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Electronic Commerce 2012 7E Test Bank Chapter 3

Electronic Commerce 2012, 7e (Turban) Chapter 3 Retailing In Electronic Commerce: Products and Services

3.1 True/False

1) Amazon is recognized as an online leader in creating sales through customer intimacy and customer relationship management (CRM). Answer: TRUE Diff: 1 Page Ref: 100

2) According to Internet Retailer, in 2009, approximately 20 percent of adult U.S. Internet users shopped online and/or research offline sales online. Answer: FALSE Diff: 2 Page Ref: 102

3) Sales of goods on the Internet are no longer increasing rapidly because of the bankruptcy of numerous dot-coms. Answer: FALSE Diff: 2 Page Ref: 102

4) As the number of Internet users reaches saturation, the challenge for e-retailers now is to increase the amount that shoppers spend online. Answer: TRUE Diff: 3 Page Ref: 102

5) E-tailing is retailing conducted online over the Internet. Answer: TRUE Diff: 1 Page Ref: 102

6) A retailer is a sales intermediary, a seller that operates between manufacturers and customers. Answer: TRUE Diff: 1 Page Ref: 102

7) When new capabilities are required to conduct EC, for example capabilities in logistics and distribution, one method is to obtain them through external strategic alliances. Answer: TRUE Diff: 1 Page Ref: 104

8) With all else being equal in the online environment, goods that are relatively expensive or frequently purchased are expected to have higher sales volumes than goods that are inexpensive or infrequently purchased. Answer: FALSE Diff: 3 Page Ref: 105

9) A business model is a description of how an organization intends to generate revenue through its business operations. Answer: TRUE

Diff: 2

Page Ref: 107

10) Direct marketing describes marketing that takes place over the Internet involving wholesalers and retailers. Answer: FALSE Diff: 2 Page Ref: 108

11) Click-and-mortar retailers are brick-and-mortar retailers that offer a transactional Web site from which to conduct business. Answer: TRUE Diff: 1 Page Ref: 110

12) Target, Sears, and Macys are click-and-mortar businesses selling in a multichannel business model. Answer: TRUE Diff: 1 Page Ref: 110

13) Types of online malls include referring directories and event shopping malls. Answer: FALSE Diff: 2 Page Ref: 110

14) Viral marketing, market makers, and information portals are types of B2C business models. Answer: TRUE Diff: 2 Page Ref: 111

15) Event-based commerce is a wireless based technology in which vendors send advertisements relevant to the location where customers are at a given time. Answer: FALSE Diff: 2 Page Ref: 112

16) Private shopping clubs and group gifting online are two variations of the personalized event shopping model. Answer: TRUE Diff: 1 Page Ref: 112

17) Competition among online travel e-tailers is fierce, with low margins, little customer loyalty, and increasing commoditization of products and services. Answer: TRUE Diff: 3 Page Ref: 113

18) WAYN is a social networking Web site with a goal of uniting college student travelers from North America. Answer: FALSE Diff: 3 Page Ref: 115

19) When compared to the traditional job market, the online job market has low reliability. Answer: FALSE Diff: 2 Page Ref: 117

20) The electronic job market creates high turnover costs for employers by facilitating employees movement to better jobs.

Answer: TRUE Diff: 2 Page Ref: 120

21) Assessing their market value is an advantage of the electronic job market for employers. Answer: FALSE Diff: 2 Page Ref: 120

22) Many insurance companies use a dual strategy, keeping human agents but also selling online. Answer: TRUE Diff: 2 Page Ref: 122

23) The major risk of online trading is security. Answer: TRUE Diff: 1 Page Ref: 123

24) Virtual banks have a brick-and-mortar location and also conduct online transactions. Answer: FALSE Diff: 1 Page Ref: 124

25) Online banking and other financial services are growing slowly on the Internet because many customers are not yet embracing it. Answer: FALSE Diff: 2 Page Ref: 124

26) Electronic banking refers to the various banking activities conducted from home or the road using an Internet connection. Answer: TRUE Diff: 1 Page Ref: 124

27) Only a few pure-play virtual banks failed by 2003 due to lack of financial viability. Answer: FALSE Diff: 2 Page Ref: 125

28) Both online banks and click-and-mortar banks carry some risks and problems, especially in international banking, including hackers and liquidity risk. Answer: TRUE Diff: 2 Page Ref: 127

29) An on-demand delivery service is express delivery made fairly quickly after an online order is received. Answer: TRUE Diff: 1 Page Ref: 128

30) The direct sale of digital content through digital download allows a producer of digital content to bypass the traditional retail channel, thereby reducing overall costs and capturing greater profits. Answer: TRUE

