------------- spite of the above fact, online product sales are increasing at higher rates. The
following are the advantages of selling product online:
---------------------- ●● Buyer can easily access product/service online at his/her convenient time,
---------------------- place, etc.
●● He can see the features of product/service online.
---------------------- ●● There are no salesman assumptions.
---------------------- ●● Payment, delivery, installation procedures and other things are explained
online.
----------------------
●● Product/service can be customised online.
---------------------- There are wider options for marketer to present product/service online in
much more economical way than traditional marketing. The greater reach to
---------------------- customer in all parts of the world at tremendous speed is the essential feature of
---------------------- Internet marketing.

---------------------- Check your Progress 1

----------------------
Multiple Choice Single Response.
----------------------
1. Portal contains:
---------------------- i. One-stop shop for information
---------------------- ii. News

---------------------- iii. Search facilities

iv. No navigation tools
----------------------
2. Payments can be made online through:
----------------------
i. Cheques
---------------------- ii. Credit cards
---------------------- iii. Cash
---------------------- iv. Demand draft

----------------------
5.3 PRESENTING PRODUCT ONLINE
----------------------
Products/services information, its technical specification, has traditionally
---------------------- existed in paper-based media. Due to the increasing integration of computers
---------------------- to search for new product/services and shortcomings of the paper-based media,
product information has also been made available in electronic media, such as
---------------------- CD-ROMs, DVDs and websites.

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 The Web, apart from being the latest, is perhaps the most promising Notes
platform to disseminate product/services information. The Web presents new
opportunities in organisation, presentation and distribution of product/services ----------------------
information. A number of manufacturers and service providers/suppliers have
chosen to promote their products on the Web due to the efficiency and the ----------------------
growing business value of the medium. Many companies, some of which are ----------------------
also the publishers of paper and CD-ROM based catalogues, have introduced
online catalogues. The Web, along with other Internet services such as e-mail and ----------------------
File Transfer Protocol (FTP) is gaining a greater acceptance in the architectural
community. A considerable number of organisations take advantage of online ----------------------
product information. ----------------------
Issues of Electronic Information
----------------------
Marketers must have sufficient understanding about the following issues
while disseminating information online: ----------------------
●● Ways of accessing, sorting, browsing, editing and selecting information ----------------------
●● Challenge of the emerging and changing medium of the WWW
----------------------
●● Coping with information explosion and increasing media options
----------------------
●● Virtual offices and distributed systems
Customer today likes online shopping because of high level of ----------------------
convenience, choice of broader selection, competitive prices and greater
access to information. Organisations who present products and services online, ----------------------
increase their customer value and build sustainable capabilities thus resulting in ----------------------
their profits.
----------------------
Addressing the Product/Services Information
Designers of online shops and those who present their product/services on ----------------------
websites should consider effects of information load. The notion of information
----------------------
load is directly related to concerns about whether consumers can be given too
much information in virtual shopping environments. Compared to conventional ----------------------
retail shopping, computer shopping augments the information environment of
virtual shopping by providing additional product information. This information ----------------------
could also be about competitive products, as well as various alternatives and
----------------------
attributes of each alternative.
There are two dimensions for information load: ----------------------
●● Complexity: It refers to the number of different elements or features of a ----------------------
website. It is directly related to increased information.
----------------------
●● Novelty: It refers to the unexpected, suppressing, new or innovative, or
unfamiliar aspects of the website. ----------------------
The novelty dimension has kept consumers exploring the shopping
----------------------
sites, whereas the complexity dimension has the potential to induce impulse
purchases. ----------------------

----------------------

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 Notes Factors to be considered while presenting products online are:
1. Importance of motivation of buyer: Understand the motivation of
----------------------
buyer. Most successful products/services are bought, not sold. Customer
---------------------- purchases only those products which they need and hope that may satisfy
their need. Importance should be given to the images and promises given
---------------------- by the marketer to the customer. Confirm that by your presentation your
prospective buyer will want or need your product/service.
----------------------
2. Convert customers’ need into the product/service characteristics:
---------------------- Position your product and service according to customer hopes and
desires.
----------------------
3. Explain the product/service clearly: Characteristics like full information,
---------------------- packaging, complete true information, which is easily understandable by
customer is required.
----------------------
4. Ensure that the benefits of the product are made loud and clear.
----------------------
5. Good-looking website: Build good relationship with customer with the
---------------------- help of user-friendly website. It should satisfy customer’s expectations.
---------------------- 6. Stages to build the brand through e-catalogue: Product/services
specification is a literature regarding technical specification, standards,
---------------------- performance, energy efficiency, installation details, uses, warranty
conditions, prices, etc. However, this literature can be effectively used for
---------------------- presenting product online.
----------------------
Activity 1
----------------------

---------------------- Visit the website of Flipkart and list the highlights of product presentation
therein.
----------------------

----------------------
5.4 BRAND BUILDING
----------------------
Branding is a very powerful component and an integral part of the
---------------------- business-building process. The brand image in consumer mind ensures quality
of product/services for repeated customer purchase from numerous generic
---------------------- brands.
---------------------- ●● Brand facilitates customers to take into account your product/service.
---------------------- ●● Brand builds customer’s fidelity and leads to replicate purchases.
●● Brand sends a positive message as to what your customer can expect.
----------------------
●● Brands make it easier for current customers or prospective customers to
---------------------- pass on good information to others.
●● Brand conveys an emotion.
----------------------
●● Brand adds value.
----------------------

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 How to build Brand Online Notes
The brand building can be done online in the following ways:
----------------------
●● Social networking
----------------------
●● Websites
●● Social media websites ----------------------
●● Blogs ----------------------
●● Through e-mail
----------------------
Different ways to build your brand
1. Audio-video marketing: Create video in innovative way so that viewer ----------------------
may feel interested to enter your site. Keep this interest throughout your ----------------------
presentation so that customer enjoys the presentation and may feel to use
product/service at least once. Your quality product/service may result in ----------------------
repeated purchase.
----------------------
2. Conversational marketing: Various methods of conversation can be
used effectively to build your brand, such as: ----------------------
●● Join online forums. ----------------------
●● Post a comment on various blogs.
----------------------
●● Create viral buzz online.
●● Market yourself by adding a blog. ----------------------
●● Use advanced techniques to gain RSS subscribers for maximum exposure. ----------------------
3. Social media marketing: Find your niche. Stay as ethical as you possibly ----------------------
can. Initiate social bookmarking campaigns online and create content to
support edits in Wikipedia. ----------------------
4. Banner advertising: According to target audience, identify potential ----------------------
sites’ demographics. Advertise on these sites. Get media breakouts.
5. Website: While designing website, do the following things: ----------------------

●● Always keep a consistent username. ----------------------

●● Always keep a consistent image. ----------------------
●● Maintain a consistent design.
----------------------
●● Use e-mail signatures.
●● Widen your presence. ----------------------
Investing in brand online is not spending money on the brand but building ----------------------
an entity that will resonate with customers and force them for repeated
purchase. Brand building helps in creating awareness, remain loyal for a ----------------------
longer time. ----------------------
6. Build your reputation online: Two factors should be considered to build
brand reputation – clearly defined strategy to reach your audience and ----------------------
identify tactics to use in the brand-building process. ----------------------

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 Notes 5.5 PRICE IN THE INTERNET MARKETING MIX
---------------------- Continuing progress in digitalisation and networking is manifested in the rapid
spread of Internet, information about product attributes and pricing-enabled
---------------------- organisations to easily produce and offer wide range of product versions to
their customers. By taking the advantage of the leveraging functions of Internet,
----------------------
businesses have been able to gain wide range of flexibility in pricing their
---------------------- products and services. Businesses must have pricing strategies for survival.

---------------------- The Internet has thrown many challenges in front of businesses. One can
notice price competition easily while surfing on the Net. Many costs, such as
---------------------- store cost, location cost, merchandising cost, staff cost, etc. have disappeared
for online stores, placing price pressures on traditional retailers. The Internet
---------------------- gives consumers the power to shop around for the best deal at the click of a
---------------------- button. Easy access to information through Internet helps to maintain prices
within the online world.
---------------------- General way of determining price can be shown in the following diagram:
----------------------

----------------------

----------------------

---------------------- Fig. 5.1: General Ways of Price Determination

---------------------- You cannot do business on the Internet without having a pricing strategy.
And though it may seem pretty simple on the surface, your company’s pricing
----------------------
strategy can easily mean the difference between thriving and going bankrupt. A
---------------------- lot of factors are involved.
Application benefits of e-pricing
----------------------
●● Reward loyal customers
---------------------- ●● Repeat visitors can be tracked
---------------------- ●● Easy payment mode
Marketers have to answer the following questions before arriving at
----------------------
pricing decisions:
---------------------- ●● What is in your site that visitors like?
---------------------- ●● Are they bargain hunters?
●● Do they look for excellence in customer service?
----------------------
●● Do they shop for products based on their prestige value?
---------------------- ●● What does it cost you to purchase (or produce) and market this product
or service?
----------------------
Pricing Objectives
---------------------- Firms pricing objectives include:
---------------------- 1. Current profits maximisation: Maximise short-run profit.

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 2. Maximise quantity: Seek maximum number of units sold or number of Notes
customers served.
----------------------
3. Increase market share: Gain maximum share.
4. Return on investment: Gain return on investment as quickly as possible. ----------------------
5. Price leadership: Maintain price leadership. ----------------------
6. New entrants: Discourage new entrant into the industry. ----------------------
7. Competitor’s price: Match competitor’s price.
----------------------
8. Customer interest: Create customer interest through their websites.
----------------------
9. Tangibility: Use price to make product or services visible.
10. Competitive advantage: Use price as a tool for competitive advantage. ----------------------
Price transparency has become an overnight issue for retailers with ----------------------
a growing number of customers who are using mobile. Mobile applications
and services in the market let consumers compare the prices of products and ----------------------
services across retail locations while on the go and in shopping mode. ----------------------
Consumers are increasingly turning to their mobile devices to find the
lowest prices while they are in stores or off the stores. According to a recent ----------------------
study by RSR Research, this growing trend is not only forcing more competitive ----------------------
behaviour between retailers, but also exposing different prices by geography
and channel within a retailer’s chain. This has created immense pressure on the ----------------------
organisation to rethink on their pricing strategy and cost transparency.
----------------------
Cost Transparency
----------------------
Cost transparency is a condition that exists when prices for competing
products are clearly tangible or visible and easily obtainable by buyers, sellers, ----------------------
competitors and regulators. As Internet is becoming more and more accessible
to consumers, they are able to compare the prices of numerous goods/services ----------------------
right from cell phones. However, it is not necessary for organisation to cut their
----------------------
prices to gain competitive edge. Organisations must be quality focused to gain or
retain customers. Consumers are ready to pay more for quality product/services. ----------------------

5.6 IMPORTANCE OF PRICE COMPETITIVENESS TO ----------------------

E-BUSINESS ----------------------
Internet is now playing an important role in the world’s economy. Now ----------------------
customers are sensitive to price. Therefore, it is important to pay attention to the
price competitiveness as compared to that of its competitors, if the businesses are ----------------------
to continue to grow. The competitiveness of an industry is a critical determinant
----------------------
of how well it performs in world markets. The potential of any country’s
business industry to develop will depend substantially on its ability to maintain ----------------------
competitive advantage in its delivery of goods and services to customers.
----------------------
Competitiveness is a general concept that encompasses price differentials
coupled with exchange rate movements, productivity levels of various ----------------------

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 Notes components of the industry and qualitative factors affecting the attractiveness
of product/service.
----------------------
International Competitiveness
---------------------- This refers to the ability of a firm to provide goods and services which
provide better value than their international rivals. As there is a constant threat
----------------------
from foreign competition, it is important for business to strive to improve
---------------------- competitiveness. Particularly with widespread of Internet technology, customers
are sensitive to price.
----------------------
Some determinants of international competitiveness are:
---------------------- ●● Price relative to competitors
---------------------- ●● Productivity - output per worker and unit costs
●● State of technology
----------------------
●● Investment in capital equipment
----------------------
●● Quality and reliability
---------------------- ●● Lead time
---------------------- ●● Entrepreneurship
●● Exchange rate
----------------------
●● Relative inflation
---------------------- ●● Tax rates and interest rates
---------------------- Increasing Competitiveness

---------------------- Firms can increase their international competitiveness by:

●● Rationalisation of output to get rid of high cost plants
----------------------
●● Relocating to places where labour costs are lower
---------------------- ●● Process innovation and product innovation
---------------------- ●● Incorporating the latest technology into investment
●● Sourcing from abroad where appropriate
----------------------
●● Seeking out new market opportunities
----------------------
●● Improving relationships with suppliers and customer
----------------------
5.7 PLACE IN THE INTERNET MARKETING MIX
----------------------
Due to online purchasing, online retailer has to ensure that product/
---------------------- service is delivered to the consumer within reasonable time. The Internet has
---------------------- greatest implication for place in marketing mix as Internet has global reach.
Place is supposed to signify the physical distribution channel. In case of online
---------------------- purchasing, Internet is either the point of contact or the point of sale. Many
online businesses have failed because of problems in distribution channel.
---------------------- Some of the implications are as follows:
----------------------

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 1. Place of purchase: Mc Donald and Wilson identify five options. They Notes
are:
----------------------
a. Seller-controlled sites are those that are main sites of the supplier
company which are e-commerce enabled. ----------------------
b. Seller-oriented are controlled by third parties, but represent the
----------------------
seller rather than providing a full range of options.
c. Neutral sites are independent evaluator intermediaries that enable ----------------------
price and product comparison and will result in the purchase being
----------------------
fulfilled on the target site.
d. Seller-oriented sites are controlled by third parties on behalf of the ----------------------
seller. ----------------------
e. Seller-controlled sites usually involve either procurement posting
on buyer-company sites or those of intermediaries that have been ----------------------
set up in such a way that it is the buyer who initiates the market ----------------------
making.
2. Navigation: There are three aspects of navigation that are key to achieving ----------------------
competitive advantage online. These are: ----------------------
a. Reach: This is the potential audience of the e-commerce site. Reach
----------------------
can be increased by moving from a single site to representation with
a large number of different intermediaries. Allen and Fermestad ----------------------
suggest that niche suppliers can readily reach a much wider market
due to search engine marketing. ----------------------
b. Richness: This is the depth or detail of information which is both ----------------------
collected about the customer and provided to the customer. This is
related to the product element of the mix. ----------------------
c. Affiliation: This refers to whose interest the selling organisation ----------------------
represents, consumers or suppliers. This particularly applies to
retailers. It suggests that customers will favour retailers who provide ----------------------
them with the richest information on comparing competitive
----------------------
products.
3. Localisation: Providing a local site, with or without a language-specific ----------------------
version is referred to as localisation. A site may need to support customers ----------------------
of different countries with different product needs, language and cultural
differences. ----------------------
4. New channel structures: The main types of phenomena that strategies ----------------------
need to be developed for are:
----------------------
a. Disintermediation: Is there an option for selling directly? Selling
direct can lead to the channel conflicts mentioned in the next section. ----------------------
When assessing this option, there will be a number of barriers and
facilitators to this change. ----------------------

----------------------

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 Notes b. Re-intermediation: The new intermediaries created through
re-intermediation, for example, Lastminute.com or JamJar.com
---------------------- should be evaluated for suitability for partnering with for affiliate
arrangements. These intermediaries receive a commission on each
---------------------- sale resulting from a referral from their site.
---------------------- c. Counter-mediation: Should the organisation partner with another
independent intermediary or set up its own independent intermediary?
----------------------
For example, a group of European airlines have joined forces to
---------------------- form Opodo (www.opodo.com) which is intended to counter
independent companies such as Lastminute.com (www.lastminute.
---------------------- com) or eBookers (www.ebookers.com) offering discount fares.
---------------------- 5. Channel conflicts: A significant threat arising from the introduction of
an Internet channel is that while disintermediation gives a company the
---------------------- opportunity to sell direct and increase profitability on products, it can also
threaten distribution arrangements with existing partners. Such channel
----------------------
conflicts are described by Frazier (1999), and need to be carefully managed.
----------------------
Check your Progress 2
----------------------

---------------------- Multiple Choice Multiple Response.

---------------------- 1. There are three aspects of navigation that are keys to achieving
competitive advantage online. These are:
----------------------
i. Reach
---------------------- ii. Readiness
---------------------- iii. Richness

---------------------- iv. Affiliation

2. Customer today likes online shopping because of:
----------------------
i. High level of convenience
----------------------
ii. Choice of broader selection
---------------------- iii. Competitive prices
---------------------- iv. Greater complexity of accessing information

---------------------- Multiple Choice Single Response.

1. Price transparencies have become an overnight issue for retailers with
---------------------- a growing number of customers who are using:
---------------------- i. Newspapers
---------------------- ii. Magazines
iii. Mobile
----------------------
iv. Books
----------------------

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 5.8 INTERNET TRANSACTIONS AND PHYSICAL Notes
LOGISTICS
----------------------
After Internet transaction, fast delivery and higher flexibility will play
an important role in logistic to handle business processes via the Internet. ----------------------
Over the last decade, too much emphasis has been laid on marketing as a ----------------------
means of creating customers, identifying and anticipating market needs. Other
functional areas have been neglected. This tendency is very noticeable in the ----------------------
interface between marketing and distribution. A recognition of the key role that
distribution can play in the company’s marketing effort can be the first step to ----------------------
a new, integrative approach to the management and supply of markets, based ----------------------
on the development of logistics, or total ‘‘systems’’ approach to the company’s
activities. The marketing activities should be harmonised along with production, ----------------------
communication and distribution department.
----------------------
Following are the specific activities for key decision:
----------------------
●● Facilities: Plant, warehouse, location, size and design.
●● Communication: Way of order processing, data transmission and data ----------------------
processing
----------------------
●● Unitisation: Packaging, merchandising, storage handling, inventory,
transport implications. ----------------------
●● Inventories: Raw material, component, work-in-process, semi-finished
----------------------
and finished goods stock.
●● Transportation: The physical movement of material into, within and out ----------------------
of the company.
----------------------
Organisations require more hardware and software to handle logistics via
Internet. Logistics require more sophisticated system according to the demands ----------------------
of their customers. In order to stay competitive, information technology will have
to become the core competence. It must result in low cost. Financial benefits are ----------------------
expected to both an organisation and customers from faster processes, higher
----------------------
flexibility and better service level to reduce the cost.
To reduce the cost, organisation expects atomisation of routine activities ----------------------
due to certain applications. Most companies also hope to take benefits out of
----------------------
better informational background to reduce costs in various other areas, especially
marketing (customer relationship management). According to many interview ----------------------
partners, better informational infrastructure might also lead to outsourcing of
logistics functions, since communication with service providers is improved. ----------------------
Besides transport and warehousing, certain value-adding activities such as
labelling and packing are likely to be outsourced. For future, some companies ----------------------
expect order management to be outsourced to achieve bundling of activities to ----------------------
one service provider. Also special logistics systems like those for spare parts
seem likely to be handed over to services providers. ----------------------
Internet is widely accepted for many different business processes. Its
----------------------
importance will still continue to grow, even after the crash of Internet related
businesses at the world’s stock markets. It becomes obvious, that information ----------------------

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 Notes technology is a logistical core competence with increasing importance,
especially for logistics services providers. Physical processes will have to be
---------------------- adapted to fulfil the customers’ demands in the Internet era, viz., velocity and
flexibility. Due to information technology and the Internet logistics, services
---------------------- become interchangeable commodities.
---------------------- As a consequence of the transparency resulting from the Internet,
competition will increase. Nevertheless, industrial companies will still stick to
---------------------- long-term relationships with logistics services providers to cover their basic
logistics services demands in the future rather than acquire logistics services on
---------------------- spot markets whenever needed. However, marketplaces where logistics services
---------------------- are traded will be important for industrial companies to cover surplus demands.
Impact of Internet on Logistics
---------------------- Integrated logistics system is abetted by information technology.
---------------------- Information system plays a critical role in managing market logistics, especially
computers, point-of-sale terminals, uniform production barcodes, electronic
---------------------- data interchange and electronic funds transfer. These developments have
shortened the order-cycle time, reduced clerical labour, reduced the error rate
---------------------- in document, and provided improved control of operation. They have enabled
companies to make promises such as “the product will be at dock 25 at 10:00
----------------------
a.m. tomorrow” and control this promise through information.
---------------------- Steps in Marketing Logistics Planning
●● Deciding on the company’s value proposition to its customers
----------------------
●● Deciding on the best channel design and network strategy for reaching
---------------------- the customer
●● Developing operational excellence in sales forecasting, warehouse
---------------------- management, transportation management and materials management
---------------------- ●● Implementing the solution with the best information system, equipment,
policies and procedure
----------------------
5.9 PROMOTION IN THE INTERNET MARKETING MIX
----------------------

---------------------- If customer is unaware of product/service provided by the organisation, then

it is difficult to survive in today’s competitive world. Marketer has to stimulate
---------------------- the target audience to buy your product/service. Marketer has to manage this
within a budget which an organisation can afford. Internet is an online medium
---------------------- where marketing focuses for online promotions and online campaign. The
---------------------- process of promoting is also different from other kinds of promotions. Internet
marketing builds and promotes a website putting simply web banners. Online
---------------------- marketing requires a comprehensive strategy for an effective marketing that
synergises a given company’s business model and sales.
----------------------
There are numerous online promotion strategies.
---------------------- 1. Create website: First create and then promote your website. Taking into
---------------------- consideration the target customers, design website which provides all
related content. By useful content, customer can judge whether a product/
---------------------- service can satisfy their needs.

