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Chapter 1
Company ABC sells a variety of products on its Web site to the highest bidder. What type of business model are they using?
Affiliate marketing Online auction Supply chain improver Name your price
Note: The affiliate marketing model enlists other businesses to refer customers.

Company XYZ helps individuals sell products to other individuals and takes a small commission on each sale. What EC classification do they fit?
B2C B2B C2C P2P
Note: In a B2C model, XYZ would have to sell to individuals.

Which of the following is a virtual organization?

Two companies combine resources to market a new product. They hope to continue this relationship well into the future. Two Internet companies merge to expand their product lines. An Internet company allows half of its staff to begin working from home. Two companies combine resources to market a new product. They know this product can only be sold for the next 3 months.
Note: These companies are pursuing a specific goal, but it is not temporary.

Customization allows companies to:

Produce a large number of identical products. Produce customized products for the public ("the masses"). Produce a large number of individualized products. Understand the specific features the general public desires in order to create a successful product.
Note : This is mass production.

Which of the following is not a limitation of EC?

Some customers like to physically inspect products before buying. Customers now have nearly unlimited bandwidth. The standards for security are still evolving. Software tools change frequently.
Note: This limits EC because customers cannot touch items on a Web site.

Company XYZ sells products to individuals. What EC classification do they fit?

B2C B2B C2C P2P

Note: In a B2C model, XYZ sells to individuals.

Which of the following is not an attribute of a corporate portal?

A company's partners use the portal to communicate. The company's employees use this system to communicate. The public uses this portal to access the Internet. The public uses this portal to access information about the company.
Note: This is a feature of a corporate portal.

Which of the following is a limitation of EC?

Ability to operate 24 hours a day Integration of distributor and supplier IT systems Special network and hardware requirements Increased market area
Note: This is a benefit of EC.

Which of the following is a benefit of EC?

Insufficient telecommunications bandwidth Individuals can telecommute more easily Customers may be unsure of EC security EC theory and practice is constantly evolving
Note: This is a limitation of EC.

EC reduces cycle time in all of the following ways except:

Customer satisfaction. Development of marketing materials. Product distribution. Time to market.

Note: EC is unable to reduce this cycle time.

Why is B2C generally less attractive than B2B?

Easier to implement Less expensive to implement Larger number of organizations Channel conflict
Note: B2B is easier (on a small scale) to implement.

Company XYZ helps individuals exchange digital products. What EC classification do they fit?
B2C B2B C2C P2P
Note: In a B2C model, XYZ would sell to individuals.

Company ABC has several divisions that have created private resources that can be accessed using Internet protocols. The company is now going to link these resources together. What type of network is being described?
Internet Extranet Intranet Virtual private network
Note: The Internet is public.

Company XYZ sells a variety of products on its Web site. What type of business model are they using?
Affiliate marketing Online auction E-tailing Name your price
Note: The affiliate marketing model enlists other businesses to refer customers.

Association ABC helps its members get discounts on the purchases by buying in bulk. What type of business model are they using?
Group purchasing Online auction Affiliate marketing Name your price
Note: Group purchasing involves securing discounts based on the quantity of items purchased.

An extranet uses private data lines to connect several intranets.

True False
Note: An extranet uses the Internet to connect several intranets.

A business using B2C business model trades with other businesses.

True False
Note: B2C business have transactions with customers.

An e-marketplace does not have to be centered around a physical location.

True False
Note: Their participants, not by their locations, define e-marketplaces.

A company that sells products directly to the end consumer is considered a B2C firm.
True False
Note: Businesses that sell to consumers are defined as B2C. Businesses that sell to other businesses are defined as B2B.

Social networks connect people with specific interests.

True False
Note: This is the definition of a social network.

An intranet is a private network that uses Internet protocols.

True False
Note: Corporations and other groups use intranets.

E-business refers to selling goods and services.

True False
Note: E-business also refers to customer service, collaboration, etc.

Affiliate marketing refers to using banner advertisements to bring customers to your site.
True False
Note: Affiliate marketing uses other businesses to help sell products.

The membership business model gives members discounts when they make purchases.
True False
Note: This is the membership model.

EC is primarily an IT field, it is not interdisciplinary.