Diff: 2

Page Ref: 129

31) As a paid content category, dating services are the largest attractor of Internet users. Answer: FALSE Diff: 2 Page Ref: 130

32) Electronic coughing describes the attention-grabbing behavior of agencies that go out to consumer environments and boast about how great a brand or item is in order to spread the word. Answer: FALSE Diff: 2 Page Ref: 132

33) An electronic pouch is a program that expedites online shopping by containing a shoppers information. Answer: FALSE Diff: 1 Page Ref: 133

34) Channel conflict occurs when the addition of an online distribution channel causes problems with existing distribution channels. Answer: TRUE Diff: 2 Page Ref: 135

35) A major problem in B2C is the increasing rate of online fraud. Answer: TRUE Diff: 1 Page Ref: 136

3.2 Multiple Choice

1) Amazon.com experienced each of the following except A) maintaining its position as the number one B2C money-making EC site in the world. B) driving growth largely by product diversification and its international presence. C) declaring its first profit in 2005. D) patenting its 1-click feature which allows customers to place an order in a secure manner without having to enter personal, billing, and shipping information each time they shop. Answer: C Diff: 3 Page Ref: 100-101

2) According to Internet Retailer (2009), approximately ________ percent of adult U.S. Internet users shop online or research offline sales online. A) 25 B) 60 C) 65 D) 85 Answer: B Diff: 2 Page Ref: 102

AACSB: Use of information technology

3) Each of the following describes retailing except A) a retailer is a sales intermediary. B) many manufacturers sell directly to consumers and through wholesalers and retailers. C) e-tailing makes it easier for a manufacturer to sell directly to customers by cutting out the intermediary. D) companies that produce a large number of products, such as Procter & Gamble, do not need retailers for efficient distribution. Answer: D Diff: 3 Page Ref: 102

AACSB: Use of information technology 4) Retailers who sell over the Internet are A) e-tailers. B) disintermediaries. C) marketing managers. D) multichannel marketers. Answer: A Diff: 1 Page Ref: 102

5) Each of the following sells well on the Internet except A) tobacco. B) travel. C) cars. D) health and beauty.

Answer: A Diff: 1 Page Ref: 104

AACSB: Use of information technology

6) With all else being equal in the online environment, goods with any of the following product characteristics are expected to facilitate greater online sales except A) relatively expensive items. B) high brand recognition. C) digitized format. D) frequently purchased items. Answer: A Diff: 2 Page Ref: 105

AACSB: Use of information technology

7) Which of the following is a characteristic of e-tailing? A) Competition is local. B) Customer relations are less stable due to anonymous contacts. C) Price changes are expensive, but can be done at anytime. D) Fewer resources are needed to increase customer loyalty. Answer: B Diff: 3 Page Ref: 105

AACSB: Use of information technology

8) Major advantages of e-commerce to buyers include

A) finding products and services that are not available in local stores. B) buying in groups. C) shopping globally. D) all of the above. Answer: D Diff: 1 Page Ref: 106

9) Major advantages of e-commerce to sellers include each of the following except A) charging less for items. B) lower supply chain costs. C) reacting quickly to customers needs. D) competing with larger companies. Answer: A Diff: 3 Page Ref: 106

10) A method of doing business by which a company generates revenue to sustain itself and achieve its goals best describes A) strategic plan. B) mission statement. C) business model. D) marketing plan. Answer: C Diff: 2 Page Ref: 107

11) The B2C business model used by QVC, Sharper Image, and Lands End is A) direct marketing by mail-order companies. B) direct sales by manufacturers. C) pure-play e-tailers. D) click-and-mortar retailers. Answer: A Diff: 3 Page Ref: 107

12) Based on distribution channel used, which of the following is not a B2C model classification? A) pure-play e-tailers B) click-and-mortar retailers C) Internet malls D) online medical diagnostic center Answer: D Diff: 3 Page Ref: 107-108

13) Based on distribution channel used, Dells B2C business model can be classified as a A) direct marketing by mail-order company. B) pure-play e-tailer. C) click-and-mortar retailer. D) direct sales by manufacturer. Answer: D

Diff: 3

Page Ref: 108

AACSB: Use of information technology

14) A business model where a company sells in multiple marketing channels simultaneously best defines A) multichannel business model. B) concurrent business model. C) direct marketing. D) revenue enhancement. Answer: A Diff: 2 Page Ref: 108

15) Marketing done online between any seller and buyer best defines A) personalization. B) direct marketing. C) target marketing. D) multichannel marketing. Answer: B Diff: 2 Page Ref: 108

16) The competitive advantages of a pull vehicle distribution process include each of the following except A) improved customer satisfaction and better pricing. B) large cost savings in finished vehicle inventory carrying costs.