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 2. Unique experience: Find out different techniques on how you can offer Notes
and provide your visitor something very much unique and different from
what they normally experience on other websites. ----------------------
3. Sponsored search: Display your advertisement at the top of the search ----------------------
engine so that potential customers search for “keyword” and your
advertisement appears at the top of the results page. ----------------------
4. Local advertising: Register your business in Yahoo’s business directory. ----------------------
So if you wish to promote products in specific regions next to specific
search keywords, this is a much targeted geographical service. ----------------------
5. Search engine: Registering your site to search engines is the promotion ----------------------
of the earliest ways that should be done. All Internet users utilise search
engines to find what is on the Internet. Search engines can bring in up to ----------------------
60% of all visitors on your site if your site can rank the top 10 keywords
of your site’s search results on popular search engine, such as Yahoo.com ----------------------
or Google.com.
----------------------
6. Viral marketing: Viral marketing is a marketing concept that mimics
the work of computer viruses that can work alone, spread quickly and ----------------------
automatically. The viral marketing is also often referred to as viral
----------------------
advertising and buzz marketing. Viral marketing is used as a special
marketing technique that uses social networks to increase brand awareness ----------------------
to achieve marketing objectives. Viral marketing or viral traffic is the
concept of “win solution”. ----------------------
7. Advertising network: A web of companies, they may be acting from a ----------------------
central server and get connected to different websites to promote their
products. An advertising network is media neutral, which means the ----------------------
concept of media networking can be attributed to any form of media,
viz., television ad network, print ad network, etc. There are three types ----------------------
of ad networks: vertical networks, blind networks and targeted networks. ----------------------
Vertical networks are high quality ads related to a particular portfolio,
characterised by revenue sharing, full transparency as to where the ----------------------
advertisements will be published. Blind networks are also high quality
ads operated based on sharing, but the place or location of advertisements ----------------------
are to be relinquished by the marketer. Targeted networks are also called
----------------------
next-generation or 2.0 ad networks. They focus on specific targeted
technologies like behavioural and contextual rather than upon server. ----------------------
8. Email marketing: Email marketing is a direct marketing technique by
which electronic mails (e-mails) are used to contact someone (might be a ----------------------
customer or any individual in general) in order to elicit a response. ----------------------

5.10 REACHING THE CONSUMER ----------------------

It has been speculated that more money will be spent on sales and ----------------------
marketing by 2015 in most part of the world because of generation V. In the ----------------------
light of generation V, it is important for marketer to understand how consumer
behaves in digital environment. What signal to look for when choosing the ----------------------

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 Notes right message for a particular consumer? Advertising in virtual space is about
content, conversation and community. The bulk of failures were due to most
---------------------- marketers’ inability to change with the times and devise strategies that take
advantage of the new paradigm of conversational marketing. Consumers are
---------------------- increasingly in control over their media content. They won’t tolerate intrusive advertisements,
---------------------- and Wee World has made it easy to turn the advertisements into branded content that consumers
embrace and make a part of their personalised experience. Marketers need to understand
---------------------- that it is not brand that people dislike; there are certain ways (perhaps the way
it is projected) about the brand which injures consumer’s sentiments.
----------------------
Millions of people have become familiar with these tools through sites
---------------------- like Facebook, Wikipedia and Second Life or by writing their own blogs. And
a growing number of marketers are using Web 2.0 tools to collaborate with
----------------------
consumers on product development, service enhancement and promotion. But
---------------------- most companies still don’t appear to be well versed in this area.
A marketing manager at some company said that today’s effective way to
----------------------
obtain consumer feedback and ideas for product development is through online
---------------------- communities, since, the online communities are much faster and cheaper than
the traditional focus groups and surveys used in the past. The conversations
---------------------- consumers have with each other result in some of the most interesting insights,
including gift ideas for specific occasions, such as a college graduation, and the
----------------------
prices consumers are willing to pay for different gifts.
---------------------- Seven Ways to reach Consumers
---------------------- 1. Give consumers a reason to participate. Consumers have to have some
incentive to share their thoughts, opinions and experiences on a company
---------------------- website. Make sure that consumers can use the online community to
---------------------- network among themselves on topics of their own choice. That way, the
site isn’t all about the company, it’s also about them. For instance, a toy
---------------------- company that created a community of hundreds of mothers to solicit their
opinions and ideas on toys also enables them to write their own blogs on
---------------------- the site, a feature that many use to discuss family issues.
---------------------- Other companies provide more direct incentives: cash rewards or
products, some of which are available only to members of the online
---------------------- community. Still others offer consumers peer recognition by awarding
---------------------- points each time they post comments, answer questions or contribute to
a wiki entry. Such recognition not only encourages participation, but also
---------------------- has the benefit of allowing both the company and the other members of
the community to identify experts on various topics.
----------------------
In many companies, a moderator plays a critical role in keeping
---------------------- conversations going, highlighting information that’s important to a
discussion and maintaining order. That’s important because consumers
---------------------- are likely to drift away if conversations peter out or if they feel that their
---------------------- voices are lost in a chaotic flood of comments. The moderator can also
see to it that consumer input is seen and responded to by the right people
---------------------- within the company.

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 2. Getting Sociable Notes
a. A new approach: Marketing these days is more about building a
two-way relationship with consumers. Web 2.0 tools are a powerful ----------------------
way to do that. ----------------------
b. The Pioneers: A growing number of companies are learning how to
collaborate with consumers online on product development, service ----------------------
enhancement and promotion. ----------------------
c. The Lessons: From these early efforts, a set of marketing principles
have emerged. Among them are get consumers involved in all ----------------------
aspects of marketing, listen to and join the online conversation ----------------------
about your products outside your site, and give the consumers you
work with, plenty of leeway to express their opinions. ----------------------
3. Resist the temptation to sell, sell and sell. Many marketers have been ----------------------
trained to bludgeon consumers with advertising to sell, sell, sell anytime
and anywhere consumers can be found. In an online community, it pays ----------------------
to resist that temptation. When consumers are invited to participate in
online communities, they expect marketers to listen and to consider their ----------------------
ideas. They don’t want to feel like they’re simply a captive audience for
----------------------
advertising and if they do they’re likely to abandon the community.
4. Don’t control, let it go. In an online community, every company needs to ----------------------
find an effective balance between trying to steer the conversation about its
----------------------
products and allowing the conversation to flow freely. In general, though,
the managers believe that companies are better off giving consumers ----------------------
the opportunity to say whatever is on their minds, positive or negative.
Moderators can keep things running smoothly and coherently, but they ----------------------
shouldn’t always keep the conversation on a predetermined track. The
more that consumers talk freely, the more a company can learn about how ----------------------
it can improve its products and its marketing. ----------------------
5. Find a “marketing technopologist”. The term “technopologist” is derived
from a new and 21st century term “technopolis”. It is indeed the integration ----------------------
of technology and politics. In virtual marketing, this term is widely used
----------------------
for someone who is skilled in both technology and community psychology.
A person who is skilled in these two areas perhaps could manage about ----------------------
all marketing activities through social communities. It is indeed in its
infancy, but expected to become a gigantic platform to launch virtual ----------------------
marketing tactics.
----------------------
6. Embrace experimentation. One Web 2.0 strategy does not fit all, and
sometimes the best way to find out what’s best for a given company ----------------------
is to try something out and see what happens. Blogs, wikis and online
communities are among the tools that companies are most commonly ----------------------
using for marketing, but there are other ways to reach consumers. For ----------------------
instance, Second Life, where millions of users interact with each other
through avatars. Companies can sell their goods and services and sponsor ----------------------
events in Second Life just as they do in the real world; could be one of the
best options for virtual marketing activities. ----------------------

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 Notes 7. Internet adventurers. There are dozens out there with millions of users
signed up. They cater to everyone from hardened gamers to children
---------------------- taking their first web steps.
----------------------
Check your Progress 3
----------------------
Multiple Choice Multiple Response.
----------------------
1. In today’s market, the marketing activities should be harmonised
---------------------- along with:
---------------------- i. Production
---------------------- ii. Communication
iii. Distribution
----------------------
iv. Competition
----------------------
Fill in the blanks.
---------------------- 1. Viral marketing is also often referred to as viral advertising and
---------------------- ______ marketing.
2. Online communication is much __________ and _________ than
---------------------- traditional focused groups and survey used to collect consumer
---------------------- feedback.

----------------------
Activity 2
----------------------

---------------------- Check the websites of two e-retailers and list the promotional strategies
followed by them.
----------------------

---------------------- Summary
----------------------
●● Being on the Internet does not have to mean maintaining your own World
---------------------- Wide Web site. In fact, for about 86% of the businesses, people who are
on the Internet say that they use it mainly for gathering information,
---------------------- comparing product/service with other alternatives, price comparison, etc.
---------------------- ●● So there is a need to design various strategies to boost your business
effectively. Internet marketing is inexpensive when examining the ratio
---------------------- of cost to the reach of the target audience. Companies can reach a wide
audience for a small fraction of traditional advertising budgets. The nature
----------------------
of the medium allows consumers to research and purchase products
---------------------- and services conveniently. Therefore, businesses have the advantage of
appealing to consumers in a medium that can bring results quickly. The
---------------------- strategy and overall effectiveness of marketing campaigns depend on
business goals and cost-volume-profit (CVP) analysis.
----------------------

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 ●● Internet marketers also have the advantage of measuring statistics easily and Notes
inexpensively; almost all aspects of an Internet marketing campaign can be
traced, measured and tested, in many cases through the use of an ad server. ----------------------
The advertisers can use a variety of methods, such as pay per impression,
pay per click, pay per play, and pay per action. Therefore, marketers can ----------------------
determine which messages or offerings are more appealing to the audience. ----------------------
The results of campaigns can be measured and tracked immediately because
online marketing initiatives usually require users to click on an advertisement, ----------------------
to visit a website and to perform a targeted action.
----------------------
Keywords ----------------------
●● Internet marketing: Promotion of product/services over Internet. ----------------------
●● Pay per click/impression: Advertisements for brands and products is
done on pre-decided websites and help in generating leads for companies. ----------------------
●● Search engine optimisation: The process of improving the visibility of ----------------------
a website or a web page in search engines via the “natural” or un-paid
(organic or algorithmic) search results. ----------------------
●● E-commerce: A model whereby goods are sold directly to consumers
----------------------
(B2C), businesses (B2B) or from consumer to consumer (C2C).
●● Lead-based websites: A strategy whereby an organisation generates value ----------------------
by acquiring sales leads from its website, similar to walk-in customers in
retail world. ----------------------
●● Affiliate marketing: A process wherein a product or service developed ----------------------
by one entity is sold by other active sellers for a share of profits.
●● Website: A collection of one or more web pages grouped under the same ----------------------
domain name.
----------------------
●● Blog: A type of website or part of a website supposed to be updated with
new content from time to time. ----------------------

Self-Assessment Questions ----------------------

----------------------
1. Explain the concept of Internet marketing.
2. How are the 4Ps of marketing mix as given by E. Jerome McCarthy used in ----------------------
Internet marketing? Explain.
----------------------
3. What is brand management? Explain how branding is done in online
marketing? ----------------------
4. How is customer contact done in an online marketing scenario? Explain
----------------------
ways of reaching a customer.
----------------------
Answers to Check your Progress
----------------------
Check your Progress 1
Multiple Choice Multiple Response. ----------------------
1. Portal contains: ----------------------
iv. No navigation tools

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 Notes 2. Payments can be made online through:
ii. Credit cards
----------------------
Check your Progress 2
---------------------- Multiple Choice Multiple Response.
---------------------- 1. There are three aspects of navigation that are keys to achieving competitive
advantage online. These are:
----------------------
i. Reach
---------------------- iii. Richness
---------------------- iv. Affiliation
2. Customer today likes online shopping because of:
----------------------
i. High level of convenience
---------------------- ii. Choice of broader selection
---------------------- iii. Competitive prices
Multiple Choice Single Response.
----------------------
1. Price transparencies have become an overnight issue for retailers with a
---------------------- growing number of customers who are using:
---------------------- iii. Mobile

---------------------- Check your Progress 3

Multiple Choice Multiple Response.
----------------------
1. In today’s market, the marketing activities should be harmonised along with:
---------------------- i. Production
---------------------- ii. Communication
iii. Distribution
----------------------
Fill in the blanks.
----------------------
1. Viral marketing is also often referred to as viral advertising and buzz
---------------------- marketing.
2. Online communication is much faster and cheaper than traditional focused
----------------------
groups and survey used to collect consumer feedback.
----------------------

---------------------- Suggested Reading

---------------------- 1. Belch, George E. and Michael A. Belch. 2004. Advertising and Promotion:
An Integrated Marketing Communications Perspective. New Delhi: Tata
---------------------- McGraw-Hill.
---------------------- 2. Carter, Ben, Gregory Brooks, Frank Catalano and Bud E. Smith. 2007.
Digital Marketing for Dummies. John Wiley & Sons.
----------------------
3. Clown, Kenneth and Donald Bach. 2002. Integrated Marketing
---------------------- Communications. Prentice Hall.

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 Customer Experience on the Web
UNIT

6
Structure:

6.1 Introduction
6.2 Organisational Learning
6.3 Interactive Communication with Customers
6.3.1 Service Capabilities
6.4 Convenience
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Analyse customer experiences on the web
----------------------
• Discuss organisational learning
---------------------- • Do interactive communication with customer
---------------------- • Describe convenience of online shopping

---------------------- 6.1 INTRODUCTION

---------------------- The Web is a world in its own. There are more than 30 million commercial
---------------------- websites and several billions of web pages. These socio-technological
innovations have introduced a new way to interact. People are able to collaborate
---------------------- and interact freely through tools like different social networking websites,
blogs, Wikis, etc.
----------------------
In order to adopt today’s trend and attract and retain lifelong customers,
---------------------- a more attractive, effective and easy-to-use website should be developed which
should lead to a memorable shopping experience by the customer. For this,
----------------------
customer centric sales strategy should be implemented. Superior service and
---------------------- easy-to-use customer interaction creates satisfying customer experience.
There are different ways through which a company can interact with the
----------------------
customer, such as:
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 6.1: Organisation’s Contact Points with the Customer
----------------------
But the Internet website is one of the better and effective ways of
---------------------- interaction with customers in today’s world.
---------------------- For this, a good coordination between the Web and customer is needed.
Web can be one of the socio-innovative technologies to reach to the customer
---------------------- in the easy and most effective way. The online shopping experience is used by
---------------------- customers nowadays. But website promotion and selling is not straightforward,
with that traditional communication tools should be used for better approach.
---------------------- Nowadays, Web marketers have a good opportunity as online shopping

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 experience is done by customers. But Web marketers are still learning what Notes
works and what does not. The promotional strategy which works this year may
not work next year. ----------------------
A greater user experience = increased site “success” ----------------------
Every customer who had a bad experience on website tells 10 other
----------------------
people about it. In one of e-commerce surveys, it was found that 62% of online
shoppers have given up at least once while looking for products on the website. ----------------------
And 42% of those shoppers actually abandoned the Internet and made their
purchases through traditional retail channels. ----------------------
Interactive Communication ----------------------
There are several things that can be done to make a website more customer ----------------------
friendly through effective interactive communication with customers. The
company website should have company’s address, phone number, fax number ----------------------
and email address, its working hours and days. The Web should give 24 hours
and seven days access to business. The idea should be given to the customer ----------------------
about processing their order or answering email request. And always fast and ----------------------
prompt response to the request or order is the salient feature of any website.
Search Functionality ----------------------

To make customer use more websites and make more purchases online, ----------------------
they should make the websites more easy and user-friendly. The site should
----------------------
always be according to the convenience of customer and not company’s
organisational structure. ----------------------
It’s better to have such uncomplicated and easy website where products
----------------------
can be located easily, for example, amazon.com.
Sometimes some problems and checkout difficulties may cause irritation ----------------------
and frustration. That may result in frustration and aborting of such irritating
----------------------
transactions and websites. To have more sales on websites, these points of
irritations and frustration should be determined and reduced. Security is again ----------------------
one of the important parameters which should always remain a primary concern
for Web shopping, so security and privacy policies should be posed. ----------------------
Customers do not like surprises while shopping and so detailed information ----------------------
about the product and its price should be given on the website. Customers
want to know about total taxes and shipping and handling charges before they ----------------------
complete the transaction. ----------------------
Set Frequently Asked Questions (FAQ) Page
----------------------
A separate frequently asked question page should be set up. The goal
of the FAQ page is that it gives people visiting the site immediate answer to ----------------------
some of the questions asked. The page also gives answers to questions asked
in the past by the customer. If companies don’t have customers yet and if it is ----------------------
a new website, then questions which are common about the product should be ----------------------
enlisted.
----------------------

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 Notes 6.2 ORGANISATIONAL LEARNING
---------------------- Web 2.0 is a set of trends and tools for using the Internet. Web 2.0 has
enabled interactivity and gathering of knowledge through experience and
---------------------- practice at a global level. These are socio- technological innovations which
---------------------- help to interact freely through tools like social networking sites, blogs, Wikis
and RSS.
---------------------- Organisations are unique in several respects, from their sizes to the
---------------------- industries in which they operate. They are unique in the way they understand
their internal and external environments and adapt accordingly. Employees
---------------------- are directly involved in this adaptation, whether they are top managers or field
workers. To close the gap between their practices, that what is actually done,
---------------------- and the process that is formally and systematically organised in the organisation,
---------------------- proper and continuous training is needed. Thus, organisations are in a consistent
search for new and dynamic ways to learn effectively and collectively.
---------------------- The collaboration characteristics of Web 2.0 offer new ways in which this
---------------------- need can be addressed. This brings us to the method or process of learning.
Web 2.0 technology has many more channels of communication such as
----------------------
blog, video-sharing capabilities, podcasting, etc. These had opened more ways
---------------------- of better communication. A result of this is many social networking sites like
facebook.com, myspace.com, etc. This is also used as a platform to improve
---------------------- customer support. Many companies and marketers are using this tool for
improving their customer support.
----------------------
Second, although the need is recognised, the systems and tools that enable
---------------------- such learning needs must also be given recognition in order to benefit from
them.
----------------------
Organisations have formal and informal learning methods that they
---------------------- adopt. Formal methods are structured and created with the purpose of learning.
These include meetings, discussions and conference. Many organisations
----------------------
have deployed Learning Management System (LMS) for the purpose of
---------------------- structuring the learning process. These systems are designed to manage user
learning interventions. Informal methods are built on the informal means of
---------------------- communication; they are unstructured and depend on situation to be created.
---------------------- In knowledge-driven companies like software houses, learning is an
important aspect to their business strategy and employee skills. Not all employees
---------------------- in such settings have the same skills and knowledge. Hence, managers in
---------------------- software companies encourage information sharing in a less formal setting. In
this respect, there are claims that Web 2.0 can fill the gap with social aspects of
---------------------- the content, supported by connectivity of people and knowledge sharing.

---------------------- Poorly designed organisations, ineffective processes, bureaucratic

systems, unaligned rewards, unclear customer/partner focus, fuzzy visions,
---------------------- values and purpose, unskilled team leaders and members, cluttered goals and
priorities, low trust levels and weak measurements and feedback loops all cause
---------------------- communication problem.

