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Consumer Behavior chapter 3
Terms in this set (55)
Digital Rights Management (DRM)
The combination of technical and legal means for protecting digital content from unlimited reproduction without permission.
Essentially, DRM can prevent user's from purchasing and making copies for widespread distribution over the Internet without compensating the content owners.
When Sales of new digital productions replace sales of traditional physical
Can be dangerous to digital content firms as the prices and profits from selling digital products are much lower than the prices and profits from physical products.
A Web site or app that provides subscriptions and sales of many digital magazines.
make it possible for customers to find their favorite magazine using an app (Apple's Newstand)
User of the internet to deliver entertainment services to the home on cable TV or FiOS networks.
refers to the fact that the entertainment service rides "on top" of other networks service's like cable TV and telephone service.
Involves a group of people, shared social interaction, common ties among members, and people who share am area for some period of time.
online social network
An area online, where people who share common ties can interact with one another.
Markets in which prices are variable based on the competition among participants who are buying or selling products and services.
one type of dynamic pricing
The price of the product varies, depending directly on the demand characteristics of the customer and the supply situation of the seller.
in dynamic pricing, merchants change their prices based on how much value the customer attaches to the product, and their own desire to make a sale. (Ex: haggling, bartering)
One national price, everywhere, for everyone
traditional mass-market merchants generally use.
First gained popularity with the development of retail stores.
consumer-to-consumer (C2C) auctions
Auction house acts as an intermediary market maker, providing a forum where consumers can discover prices and trade.
business-to-consumer (B2C) auctions
Auction house sells goods it owns, or controls, using various dynamic pricing models.
(Ex: Sams Club)
Benefit of auction: Liquidity
Sellers can find willing buyers, and buyers can find sellers.
Benefit of auction: Price discovery
Buyers and sellers can quickly and efficiently develop prices for items that are difficult to assess, where the price depends on demand and supply. and where the product is rare.
Benefit of auction: Price transparency
Public Internet auctions allow everyone in the world to see the asking and bidding prices for items.
Benefit of auction: Market efficiency
Auctions can, and often do, lead to reduced prices, and hence reduced profits for merchants, leading to an increase in consumer welfare-one measure of market efficiency.
Benefit of auction: Low transaction costs
Online auctions can lower the cost of selling and purchasing products, benefiting both merchants and consumers. Like other Internet markets, such as retail markets, Internet auctions have very low transaction costs.
Benefit of auction: Consumer aggregation
Sellers benefit from large auction sites' ability to aggregate a large number of consumers who are motivated to purchase something in one marketspace.
Benefit of auction: Network effects
The larger an auction site becomes in terms of visitors and products for sale, the more valuable it becomes as a marketplace for everyone by providing liquidity and several other benefits listed previously, such as lower transaction costs, higher efficiency, and better price transparency.
Risk of auction: Delayed consumption costs
Internet auctions can go on for days, and shipping will take additional time.
Risk of auction: Monitoring costs
Participation in auctions requires your time to monitor bidding.
Risk of auction: Equipment costs
Internet auctions require you to purchase a computer system, pay for Internet access, and learn a complex operating system.
Risk of auction: Trust risks
Online auctions are the single largest source of Internet fraud. Using auctions increases the risk of experiencing a loss.
Risk of auction: Fulfillment costs
Typically, the buyer pays fulfillment costs of packaging, shipping, and insurance, whereas at a physical store these costs are included in the retail price.
Most common form of auction; the highest bidder wins
Dutch Internet auction
Public ascending price, multiple unit auction. Final price is lowest successful bid, which sets price for all higher bidders.
Name your own price auction
Auction where users specify what they are willing to pay for goods or services.
Demand aggregators (group buyer auctions)
Suppliers or market makes who group unrelated buyers into a single purchase in return for offering a lower purchase price. Prices on multiple units fall as the number of buyers increase.
The tendency to bid higher for items based on the highers bids of others.
attempt to attract a very large general audience and then retain the audience on-site by providing in depth vertical content, such as news finance, movies, and weather. (Ex: Yahoo! MSN, AOL)
Typically offer Web search engines, free-email, personal home pages, chat rooms
Vertical market portals
Attempt to attract highly focused, loyal audiences with a deep interest in either community or specialized content.
(Ex: facebook, ESPN.com, Bloomberg.com)
Total inter-firm trade
the total flow of value among firms.
All types of inter-firm trade to exchange value across organizational boundaries.
that portion of B2B commerce that is enabled by the Internet.
The links that connect business firms with one another to coordinate production.
connect business firms in the production of goods and services.
Automated order entry systems
involve the use of telephone modems to send digital orders.
Electronic data interchange (EDI)
A communications standard for sharing business documents and settlement information among a small number of firms.
B2B electronic storefronts
Online catalogs of products made available to the public marketplace by a single supplier.
bring hundreds to thousands of suppliers and buyers into a single internet-based environment to conduct trade.
Private Industrial Networks (PTX)
Internet-based communication environments that extend far beyond procurement to encompass truly collaborative commerce.
how firms purchase goods they need to produce goods for consumers.
goods directly involved in the production process.
all other goods not directly involved in the production process.
products for maintenance, repair, and operations
involves long-term written agreements to purchase specified products, under agreed-upon terms and quality, for an extended period of time.
involves the purchase of goods based on immediate needs in larger marketplaces that involve many suppliers.
multi-tier supply chain
the chain of primary, secondary, and tertiary suppliers
supply chain management (SCM)
a wide variety of activities that firms and industries use to coordinate the key players in their procurement process.
A method of inventory cost management that seeks to eliminate excess inventory to a bare minimum.
a set of production methods and tools that focuses on the elimination of waste throughout the customer value chain.
a method for ensuring that suppliers precisely deliver the ordered parts, at a specific time and particular location, to ensure the production process is not interrupted for lack of parts.
Supply chain management (SCM) systems
continuously link the activities of buying, marketing, and moving products from suppliers to purchasing firms, as well as integrating the demand side of the business equation by including the order entry system in the process
the use of digital technologies to permit organizations to collaboratively design, develop, build, and manage products through their life cycles
provides electronic catalog that represents the products of thousands of direct manufacturers
e-procurement Net markeplace
independently owned intermediary that connects hundreds of online suppliers offering millions of maintenance and repair parts to business firms who pay fees to join the market.
Value chain management (VCM) systems
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