C) better cash flow to the manufacturers. D) creating a build-to-stock environment. Answer: D Diff: 2 Page Ref: 109

17) Firms that sell directly to consumers over the Internet without maintaining a physical sales channel describes A) click-and-mortar stores. B) viral marketers. C) virtual e-tailers. D) social network. Answer: C Diff: 2 Page Ref: 109

18) Sears marketing strategy is best described as a A) brick-and-mortar strategy. B) shared service mall strategy. C) click-and-mortar strategy. D) direct marketing from a manufacturer strategy. Answer: C Diff: 2 Page Ref: 110

AACSB: Use of information technology

19) An online seller of travel services that generates revenue by charging fees for its services is an example of a A) market maker. B) transaction broker. C) content disseminator. D) viral marketer. Answer: B Diff: 2 Page Ref: 111

AACSB: Use of information technology

20) A marketer that uses e-mail to advertise to potential customers is called a A) market maker. B) transaction broker. C) content disseminator. D) viral marketer. Answer: D Diff: 2 Page Ref: 111

AACSB: Use of information technology 21) A company that creates and manages many-to-many markets is called a A) market maker. B) transaction broker. C) content disseminator. D) viral marketer.

Answer: A Diff: 2 Page Ref: 111

AACSB: Use of information technology

22) In an e-market, PayPal serves as a(n) A) intermediary. B) service provider. C) content disseminator. D) viral marketer. Answer: B Diff: 3 Page Ref: 111

AACSB: Use of information technology

23) A B2C model in which sales are done to meet the needs of special events describes A) anniversary shopping. B) time-based shopping. C) event shopping. D) choreographed shopping. Answer: C Diff: 2 Page Ref: 112

24) Which of the following is not a social shopping model? A) personalized event shopping

B) location-based e-commerce C) private shopping clubs D) private auctions Answer: D Diff: 2 Page Ref: 112

25) A members-only shopping club, where members can buy goods at large discounts describes A) specialty club. B) membership-based club. C) exclusive club. D) private shopping club. Answer: D Diff: 2 Page Ref: 112

26) Delivery of e-commerce transactions to individuals in a specific location, at a specific time defines A) location-based commerce. B) event-driven commerce. C) mobile computing. D) service on demand. Answer: A Diff: 2 Page Ref: 112

27) Each of the following is a revenue model for online independent travel agents except A) contract negotiators. B) direct revenues from commissions. C) subscription or membership fees. D) revenue sharing fees. Answer: A Diff: 3 Page Ref: 113

AACSB: Use of information technology

28) Each of the following is a characteristic of WAYN except A) it is a popular social networking Web site. B) when it introduced fees for its premier travel membership service, it lost most of its new subscriptions. C) it is not aimed at any particular age group. D) it enables its users to create a personal profile and upload and store photos. Answer: B Diff: 3 Page Ref: 115

AACSB: Use of information technology

29) Limitations of online travel services include A) limited amount of free information. B) substantial discounts. C) the difficulty of using virtual travel agents can be very large.

D) increases in providers commission and its processing. Answer: C Diff: 2 Page Ref: 116

30) Compared to the traditional job market, the online job market A) has a shorter life cycle. B) is usually specialized and local in scope. C) tends to be less reliable. D) tends to be much less expensive. Answer: D Diff: 2 Page Ref: 117

AACSB: Use of information technology

31) Advantages of the electronic job market for job seekers include A) accessing newsgroups that are dedicated to finding jobs. B) reducing application-processing costs by using electronic application forms. C) conducting interviews online. D) viewing salary surveys for recruiting strategies. Answer: A Diff: 3 Page Ref: 120

32) Which of the following is not a characteristic of e-banking?

A) saves users time and money B) is more expensive for banks C) is becoming an enabling feature of business growth in the developing world D) is increasing peer-to-peer (P2P) online lending Answer: B Diff: 2 Page Ref: 124

AACSB: Use of information technology 33) Types of online banking applications include each of the following except A) informational. B) administrative. C) directional. D) portal. Answer: C Diff: 3 Page Ref: 125

34) The portal online banking application provides A) general bank information and history. B) account transfer capabilities. C) online brokerage services. D) links to local business. Answer: D Diff: 3 Page Ref: 125

35) Security for online bank transactions includes each of the following except A) firewalls. B) SSL encryption. C) virtual biometrics. D) digital certificates. Answer: C Diff: 2 Page Ref: 126

AACSB: Use of information technology

36) Gateways to storefronts and e-malls are A) shopping portals. B) shopbots. C) shopping browsers. D) intelligent search engines. Answer: A Diff: 2 Page Ref: 130

AACSB: Use of information technology

37) Software tools that scout the Web on behalf of consumers who specify search criteria are A) shopping portals. B) shopbots. C) shopping browsers.