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 Education and communication strategies influence the energy levels for Notes
change and improvement. Strong communications keep everyone focused on
goals and priorities while providing feedback on progress and course corrections ----------------------
are needed. Effective communication strategies, systems and practices have a
huge and direct effect on organisational learning and innovation. ----------------------

Characteristics ----------------------
Effective communication strategies, systems and practices: ----------------------
• Deliver clear and consistent messages to all parts of the organisation.
----------------------
• Simple, direct and fast with a minimal number of filters and interpreters.
----------------------
• Inspiring and energetic.
• User-friendly. ----------------------

• It provides information, experiences, learning, ideas, direction and ----------------------

feedback within the organisation.
----------------------
• Provide multiple channels.
----------------------
• Possible only in an atmosphere of trust and openness.
Many managers do not appreciate the highly strategic role communication ----------------------
plays in their improvement efforts. ----------------------

Check your Progress 1 ----------------------

----------------------
Fill in the blanks.
----------------------
1. ____________________ and easy-to-use customer interaction creates
satisfying customer experience. ----------------------
2. The websites should be made more __________ to make customer ----------------------
use more websites and make more purchases online.
----------------------

Activity 1 ----------------------

----------------------
Elaborate on some of the online shopping websites, which built a good
business at the global level. ----------------------

----------------------
6.3 INTERACTIVE COMMUNICATION WITH CUSTOMERS ----------------------
The marketer should create and manage to have good and effective ----------------------
customer communication for customer support and retaining the customers. In
this way, a marketer can have a human touch and can fulfil the customer’s ----------------------
needs. The marketer must emphasise on streamlining the customer service and
communications to deliver more accurate information. ----------------------

Interactive communication will help to have more effective and efficient ----------------------

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 Notes customer service. Interactive communication products permit the seller to deliver
documents in real-time ad that too through the customers’ preferred channel
---------------------- like email, SMS, fax and print and can be queued up for batch processing for
production saving.
----------------------
Internet is a miracle, which is used in business for providing customer
---------------------- service. The applications of Internet offer number of opportunities for making
money. The use of these applications make the customer service faster, cheaper
----------------------
and more profitable.
---------------------- Having online support centres is the right way to create customer loyalty
that will last lifelong. So Internet customer service can be turned into a profitable
----------------------
process.
----------------------

----------------------

----------------------
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 6.2: Interactive Communication with the Customer
----------------------
1. Automate everything: The entire sales process becomes automatic when
---------------------- the business is conducted on the Internet. Where customer service is concerned,
one can leverage the power of automation by using tools like auto responders.
---------------------- Auto responders deliver the seller transactional emails during and after the sales
process and it works even at night while the seller is asleep. Automation works
----------------------
in favour of the seller and it lets the customers feel reassured that the seller has
---------------------- taken all the necessary measures to make their purchases a cinch.
2. Real-time support with VoIP: VoIP is a technology that has made real-
----------------------
time customer support over the Internet a reality. These are easily seen in some
---------------------- of the shopping websites in the form of an icon displayed as, “click here”,
“click for live online support”. These icons connect the customers directly to
---------------------- a sales representative for live interaction. By this, the buying process becomes
easier. This technology is highly effective for improving the seller’s online
----------------------
conversation rate. It provides better services to the customer. One such example
---------------------- is LivePerson.com.
3. Online FAQ: As discussed in the earlier sections, the most frequently asked
----------------------
questions will be on one page so that customers can access this before filling
---------------------- out the contact form for inquiries. Customers go through this FAQ to clarify the

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 common doubts and questions. It also frees upon the marketer time required Notes
to attend to such common doubts and questions. And in spite of this, if the
customer has any enquiry, he can ask them online which will be answered. ----------------------
4. Display the seller’s contact information prominently on the website: The ----------------------
seller must appreciate that it’s hard enough for any online customers to come
to a buying decision, let alone struggle to find the seller’s contact information. ----------------------
Therefore, the seller must publish his contact information prominently on
----------------------
the website so that the customers have no trouble finding it. Armed with this
information, the customers would have a quick access to the seller if they face ----------------------
any problem during the buying process. In turn, even the seller will get the
opportunity to allay the fears of his customers and guide them through the sale. ----------------------
5. Prepare an online troubleshooting web page: Whether one is selling a ----------------------
product or offering a service, the idea of preparing an online troubleshooting
web page complements FAQ page very well. The troubleshooting web page ----------------------
provides the details of more technical questions that the customers may want to
----------------------
ask. These questions are explained clearly on the website. Such a facility can
provide good customer support. ----------------------
6. Use of Web technology: The Web 2.0 technology, already discussed in
----------------------
previous sections, is one effective way used in marketing. The marketer can also
use blogs to interact with his/her customer. The seller or marketer can also invite ----------------------
customers to interact via messages or online chat room. Online video-sharing
capabilities have also made business very easy as the marketer can create step- ----------------------
by-step video instructions to teach customers on how to use their products or
----------------------
services. The potential of this technology is unlimited. This technology is a
modern way to have effective business at ease and at a cheaper rate. ----------------------
7. Outsource your customer service: Internet has attracted a very large pool ----------------------
at a very low cost. This has afforded even small businesses the opportunity to
outsource their most time-consuming activities to individuals or companies that ----------------------
specialise in these area, freeing up the time for business owners to concentrate
on growing their business. ----------------------

In the customer service field, salesforce.com has taken the online business ----------------------
world by storm with its virtual customer service representatives managing every
aspect of customer service professionally. It gives the seller the edge because ----------------------
now he/she can have a CRM team that can equal that of a Fortune 500 CRM ----------------------
department at his/her disposal.
These are some of the ways with which we can improve the Internet ----------------------
customer service. This is possible by the use of number of Internet applications ----------------------
being made available every day.
----------------------
6.3.1 Service Capabilities
The services of any organisation can be improved by the use of some of Internet ----------------------
technologies for better customer service. Today in this highly competitive
----------------------
world with good quality of product, better services are also required to sustain
the customer. This innovative technology helps to provide better service to ----------------------

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 Notes the customer with ease and at low cost. These better service capabilities will
help to have good relationship with customer and thus retain customer with the
---------------------- organisation.
----------------------
Activity 2
----------------------

---------------------- Check the Internet customer service of any nationalised bank and list down
how it can be made more effective to improve the business.
----------------------

---------------------- 6.4 CONVENIENCE

---------------------- Convenience refers to the ease of buying and lack of efforts related to
online shopping experience.
----------------------
With the increasing number of customers worldwide, marketplace, web
---------------------- and online shopping is used as it is very convenient and can be done by a mere
---------------------- click. New innovative technology is now changing the shopping from products
on racks and shelves and dealing with salesman to just surfing and clicking the
---------------------- purchases from anywhere in the world.

---------------------- When designing and framing any e-commerce site, it should be

remembered that customers are online because they have limited time and want
---------------------- to make purchases quickly and with ease.
---------------------- So before designing a website or launching a web store, some important
factors should be remembered. The company should:
----------------------
1. Carry as many items in stock as possible to avoid backorders. Often
---------------------- convenience goes hand in hand with timeliness and customers want to
know right away if they have to wait three days or three weeks for an
---------------------- item.
---------------------- 2. Send the confirmation of the order by mail for record. It is better to send a
mail than asking the customer to have a print of the page of order. It may
---------------------- happen that at that moment the customer may not have a printer to take a
print. This may be very inconvenient for a customer.
----------------------
3. Ask only required information during the process of order like address,
---------------------- email ID, contact number or payment data. The company can do other
---------------------- research questions another time as at that time it may be inconvenient for
the customer.
---------------------- 4. Offer a variety of options to the customers about the shipping because
---------------------- company doesn’t want to lose a customer at last moment of shopping due
to inconvenience of delivery process of purchases.
---------------------- 5. The site should be easily accessible to the customer and can be searched
---------------------- easily by displaying information about products or any keywords because
customers want an ease in shopping to access the website, find the items,
---------------------- make purchases and move out.

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 6. Post all the required and necessary information on the home page, so it Notes
can be easy for the customer to get the required information before the
purchases are made. ----------------------
7. Make sure that all the information and components of the site load quickly. ----------------------
That includes all text, graphics and interactive elements. Customers’
frustration starts when they have to wait for uploading of the web pages. ----------------------
8. Accept credit cards and as many other forms of payments as possible. It ----------------------
is better to give the customer different types of options for the mode of
payment. ----------------------
If this care is taken while designing the website, the shopping experience ----------------------
will be quick and painless. More customers will be attracted. Even repeated
purchases will increase. ----------------------

----------------------
Check your Progress 2
----------------------
Fill in the blanks. ----------------------
1. _________ refers to the ease of buying and lack of efforts related to
----------------------
online shopping experience.
----------------------

Summary ----------------------

• These socio-technological innovations have introduced a new way to ----------------------

interact. People are able to collaborate and interact freely through tools
----------------------
like different social networking sites, blogs, Wikis, etc.
• Web can be one of the socio-innovative technologies to reach to the ----------------------
customer in the easy and most effective way. The online shopping
----------------------
experience is used by customers nowadays.
• To make customer use more websites and make more purchases online, ----------------------
websites should be more user-friendly. ----------------------
• Security is again one of the important parameters, which should always
remain a primary concern for web shopping, so security and privacy ----------------------
policies should be posed. ----------------------
• The goal of the FAQ page is that it gives people on the site immediate
answer to some of the questions asked and it cuts down on the number ----------------------
of support requests. The FAQ page also gives the details of the questions ----------------------
asked in the past by the customers.
----------------------
• Web 2.0 is a set of trends and tools for using the Internet. There is an
opportunity for sharing knowledge and interacting with people. ----------------------
• The marketer should create and manage to have good and effective
----------------------
customer communication for customer support and retain the customer. In
this way, a marketer can have a human touch and can fulfil the customer’s ----------------------
needs.
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 Notes • Internet is a miracle, which is used in business for providing customer
service. The applications of Internet offer number of opportunities for
---------------------- making money. The use of this application makes the customer service
faster, cheaper and more profitable.
----------------------
• This innovative technology helps to provide better service to the customer
---------------------- with ease and at low cost. These better service capabilities will help to
have good relationship with customers and thus retain customers with the
----------------------
organisation.
----------------------
Keywords
----------------------
• FAQ: Frequently asked questions are questions that are asked repeatedly
----------------------
by the customers.
---------------------- • Search functionality: The site should always be according to the
---------------------- convenience of the customer and not company’s organisational structure.
It should be easy to locate the desired information like product and service
---------------------- details, prices, etc.

---------------------- • Service capabilities: This innovative technology helps to provide better

service to the customer with ease and at low cost.
----------------------

---------------------- Self-Assessment Questions

---------------------- 1. Explain the different techniques to make a site more customer-friendly.

---------------------- 2. Explain the role of Web 2.0 in improving customer experience on the
Web.
---------------------- 3. What are the different convenience factors that should be considered
---------------------- before launching a website?
4. Discuss the various techniques to improve customer service.
----------------------

---------------------- Answers to Check your Progress

---------------------- Check your Progress 1
---------------------- Fill in the blanks.
1. Superior service and easy-to-use customer interaction creates satisfying
----------------------
customer experience.
---------------------- 2. The websites should be made more user-friendly to make customer use
more websites and make more purchases online.
----------------------

----------------------

----------------------

----------------------

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 Check your Progress 2 Notes
Fill in the blanks.
----------------------
1. Convenience refers to the ease of buying and lack of efforts related to
online shopping experience. ----------------------

----------------------
Suggested Reading
----------------------
1. Chase, Peter R. A Success Model for CRM Integration.
----------------------
2. Gray, Paul. Customer Relationship Management.
----------------------
3. Kolks, David C. and Robert J. Sweeney. Beyond Process - The Value of
Pre-planning Implementation. ----------------------
4. Morphy, Erica. Why CRM Just Keeps on Ticking.
----------------------
5. PeopleSoft White Paper Series
----------------------
6. www.saventech.com
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 E-Customer Relationship Management
UNIT

7
Structure:

7.1 Introduction
7.2 Economics of E-Loyalty
7.3 Importance of Trust and focusing on the “Right” Customer
7.4 Upselling and Cross-Selling
7.5 Relationship Capital
7.6 E-CRM and Internet Strategies facilitating CRM
7.7 Data Warehousing and Data Mining
7.8 Operational, Collaborative and Analytical CRM
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Analyse the economics of e-loyalty
----------------------
• Identify the importance of trust and focusing on the right customer
---------------------- • Differentiate between price rational and price obsessive consumer
---------------------- • Explain the concepts of upselling and cross-selling

---------------------- • Discuss the Internet strategies facilitating CRM

• Describe the operational, collaborative and analytical CRM concepts
----------------------
• Explain data warehousing, data mining and real-time profile
----------------------

---------------------- 7.1 INTRODUCTION

---------------------- The new marketing is aimed at winning customers forever, where

companies greet the customers, create the product to suit their needs and work
---------------------- hard to develop lifetime customer through the principle of “customer delight”.
The success of any business depends solely on the quality of product and/or
---------------------- service and customer organisation relationship. Instead of running after the
---------------------- customer, there is need to run with the customer. The relationship between
the customer and the business firm has been consistently encouraging as a
---------------------- successful business practice.
---------------------- Technology, people and customer are the three elements on which depends
the success of any organisation in today’s fast changing economic environment.
---------------------- E-CRM, which is the latest buzzword in the corporate sector, is perceived as one
of the effective and efficient tools for relationship management. Its emphasis is
----------------------
on defining the customers as valuable in the long term and on viewing customer
---------------------- relationships as learning relationship.
Businesses are shifting from being product centric to customer centric.
----------------------
Long before the advent of technology, businesses have always recognised that
---------------------- the customer is the soul of every business. Businesses try to have personal
relationship with their customers. Moving towards customer- centric approach
---------------------- is a multi-prolonged effort that requires transformation of process, culture and
strategy from top level to every individual employee.
----------------------
Maintaining customer is one of the significant skills to maintain any
---------------------- business. It is the best approach for winning, retaining and servicing of customers.
As information technology is becoming important in business, many companies
----------------------
consider it as an opportunity to reduce customer service cost, improve customer
---------------------- relationship and most importantly further personalise marketing messages and
enable customisation.
----------------------
Electronic CRM (e-CRM) concerns all forms of managing relationship
---------------------- with the customer by use of Information Technology (IT). In simple words,

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 e-CRM provides organisation a means to conduct interactive personalised and Notes
relevant communication with customers across both electronic and traditional
channels. It utilises a complete view of the customer to make decisions about ----------------------
messaging, offers and channel delivery. E-CRM can also be defined as activities
to manage customer relationships by using the Internet, web browsers or other ----------------------
electronic ways. ----------------------

7.2 ECONOMICS OF E-LOYALTY ----------------------

Bain and Company, working with Earl Sasser of Harvard Business School, ----------------------
analysed the cost and revenues derived from serving customers over their ----------------------
entire purchasing life cycle and published “Zero Defections: Quality comes
to Services” in Harvard Business Review in September– October 1990. The ----------------------
bottom line: the increasing number of customer retention by 5% has increased
the profitability by 25% to 95% which had startled many executives and the ----------------------
article set off rush to craft retention strategies. ----------------------
Repeat customers spend more than twice in a month than any newly acquired
customers of first six months and so it’s relatively easy for web stores to extend their ----------------------
range of products. They can sell more and more kinds of goods and services to loyal ----------------------
customers broadening as well as deepening relationships over time.
----------------------
The evidence indicates that the web customers tend to consolidate their
purchase with the same supplier than sales at physical outlet. Sales to these customers ----------------------
increased at triple the rate of similar customers who used only the physical outlet.
That means the use of technology has increased the number of customers. ----------------------
In addition to purchasing, more loyal customers also frequently refer new ----------------------
customers to a supplier, providing another rich source of profits. The combination
of all these economic factors means that the value of loyalty is often greater on ----------------------
the Internet than in the physical world. For all companies doing business on the
----------------------
Web, the implication is clear, you cannot generate superior long-term profits
unless you achieve superior customer loyalty. ----------------------

7.3 IMPORTANCE OF TRUST AND FOCUSING ON THE ----------------------

“RIGHT” CUSTOMER ----------------------
Trust of the customer on the organisation and its products and services is one ----------------------
of the important parameters for retention of customer. Use of CRM techniques is
the best way for retaining customer and creating trust among the customers. ----------------------

Focusing on the right customer by e-CRM is the best way to have ----------------------
customer loyalty. In today’s competitive world where business has become
customer centric, keeping pace with the customers and maintaining relationship ----------------------
with them is required. Focusing on the right customer is the requirement today. ----------------------
Creating trust for the brand, its products and services and focusing on the right
customer is most important. This can be done more effectively by the electronic ----------------------
customer relationship management.
----------------------

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 Notes Loyalists vs. Butterflies
Loyalists mean the customers who are loyal to the brand and the
----------------------
organisation. These customers are also called price rational customers.
---------------------- Butterflies are the customers who switch from one brand to another or change the
organisation frequently. These customers are called price obsessive customers.
----------------------

---------------------- Check your Progress 1

---------------------- Fill in the blanks.

---------------------- 1. Trust of the customer on the organisation and its products and services
is one of the important parameters for _______________.
----------------------

----------------------
Activity 1
----------------------
---------------------- Keeping in view the current global and regional developments, try to
visualise the importance and need of electronic customer relationship
---------------------- management in business in India.
----------------------

----------------------
7.4 UPSELLING AND CROSS-SELLING

---------------------- Upselling is a sales technique whereby a salesperson induces the customer

to purchase more expensive items, upgrades or other add-ons in an attempt to
---------------------- make a more profitable sale. Up- selling implies selling something that is more
profitable but also simply exposing the customer to other options he or she may
---------------------- not have considered previously.
---------------------- It includes selling the upgraded and new range of products to the existing
customers. In this way, profitability can be increased and hence business. For
---------------------- example, while giving order at the fast food outlet, the waiter asks about burger
---------------------- with cheese or big size hamburger or some combo pack with fries and cold
drink which may save some money of the customer. By this way, it helps the
---------------------- marketer to sell its upgraded product or services and make more profit.
---------------------- Cross-selling is defined as the action or practice of selling among or
between established clients, markets, traders, etc. or that of selling an additional
---------------------- product or service to an existing customer.
---------------------- Cross-selling on e-commerce sites has been quite effective, raising sale
percentage. Cross-selling means selling the different products from the range to
---------------------- the customer when he or she is buying one product from the marketer. By this,
another product or service can be sold while selling one product. For example,
----------------------
when a Eureka Forbes salesman comes for the demo of Aquaguard, he also tries
---------------------- to sell vacuum cleaner to the customer. In the automobile industry, after the
sale of a car model, the salesperson talks about the insurance to the customer or
---------------------- finance provided by the bank. After booking of air tickets, travel agent asks or
shows some offers for hotel booking or sightseeing to the customer.
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 Notes
Check your Progress 2
----------------------
Fill in the blanks. ----------------------
1. __________implies selling something that is more profitable but also
----------------------
simply exposing the customer to other options he or she may not have
considered previously. ----------------------

----------------------
Activity 2
----------------------
Examine the text and your surroundings to analyse upselling and cross- ----------------------
selling. List out some examples.
----------------------

----------------------
7.5 RELATIONSHIP CAPITAL
----------------------
The true capital for any business to be successful is its network of its
loyal customers. To maintain and have a good network of loyal customers, good ----------------------
relationship is very important. So ultimately, relationship is the capital of any
business. The relationship with the customers determines the success of the ----------------------
organisation. Organisations’ true wealth is its human capital and the space and ----------------------
health of its personal relationship.
----------------------
7.6 E-CRM AND INTERNET STRATEGIES FACILITATING
----------------------
CRM
----------------------
Having right information in timely fashion in the appropriate amount and
delivering it in the right style and right tempo to right customers is the need ----------------------
today. Using Internet strategies facilitating CRM process is one of the best ways
for maintaining and satisfying customers. ----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 7.1: Virtuous Cycle between IT and Relationship Marketing
----------------------

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 Notes Changing customers, their lifestyle, their demand, increased competition
and IT revolution have made tremendous marketing evolution. This has led
---------------------- to greater demand for relationship marketing for which new technology, i.e.,
e-CRM has been used in a more affordable and effective way.
----------------------
Interactive media such as the Internet allows marketers to deliver real-
---------------------- time personalised information to one consumer at a time. Such media allows
marketers to provide better service at lower cost.
----------------------
Internet strategies have facilitated the use of CRM in a better way. Web-
---------------------- based commerce is still in its infancy, although it is growing at an exponential
rate for satisfaction of the customer and to maintain good relationship.
----------------------

----------------------

----------------------

----------------------
----------------------

----------------------

----------------------
Fig. 7.2: Interactive Media and Relationship Marketing
----------------------
7.7 DATA WAREHOUSING AND DATA MINING
----------------------
Data warehousing means collection of integrated data used for decision-
----------------------
making. A data warehouse is essential for a business to have consistently clean,
---------------------- reliable customer-level data that is continually accessible enterprise wide.
Data warehouse can be deployed very effectually to achieve both customer
---------------------- acquisitions, product campaign launches and cross-selling.
---------------------- Data mining is the process of extracting new knowledge, previously

+
undetected, selected from databases for actionable decisions. It is the process
---------------------- of analysing detailed data to extract and present actionable, implicit and novel
---------------------- information to solve a business problem. It is the process of extracting valid
and previously unknown information from a large database and using it to make
---------------------- crucial business decisions.

---------------------- This technology is used for extracting knowledge hidden in large volumes
of raw data which can be used for business and other purposes. The process of
---------------------- extracting knowledge from data is called data mining.

---------------------- The advent of inexpensive but powerful computers which can store large
data and can crunch numbers at very high speeds at a low cost has made data
---------------------- mining much more affordable. This tool can provide the levels of access and
knowledge to widen, lengthen and deepen the customer relationship.
----------------------
Data mining tool supports all steps of data pre-processing and modelling
---------------------- and results delivering; it enables to solve tasks. At the front-end of the process

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 is the data pre-processing phase; the specific business problem must be clearly Notes
defined. Based on business, problem data is identified and selected.
----------------------
From the identified data, appropriate data is selected for technical solution.
Segmentation might also involve using clustering techniques to break the data ----------------------
into separate subsets based on common characteristics and then analysing each
segment separately. ----------------------
Data analysis involves reorganising the data to best match the selected ----------------------
algorithm and the business problem which is called data transformation. Then
the selected data mining tool is applied to the data and this typically involves ----------------------
creating a model and then testing and verifying the model with at least one
----------------------
separate set of test data. The model’s accuracy and validity can then be evaluated.
The different data mining techniques or parameters should be tried on ----------------------
different subsets of the data before arriving at a successful outcome.
----------------------

----------------------
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 7.3: Research Activities
----------------------
Check your Progress 3 ----------------------

----------------------
Fill in the blanks.
1. ___________ is the process of extracting new knowledge, previously ----------------------
undetected, selected from databases for actionable decisions.
----------------------

----------------------

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 Notes
Activity 3
----------------------

---------------------- As a director in a retail chain, how will you implement data warehouse and
data mining to increase the network of customers in the northern part of
---------------------- India?
----------------------

---------------------- 7.8 OPERATIONAL, COLLABORATIVE AND

ANALYTICAL CRM
----------------------
Operational CRM means supporting the front office business processes
---------------------- which include all customer contact (sales, marketing and service). Tasks
---------------------- resulting from these processes are forwarded to the employees responsible for
them.
---------------------- Operational CRM represents the automation of business processes
---------------------- involving customers. Its purpose is to provide transaction-level data about
individual and products and provide support for customer-facing processes
---------------------- such as direct mail, phone interaction, web-based communication and point-
of-sales information. Operational solutions directly affect the customer; they
---------------------- are very appealing and often are the first implemented components of a CRM
---------------------- strategy.
The operational application of CRM enables effective interaction with
---------------------- customers. It also enables and streamlines the communications to and from
---------------------- customers.
Operational CRM is also known as “front-office” CRM where direct
---------------------- customer contact occurs. These interactions are referred to as “touch points”.
---------------------- The touch point can be in-person sales call or an e-mail promotion. The majority
of self-described CRM products on the market today fall into the operational
---------------------- category.
---------------------- Collaborative CRM provides a point of interaction between customers,
staff and business parameters, through new and traditional technologies. The
---------------------- application of collaborative service like e-mail, conferencing, web-enabled
customer interaction centres, etc. helps to facilitate interactions between
---------------------- customers and organisations for the purpose of improving coordination and
---------------------- communication, thereby establishing lifetime customer value beyond the
transaction.
---------------------- The various departments of the organisation like sales, marketing and
---------------------- technical support share the information they collect about customers. The
objective is to improve the quality of customer service and hence customer
---------------------- loyalty.

---------------------- It helps the organisation in efficient productive interaction with customers,

partners, prospects and internal associates across all communication channels.
---------------------- At every transaction, the customer’s viewpoint is considered to enable better

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 service to customer. Collaborative CRM also reduces web service cost by Notes
enabling web collaboration.
As today’s companies collect more and more customer data, they seek ----------------------
technologies that allow them to use this data to uncover additional revenue ----------------------
opportunities and decipher customer spending patterns. Analytical CRM
generally makes heavy use of data mining and other techniques to produce ----------------------
useful results for decision-making. The following are some of the functions of
analytical CRM. ----------------------

• Analyses customer data for a variety of purposes. ----------------------

• Designs and executes targeted marketing campaigns. ----------------------
• Designs and executes campaigns, e.g., customer acquisition, cross-selling.
----------------------
• Analyses customer behaviour in order to make decision relating to
products and services. ----------------------

• Management information system. ----------------------

• Facilitates to understand buying behaviour though RFM analysis. ----------------------
• Executes marketing campaigns and promotions through the optimal
----------------------
channel based upon customer purchase preference.
----------------------
Summary
----------------------
• E-CRM which is the latest buzzword in the corporate sector is perceived
as one of the effective and efficient tools for relationship management. Its ----------------------
emphasis is on defining the customers as valuable in the long term and on ----------------------
viewing customer relationships as learning relationship.
----------------------
• In simple words, e-CRM provides organisation a means to conduct
interactive personalised and relevant communication with customers ----------------------
across both electronic and traditional channels.
----------------------
• Using Internet strategies facilitating CRM process is one of the best ways
for maintaining and satisfying customers. ----------------------
• Interactive media such as the Internet allows marketers to deliver real-
----------------------
time personalised information to one consumer at a time. Such media
allows marketers to provide better service at lower cost. ----------------------
• For all companies doing business on the Web, the implication is clear, you ----------------------
cannot generate superior long-term profits unless you achieve superior
customer loyalty. ----------------------
• The value of loyalty is often greater on the Internet than in the physical ----------------------
world.
----------------------
• Upselling is a sales technique whereby a salesperson induces the customer
to purchase more expensive items, upgrades or other add-ons in an attempt ----------------------
to make a more profitable sale.
----------------------

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 Notes • Cross-selling means selling the different products from the range to the
customer when he or she is buying one product from the marketer.
----------------------
• Relationship management is the capital of organisation which helps to
---------------------- create revenue and gives profit to business.
• Data warehousing means collection of integrated data used for decision-
----------------------
making. Data warehouse can be deployed very effectually to achieve both
---------------------- customer acquisitions, product campaign launches and cross-selling.
• Data mining is the process of extracting new knowledge, previously
----------------------
undetected, selected from databases for actionable decisions. It is the
---------------------- process of extracting valid and previously unknown information from a
large database and using it to make crucial business decisions.
----------------------
• Operational CRM means supporting the front-office business processes
---------------------- which include all customer contact (sales, marketing and service).

---------------------- • Collaborative CRM provides a point of interaction between customers,

staff and business parameters, through new and traditional technologies.
---------------------- • Analytical CRM generally makes heavy use of data mining and other
---------------------- techniques to produce useful results for decision-making.

----------------------
Keywords
----------------------
• Customer delight: Keeping the customer more than satisfied.
---------------------- • E-CRM: Electronic customer relationship management is the modern
technique used to help an enterprise to manage customer relationships in
----------------------
an efficient way.
---------------------- • E-loyalty: When loyalty of the customer is achieved by electronic
customer relationship management.
----------------------
• Upselling: A sales technique whereby a salesperson induces the customer
---------------------- to purchase more expensive items, upgrades or other add-ons in an attempt
to make a more profitable sale.
----------------------
• Cross-selling: Selling an additional product or service to an existing
---------------------- customer.
---------------------- • Data warehousing: Collection of integrated data used for decision-
making.
---------------------- • Data mining: The process of extracting new knowledge, previously
---------------------- undetected, selected from databases for actionable decisions.

---------------------- Self-Assessment Questions

----------------------
1. Explain the significance of e-CRM for an organisation. How does it
---------------------- benefit the company?
2. Explain the economics of e-loyalty in detail.
----------------------

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 3. What do you mean by upselling and cross-selling? Notes
4. Explain how relationship can be capital for any organisation.
----------------------
5. Explain the importance of data warehousing in CRM.
6. What is data mining? How does it help CRM? ----------------------
7. Elucidate the role of operational CRM and collaborative CRM with ----------------------
suitable examples.
----------------------
8. Explain the function of analytical CRM. Illustrate the relevance of
analytical CRM with suitable examples. ----------------------

Answers to Check your Progress ----------------------

Check your Progress 1 ----------------------

Fill in the blanks. ----------------------

1. Trust of the customer on the organisation and its products and services is ----------------------
one of the important parameters for retention of customer.
----------------------
Check your Progress 2
Fill in the blanks. ----------------------
1. Upselling implies selling something that is more profitable but also simply ----------------------
exposing the customer to other options he or she may not have considered
previously. ----------------------

Check your Progress 3 ----------------------

Fill in the blanks. ----------------------
1. Data mining is the process of extracting new knowledge, previously
----------------------
undetected, selected from databases for actionable decisions.
----------------------
Suggested Reading ----------------------
1. Chase, Peter R. A Success Model for CRM Integration. ----------------------
2. Gray, Paul. Customer Relationship Management.
----------------------
3. Kolks, David C. and Robert J. Sweeney. Beyond Process - The Value of
Pre-planning Implementation. ----------------------
4. Morphy, Erica. Why CRM Just Keeps on Ticking. ----------------------
5. PeopleSoft White Paper Series ----------------------
6. www.saventech.com
----------------------

----------------------

----------------------

----------------------

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 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 Virtual Communities
UNIT

8
Structure:

8.1 Introduction
8.2 The Community Concept
8.3 Building Partnership through Community
8.4 User-Generated Content
8.5 Blogs
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Discuss the concept of community
----------------------
• Describe how to build partnership through community
---------------------- • Analyse user generated content
---------------------- • Explain the concept of blog

----------------------
8.1 INTRODUCTION
----------------------
A virtual community interacts across the boundaries with people through
---------------------- any media. It is a social network of individuals. It provides interaction, friendship,
information and acceptance among individuals. Virtual communities are used
---------------------- by social or professional groups for interaction. Virtual community can be one
---------------------- of the important ways to reach the customer in a more efficient and effective
way.
----------------------
8.2 THE COMMUNITY CONCEPT
----------------------
Community is defined as a “network of customers that interacts with a
----------------------
company and each other”.
---------------------- One of the major uses of Web is to build a number of customers for
---------------------- exchanging product related or service related information. It also helps to build
a good relationship between the customers and an organisation. These networks
---------------------- and relationships are called communities.

---------------------- In this way, an environment can be developed where it’s difficult for the
customers to leave the family of other people who also purchase from the same
---------------------- company. The customers can exchange tips and other information with each
other and in the process they become more bonded to the company and the
---------------------- brand.
---------------------- Companies can also potentially post on the website about the experiences
of the customers with the product to promote their services. It will actually
---------------------- contribute value to the community. This also helps to build good network with
---------------------- the customers.

---------------------- 8.3 BUILDING PARTNERSHIP THROUGH COMMUNITY

---------------------- The customers should be given the impression that they are a part of the
---------------------- organisation and that they own the section of the site of the company where
they can share the information and their experience. By this, a company creates
---------------------- a more personal relationship with the customers. Web- based communities can
enhance the repeated purchases of the brand.
----------------------

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 For example, Procter and Gamble’s Crest brand has a website that invites Notes
families to participate in games and obtain information. Taken together, these
relationship programmes help to implement the concept of personalisation in ----------------------
the introduction. Web-based customer service, loyalty programmes, customised
products and services, and communities all bring a sense of an individual ----------------------
relationship between company and customer which was difficult and costly to ----------------------
implement before the commercialisation of the Internet.
----------------------
Communities or social network are all over the Internet. It is great that
customers and prospects interact about the brand and related issues. Community ----------------------
is a new media that differentiates it from the traditional media.
----------------------
“The rise of virtual communities in online networks has set in motion
an unprecedented shift from vendors of goods and services to the customers ----------------------
who buy them. Vendors who understand this transfer of power and choose to
capitalise on it by organising virtual communities will be richly rewarded with ----------------------
both peerless customer loyalty and impressive economic returns.” - John Hagel.
----------------------
Roger Parker, author of Relationship Marketing on the Web, lists eight
useful questions to ask when considering how to create a community for the ----------------------
customers. The questions are as follows:
----------------------
• What interest, needs or passions do many of the customers have in
common? ----------------------

• What topic or concerns might the customers like to share with each other? ----------------------
• What information is likely to appeal to the customer’s friends or ----------------------
colleagues?
----------------------
• What other types of business in the area appeal to buyers of the products
and services? ----------------------
• How can a person create packages or offers based on combining offers
----------------------
from two or more affinity partners?
• What price, delivery, financing or incentives can one afford to offer to ----------------------
friends (or colleagues) that the current customers recommend? ----------------------
• What types of incentives or rewards can one afford to provide to customers
who recommend friend (or colleagues) who make a purchase? ----------------------

• How can a person best track purchases resulting from word-of-mouth ----------------------
recommendations from friends?
----------------------
The key to successful community is customer-centred communications.
Community helps in customer-to-customer, customer-to-company, and ----------------------
business-to-business interaction. It also helps to create a global exchange shop
----------------------
by acting as intermediaries enabling users to exchange views.
Types of Virtual Communities and associated Challenges ----------------------
With respect to traffic, communities can be classified as below: ----------------------
1. Empty community: A community without any people. ----------------------

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 Notes 2. Silent community: A community may have many registered members,
but there are no conversation flags among community members.
----------------------
3. Critical community: Many communities on the manufacturer or retailer
---------------------- sites can be critical of the brand.
Strategies to overcome problems associated with virtual communities
----------------------
are:
---------------------- 1. Empty communities: A community without people is not a community.
It is better to be involved in a group or collaborate with third party rather
----------------------
than starting one’s own site which may not get great number of mass. For
---------------------- example, a cosmetic company is likely to be better served and get great
mass by getting involved on community sites as beauty world (www.
---------------------- beautyworld.com) and cosmetic centre (www.cosmeticcentre.co.in),
rather than starting its own community or site which may not gain critical
----------------------
mass. Such type of website gain more visits by the customers as many
---------------------- times the customers visit the popular sites or use search engine to go to
the sites.
----------------------
2. Silent communities: A community may have mass of customers
---------------------- registered with them but they don’t visit the site afterwards or don’t have
any interaction through it. Such people who have joined the community
---------------------- should be motivated to have interaction with the community.
---------------------- To tackle these problems, following tactics can be used:
---------------------- i. Seed the community: Use a mediator who will post a question and
have an expert who will answer to it. It will break the silence.
----------------------
ii. Make it select: Limit some services to the loyal customers or
---------------------- limited customers that are offered to the valued customers as a value
addition. In such a way customers will be more ready to involve in
---------------------- the activity.
---------------------- iii. Use e-mail: With e-mail groups such as Yahoo Groups, participant
don’t need to revisit the website; it is always in their email inbox.
---------------------- Or we can also mail the details of valuable discounts and schemes
for loyal and value-added customers.
----------------------
3. Critical communities: Many communities on manufacturer or retailer
---------------------- sites can be critical of the brand. Companies use virtual communities to
---------------------- reach the customer in a more easy and effective way. It is a media to
understand their customers’ needs and problems with their services. It
---------------------- may also be a better tool to control and contain critical comments on
one’s site than being voiced elsewhere. The answers to the questions and
---------------------- solution to the problem is given on the site.
---------------------- Advantages and Benefits of Virtual Communities

---------------------- • Well-run communities strengthen relationship/partnership, trust and

loyalty, as well as maintain brand awareness in the minds of the community
---------------------- members.

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 • Communities also allow a unique opportunity to stay close to the Notes
customers for their concern, their worries and their desires.
----------------------
• Despite these benefits -
1. Building an active community can be time-consuming, expensive and ----------------------
difficult.
----------------------
2. Careful moderation and seeding of topics from a subject expert may be
required. ----------------------
3. An alternative approach is to hook up to an established community that ----------------------
has greater independence.
----------------------
Either way, communities are part of the dynamic dialogue or dynamic
opportunities that today’s marketer enjoys. ----------------------

----------------------
Check your Progress 1
----------------------
State True or False.
----------------------
1. A community without people is not a community.
----------------------

----------------------
Activity 1
----------------------
Browse and visit few virtual communities online and explain as to how
----------------------
virtual community is helpful and beneficial for business in today’s global
world. ----------------------

----------------------
8.4 USER-GENERATED CONTENT
----------------------
User-generated content is defined as “various kinds of media content that
----------------------
are produced or primarily influenced by end-users, as opposed to traditional
media producers, licensed broadcasters and production companies.” ----------------------
Today, many organisations use collaborative product development tools,
----------------------
such as initiating discussions on blogs to test ideas and exchange views, or
virtual development tools involving customers in the use of collaborative design ----------------------
tools, or testing about the sale within the virtual world. Many organisations use
online tools to involve their customers in product development. Each industry ----------------------
is different from another; some focus on testing concepts and others focus on
----------------------
generating new ideas.
Some organisations are realising that user-generated content is not just ----------------------
about having a new dialogue between the brand and the customer, but having ----------------------
a trialogue where customers talk to each other and the brand can then be a
small part of billions of conversations. Customers want to share their ideas and ----------------------
want to talk to each other, to participate and to create and to hear what other
customers want to say. ----------------------

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 Notes User-generated content is created by users or organisations themselves
which is also known as Consumer-Generated Media (CGM) or User-Created
---------------------- Content (UCC). It refers to various kinds of media content, publicly available,
that are produced by end-users. It can be in the form of posts on discussion
---------------------- groups, personal or departmental blogs or wikis. UCC can come from many
---------------------- sources. Customers have been willing to receive free content via commercial
radio and television broadcasts, in exchange for advertisement.
----------------------
The rise of Internet in the 1990s has made a revolutionary change in the
---------------------- business world. The continuous rise in the use of Internet in this decade has made
a major change. And by its use the professionally produced material is offered
---------------------- for free and the public is allowed to access this material, indeed are encouraged,
making its content available to everyone. The use of user- generated content has
----------------------
been more in practice. Its use is for a variety of functions including:
---------------------- • Problem processing
---------------------- • News

---------------------- • Gossips
• Research and surveys
----------------------
Frequently, user-generated content is partially or totally monitored
---------------------- by website administrators to avoid offensive content or language, copyright
infringement issues and to determine if the content posted is relevant to the
---------------------- general theme of the site.
----------------------
Check your Progress 2
----------------------

---------------------- State True or False.

---------------------- 1. Customers want to share their ideas and want to talk to each other, to
participate and to create and to hear what other customers want to say.
----------------------

---------------------- 8.5 BLOGS

---------------------- A blog is a website, usually maintained by an individual with regular
---------------------- entries of commentary, descriptions of events, or other material such as graphics
or video. Entries are usually exhibited in reverse chronological order.
---------------------- Evolution of Blog
---------------------- The term “weblog” was coined by Jorn Barger on 17th December, 1997.
The short form, “blog” was coined by Peter Merholz, who jokingly broke the
---------------------- word ‘weblog’ into the phrase ‘we blog’ in the sidebar of his blogPeterme.com
---------------------- in April 1999. Shortly thereafter, Evan Williams at Pyra Labs used “blog” as
both noun and verb that is to blog means to edit weblog or to post to weblog.
---------------------- The term was soon popularised.
---------------------- Initially, blogs were simply manually updated elements of common

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 websites. However, the evolution of tools to facilitate the production and Notes
maintenance of web articles posted in reverse chronological order made
the publishing process feasible to a much larger, less technical population. ----------------------
Ultimately, the distinct class of online blogging services that produces blogs are
abundant today. For instance, the use of some sort of browser-based software ----------------------
is now a typical aspect of “blogging”. Blogs can be hosted by dedicated blog ----------------------
hosting services, or they can run using blog software or on regular web hosting
services. ----------------------
In short, the meaning of blogging is to maintain or add content to a blog. ----------------------
A blog is:
----------------------
• A personal diary
• A daily pulpit ----------------------
• A collaborative space ----------------------
• A political soapbox ----------------------
• Breaking news
----------------------
• A collection of links
----------------------
• Our views and thoughts
• Memos to the world ----------------------
Hence, a blog is a website, where you write stuff on an ongoing basis. ----------------------
New stuff shows up at the top, so your visitors read what’s new, then they
comment on it or link to it. ----------------------

A blog is a voice on the web. It’s a place to share, inform, complain, ----------------------
enquire and exchange views. Many people use a blog just to organise their
thoughts, while others command influential, worldwide audiences of thousands. ----------------------
It is also useful for publishing news. A typical blog combines text, images and ----------------------
links to other blogs.
----------------------
Blogs give an easy method of regularly publishing web pages which are
best described as online journals, diaries or news or events listings. Frequency ----------------------
can be hourly, daily, weekly or less frequently but daily updates are typical.
----------------------
Business blogs are created by people within an organisation. They can be
useful in showing the expertise of those within the organisation, but need to be ----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 Notes carefully controlled to avoid releasing damaging information.

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
---------------------- Fig. 8.1: An Example of Business Blog

---------------------- Podcast
Podcasts are related to blogs since they can potentially be generated by
---------------------- individuals or organisations to voice an opinion either as audio or less usually as
---------------------- video, which is successfully used by media organisations such as film reviews
and for live recording. A major difficulty in achieving noticeable podcasts is
---------------------- that the contents can only be recognised by tags and it is difficult to assess the
quality without listening to the start of a podcast. All the main search engines
---------------------- are working on techniques to make searching of voice and video substance
---------------------- practical.
Really Simple Syndication
----------------------
Really Simple Syndication (RSS) is an extension of blogging where
---------------------- blog, news or any type of content is received by subscribers using the systems
mentioned above. It offers a method of receiving news that uses a different
----------------------
broadcast method from e-mail, so it is not subject to the same conflicts with
---------------------- spam or spam filters.

---------------------- Many blogs provide:

• Web pages and other media related to its topic.
----------------------
• Interactive formats where readers can share and give their comments.
----------------------
• Artlog – Most blog are primarily textual although some focus on art.
---------------------- • Photo blogs - where photographs are included in blog.
---------------------- • Sketch blog - sketches are there in blog.

---------------------- • V-blog - it deals with videos.

• MP3 blog – Music.
----------------------

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 • Podcasting - Audio, which are part of a wider network of social media. Notes
Microblogging is another type of blogging, one which consists of blogs with
----------------------
very short post. That is why it is called microblogging.
Types of Blogs ----------------------
There are different types of blogs differing from each other not only in ----------------------
size but also in subject matter and the way they present or write the matter.
----------------------
1. Corporate blog: A blog can be private or for business purpose. Even in
business, it is used for internal purpose, that is, for communication within ----------------------
the organisation. If a corporation uses blogs externally for marketing,
advertisement, branding or public relation purposes, then it is called ----------------------
corporate blog.
----------------------
2. Personal blog: A personal blog is a common blog used by the individual
for his personal use as a daily ongoing diary or for making comments. ----------------------
This type of a blog is more than a way to communicate as it reflects the
----------------------
way of life or work of the individual. It has a more sentimental touch.
Few personal blogs rise to fame. Sites, such as Twitter allow bloggers to ----------------------
share thoughts and feelings with the friends and family and much faster
than a mail or a writing. This form of communication media is helpful for ----------------------
today’s generation to be in touch even in a busy schedule.
----------------------
3. Blog searching engines: Several blog search engines are used to search
the important information on blog or blog content, such as Bloglines, ----------------------
Blogscopes. Technorati is one of the most important and popular blog
----------------------
search engine which provides current information on popular searches
and tags used to categorise blog postings. ----------------------
4. Blogsphere: The collective community of all blogs is known as
----------------------
Blogsphere. Since all the blogs are interconnected with each other and
socially networked through blogrolls, comments, linkbacks and backlinks, ----------------------
discussion in Blogsphere is considered public opinion.
----------------------
5. Question blogging: Question blogging is a type of a blog which answers
questions. Questions are submitted by email or are submitted by others ----------------------
means like telephone. Answers to such questions are posted on the blog.
Many question logs also use syndication such as RSS as a means of ----------------------
conveying answer to questions.
----------------------
6. Blogging and advertising: It is common for blogs to feature
advertisements either to financially benefit the blogger or to promote the ----------------------
blogger’s favourite cause. The popularity of blogs has also given rise to
----------------------
fake blogs in which a company will create a fictional blog as a marketing
tool to promote a product. ----------------------
Blogging Outcomes
----------------------
The use of blogging as one of virtual marketing tools has brought
following unforeseen outcomes: ----------------------
• Issues of liability ----------------------

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 Notes • Employment problems
• Political hazards
----------------------
• Threat to personal identity
---------------------- Now we will understand the above outcomes one by one in detail.
• Liability: Several cases have been brought in front of courts against
----------------------
bloggers concerning issues of liabilities. Internet service providers are
---------------------- immune to any liability for information that originates from the third
party.
---------------------- • Employment: In general, attempt at hiding the bloggers’ name and the
---------------------- place of employment has proved ineffective at protecting the blogger.
Employees blog about elements of their place of employment, raise issues
---------------------- of employee branding, and their activities can begin to affect the brand
recognition of their employer.
----------------------
• Political hazards: Blogging can sometimes have unforeseen outcomes
---------------------- in some of the sensitive political areas. Blogs are very difficult to control
than broadcast or even print media.
----------------------
• Personal protection: One outcome of blogging is the chance of attacks
---------------------- or threats against the blogger, and sometimes without apparent reason. So,
to avoid such type of activities, blogger’s code of conduct was developed
---------------------- which aims at countering violent online behaviour.
---------------------- Advantages of Blog
The following are some of the potential advantages of blogs:
----------------------
• Blogging is the new influential medium.
---------------------- • Blogs build trust.
---------------------- • It can be an important media for news.
• Blogs are cheap (free).
----------------------
• Blogging builds relationships.
---------------------- • It’s a tool to inform, share opinion, views, etc.
---------------------- • Blogs can divert people to your site.
---------------------- Rules of Blog
Blogs can give best results when they are prepared with an aim, keeping
----------------------
the purpose in mind. At times, they outweigh advantages of websites by
---------------------- disseminating information and attracting wide variety of audiences. The
following points can be kept in mind while designing a blog.
----------------------
• Know your audience.
---------------------- • Engage your audience.
• Stay up to date with current affairs.
----------------------
• Stay credible.
---------------------- • Be consistent.
---------------------- • Be conversational.