D) intelligent search engines. Answer: B Diff: 2 Page Ref: 131

AACSB: Use of information technology

38) The TRUSTe seal is an example of a(n) A) business rating. B) intermediary. C) B2B exchange. D) trustmark. Answer: D Diff: 1 Page Ref: 132

AACSB: Use of information technology 39) Charles wants to buy a John Lennon lithograph over the Internet, but he is unwilling to pay for it until he inspects it to ascertain authenticity. The auction site through which he purchases the painting agrees to hold his money until he tells them to release it to the seller. This is an example of a(n) A) escrow service. B) trustmark. C) warranty. D) verification. Answer: A Diff: 2 Page Ref: 132

AACSB: Use of information technology

40) The effect upon sales of consumers receiving a referral or recommendation from other consumers defines A) location-based economy. B) referral economy. C) regional economy. D) viral marketing. Answer: B Diff: 2 Page Ref: 132

41) A search engine whose mission is to help people find local qualified services ranging from mechanics to restaurants to hairstylists describes A) Freddys List. B) Pricescan.com. C) Yelp. D) Local.com. Answer: C Diff: 2 Page Ref: 133

42) The removal of organizations or business process layers responsible for certain intermediary steps in a given supply chain describes A) reintermediation. B) extraction. C) relocation. D) disintermediation. Answer: D

Diff: 3

Page Ref: 134

43) The process whereby intermediaries take on new intermediary roles defines A) reintermediation. B) seller reassignment. C) relocation. D) disintermediation. Answer: A Diff: 2 Page Ref: 134

44) The situation in which an online marketing channel upsets the traditional channels due to real or perceived damage from competition defines A) disintermediation. B) channel conflict. C) distributor reassignment. D) partner disassociation. Answer: B Diff: 3 Page Ref: 135

45) A traditional brick-and-mortar store with a mature website that uses a successful click-and-mortar strategy is able to A) give customers the opportunity to perform various functions interactively at any time. B) link all of its back-end systems to create an integrated customer experience.

C) leverage its marketing channels by offering the advantages of each marketing channel to customers from all channels. D) do all of the above. Answer: D Diff: 2 Page Ref: 136

3.3 Essay

1) Identify five major advantages of e-tailing to sellers. Answer: Major advantages of e-tailing to sellers include lower product cost and increasing competitive advantage; reaching more customers; changing price and catalogs quickly; lower supply chain costs; and competing with larger companies. Additional advantages are listed on page 106. Diff: 3 Page Ref: 106

2) Based on the distribution channel used, identify five categories of e-tailing business models. For each category, provide an example. Answer: Direct marketing by mail-order company, direct sales by manufacturer, pure-play e-tailer, click-and-mortar retailer, and retailing in online malls are five categories. QVC is an example of a direct marketing by mail-order company. Dell is an example of a direct sales by manufacturer. Amazon.com is a pure-play e-tailer. Target is an example of a click-and-mortar retailer, and bing.com/shopping is an example of an online mall retailer. Diff: 2 Page Ref: 107-110

3) What are virtual (pure play) e-tailers? Give an example. List one advantage and one disadvantage of this business model.

Answer: Virtual (pure-play) e-tailers are firms that sell directly to consumers over the Internet without maintaining a physical sales channel. Amazon.com is a prime example of this type of e-tailer. Virtual e-tailers have the advantage of low overhead costs and streamlined processes. One disadvantage is a lack of established infrastructure or back office to support the online front-office activities. Diff: 2 Page Ref: 109

4) Why are trust verification sites important to e-tailers and other online sellers? List two verification sites. What is their function? Answer: With so many sellers online, many consumers are not sure whom they can trust. Several companies evaluate and verify the trustworthiness of various e-tailers. One such company is TRUSTe. The TRUSTe seal appears at the bottom of each TRUSTe-approved e-tailers Web site. E-tailers pay TRUSTe for use of the seal or trustmark. Two trust verification sites are VeriSign and BBBOnline. TRUSTes members hope that consumers will see the seal as an assurance of their ethical conduct, privacy policy, and personal information protection. Diff: 2 Page Ref: 132

5) Identify five social shopping models. Answer: Personalized event shopping, private shopping clubs, group gifting online, location-based commerce, and shopping in virtual worlds are five social shopping models. Personalized event shopping is a B2C model in which sales are done to meet the needs of special events. A private shopping club is a members-only shopping club, where members can buy goods at large discounts. Online group gifting enables individuals to share in the cost of a gift. Location-based commerce delivers e-commerce transactions to individuals in a specific location, at a specific time. Shopping in virtual worlds allows individuals to purchase virtual products or real products for use. Diff: 2 Page Ref: 111-112