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 • Be real with profile of a real host. Notes

Check your Progress 3 ----------------------

----------------------
State True or False.
----------------------
1. MP3 blog is used for sketches.
2. Photo blog is for music. ----------------------

----------------------
Activity 2
----------------------

1. Write the application of different types of blogs as part of virtual ----------------------

communication.
----------------------
2. Make a personal blog to share your views and comments on it.
----------------------
Summary ----------------------

• A virtual community interacts across the boundaries with people through ----------------------
any media. It is a social network of individuals. It provides interaction,
friendship, information and acceptance among individuals. ----------------------
• Virtual communities are used by social or professional groups for ----------------------
interaction. Virtual community can be one of the important ways to reach
the customer in a more efficient and effective manner. ----------------------
• One of the major uses of Web is to build a number of customers for
exchanging product related or service-related information. ----------------------
• The key to successful community is customer-centred communications. ----------------------
Community helps in customer-to-customer, customer-to-company, and
business-to-business interaction. It also helps to create a global exchange ----------------------
shop by acting as intermediaries enabling users to exchange views.
• A blog is a website, usually maintained by an individual with regular ----------------------
entries of commentary, descriptions of events, or other material such as ----------------------
graphics or video. Entries are usually exhibited in reverse chronological
order. ----------------------
• Podcasts are related to blogs since they can potentially be generated by
individuals or organisations to voice an opinion either as audio or less ----------------------
usually as video, which is successfully used by media organisations such ----------------------
as film reviews and for live recording.
• Really Simple Syndication (RSS) is an extension of blogging where ----------------------
blogs, news or any type of content is received by subscribers using the
systems. ----------------------

----------------------
Keywords
----------------------
• Community: A network of people to interact with each other.
----------------------
• Virtual community: An online network set to make interaction between

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 Notes marketer and customer more effective to enhance the business.
• Blog: A website maintained for regular entries and posting of comments,
---------------------- events, news, graphics and video.
---------------------- • Podcast: A type of blog which is generated to voice an opinion by audio
or video.
----------------------

---------------------- Self-Assessment Questions

---------------------- 1. Define community. Describe the concept of building partnerships through

community.
---------------------- 2. What are difficulties faced by a community? Also explain ways out from
community problems.
----------------------
3. Define user-generated content. List out the pros and cons of user-generated
---------------------- content.
4. What is the use of user-generated content?
----------------------
5. Define blogs. What are the different types of blogs?
---------------------- 6. Describe the significance of blogs especially for marketers.
---------------------- 7. Write short notes on:
i. Blogging and advertisement
---------------------- ii. Blog search engine
---------------------- iii. Blogging outcome
iv. Silent communities
----------------------

---------------------- Answers to Check your Progress

---------------------- Check your Progress 1
State True or False.
----------------------
1. True
---------------------- Check your Progress 2
State True or False.
----------------------
1. True
---------------------- Check your Progress 3
---------------------- State True or False.
1. False
---------------------- 2. False
----------------------
Suggested Reading
----------------------
1. Gadkari, Prasad. Guide to E-Marketing.
----------------------
2. Jaiswal, M.P. & Anjali Kaushik. e-CRM: Business & System Frontiers.
---------------------- 3. Rust, Roland T. and P.K. Kannan. e-Service-New Directions in Theory &
Practice.
----------------------
4. Strass, El-Ansary, Frost. e-Marketing.

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 Legal and Ethical Issues
UNIT

9
Structure:

9.1 Introduction
9.2 Privacy Legislation
9.3 Security
9.3.1 Types of Security Threats
9.4 Electronic Payment System
9.5 Modes of Payment
9.6 Electronic Money/Electronic Cash (E-Cash)
9.7 Electronic Cheques (E-Cheques)
9.8 E-Security
9.9 Firewalls
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Discuss the concept of legal issues in virtual marketing
---------------------- • State the ethical standards and approach in Internet marketing
---------------------- • Analyse the privacy legislation
• Explain the security issues on Internet and know the security solutions
---------------------- • Describe the electronic payment systems
---------------------- • Explain firewalls

---------------------- 9.1 INTRODUCTION

----------------------
The acceptance of Internet by the business community has resulted in the
---------------------- extraordinary growth in global electronic communications. It has given business
a new turn in today’s global competition. To ensure the longer term success of
---------------------- e-business, there have been calls for an adequate enabling framework to be put
in place, particularly of a legislative nature.
----------------------
In the past, technical issues (e.g., interconnection, inter-working,
---------------------- interoperability) were the main concerns of the e-business companies. At present,
many companies aim at creating the necessary commercial environment (e.g.,
----------------------
competitiveness, framework and market access) to stimulate the emergence
---------------------- of a global marketplace. The situation has changed yet again with the growth
of the Internet, more specifically the Web. It is now a common practice for
---------------------- companies to use the Web to advertise and promote their products and services,
often including copies of product brochures, other promotional materials and
----------------------
contact details.
---------------------- In near future, e-business will involve greater concerns for legislative
---------------------- actions (e.g., liability, jurisdiction, taxation, copyright, data protection,
encryption, consumer rights and authentication) to safeguard the interests of all
---------------------- stakeholders with a sound technology base and commercial infrastructure.

---------------------- The Internet has posed significant challenges to the legal structure. There
is a difference between the physical environment consisting of sequential
---------------------- and geographical boundaries, and cyberspace, where there are no geographic
boundaries and no limits. The legal issues are of more concern for online
---------------------- transactions over the Web than the more traditional business. That is because
---------------------- in traditional business interactions, usually some previous negotiations have
established a relationship between the trading parties, whereas online customers
---------------------- appear as spontaneous users usually with no prior relationship having established
between buyer and seller.
----------------------
Common Legal Disagreements on the Internet
----------------------
Disagreements on the Internet in an online shopping scenario occurs often
---------------------- because of many reasons as follows:

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 • The customer pays, but the merchant does not deliver. Notes
• The customer pays, but the wrong good or less quantity or defective piece
----------------------
is delivered.
• The customer pays, but the payment is not received by the seller. ----------------------
• The merchant delivers the good, but after receiving the customer is not ----------------------
ready to pay.
----------------------
• The customer refuses to accept goods when it is delivered at the said
address. ----------------------
• The merchant delivers, but the customer has not ordered anything. ----------------------
These are the most common issues and problems that occur between
----------------------
buyer and seller when the transaction is made online. In order to resolve them,
laws are in place to support one or the other. Here problem occurs as buyer and ----------------------
seller may be in different locations or even may be in different countries.
----------------------
9.2 PRIVACY LEGISLATION ----------------------
Privacy refers to a moral right of individuals to avoid intrusions into ----------------------
their personal affairs by third parties. Privacy of personal data such as one’s
identity, likes and dislikes is a major concern to consumers, particularly with ----------------------
the dramatic increase in identity theft.
----------------------
But for marketers to understand their customers’ needs, this type of
information is very valuable. Through collection of this information, it becomes ----------------------
easy for the marketer to target the customer in a better way. There is a privacy
law, which may sound straightforward, but in practice it’s difficult to implement. ----------------------
In practice, companies have to take their own business decisions based on the ----------------------
business benefits.
----------------------
Effective e-commerce requires a delicate balance to be struck between the
benefits the individual customer will gain from their online experience through ----------------------
providing personal information and the amount and type of information that
they are prepared for companies to hold about them. ----------------------
The main information types used by the Internet marketer, which are ----------------------
governed by ethics and legislation, are as follows:
----------------------
1. Contact information: This means the information regarding name,
postal address, email address and B2B companies’ website address. ----------------------
2. Profile information: This is the information regarding customer’s ----------------------
characteristics that can be used for segmentation. It includes demographic,
geographic, behavioural and sociological information. This has been ----------------------
observed that the customers are willing to give such information as it
doesn’t include any financial data. ----------------------

3. Behavioural information: This is about any general information from ----------------------

customer’s purchase history and his/her behavioural characteristics
----------------------

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 Notes during the whole buying process. Usually, individual’s behaviour can
be observed with respect to perception, attitude, personality, consumer
---------------------- learning styles, etc. Web analytics can be used to access the individual’s
information on the Web.
----------------------
4. Behavioural information (across multiple sites): Here consumers are
---------------------- studied as to how he/she potentially accesses multiple sites and responds
to ads across sites. Ethical issues concerned with personal information
----------------------
ownership have been usefully summarised by Mason (1986) into four
---------------------- areas as follows:
Privacy - what information is held about the individual?
----------------------
Accuracy - is it correct?
----------------------
Property - who owns it and how can ownership be
---------------------- transferred?

---------------------- Accessibility - who is allowed to access this information, and

under which conditions?
---------------------- Fletcher (2001) provides an alternative perspective, raising these issues
---------------------- of concern for both the individual and the marketer.
Transparency - that who is collecting the information.
----------------------
Security - about the security of information once it has been
---------------------- collected.
---------------------- Liability - who will be considered responsible if the
information is misused or abused?
----------------------
Data protection legislation is enacted to protect the individuals, to protect
---------------------- their privacy and to prevent misuse of their personal data.

---------------------- Personal Data: The personal data should be:

1. Fairly and lawfully processed: Personal data shall be processed fairly
----------------------
and lawfully and, in particular shall not be processed unless there is data
---------------------- controller who is the person with defined responsibility for data protection
within the company, and in case of sensitive personal data till the clear
---------------------- details in communications such as on a website or direct mail of how a
data subject can contact the data controller or such representative of the
----------------------
company is met.
---------------------- 2. Processed for limited purposes: Personal data shall be obtained only for
one or more specified and lawful reason and shall not be further processed
----------------------
in any manner for any purpose.
---------------------- It implies that the organisation or company must be clear about the process
of the data at the point of collection. The organisation should explain how
----------------------
the data will be used if the customer provides the details asked on the
---------------------- website. Customers would also give consent for further communication
from the organisation or company.
----------------------

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 3. Adequate, relevant and not excessive: Personal data shall be adequate, Notes
relevant and not excessive in relation to the purpose for which it has been
processed. ----------------------
This specifies that minimum necessary amount of data is requested for ----------------------
processing. The more details that an organisation has about the customer,
the better they can understand the needs and wants of the customer and ----------------------
so can develop the product and design the services according to it. It also
----------------------
helps for better marketing communication so that customer is more likely
to respond. ----------------------
4. Accurate: Personal data shall be accurate and where necessary kept up to
----------------------
date. It also helps in ongoing relationship, so the data is kept accurate and
up to date. Additional steps should be taken to check if the data is accurate, ----------------------
in case there is any error. Inaccurate data are defined in the guidelines as
“incorrect or misleading as to any matter of fact”. The guidelines go on ----------------------
to discuss the importance of keeping information up to date. This is only
----------------------
necessary where there is an ongoing relationship and the rights of the
individual may be affected if they are not up to date. ----------------------
5. Not kept longer than necessary: Personal data processed for any purpose
----------------------
shall not be kept for longer than is necessary for that purpose. To comply
with the principle, data controllers will need to review their personal data ----------------------
regularly and delete the information which is no longer required for their
purpose. It has to be decided by the company which data is important and ----------------------
which has to be cleared. As there may be a possibility that the customer
----------------------
who currently doesn’t buy regularly may buy again, in such a case the
information may be useful. With a customer who has purchased products ----------------------
from a company, this is less clear since frequency of purchase may vary,
e.g., a car manufacturer could justifiably hold data for several years. ----------------------
6. Processed in accordance with the data subjects’ right: Personal data ----------------------
shall be processed in accordance with the Right of Data Subject. One aspect
of the data subjects’ right is the option to request a copy of their personal ----------------------
data from an organisation, this is known as a “subject access request”. For ----------------------
payment of small fees, such as Rs. 15 or Rs. 30, an individual can request
information which must be supplied by the organisation within 40 days. ----------------------
This includes all information on paper files and on computer.
----------------------
7. Secure: Appropriate technical and organisational measures shall be taken
against unauthorised or unlawful processing of personal data and against ----------------------
accidental loss or destruction of or damage to personal data. This guideline
places a legal imperative on organisations to prevent unauthorised internal ----------------------
or external access to information and also its modification or destruction. ----------------------
Most organisations would want to do this anyway since the information
has value to their organisation. Of course, the cost of security measures ----------------------
will vary according to the level of security required. The Act allows for
this through this provision: ----------------------

Taking into account the state of technological development at any time ----------------------

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 Notes and the cost of implementing any measures, the measures must ensure a
level of security appropriate to:
----------------------
a. The harm that might result from a breach of security; and
---------------------- b. The nature of the data to be protected.
---------------------- 8. Not transferred to countries without adequate protection: Personal
data shall not be transferred to a country or territory outside, unless that
---------------------- country or territory ensures an adequate level of protection of the rights
and freedom of data subjects in relation to the processing of personal
----------------------
data.
----------------------
Check your Progress 1
----------------------

---------------------- State True or False.

---------------------- 1. The personal data should be fairly and lawfully processed.

----------------------
Activity 1
----------------------

---------------------- Keeping in view today’s global markets, discuss with examples the legal
issues in e-business to have a safe and secure online business.
----------------------

----------------------
9.3 SECURITY
----------------------
There are thousands of hackers and viruses at large who disturb the privacy
---------------------- and security of the data in the system. In the corporate world, the popular targets
include large corporate, news outlets, banking and finance, political sites,
---------------------- e-commerce, credit card data and computer security sites.
---------------------- The excitement of building new dynamic e-business has exposed the
companies to higher risks. Organisations can be accused of negligence for
---------------------- malpractices of privacy and security. Having antivirus software and a secure
---------------------- server are not sufficient; as they only provide minimal protection against very
few of the threats that website will see.
----------------------
Apart from damaging customers’ trust in the organisation, security lapses
---------------------- can end company directors up in the court, if they are deemed to be negligent in
their responsibilities towards good security.
----------------------
Good website management needs to build in:
---------------------- • Security policies
---------------------- • Security reviews
• Security testing and auditing
----------------------
• Planning for business continuity in case of disaster recovery and
---------------------- emergencies.

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 9.3.1 Types of Security Threats Notes
The list of different types of security threats are as follows:
----------------------
1. Credit card fraud: Card details are least secured and most vulnerable to
fraud. Almost more than half of Visa’s card disputes are Internet related. ----------------------
For the e-tailer the percentage of fraudulent purchases on sites can run
to double figures. Phishing attacks where SPAM emails encourage users ----------------------
of secure service such as banks to disclose their security details are still ----------------------
widespread because some new consumers fall for them.
2. Distributed Denial of Service (DDOS): This effectively denies access ----------------------
to one’s sites when hackers flood network routers from lots of different ----------------------
sites with an overcoming amount of traffic to targeted websites. They
effectively shut down the sites. ----------------------
3. Cyber graffiti: Hackers can: ----------------------
• Alter websites
----------------------
• Insert nasty images
• Give false information ----------------------
• Give false testimonials ----------------------
• Even direct customers to another site
----------------------
Non-hackers can put up rogue sites sounding very similar to existing site
and attract lots of customer to that site, e.g., Investsmartindia.com and ----------------------
Investmartindia.com sounds similar and thus creates confusion in the
minds of the customers. ----------------------

4. Botnets or alien computer control: If there is permanent Internet ----------------------

connection, then it is constantly open and vulnerable to outside world.
Any hacker can easily gain access to the computer by using network ----------------------
scanning tool which tracks poorly protected system. Then alien or remote ----------------------
third party software controls the PC.
----------------------
The website is used to host and distribute other unauthorised software,
some of which may damage other user’s computers. Even a simple ----------------------
response from an enquiry could have some hidden code placed by the
hacker so that it deletes database information or sends emails to everyone ----------------------
in the address book. Remember, social media Web 2.0 can increase
----------------------
vulnerability to hackers.
5. Chat rooms: Even without permanent connections, a chat room can be ----------------------
invaded by uninvited and unwanted third parties such as racists. They post
----------------------
obscene messages or more subtle racist arguments to often vulnerable
audiences. ----------------------
6. Intellectual property theft: Intellectual theft of property occurs all the
----------------------
time like theft of software, music and information downloaded, copied
and passed on. Sometimes it’s duplicated and sold commercially by ----------------------
unauthorised pirates. Pirating is effectively legal in some countries where
there is no IPR law. This may cause problem related to security. ----------------------

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 Notes 7. Competitive information: Another type of intellectual property also
gets stolen like sensitive company information, particularly competitive
---------------------- information and database of customers.
---------------------- Anything that damages the data or information can have huge legal
implications, since without properly used backup system, directors can
---------------------- be liable for any damage to their own business caused by viruses.
----------------------
Activity 2
----------------------

---------------------- Examine available data and Internet to find out which security is effectively
used in any online business for safe and secure transaction.
----------------------

---------------------- 9.4 ELECTRONIC PAYMENT SYSTEM

---------------------- Issue of trust and acceptance plays a more important role in the e-commerce
---------------------- world than in any traditional businesses as far as payment system is concerned.
Payment is a more important issue in such type of transactions. As in traditional
---------------------- business, customer sees the product, examines it and then purchases it by paying
cash, cheque or by credit card. But when the business takes place online, the
---------------------- product is not actually seen or examined by the customer but ordered online and
---------------------- the payment is performed electronically.
Electronic Payment System (EPS) enables a customer to pay for the goods
---------------------- or services ordered online by using integrated hardware and software system.
---------------------- The main objectives of such transactions are to increase efficiency, customer
convenience and easiness to use.
----------------------
While customers pay for goods or services by cash, cheque or debit or
---------------------- credit card in traditional businesses, online buyers may use one of the following
EPSs to pay for the goods or services they have ordered online:
----------------------
• Electronic funds transfer: Electronic funds transfer of money involves
---------------------- transfer of money by financial institutes.
• Payment cards: They contain stored financial value which can be
----------------------
converted from customer’s account to the businessman’s account online.
---------------------- • Credit cards: They are the most popular method used in electronic
---------------------- payment mode.
• Smart cards: They include stored financial value and other important
---------------------- personal and financial information used for online payments.
---------------------- • Electronic money (e-money/e-cash): This is standard money converted
into electronic format to make payment on online transactions and
---------------------- purchases.
---------------------- • Online payment: This can be used for monthly payment for Internet,
phone bills, etc.
----------------------

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 • Electronic wallets (e-wallets): They are similar to smart cards as they Notes
have stored financial value for online payments. E-wallets can also
be classified as payment cards when they are used to store credit card ----------------------
information or as e-money when they store electronic currency.
----------------------
• Micro payment system: They are similar to e-wallets as they have stored
financial value for online payments. They are mostly used for small ----------------------
payments.
----------------------
• Electronic gifts: They are one way of sending electronic currency or
gift certificates from one individual to another. The receiver can spend ----------------------
these gifts in their favourite online stores provided they accept this type
----------------------
of currency.
The well designed and an uncomplicated payment mechanism on the ----------------------
Internet is essential to the success of any online transaction. Businesses offering
----------------------
services in domestic or international transaction should assure the security of
the payment received. Security is the major issue in any payment transaction ----------------------
for online business, so customer and merchant should be able to trust that the
information is kept intact and remains secure during transmission. ----------------------
Electronic Funds Transfer (EFT) ----------------------
In spite of this being mentioned above, this concept needs little more ----------------------
emphasis. Electronic funds transfer is the oldest and one of the safest methods of
transfer of money electronically without any cheque and paper bills. Electronic ----------------------
funds transfer is used for transferring money from one bank account directly to
another account without any paper or money changing hands. Here the money ----------------------
is deposited electronically instead of pay cheques and putting it into a bank ----------------------
account. Electronic funds transfer is considered to be a safe, reliable and a
convenient way to conduct business. ----------------------
The advantages of electronic funds transfer are: ----------------------
• Simplified accounting
----------------------
• Reduced administrative cost
----------------------
• Improved efficiency
• Improved security ----------------------

----------------------
9.5 MODES OF PAYMENT
----------------------
Credit cards, debit cards, charge cards and smart cards are the most
effective and popular tools for electronic payment transactions. ----------------------
1. Credit cards: There are two types of credit cards in the market today. ----------------------
Cards issued by:
----------------------
a. Credit card companies (e.g., Master Card, Visa)
----------------------
b. Major banks
----------------------

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 Notes Credit cards are issued to the customers on their income level, credit
history and total wealth. This card can be used to buy goods or services
---------------------- by the customers on credit for the limit period given by the financial
institution, otherwise interest will be accumulated. It is also used to get
---------------------- cash on credit. Such types of cards have limitations when the transaction
---------------------- is excessively large or very small. Credit card has limitation on credit
payments.
----------------------
Credit cards issued by oil companies or departmental stores are extremely
---------------------- beneficial as these credit cards are cheaper to operate. They are widely
issued by the companies and used by a large number of customers.
----------------------
2. Debit cards: Debit cards are also one of the popular modes of payment
---------------------- for purchases. In this, payments of purchases are deducted from the
account of the customer. For payment with debit card, one needs to know
---------------------- the Personal Identification Number (PIN) and needs a hardware device
that can read the information stored in the magnetic strip on the back. It is
----------------------
easy to access and is convenient to the customer.
---------------------- 3. Charge cards: Charge cards are similar to credit cards. Some of the
reasons for using payment cards by the customer are its availability to
----------------------
customers, ease of operation and acceptance for transaction.
---------------------- 4. Smart cards: A smart card is made of plastic with an embedded
---------------------- microprocessor chip which holds the information related to personal data
and financial status. It is similar to the size of a credit card. The money
---------------------- on the card is saved in an encrypted form protected by a password to
ensure the security of the smart card solutions. In order to pay via smart
---------------------- card, it is necessary to introduce the card into a hardware terminal. The
---------------------- device requires a special key from the issuing bank to start a money
transfer in either direction. Smart cards can be disposable or rechargeable.
---------------------- A popular example of a disposable smart card is the one issued by
telephone companies. After using the pre-specified amount, the card can
---------------------- be discarded.
---------------------- Smart cards have been extensively used in the telecommunications
industry for years. Smart card technology can also be used to hold information
---------------------- on health care, transportation, loyalty programmes and banking.
---------------------- Some of the advantages of smart cards include the following:
---------------------- • Store many type of information.
• Not easily duplicated.
---------------------- • Does not occupy much space.
---------------------- • Portable.
• Low cost to issuers and users.
----------------------
• Includes high security.
---------------------- The disadvantage of smart card is lack of universal standards for their
---------------------- design and utilisation.

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 Notes
Check your Progress 2
----------------------
State True or False. ----------------------
1. Smart card is similar to the size of a ration card.
----------------------

----------------------
Activity 3
----------------------
There are different modes of payment for making transaction while ----------------------
purchasing online. Which mode of payment will you process if you are the
customer and why? ----------------------

----------------------
9.6 ELECTRONIC MONEY/ELECTRONIC CASH (E-CASH)
----------------------
Electronic money/e-cash is broadly defined as an electronic store of ----------------------
monetary value on a technical device that may be widely used for making
payments to undertakings other than the issuer without necessarily involving ----------------------
bank accounts in the transactions, but acting as a prepaid bearer instrument.
----------------------
Similar to regular cash, e-cash enables transactions between customers
without the need for banks or other third parties. It is also feasible for small ----------------------
payments and transaction. When used, the transaction occurs immediately
and directly to the merchant’s account. It is one of the secure and convenient ----------------------
alternatives to bills and coins. ----------------------
Using e-cash, the customer has two options:
----------------------
a. A stand-alone card containing e-cash
----------------------
b. A combination card that incorporates both e-cash and debit
A typical e-cash system work process is as follows: ----------------------
• A customer or merchant signs with one of the participating banks or ----------------------
financial institutions.
----------------------
• The customer receives specific software to install.
• The software allows the customer to download electronic coins to his/her ----------------------
desktop. The software manages the electronic coins. ----------------------
• The initial purchase of coins is charged against the customer’s bank
----------------------
account or against a credit card.
• During purchase of goods or services from the website that accepts e-cash, ----------------------
the customer has to simply click on the “Pay with e-cash” button.
----------------------
• The site on which a purchase has to be made generates a payment request
describing the details of the goods or services purchased, price and the ----------------------
time and date.
----------------------

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 Notes • The customer can then accept or reject the request. If the customer accepts
the payment request, the payment amount is deducted from the balance
---------------------- and the payment is deposited in the merchant account of bank or the
financial institution.
----------------------
• The attractive feature of the entire process is its turnaround time which is
---------------------- few seconds and easy to use.
----------------------
9.7 ELECTRONIC CHEQUES (E-CHEQUES)
----------------------
E-cheques are the result of cooperation among several banks, government
---------------------- entities, technology companies and e-commerce organisations. An e-cheque uses
same legal and business protocols associated with traditional paper cheques.
---------------------- It involves high speed, security, convenience and processing efficiencies for
---------------------- online transactions. It can be used by large and small organisations, even where
other electronic payment is risky or not appropriate.
---------------------- The key advantages of e-cheques are as follows:
---------------------- • Secure and quick settlement of financial obligations
• Fast processing
----------------------
• Very low transaction cost
----------------------
9.8 E-SECURITY
----------------------
Good security starts with good security policy. It is good to build security
----------------------
into the design of an e-business early as it is difficult to retrofit security to an
---------------------- operational system under attack. Tough decisions are required, e.g., convenience
and security do not always work together; passwords are a trouble but do offer
---------------------- at least a minimal level of security. Equally, risk can be reduced by asking
customers to pre-register before purchasing anything or clearing payment
----------------------
before goods are dispatched.
---------------------- There is more other technological, physical and procedural control
required:
----------------------
1. Contracts: Security can be obtained to some level by having a contract
---------------------- with companies with whom business has to be done online.
2. Trends and exception monitoring: Visa contacts cardholders if any out-
---------------------- of-character purchases are made and AmEx offers temporary numbers
---------------------- that are valid for a predetermined shopping period and amount, i.e., one
or two hours.
---------------------- 3. Public key technology and cryptography: Web servers and browsers
can be set up easily to encrypt or seal all communications. Public key
----------------------
encryption basically confirms the identity of an individual or a company.
---------------------- 4. Intrusion detection routines: These scan for attacks such as denial of
service or access to a site via a competitor. They are often part of a firewall
----------------------
solution which is a specialised server at the gateway to a company that is
---------------------- used to keep out unwanted intruders.

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 5. Virus scanners: These should be set up to monitor continuously and kept Notes
updated to the latest version. It helps to secure data to some extent.
----------------------
6. Audit trails: One needs to record good audit trails of key events, with
particular security related events and transaction records. The information ----------------------
should be audited to help resolution of disputed electronic transactions.
----------------------
7. Backup: Backup is crucial and difficult once the business is online. The
backup should be good and there should be good recovery procedures to ----------------------
secure the data.
----------------------
The best system in the world is not going to help if people don’t use it
properly. Security is the major concern as there are more businesses coming ----------------------
online.
----------------------
9.9 FIREWALLS ----------------------
To prevent unauthorised activities between the Internet and the private ----------------------
network, a specialised hardware, software or software-hardware combination
known as firewall is often organised. Firewall software often runs on a ----------------------
dedicated server between the Internet and the protected network. All network
----------------------
traffic entering the firewall is examined, and possibly filtered, to ensure that
only authorised activities take place. ----------------------
Firewalls usually provide separate layer between the inside also known
----------------------
as clean network and outside known as dirty network. Multiple sub-networks
are separated to control interactions between them. A common assumption is ----------------------
that all the threat comes from the outside network or Internet, but many modern
firewalls provide protection against insiders acting inappropriately and against ----------------------
accidental harm that could result from internal configuration errors, viruses or
----------------------
experimental implementation. Outside threats may be able to circumvent the
firewall entirely if dial-up modem access remains uncontrolled or unmonitored. ----------------------
Incorrectly implemented firewalls can spoil the situation by creating new ----------------------
and sometimes undetected, security problems or by creating such barriers to lid
uses that insiders reduce its processes intentionally. If incorrectly configured ----------------------
and unmaintained firewall is used, then it is of no use as it gives a false sense of
security. ----------------------

Advantages of Firewall ----------------------

• When properly configured and monitored, firewalls can be an effective ----------------------
way to protect network and information resources.
----------------------
• Firewalls are used to reduce cost associated with protecting larger number
of computers that are located inside it. ----------------------
• Firewalls also provide control point that can be used for other protective
----------------------
purposes.
Disadvantages of Firewall ----------------------
• Firewall can create complication as its complex rule sets. ----------------------

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 Notes • Firewalls must be configured, managed and monitored by properly trained
personnel.
---------------------- • Even a properly configured firewall is not sufficient or complete as an
---------------------- outer limit security solution.
Firewalls often interfere with network applications that may expect
---------------------- direct connections to end- user workstations, such as Voice over Internet
---------------------- Protocol (VOIP) phones and Virtual Private Networks (VPNs) as well as some
collaborative tools such as instant messenger, and video and audio conferencing
---------------------- software.

---------------------- Types of Firewall

1. Bastion host: Hardened server with trusted operating system that serves
---------------------- as the basis of the firewall.
---------------------- 2. Packet filtering firewall: A firewall that allows or blocks packet
transmission based on source and destination Internet Protocol (IP)
---------------------- addresses.
---------------------- 3. Application gateways: Application-level filters examine the entire
request for data rather than only the source and destination addresses.
----------------------
4. Circuit-level proxies: Proxy servers that work at the circuit level by
---------------------- proxying such protocols as file transfer protocol.
5. Stateful firewall: A firewall that monitors connections and records packet
---------------------- information in state tables to make forwarding decisions in the context of
---------------------- previous transmitted packets over a given connection.
6. Trusted gateway: In a trusted gateway, certain applications are identified
---------------------- as trusted, are able to bypass the application gateway entirely and are able
---------------------- to establish connections directly rather than by proxy.
7. Internal firewall: Firewalls that include filters that work on the data link,
---------------------- network and application layers to examine communications that occur
---------------------- only on an organisation’s internal network, inside the reach of traditional
firewall.
----------------------
Check your Progress 3
----------------------

---------------------- State True or False.

---------------------- 1. E-cash enables transactions between customers without the need for
banks or other third parties.
----------------------
2. E-cheques are not secure.
---------------------- Fill in the blanks.
---------------------- 1. A firewall aims at preventing unauthorised activities between ______
and ______.
----------------------
2. __________ is a type of firewall.
----------------------

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 Summary Notes

• The acceptance of Internet by the business community has given the ----------------------
business a new turn in today’s global competition which has resulted in
----------------------
the extraordinary growth in global electronic communications.
• The laws are in place to resolve common issues and problems that occur ----------------------
between buyer and seller when the transaction is made online. Here ----------------------
problem occurs as buyer and seller may be in different cities or even may
be in different countries. ----------------------
• Privacy of personal data such as one’s identities, likes and dislikes is a ----------------------
major concern to consumers, particularly with the dramatic increase in
identity theft. ----------------------
• Data protection legislation is enacted to protect the individuals, to protect ----------------------
their privacy and to prevent misuse of their personal data.
----------------------
• There are thousands of hackers and viruses who disturb the privacy and
security of the data in the system. ----------------------
• Issue of trust and acceptance plays a more important role in e-commerce
----------------------
world than in any traditional businesses as far as payment system is
concerned as it is a more important issue in such type of transactions. ----------------------
• Electronic payment system enables a customer to pay for the goods
----------------------
or services ordered online by using integrated hardware and software
system. The main objective of such transaction is to increase efficiency ----------------------
and enhance customer convenience and ease of use.
----------------------
• Electronic funds transfer is one of the safest and convenient methods
of transfer of money electronically without any cheque and paper bills. ----------------------
Electronic funds transfer is used for transferring money from one bank
account directly to another account without any paper or money changing ----------------------
hands. ----------------------
• Electronic money/e-cash is broadly defined as an electronic store of
monetary value on a technical device that may be widely used for making ----------------------
payments to undertakings other than the issuer without necessarily ----------------------
involving bank accounts in the transactions, but acting as a prepaid bearer
instrument. ----------------------
• E-cheques are the result of cooperation among several banks, government ----------------------
entities, technology companies and e-commerce organisations and uses
same legal and business protocols associated with traditional paper ----------------------
cheques. It involves high speed, security, convenience and processing
efficiencies for online transactions. ----------------------

• Good security starts with good security policy. It’s good to build security ----------------------
into the design of an e-business early as it’s difficult to retrofit security to
----------------------
an operational system under attack.
• To prevent unauthorised activities between the Internet and the private ----------------------

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 Notes network, a specialised hardware, software or software-hardware
combination known as firewall is often organised. Firewall software often
---------------------- runs on a dedicated server between the Internet and the protected network.
----------------------
Keywords
----------------------
• Privacy: A moral right of individuals to avoid intrusion into their personal
---------------------- affairs by third party.
---------------------- • Personal data: The data of an individual about personal identities,
address, contact information, e-mail address, workplace and income
---------------------- status, etc.
---------------------- • Security: The security of the personal data and privacy which should be
maintained.
----------------------
• Electronic payment systems: Different payment systems which play a
---------------------- significant role in transaction in the e-commerce world.
---------------------- • Electronic fund transfer: It involves electronic transfer of money by the
financial institutions.
----------------------
• E-cash: An electronic store of monetary value on the technical device
---------------------- that can be used for payments.
• Firewall: A security measure to prevent unauthorised activities between
----------------------
the Internet and the private network.
----------------------

---------------------- Self-Assessment Questions

---------------------- 1. Discuss the legal issues in e-business.

2. Summarise the main security threats to e-business and describe solutions
----------------------
to each threat.
---------------------- 3. What do you understand by Electronic Payment System (EPS)?
---------------------- 4. Discuss the various types of payment cards in detail.

---------------------- 5. Write short notes on:

i. E-cash
----------------------
ii. E-cheque
----------------------
iii. Firewall
---------------------- iv. Electronic fund transfer
----------------------
Answers to Check your Progress
----------------------
Check your Progress 1
----------------------
State True or False.
---------------------- 1. True

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 Check your Progress 2 Notes
State True or False.
----------------------
1. False
----------------------
Check your Progress 3
State True or False. ----------------------
1. True ----------------------
2. False ----------------------
Fill in blanks.
----------------------
1. A firewall aims at preventing unauthorised activities between the Internet
and the private network. ----------------------
2. Bastion host is type of firewall. ----------------------

----------------------
Suggested Reading
----------------------
1. Chakraborty. The Management and ethics omnibus. OUP.
----------------------
2. Crane & Matten. Business Ethics. OUP.
3. DeGeorge, Ricahrd T. Business Ethics. Pearson. ----------------------
4. Mallin. Corporate Governance. OUP. ----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 Risk Mitigation and Consumer Rights
UNIT

10
Structure:

10.1 Introduction
10.2 What is Risk
10.3 Information Security and Reliability
10.4 Technology in Security
10.5 Assessment of Risk
10.6 Consumers’ Role in Virtual Market
10.7 Consumers’ Rights and Law
10.7.1 The Sale of Goods Act
10.7.2 Information Technology Act, 2000
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Analyse risk
----------------------
• Explain different types of risk
---------------------- • Describe information security and reliability
---------------------- • Assess risk

---------------------- • Identify the role of consumer in virtual markets

• State consumer’s rights and law
----------------------

----------------------
10.1 INTRODUCTION
----------------------
During the late 1990s and early 2000s, several industries started using
---------------------- extranet as a part of their business, which is called e-commerce. E-commerce
continues its rapid growth, continues to evolve and continues to increase in
---------------------- technical sophistication. It may yet live up to Peter Drucker’s prediction that
just as the railroad emerged from the Industrial Revolution to forever change
----------------------
the economy, society and politics of the country, e-commerce is coming out
---------------------- of the Information Revolution to do the same in our own age. Many others,
however, believe that e-commerce simply provides a new channel that will be
---------------------- very useful for some buyers, such as companies looking for additional sources
of materials, or for individuals who want to compare prices.
----------------------
In an increasingly competitive global marketplace, it is extremely
---------------------- important for businesses to embrace the latest methods and trends to conduct
---------------------- their businesses. With the advancement of technology, particularly the Internet,
the world has discovered a new path of opportunities, switching the transactions
---------------------- of traditional business models into a better model far superior in terms of
efficiency, productivity, profitability and competitiveness.
----------------------
Over the last 20 years, technology has brought changes in the way business
---------------------- is today, besides developing numerous risks. The reason behind it is awareness
of customers, increasing demand of the products and services by the customers,
---------------------- introduction of new technologies as a part of communication and business in
---------------------- market, changing market conditions and regulatory guidelines, etc.

---------------------- 10.2 WHAT IS RISK

---------------------- Risk is part of every human endeavour. From the moment we get up in
---------------------- the morning, drive or take public transportation to work or to our office until we
get back into our beds (and perhaps even afterwards), we are exposed to risks
---------------------- of different degrees. What makes the study of risk fascinating is that while some
of this risk-bearing may not be completely voluntary, we seek out some risks on
---------------------- our own (speeding on the highways or gambling, or risk in investment or risk in

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 a new business or new decision in the existing business for instance) and enjoy Notes
them. While some of these risks may seem trivial, others make a significant
difference in the way we live our lives. On a loftier note, it can be argued that ----------------------
every major advance in human civilisation, from the caveman’s invention of
tools to gene therapy, has been made possible because someone was willing to ----------------------
take a risk and challenge. So risk and taking risk is a very important part of our ----------------------
life.
----------------------
Oxford Dictionary defines the term “risk” as a chance or possibility of
danger, loss, injury or other adverse consequences. In legal parlance, the term ----------------------
“risk” denotes peril, hazard or chance of loss. Therefore, etymologically or
legally what we refer to risk is the chance of encountering a situation in which ----------------------
one has to suffer loss or injury.
----------------------
When a company encounters risk, it might be the loss or any injury
suffered by any damage to the property or money or imprisonment to any person ----------------------
of the company which is also called corporeal loss. Corporeal loss is borne by
----------------------
its proprietor or any officers by default as the case may be. Business risk may
include financial risk, political risk, fidelity risk, security risk and legal risk. ----------------------

Check your Progress 1 ----------------------

----------------------
Multiple Choice Multiple Response.
----------------------
1. In legal parlance, the term “risk” denotes:
----------------------
i. Peril
ii. Hazard ----------------------
iii. Chance of loss ----------------------
iv. Gambling ----------------------
2. Business risk involves:
----------------------
i. Political risk
----------------------
ii. Legal risk
iii. Security risk ----------------------
iv. Advertising ----------------------

----------------------
Activity 1 ----------------------

Examine available data from the Internet to find out the risk in virtual ----------------------
marketing. Provide suitable examples.
----------------------

----------------------

----------------------

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 Notes 10.3 INFORMATION SECURITY AND RELIABILITY
---------------------- Information security is one of the important issues of security to be
considered when business is done online. It is disturbing whether you are
---------------------- concerned with the privacy of your personal data or the potential risk to your
---------------------- organisation. Businesses and customers get damaged. Kids, common men,
criminals and competitors, not to mention pressure groups, political groups,
---------------------- government intelligence agencies and many more want to break through
security system.
----------------------
Poorly designed systems are vulnerable to wide variety of risks.
---------------------- Organisations can be accused of negligence for malpractices of privacy or
security. Thus, security of information is the important parameter. Therefore,
---------------------- in the UK, the Information Commissioner has announced that he will take a
---------------------- stronger line with the organisations that have privacy malpractices. So apart from
damaging customers’ trust in organisation, security lapses can end company
---------------------- directors up in court, if they are deemed to be negligent in their responsibilities
towards good security.
----------------------
Good security starts with good security policy. System security is a part of
---------------------- a wider security policy that should include physical (lost laptop, stolen PC, etc.)
and procedural security (to avoid disaffected employees deliberately formatting
---------------------- a disc or sending information out). This security is very important to be taken
---------------------- care of.
The data when properly configured and monitored can be an effective
----------------------
way to protect network and information resources. Such type of system can be
---------------------- a control point that can be used for other protective purpose. The personal data
should be regularly reviewed and the extra or unneeded information which is no
---------------------- longer required for their purpose should be deleted.
---------------------- It might be in the company’s interest to clean data so that records that
are not relevant are archived or deleted, e.g., if a customer has not purchased
---------------------- for 10 years. However, there is the possibility that the customer may still buy
again, in which case the information can be useful. If a relationship between
----------------------
the organisation and the data subject ends, then data should be deleted. This
---------------------- will be clear in some instances, e.g., when an employee leaves a company, their
personal data should be deleted. With a consumer who has purchased products
---------------------- from a company, this is less clear since frequency of purchase will vary, e.g., a
car manufacturer could justifiably hold data for several years.
----------------------
Now the question comes about reliability. How much to rely on the security
---------------------- of information? It is a big question. Reliability depends on the company’s
privacy and security policies.
----------------------

---------------------- 10.4 TECHNOLOGY IN SECURITY

---------------------- It’s good to keep security as inherent part of e-business design at very
early stages as it is difficult to retrofit security to an operational system under
----------------------

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 attack. There are many technological, physical and procedural controls which Notes
help for the purpose of security. This has been already explained in detail in
Unit 9. ----------------------
One more technology used nowadays is the firewall system. Commercially ----------------------
available firewalls generally use either packet filtering or proxies as firewall
architecture and add an easy-to-use Graphic User Interface (GUI) to ease ----------------------
the configuration and implementation task. Some firewalls even use industry
----------------------
standard Web browsers as their GUIs. Several certifying bodies are available
to certify various aspects of firewall technology. As an example, one certifying ----------------------
body certifies the following:
----------------------
• That firewalls shall meet the minimum requirements of reliable protection.
• That firewalls shall perform as advertised. ----------------------
• That Internet applications shall perform as expected through the firewall. ----------------------
The details about firewalls and many other technologies for security is ----------------------
described in detail in the previous unit.
----------------------
10.5 ASSESSMENT OF RISK
----------------------
Risk models typically aim at evaluation of losses over a given time horizon ----------------------
that could incur for a variety of risks. Formal risk modelling, for instance, is
required under the new (risk-sensitive) supervisory frameworks in the market in ----------------------
different areas. The most prominent risk measure undoubtedly is Value at Risk
(VaR). It refers to the question as to how much market can fall in value over a ----------------------
certain time period with a given probability. Modern risk management is being ----------------------
applied to areas of industry well beyond the financial ones.
Paul et al, describes how uncertainty or risk in actuarial sciences are ----------------------
measured mathematically. As they quote, uncertainty or risk will always be ----------------------
represented by a random variable, say X or X (t), defined on a filtered probability
space, where F is filtration and F(t) is any filtered function of element t. ----------------------
Since risks are modelled as (non-negative) random variables, measuring ----------------------
risk is equivalent to establishing a relation Q between the set of random
variables and R, the real numbers. Put another way, a risk measure is a function ----------------------
mapping a risk X to a real number Q(X). If, for example, X defines the loss in
a financial portfolio over some time horizon, then Q(X) can be interpreted as ----------------------
the additional amount of capital that should be set aside so that the portfolio ----------------------
becomes acceptable for a regulator. The definition of a risk measure is very
general, and yet risk measures should fulfil certain properties to make them ----------------------
“good” risk measures. For instance, it should always hold that Q(X) is bounded
by the largest possible loss, as modelled by FX. ----------------------

----------------------
10.6 CONSUMERS’ ROLE IN VIRTUAL MARKET
----------------------
Shopping occupies an ongoing role in our lives and consciousness,
whether it’s viewed as a task, a way of achieving a goal, a way to pass the ----------------------

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 Notes time, a preferred means of entertainment and it can be an addiction. Consumers
struggle with deciding what goods and services they want and how they will
---------------------- obtain them virtually on a daily basis. Now customers have many ways of
shopping from vendors on street to big malls and departmental stores, airports,
---------------------- catalogues, shopping TV channels, magazines, etc.
---------------------- Of the various channels to market and shopping, the one that has probably
received the greatest attention and preferred by the customers with the highest
----------------------
expectations of impact and adoption is the Internet. The Internet has changed
---------------------- the way to look towards market and shopping. It has promised to change the
very way customer shopped. The popularity of e-mail and use of browser shows
---------------------- that sociality and entertainment are common activities. Internet uses both these
activities to reach the customer. Customers not only in developed countries but
----------------------
also in developing countries are getting used to new shopping channels like
---------------------- online shopping. Many customers, mostly who are highly busy in their work,
shop online as use of virtual market is the best alternative for their shopping
---------------------- which saves their time and energy and the products are delivered at their
doorstep.
----------------------
If consumers stop buying, or if they decide to spend less on a product for
---------------------- whatever reason, prices will drop. If they buy more, there will be increase in
demand and the prices will rise. The same is the case with the virtual market
----------------------
also. Depending on the response on the use of virtual market as part of shopping
---------------------- by the customers, the virtual market exists.
Nowadays, customers are playing an important role in virtual markets.
----------------------
Without their access, the virtual market can’t be successful. A customer has
---------------------- the power to choose the right product from the number of competing suppliers.
So searching the right information and selecting and ordering the right product
---------------------- needed is important in the virtual market. Customer here is as much important
as the suppliers. Accessing the Net and proper online buying is again one
----------------------
parameter where customer plays a role. If there is any mistake in the process, it
---------------------- may lead to problems.

---------------------- Check your Progress 2

----------------------
State True or False.
----------------------
1. It is difficult to retrofit security to an operational system under attack.
----------------------
2. System security is a part of a wider security policy that should include
---------------------- physical and procedural security.

---------------------- Fill in the blanks.

1. ____________ refers to the question as to how much market can fall
---------------------- in value over a certain time period with a given probability.
---------------------- 2. _________ system is used as a technology for security in the internet
system
----------------------

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 10.7 CONSUMERS’ RIGHTS AND LAW Notes
Virtual marketing depends on developing a collaborative partnership ----------------------
and relation between company and their customers. Too often the relationship
between company and customers becomes adverse due to any problem in ----------------------
transactions of business between them.
----------------------
The customers have all their rights in the virtual market as it is in traditional
market. Customers have the right to timely service when seeking service in ----------------------
person and by phone. Customers have the right to get complete, accurate, ----------------------
reliable information and feedback. They have the right to get complete and true
information online as they are using this method for shopping and totally rely ----------------------
on it. Customers also have the right to consistent and fair application of codes
and rules. ----------------------

The product should be as it is shown and described on the website. ----------------------

Customers have full authority to return, repair, replace or get the refund of
their product if there is any fault in the item delivered to them. A customer has ----------------------
full right to post complaints or feedback about the goods or services purchased ----------------------
online.
----------------------
When you buy an item from a trader (e.g., a shop or online shop), the law
says the item must be: ----------------------
• Of satisfactory quality – last for the time you would expect it to and be
----------------------
free of any defects
• Fit for purpose – fit for the use described and any specific use you made ----------------------
clear to the trader
----------------------
• As described – match the description on packaging or what the trader told
you ----------------------

If an item doesn’t meet any of these rights, it is faulty and you will usually ----------------------
have the right to a:
----------------------
• Repair
----------------------
• Replacement
• Refund ----------------------
These rights apply to most items that are bought online. Consumers may ----------------------
have additional rights to these if they have a warranty. If the trader makes a
fault known to any consumer and consumer buys the item, then the consumer ----------------------
can’t return it unless that consumer discovers a different fault. Consumers have
----------------------
fewer rights if they buy items from a private seller, e.g., in an online auction or
from a newspaper advertisement. The items only have to match the description ----------------------
given by the seller and be theirs to sell. Consumers also have rights if they buy a
service or sign up to a contract, e.g., if consumer hires a builder or joins a gym. ----------------------
10.7.1 The Sale of Goods Act ----------------------
Rights of customers ----------------------

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 Notes If the goods are sold regardless of contract – that aren’t as described,
are unfit for their purpose or of unsatisfactory quality – then sellers are legally
---------------------- obliged to resolve the problem if customers seek to redress.
---------------------- The Sale of Goods Act states that if customers want to reject faulty goods,
they have to do so within a “reasonable time”. A legal definition of “reasonable”
---------------------- is not given though – it varies from case to case and could be just a few weeks
from the date of purchase.
----------------------
If a customer rejects faulty goods within this “reasonable” period, they
---------------------- are entitled to ask for their money back. All customers can claim compensation
at any time if they choose. If goods are sold to consumers – not other traders
----------------------
– they can ask for a repair or a replacement immediately (instead of asking for
---------------------- a refund) at any time until six years after purchase. Any repair or replacement
arranged must not cause too much inconvenience. Sometimes seller also may
---------------------- have to pay for other costs such as transportation. However, if a replacement is
impossible and the goods cannot be repaired economically or vice versa, then
----------------------
the seller can offer a full or partial refund.
---------------------- As per the Act, every seller needs to be responsible for up to six years from
the date of purchase (in Scotland, five years from discovery of the problem).
----------------------
During this period, sellers are legally obliged to deal with any claim of breach
---------------------- of contract.

---------------------- 10.7.2 Information Technology Act, 2000

The Information Technology Act, 2000 facilitates e-commerce, legal
---------------------- recognition to electronic transactions, digital and electronic signatures.
---------------------- Information Technology Act, 2000 also deals with wrongs which are treated
as contraventions and offences as well. The contraventions are civil wrongs
---------------------- and remedy for which is compensation for the victim. Contraventions are less
serious than offences. Offences are criminal wrongs for which the remedy lies in
---------------------- the form of punitive action like imprisonment and fine. Because of the coming
---------------------- in to force of Information Technology Act, 2000 many changes, amendments
were necessary in the existing laws.
---------------------- Along with this new legislation, existing legislations such as Indian Penal
---------------------- Code, The Indian Evidence Act 1872, The Bankers Book Evidence Act 1891,
The Reserve Bank of India Act 1934 and the Negotiable Instruments Act 1881
---------------------- also underwent some amendments to give full effect to the aforesaid objects.
Due the amendments carried out in the Indian Penal Code and The Evidence Act,
---------------------- the electronic record is now treated at par with a paper based document and is
---------------------- therefore admissible in evidence as ‘documentary evidence’ and crimes relating
to documents such as forging a document are also applicable to electronic
---------------------- records such as forging an electronic record. The Reserve Bank of India Act
was amended to give recognition to electronic fund transfer between banks and
---------------------- financial institutions while The Negotiable Instruments Act was amended to
---------------------- give legal recognition to electronic payments.

----------------------

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 ● Technology is always ahead of the law. Law must keep pace with the Notes
advancement in the technology. Legislature has tried its best to make
a new law or amend the existing law to keep pace with technology to ----------------------
curb any harm against the society. The Amendment in 2008 has changed
the face of The Information Technology Act, 2000 totally. Previously, ----------------------
there were certain specific offences which were not considered in the ----------------------
application of the law. But now with the Amendment Act of 2008, the
issues like identity theft, breach of privacy have been addressed. ----------------------
● Even though, in the initial stages The Information Technology Act, 2000 ----------------------
was not sufficient enough to deal with every single aspect of the cyber
crimes and contraventions the Amendment in the said Act in 2008 is almost ----------------------
as good as making it a stringent and strict law. After the Amendment of
----------------------
2008, the Information Technology Act also makes acts such as spamming,
blogging, cyber stalking, phishing, identity theft as punishable. ----------------------

Summary ----------------------

• With the advancement of technology, particularly the Internet, the world ----------------------
has discovered a new path of opportunities, switching the transactions of ----------------------
traditional business models into a better model far superior in terms of
efficiency, productivity, profitability and competitiveness. ----------------------
• Over the last 20 years, as technology has changed the way of business ----------------------
today, the market has also developed numerous risks.
----------------------
• The term “risk” is defined as a chance or possibility of danger, loss, injury
or other adverse consequences. ----------------------
• When a company encounters a risk, it means the loss or any injury suffered
----------------------
by any damage to the property or money or imprisonment to any person
of the company which is also called corporeal loss. ----------------------
• Good security starts with good security policy. ----------------------
• The data when properly configured and monitored can be an effective
way to protect network and information resources. Such type of system ----------------------
can be a control point that can be used for other protective purpose. ----------------------
• The personal data should be regularly reviewed and the extra or unneeded
information which is no longer required for their purpose should be ----------------------
deleted. ----------------------
• Reliability depends on the company’s privacy legislation and different
----------------------
security policies are used to keep the data personal and secure for the
purpose it has been given to the company. ----------------------
• There are many technological, physical and procedural controls which
----------------------
help in the purpose of security.
• Of the various channels to market shopping, the one that has probably ----------------------
received the greatest attention and preferred by the customers with the ----------------------
highest expectations of impact and adoption is the Internet.

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 Notes • The Internet has changed the way to look towards market and shopping.
It has promised to change the very way customer shopped.
----------------------
• Customers also play an important role in the virtual market as a part of a
---------------------- market. Without their access, the virtual market can’t be successful.
• Customers have full authority to return, repair, replace or get the refund of
----------------------
their product if there is any fault in the item delivered to them. A customer
---------------------- has full rights to post complaints or feedback about the goods or services
purchased online.
----------------------
• The Sale of Goods Act states that if customers want to reject faulty
---------------------- goods, they have to do so within a reasonable time. A legal definition of
“reasonable” is not given though – it varies from case to case and could
---------------------- be just a few weeks from the date of purchase.
---------------------- • If a customer rejects faulty goods within this reasonable period, they’re
entitled to ask for their money back. All customers can claim compensation
---------------------- at any time if they choose.
----------------------
Keywords
----------------------
• Risk: Any chance or possibility of danger, loss, injury or any other adverse
----------------------
situation.
---------------------- • Information security: The protection of the information collected by the
company for any purpose.
----------------------
• Reliability: The personal data collected should be reliable and relevant in
---------------------- relation to the purpose or purposes for which they are processed.
---------------------- • Firewall: A specialised hardware, software or software-hardware
combination used to prevent unauthorised activities between the Internet
---------------------- and the private network.
---------------------- • Customers’ right: Right of customers while having transaction with the
suppliers.
----------------------

---------------------- Self-Assessment Questions

---------------------- 1. Define risk and explain the concept of risk in relation to virtual markets at
the global level with suitable examples.
----------------------
2. “Information security and reliability of the personal data is the most
---------------------- important part of transaction and business in the virtual market.” Justify
---------------------- this statement with suitable examples.
3. Explain the role of customer in the virtual market.
----------------------
4. Describe in detail the customers’ rights.
----------------------
5. Write short notes on:
---------------------- a. Technology in security

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 b. Law for customers Notes
c. Risk
----------------------
d. Assessment of risk
----------------------
Answers to Check your Progress ----------------------
Check your Progress 1 ----------------------
Multiple Choice Multiple Response.
----------------------
1. In legal parlance, the term “risk” denotes:
----------------------
i. Peril
ii. Hazard ----------------------
iii. Chance of loss ----------------------
2. Business risk involves:
----------------------
i. Political risk
ii. Legal risk ----------------------
iii. Security risk ----------------------
Check your Progress 2
----------------------
State True or False.
----------------------
1. True
2. True ----------------------
Fill in the blanks. ----------------------
1. Value at Risk (VaR) refers to the question as to how much market can fall
in value over a certain time period with a given probability. ----------------------
2. Firewall system is used as a technology for security in the Internet system. ----------------------

----------------------
Suggested Reading
----------------------
1. Sales of Goods Act, 1930
----------------------
2. Information Technology Act, 2000
3. http://www.mit.gov.in/sites/upload_files/dit/files/RNUS_CyberLaw_15411. ----------------------
pdf
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 Business Models for Virtual Enterprises
UNIT

11
Structure:

11.1 Introduction
11.2 Internet Business Models
11.3 Models for Internet-Based E-Commerce
11.4 Best Practices for Online Business Models
11.5 Models for the Music Industry
11.6 Models for the Software Industry
11.7 Models for the Telecom Industry
Summary
Keywords
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

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 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Discuss the meaning of business model
----------------------
• Explain the different types of Internet business models
---------------------- • Analyse the business models for software, telecom industry
---------------------- • Choose appropriate business model

---------------------- 11.1 INTRODUCTION

----------------------
Business models are basically a working sketch or detailed information
---------------------- regarding the method of doing business. It is the architecture of business. It
contains detailed information which spells out various aspects of business, such
---------------------- as:
---------------------- • How business operates?

---------------------- • How business generates revenue?

• Components of business
----------------------
• Functions of business
----------------------
• Operating structure strategy
---------------------- • Sales and marketing procedures
---------------------- • Division and various departments and job responsibilities, etc.

---------------------- Some business models are simple in nature. Some may have complex
procedures. Complex model’s success depends upon many competing factors.
---------------------- The advent of Internet technology, other technologies and changing
---------------------- business environment has forced many businesses to change their traditional
business models. It has given opportunities to many businesses to try new
---------------------- business models. For example, auctions are used for brokering and to set prices
of certain commodities since a very long time. However, online auctions have
---------------------- proved its popularity and can be applicable to a wide array of products and
---------------------- services.

---------------------- 11.2 INTERNET BUSINESS MODELS

---------------------- New models keep on evolving along with Internet. It is not possible to
---------------------- give complete or exhaustive types of Internet business models. Following are
some of the types of models which are gaining popularity:
---------------------- 1. Commission Agent Model: Commission agents bring buyers and sellers
---------------------- at common platform and assist in transaction. They usually charge certain
percentage of fees, which may vary. These commission agents play an
---------------------- important role in Consumer to Consumer (C2C), Business to Business

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 (B2B) and Business to Consumer (B2C) markets. The commission agent Notes
model includes:
----------------------
a. Marketplace exchange: It includes complete range of services like
transaction, negotiation, fulfilment, etc. ----------------------
For example:
----------------------
i. Orbitz.com: Orbitz is a global online travel company. It helps
international travellers in planning, researching, and booking ----------------------
of tickets, hotel, club, etc.
----------------------
ii. ChemConnect.com: It helps customers in their purchase
and sales processes for plastics, chemicals and relevant ----------------------
products through current market information, industry expert,
----------------------
e-commerce solution network of trading partners.
b. Buy-sell realisation: It deals in catering orders to buy or sell a ----------------------
product or service. It also covers terms of payment condition,
----------------------
delivery schedule, etc.
For example: ----------------------
i. CarsDirect.com: It offers online car buying service, providing ----------------------
new car, second hand or used car, and auto finance, etc.
----------------------
ii. Respond.com: RESPOND is a group of buyers and sellers
to provide quality service. It covers more than 100 types of ----------------------
purchases, where consumers are matched and coordinated
to quality merchants who respond to their requests for ----------------------
information.
----------------------
c. Demand collection system: In this type of system, the prospective
buyer makes a final bid for specific product/service and commission ----------------------
agent arranges fulfilment.
----------------------
For example:
----------------------
i. Priceline.com: It deals in online travel service. It is one of the
leading US based organisations. Priceline helps to save time of ----------------------
value-conscious travellers and to save time in airline tickets,
rental cars, accommodation facilities in hotels according to ----------------------
customer demand, vacation packages, etc. This had given
----------------------
a new outlook and way for looking at travel business. Its
popularity designates opportunities for other travel agencies. ----------------------
ii. Agoda.com: Agoda is an Asian online hotel reservation
service. ----------------------

d. Auction broker: It conducts auctions for sellers. ----------------------

For example: ----------------------
i. eBay.com: On a given day, it sells millions of product/services
across local, national and international market online. ----------------------

e. Transaction broker: It provides third-party payment instrument to ----------------------

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 Notes facilitate transaction.
For example:
----------------------
i. PayPal.com: PayPal offers customers to pay and get paid
---------------------- online in the safest mode. Customers do not have to split
their financial information. It offers customer flexibility in
----------------------
the mode of payment. Payment can be paid through Internet
---------------------- banking, credit cards or account balances.
ii. Escrow.com: Escrow is one of the most trusted and reliable
----------------------
online transaction organisations. Online escrow service
---------------------- facilitates and speeds e-commerce. It offers secure settlement.

---------------------- f. Distributor: Distributor connects manufacturers and buyers.

Commission agent facilitates transactions in lieu of commission.
---------------------- g. Search (software) agent: It is used to search various product/
---------------------- service, its price, availability, information through e-catalogue, etc.
h. Virtual marketplace: It is hosting service for online business that
---------------------- charges set-up, transaction fees, monthly listing.
---------------------- For example:
---------------------- i. Amazon.com: Amazon is a consumer-oriented organisation.
It assists customers to locate, discover products/services
---------------------- which they wish to buy online. Its utility is very high to
customers because of its offering of lowest possible price
----------------------
to customers. There are millions of new, unique, innovative,
---------------------- refurbished products/services available for customers to buy
online. These are available in several categories like health
---------------------- care products, jewellery, foods, garments, music, books,
electronics and electrical items, office products, stationeries,
----------------------
computer peripherals, household items, etc.
----------------------

---------------------- 2. Advertising Model: There is a transformation from traditional media

broadcasting to web advertising model. It provides content and services
---------------------- like e-mail, blogs, social services, etc.
---------------------- i. Portals: It is usually a search engine. It has high volume traffic. It
facilitates in improvement in sales and offers profits. These profits
---------------------- can be further used for diversification of items and adding value to
---------------------- current products/service. A portal can be customised according to
user. For example, Yahoo.com
----------------------
ii. Classifieds: With nominal fees or membership fees, products and
---------------------- services are listed for sale or purchase. For example, Monster.com,
Craiglist.com
----------------------
iii. Query-based paid placement: It is also known as sponsored link.
---------------------- It is the model in which advertiser’s search engine optimisation

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 specialists, webmasters, etc. have to pay according to user query Notes
such as overture’s trademark “pay-for-performance” model. For
example, Google.com. ----------------------
iv. User registration: These sites are free to access but user has to ----------------------
register by providing information about him/her. This information
could be age, educational qualification, income, nationality, etc. ----------------------
This helps advertiser by analysing data and can be used for targeted
----------------------
marketing. For example, NYTimes.com
v. Contextual advertising: Contextual advertising is a form of ----------------------
targeted advertising on websites. For example, if the user is viewing
----------------------
a website pertaining to health care products and if that website uses
contextual advertising system, then user may see advertisements for ----------------------
health related products and services. Based on the users’ keywords
or query, advertising is displayed on search engines on their search ----------------------
result pages.
----------------------
3. Information Model: The current data of consumers is maintained
regarding their consumption habits, taste, change in trend, fashion, etc. This ----------------------
data is useful for designing marketing strategy. It helps in understanding
----------------------
the customer. Some firms work as information intermediaries through
their continuous market research. ----------------------
i. Advertising network: It feeds banner advertisement to a network ----------------------
of member sites. By collecting data of web users, marketing
effectiveness can be analysed. For example, DoubleClick.com ----------------------
ii. Audience measurement services: Organisations like AC Neilson ----------------------
is engaged in measuring audience attitude, etc.
4. Merchant Model: They are wholesalers and retailers of products/ ----------------------
services. They put prices on their websites or they are engaged in auction ----------------------
sale.
----------------------
These merchant models may include:
i. Virtual merchant: These merchants operate online only. They are ----------------------
also known as e-tailer. For example, Amazon.com.
----------------------
ii. Catalog merchant: They accept online order against listed prices
on websites. They operate mainly through email, telephone, etc. ----------------------
iii. Brick and click model: In this model, organisation operates ----------------------
through both brick (offline) and online (click). For example, Barnes
& Noble. ----------------------

iv. Bit vendor model: This model is used by organisations which are ----------------------
engaged in digital products only, order and delivery both processed
online. For example, Apple iTunes. ----------------------

5. Direct Model: The manufacturer creates a website to reach directly to ----------------------

customer by reducing distribution channel. These models may include:
----------------------
i. Purchase model: The right of ownership is directly transferred to
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 Notes buyer.
ii. Lease: Organisation charges rental fees to use their products/
----------------------
services.
---------------------- iii. License: In case of software products, the user rights are given to
buyer but ownership rights remain with manufacturer.
----------------------
6. Affiliate Model: It provides purchase opportunities wherever customers
---------------------- are surfing. By paying financial incentives to affiliating partner, business
transaction is completed. This may include:
----------------------
i. Banner exchange: It deals in banner posting among a network of
---------------------- affiliated sites.
---------------------- ii. Pay per click: Only after click by customer, one has to pay to
affiliate partner.
----------------------
iii. Revenue sharing: They share certain amount of sales commission
---------------------- on a user click through which transaction is completed.
---------------------- 6. Subscription Model: Users are charged according to their uses on daily,
monthly, quarterly or annual basis.
----------------------

---------------------- 11.3 MODELS FOR INTERNET-BASED E-COMMERCE

---------------------- The tremendous growth of Internet business has changed the world
economic scenario. Many businesses come with their own business strategy
---------------------- and have great success. They have overcome drawback in traditional business
models. The Internet-based business could be measured in terms of four layers:
----------------------
1. Internet Infrastructure: It consists of infrastructure required for
---------------------- conducting business via the Internet. The telecommunication, computer
and network organisations build such infrastructure for designing online
----------------------
programmes for conducting business.
---------------------- 2. Applications: It provides support system through software application.
---------------------- 3. Intermediary: These are the host organisations that participate in market
making process.
----------------------
4. Commerce layer: It conducts business in an overall ambience provided
---------------------- by the above three layers. Focus on last two layers is required. There
is more growth in the intermediary layer and commerce layer as more
---------------------- customer interaction that takes place there.
---------------------- An Overview of Market Structure
---------------------- The market could be categorised in three forms.
1. Portals: Portals draw customers to websites for viewing information
----------------------
regarding products/services. These are designed by manufacturers or
---------------------- service providers for online information.
2. Market makers: They play a similar role as portals does in building
----------------------

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 of community of customers. However, it differs from portals, such as Notes
market makers actively participate in different ways to complete business
transaction. They have high degree of domain knowledge to provide ----------------------
service to the customers. Also they are engaged in providing various
services and security of products/services. Market makers bring suppliers ----------------------
and buyers together. ----------------------
3. Product/service providers: They deal directly with customers.
----------------------
Business Models for Internet-based e-Commerce
----------------------
Business model is the combination of three streams:
1. Value stream ----------------------

• It identifies value proposition. ----------------------

• Long-term viability is related to the health of the value stream. ----------------------
• Increases buyer’s value by reducing product search costs and transaction
----------------------
costs.
• Increases supplier’s value by reducing customer search costs, promotion ----------------------
costs and transaction costs, for example, Pigsback.com
----------------------
2. Revenue stream
----------------------
• It is a plan for assuring revenue generation.
• Increased margins over brick and mortar operations, for example, South- ----------------------
West Airlines, Ryanair, Easyjet. ----------------------
• Variable pricing strategies can be possible, for example, Internet-based
----------------------
marketing research firm.
• Could attract by free offerings, for example, real-player.com. ----------------------
3. Logistical stream ----------------------
• Deals with issues regarding design of supply chain. ----------------------
• Disintermediation: Process by which the logistical stream is shortened,
for example, Banking365. ----------------------

• Info-mediation: Storing and giving out of information to an individual ----------------------

web user, for example, Google, Yahoo and Alta Vista.
----------------------
• Meta mediation: Obtaining and providing the missing link in a value chain
when possible, for example, Innoverse, an e-commerce infrastructure ----------------------
provider.
----------------------

----------------------

----------------------

----------------------

----------------------

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 Notes
Check your Progress 1
----------------------

---------------------- Multiple Choice Single Response.

1. Business model gives information regarding:
----------------------
i. How business will operate
----------------------
ii. How business will generate revenue
---------------------- iii. Components of business
---------------------- iv. Competitor analysis
---------------------- 2. Affiliate model includes:
i. Intermediaries
----------------------
ii. Pay per click
----------------------
iii. Commission agent
---------------------- iv. Travel agency
----------------------

---------------------- 11.4 BEST PRACTICES FOR ONLINE BUSINESS MODELS

---------------------- Online business organisations have number of business models available
to conduct their businesses. The best model is that which offers unique value
----------------------
to its customer and continuously generates revenue to the organisations. An
---------------------- appropriate business model enables online merchants for its survival in the long
term. Following are some of the online business models:
----------------------
1. Frequent Subscription Model: There is predictable revenue but has
---------------------- higher cost barrier.
2. Infrequent Subscription Model: It can be used in long term and has
----------------------
predictable revenue. However, there is low retention of customer and
---------------------- high coat barrier.

---------------------- 3. Freemium Model: In this model, there are no price restrictions and no
need for free trials. But one of the disadvantages is to challenge pricing
---------------------- strategy since the majority of users do not pay.

---------------------- 4. Micro-transactions Model: There is low cost barrier in this model since
it is generating low margins as majority of users do not pay and also due
---------------------- to high payment cost.
---------------------- 5. Virtual Model: Virtual goods and virtual currency is the main feature
of this model. It has high acquisition rate and low cost barrier. But again
---------------------- majority of customers do not pay.
---------------------- 6. Dual Currency Model: It has high acquisition rate and reduction in
conversion friction in currency. But, legal issues may arrive and there are
---------------------- chances of low percentage of paying users.

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 Best Practice Tips Notes
Some factors are to be considered before choosing online model such as:
----------------------
• Type of industry
----------------------
• Customer demographics
• Risk tolerance ----------------------
• Type of product/service ----------------------
Following are some of the practical tips for effective online business:
----------------------
1. React promptly: Keep track of market trends. React promptly to new or
evolving market trends. If your current business strategy is not delivering ----------------------
desired results, then try to analyse it quickly. Respond to customer needs
----------------------
and demands. Try to access key metrics that help in making the right
business decision. ----------------------
2. Identify metrics: Identify and monitor the main and controllable metrics
----------------------
which are applicable to your business. Put these key metrics in processes
and infrastructure in place to track them effectively. This will help in ----------------------
making sound decisions in the long term.
----------------------
3. Understand customer: Try to collect current data of customer regarding
purchasing habits, taste, motivation in buying, etc. All these data should ----------------------
be gathered on continuous basis so that any deviation can be tracked.
----------------------
4. Add value: Always add value to your product and services. Utility to
consumer has to be given more importance rather than your expertise. ----------------------
Keep on adding new innovative features, capabilities, extended uses of
product so that it will add value. And all value-added products should be ----------------------
updated on website for customer information.
----------------------
5. Use key phrases about your products/services on website: Use key
phrases and include only essential information on website. Choose only ----------------------
the top three or four points about your product/service and make them
----------------------
appear consistently throughout the web page. Simplify and limit the
number of words on each web page. ----------------------
6. Website layout is important: To retain customer website, layout plays
----------------------
an important role. Website layout must be user-friendly.
7. Use contrasting colours for text and background: Dark text on a ----------------------
light background is best, but avoid white backgrounds - tone it down by
----------------------
using beige or another light colour that will be easy on the eyes. Dark
backgrounds are effective to show off company colours or if you just ----------------------
want to dazzle the crowd. In that case, be sure to make text a light colour
for easy reading. ----------------------
8. Use web designs effectively: Considering type of product/service and ----------------------
targeted consumer use appropriate web design.
----------------------
9. Limit the number of web pages: Keeping the number of web pages
to a minimum ensures that the presentation will not become too long ----------------------

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 Notes and drawn out. It also avoids the problem of continually changing pages
during surfing that can be a distraction to your target audience.
----------------------
10. Use photos, charts and graphs: A picture can speak more than thousand
---------------------- words. Keeping this in mind, use appropriate picture to demonstrate
your product/service. Meaningful charts, graphs can help for better
---------------------- understanding of your product/service. Combining photos, charts and
graphs and even embedding digitised videos with text, will add variety
----------------------
and keep your audience interested in the presentation of product/service.
---------------------- 11. Avoid excessive use of page transitions and animations.
---------------------- 12. Make sure your presentation can run on any computer: If you are
using flash player or any other type of media player, then make sure that
---------------------- it should run on any type of computer.
----------------------
11.5 MODELS FOR THE MUSIC INDUSTRY
----------------------
Music piracy is causing huge losses to the music industry. An Internet user
---------------------- illegally downloads billions of copyrighted files available online everywhere.
More than one billion users copy files through their peer-to-peer (P2P) networks.
----------------------
Thus, there is decline in music sales. The music industry is resisting P2P while
---------------------- encouraging online content in a limited way like:
• Licensing content to non-P2P Internet sites for limited online distribution
----------------------
• Suing P2P software companies to slow technology proliferation
----------------------
• Lobbying Congress to curtail P2P expansion in various ways
---------------------- • Suing consumers to drive them away from P2P usage
---------------------- But the major labels have not tried legitimate online sales of music in a
domain that already has over 80 million users in search of content – the existing
----------------------
P2P marketplace. The music industry can use the P2P marketplace for legitimate
---------------------- sales, thereby minimising copyright infringement and capturing the thriving
online consumer demand. The wholehearted embrace of online distribution by
---------------------- the music industry could grow retail sales at a nearly 10% compounded annual
rate over four years – outstripping projected GDP growth.
----------------------
The Business Model for Digital Music Distribution
----------------------
Sell content to consumers in the P2P marketplace – first by using digital
---------------------- rights management (DRM), then through universal ISP-based billing. Under
this, implementation and building the new business model involves three
---------------------- phases:
---------------------- Phase 1: Make the content of top five major labels available for sale in
the P2P marketplace with existing credit card billing. Expand current business
---------------------- model of selling legitimate content in the P2P marketplace by adding top five
---------------------- major labels.
Implementation and build-out steps:
----------------------

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 • Establish DRM–WMA library of content with existing digital assets and Notes
new assets provided via licenses from majors.
----------------------
• Populate content in priority position and activate to use credit card
payment. ----------------------
• Continue to deliver content into KAZAYA and other P2P applications in
----------------------
the marketplace.
• Promote the benefits of legitimacy and quality of content to users. ----------------------
Phase 2: Expand payment options for consumers by adding the option of ----------------------
charging music track downloads to phone bills.
----------------------
• Negotiate payment deals with Telco’s to enable bill-to-phone
• Evaluate regulatory issues to ensure consistent fair rates. ----------------------
• Record artist bill-to-phone messages, intro value-add and other upsell. ----------------------
Expand P2P legitimate sales by making user experience more seamless ----------------------
with a bill-to-phone option implementation and build-out:
• Turn on bill-to-phone features in DRM payment gateway. ----------------------
• Promote use of phone and artist voice connectivity as benefit over ----------------------
unlicensed music.
----------------------
• Monitor results and begin to add complimentary smaller label and
independent music into P2P platforms. ----------------------
Phase 3: Implement ISP-based billing that will allow for universal payments ----------------------
for the majority of downloads of copyrighted content. Make payment of online
music through P2P systems universal using ISP-based billing and file-hash- ----------------------
signature monitoring.
----------------------
Implementation and build-out:
• Work with ISPs collectively to enable bulk billing solutions and pricing ----------------------
that resembles previously negotiated Telco rates. ----------------------
• Explore possible need for legislation to ensure solutions for capturing
data tags on traffic flowing between ISPs and end-users. ----------------------

• Negotiate with router manufacturers to provide a packet header and file- ----------------------
hash-turnstile billing solution to be implemented at the ISP level.
----------------------
• Work with the music industry to establish databases of copyrighted files
using file hashes. ----------------------
• Online music sales will grow to outperform traditional music sales. ----------------------
Services Marketing Strategy Recommendations for the Music Industry
----------------------
1. Product: More options should be available legitimately in both online
and offline mode at reasonable price. Make more new music-related ----------------------
alternatives available that speak to the hearts and minds of consumers
----------------------
(niches). Create product and service packages of core and supplementary
benefits that are unique or exclusive to each firm. ----------------------

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 Notes 2. Price: Economical prices may appeal to consumer to download songs
online. Take care of securing concern while buying online. Offer value
---------------------- and rewards for subscription services.
---------------------- 3. Place: Enhance or give more choice to customer to get music in both on
and offline mode
----------------------
4. Process: Processing of online order must give satisfaction to consumer.
---------------------- Process should enhance ease of use, search, acquisition and consumption
of music.
----------------------
5. Physical evidence: Identify what physical evidence consumers want
---------------------- and offer tangible benefits. Physical evidence must create or add value to
consumer.
----------------------
6. Promotion: Increase usage of convergent promotional strategies utilising
---------------------- the Internet and traditional media, depending on target market preferences.
Use customer relationship management, permission marketing and viral
---------------------- marketing.
---------------------- 7. People: Connect digital community networks to generate positive word
of mouth. Word of mouth results in sales and profitability. Do viral
---------------------- marketing (forward promotional offers from legitimate firms to friends).
---------------------- Train employees to be customer-oriented in delivering services and
products.
----------------------
11.6 MODELS FOR THE SOFTWARE INDUSTRY
----------------------

---------------------- Software industry is booming at an unbelievable speed. Business model of

software industry generally adapts models which are depicted below. Although
---------------------- this model list is not complete but some popular models are:

---------------------- 1. Services Model: It is one of the simple business models. It has fewer
barriers to entry. Boutique web development firms build a custom code
---------------------- for their clients. They design the products according to their demand.
Generally, the work is charged on hourly basis. The characteristic of this
---------------------- model is appealing. But there are drawbacks in this model. They are:
---------------------- • Code reuse is likely to be lesser than other models.
---------------------- • One may get certain maintenance work. This may include the tools
one has to use.
----------------------
• When client asks for some distasteful or time-consuming work,
---------------------- only two situations arrive. Either one has to complete it or induce
them to accept some other alternative.
----------------------
• Irregular cash flow may arise.
---------------------- 2. Product-centred Services Model: It is likely to acquire more planning
---------------------- and investment than services model. The revenue generated in this model
is greater than pure services model. Specific product is feature of product
---------------------- centred services. You can reuse this product to a certain degree, and

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 can be developed in-house. It is an easy-to-extend product. Code and Notes
standards can be reused undoubtedly than in pure services. This model
offers enterprise solution but has some drawbacks. ----------------------
• It is expensive because experts are needed to design products. ----------------------
• The complexity of services may lead to some unrealistic expectations
----------------------
which result in scope creep.
• Clients may request some distasteful work. ----------------------
• If external expert is required, then it may disturb your original plan ----------------------
and lead to more expenses.
----------------------
• Some features may disappear with the support of older versions.
3. Products Model: Instead of doing customised work for clients, it is ----------------------
advisable to design own products and then sell it. You can sell these ----------------------
products to as many clients you want to sell. However, selling cost can
be compensated by producing more copies of products. The other cost ----------------------
like support and maintenance cost are close to nil, thus providing high
profit margin if products are marketed properly. Software providing ----------------------
organisations like Microsoft, Intuit and Adobe are earning huge revenues ----------------------
by adopting this model. However, there are certain barriers to entry.
----------------------
a. Millions of rupees are required as set-up cost.
b. Huge amount of money and time is required before first product is ----------------------
available for sale.
----------------------
c. Features offered in software products must be flexible.
----------------------
d. After designing certain product, it may not be according to customer
requirement and does not give guaranty that it will sell. ----------------------
e. Software products are dependent on environment. It is difficult to ----------------------
test under all configurations which customers may have.
----------------------
4. Products distributed as Services Model: Designing and further
developing the products is very costly. If products are distributed as ----------------------
services then clients can benefit from code updated regularly and instantly.
In this model, code reuse and profit gain is very high. When clients are ----------------------
connected through service, then one can get good network effects. The
----------------------
software can become valuable to customers with little extra efforts.
The only requirement in this model is live connection. No other special ----------------------
configuration is required to test the product apart from basic requirement
----------------------
of hardware.
Services are likely to be simpler interfaces and are user-defined. In this ----------------------
model, the software providing organisation has complete control over the
----------------------
code environment. Organisations like Google, 37Signals and many other
Internet-based service organisations are using this model and earning ----------------------
huge profits.
----------------------

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 Notes Although this model may seem to be attractive, it has certain pitfalls.
• The requirement of network connections and hardware where codes
----------------------
are generated need to be maintained properly. If anyone fails, then
---------------------- your client cannot use your service.
• Codes do not have access to the client’s hardware. Personal
----------------------
computers can be handled easily on advanced calculation or data
---------------------- operation for one user. But the same action on your server multiplied
by tens of thousands of users at once is not an easy task and cost-
---------------------- effective.
---------------------- • Revenues generated by this model are lower than those of a pure
software product.
----------------------
• As there can be reduction in functionality, client may expect
---------------------- reduction in cost.

---------------------- • There is advantage of changing hardware to client by storing data

to parent server but this may lead to loss of control over data. This
---------------------- may cause great concern to organisations that needs security and
are business sensitive.
----------------------
• Users are constantly demanding new versions of software. If you
---------------------- change or remove some feature, then user either must have to wait
to re-add the feature or be provided an acceptable feature.
----------------------

---------------------- 11.7 MODELS FOR THE TELECOM INDUSTRY

---------------------- According to the Telecom Regulatory Authority of India (TRAI), about
875 millions of subscribers are now part of the Indian Telecom Industry. Apart
---------------------- from the Indian Telecom Industry, there were 5.6 billion mobile users worldwide
---------------------- in March 2011.
Openness, competition and reduction in operating costs have fuelled the
---------------------- tremendous growth of mobile communication. However, the business models
---------------------- adopted by the telecom industry is not able to match the pace of industry due to
the following factors:
----------------------
i. Expansion (Rural Reach): The saturation point has come in case of
---------------------- urban subscribers. Now for further expansion, telecom operators have to
concentrate or focus on rural subscribers.
----------------------
ii. Sustenance (Revenue): There is a rise in the cost due to the new concept
---------------------- of 3G. The telecom operators are forced to participate in 3G auctions and
borrow money.
----------------------
iii. Competitions (Retention): With the new law of Mobile Number
---------------------- Portability (MNP), the telecom operators are finding it difficult to retain
customers.
----------------------
The mobile broadband is becoming popular due to advent of smart devices
---------------------- like iPhone or iPad. These devices are contributing economies of scale.

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 Therefore, telecom operators are forced to change their operation models Notes
to reduce the cost.
----------------------
Trends in the Telecom Industry
1. Mobile Internet Model: Internet connection earlier was available to ----------------------
desktop computers with wired connection of Internet. Costly cable
----------------------
network and unportability of desktop computers have given rise to the
need for new wireless connection which can be used through smart ----------------------
device. As new cell phones are playing important role in mobile Internet
connection, telecom operators are providing this new Internet facility to ----------------------
their users.
----------------------
2. Digital Home: A new concept has arrived in IT and other business sector.
A digital home facilitates to work from home and can use facilities like ----------------------
downloading, video- conferencing, tracking individuals, entertainment,
----------------------
etc. It is demanded particularly by housewives who are skilled IT
professionals and want to work from home at their flexible hours. ----------------------
3. Online Services: There is demand from consumer for online services ----------------------
like online payment, online security, online consultancy, online statistical
analysis, online marketing, etc. Online is one of the most demanded ----------------------
features by customers. It requires high quality wireless Internet connection
and other telecom devices to fulfil the demand of the customer. ----------------------

4. ICT Services: Cloud services such as enterprise applications and XaaS ----------------------
services require telecom services to have competence, such as process
consulting, management consulting, design/development/optimisation, ----------------------
business process outsourcing, application- based SOA design, system ----------------------
integration, etc.
The new telecom service model should be able to provide end-to-end ----------------------
(E2E) services. It must cater to the market requirements for customer experience ----------------------
enlargement. New telecom models are evolving from traditional models
to integrated and interactive mode. It should aim to serve objectives for the ----------------------
telecom industry and its operations. It should be able to keep pace of changing
aspirations of customers. ----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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 Notes
Check your Progress 2
----------------------

---------------------- Multiple Choice Single Response.

1. Virtual models have the following benefit:
----------------------
i. Customers are ready to pay
----------------------
ii. Low cost barrier
---------------------- iii. No competition
---------------------- iv. No legal problems
---------------------- 2. The Dual Currency Model has _________ acquisition rate and
reduction in conversion friction in currency.
----------------------
i. Low
---------------------- ii. High
---------------------- iii. Moderate

---------------------- iv. Average

State True or False.
----------------------
1. In the Freemium Model, there are no price restrictions and no need
---------------------- for free trials.
---------------------- 2. Music Industry encourages P2P Network for their sales of online
music.
----------------------

---------------------- Activity 1
----------------------
Check the business models for any two internet based e-commerce
---------------------- organisations, with a view to payments and delivery of goods/services.
----------------------

---------------------- Summary
---------------------- • The huge success of Internet-based business organisations in B2B
segments and other segments in the last decade is quite remarkable.
---------------------- It is extensively projected that B2B segment is on the edge of getting
---------------------- astonishing growth as well. However, a reliable definition and a perfect
sketch or framework for Internet-based business models are still missing
---------------------- or are non-existent.
---------------------- • An appropriate model had to be determined according to emerging
market structure. A certain Internet-based business model must define and
---------------------- identify certain factors that can guide organisations in their selection of an
appropriate business model.
----------------------

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 • New Internet models are emerging and it needs to ensure that the consumer Notes
interest is taken care of. The model must suit consumer needs.
----------------------
• Due to higher development cost and ever-demanding customers who
expect services at lower cost, there is a need for an appropriate model. ----------------------
• The success of any Internet-based business model depends upon the
----------------------
competing factors over competitors, customer need and its utility.
----------------------
Keywords ----------------------
• Business model: The sketch or framework implemented by organisation ----------------------
to generate revenue and make a profit from its various operations.
• Commission agent: A person who solicits and procures the business ----------------------
from potential customers on behalf of one or more principals. ----------------------
• Web portal: A link page that operates as point of access to information in
----------------------
World Wide Web.
• P2P network: A distributed application architecture that partitions tasks ----------------------
or workloads among peers.
----------------------
• Pay per click (PPC): An Internet advertising model used to direct traffic
to websites, where advertisers pay the publisher when the advertisement ----------------------
is clicked.
----------------------
• KAZAYA: A music portal from where either user can listen to music
freely and download on demand. ----------------------

• DRM: Digital Rights Management is anti-piracy technology. ----------------------

• Windows media audio (WMA): An audio data compression technology ----------------------
developed by Microsoft.
----------------------
• Freemium: A business model that works by offering a product or
service free of charge while charging a premium for advanced features, ----------------------
functionality or related products and services.
----------------------
Self-Assessment Questions ----------------------

1. Explain the term business model. List and explain different Internet ----------------------
business models. Give examples.
----------------------
2. List down the best practices as followed for online business models.
----------------------
3. Design and explain the business model with example of a regional film
industry. ----------------------

----------------------

----------------------

----------------------

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 Notes Answers to Check your Progress
---------------------- Check your Progress 1

---------------------- Multiple Choice Single Response.

1. Business model gives information regarding:
----------------------
iv. Competitor analysis
----------------------
2. Affiliate model includes:
---------------------- ii. Pay per click
---------------------- Check your Progress 2

---------------------- Multiple Choice Single Response.

1. Virtual models have the following benefit:
----------------------
ii. Low cost barrier
----------------------
2. The Dual Currency Model has _________ acquisition rate and reduction
---------------------- in conversion friction in currency.
ii. High
----------------------
State True or False.
----------------------
1. True
----------------------
2. False
----------------------

----------------------
Suggested Reading

---------------------- 1. Bajaj, Kamlesh K. and Debjani Nag. 2005. E-Commerce. New Delhi:
Tata McGraw-Hill.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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