True False
Note: EC is very interdisciplinary.

MySpace is an example of a B2B site.

True False
Note: MySpace is an example of a social network.

A revenue model describes how a company will generate profits.

True False
Note: This is the definition of a revenue model.

Lower prices on products is not a consumer benefit of EC.

True False
Note: EC increases competition and creates lower prices for consumers.

A portal is an Internet gateway to a large variety of information and services.

True False
Note: A portal is a quick way to access a variety of resources.

Lack of consumer confidence in EC security is a limitation of EC.

True False
Note: Some customers do not feel secure with online ordering.

Chapter 2
Which of the following is not the function of a market?

Matching buyers and sellers Facilitation of transactions Ensuring profits of brokers Provide institutional infrastructure
Note: Matching buyers and sellers is an important feature of a market. It is necessary before transactions can occur.

Which of the following is an intermediary?

Marketing firm that prepares advertising materials Computer system that matches buyers with "Goods Wanted" to seller with "Goods for Sale" Seller who makes products available online UPS delivering the products to the customer
Note: This firm aids in the sale, but does not facilitate it.

Lowering a customer's search cost allows them to:

Research more items to find the best price. Make correct purchasing decisions. Apply the savings to the cost of the product. Negotiate the best price.
Note: With a low or no search cost, customers can examine more options and vendors.

In what way does mobile computing not help organizations?

Improves productivity Costs of hardware are increasing Application selection is improving Telecom support is growing
Note: This is one of the benefits.

Which of the following is not a disadvantage of paper catalogs?

Difficult to update Limitation of number of products displayed Large fixed cost Portability
Note: This is a stated disadvantage.

What is NOT one of Porter's Five Forces?

Threat of Substitutes Power of Suppliers Rivalry of Competitors Effects of EC Systems

Note: Threat of Substitutes is a part of Porter's model.

Why would a merchant want to customize products?

To charge a higher price To decrease costs It is required in EC Customers will only accept customized products
Note: Custom products can be priced higher because they meet very specific needs.

A Web site offering content created by a third party transparently to customers is an example of:
Reintermediation. Syndication. Virtual manufacturing. Build-to-order.
Note: Syndication is offering products and services, created by others, to customers.

Which is an example of reintermediation?

Using a salesperson to negotiate a large, complex agreement Buying tickets directly from the airline Purchasing insurance from the national company, not your local agent Eliminating a broker and using EC instead
Note: This is an example of reintermediation.

Which of the following is not a limitation of traditional auctions?

Duration of sale Time to examine products Technical ability of buyers Physical presence required
Note: This is a limitation of traditional auctions.

An item is offered with a minimum bid. The winner pays the exact price of his bid. What type of auction is being described?
Reverse auction Forward auction Name-your-own-price auction Double auction
Note: A forward auction is described.

The bidder details exactly what they are willing to pay. The Seller accepts or rejects the price. What type of auction is being described?
Forward auction Name-your-own-price auction Reverse auction Double auction
Note: A name-your-own-price auction is described.

Which of the following is not a benefit of auctions to sellers?

Expanded customer base Entertainment Liquidation Disintermediation

Note: This is a benefit to sellers.

What three factors facilitate online negotiations?

Bundling & customization Voice over IP systems Technology that facilitates the process Intelligent agents
Note: This is one of the stated factors.

Which of the following is a limitation of auctions?

Market size Diversity of offerings Potential for fraud Dynamic nature of sales
Note: This is a benefit of auctions.

The three functions of a market include: matching buyers and sellers, facilitating transactions and institutional infrastructure.
True False
Note: These three functions are inherent in a market.

Marketspaces are defined by their physical locations.

True False
Note: Marketplaces are defined by their locations.

In a marketspace, some goods can be digitized.

True False
Note: Many goods are digital products and are sold in marketspaces.

The Internet ecosystem refers to animals and plants discussed online.

True False
Note: The Internet ecosystem is the business model of the Internet economy.

When choosing between two identical goods, customers will always choose the lowest price.
True False
Note: Many other factors can come into play, including customer service.

Intermediaries help to decrease contracting risk in marketspaces.

True False
Note: Because a seal of approval can be removed or because feedback can be posted, marketspaces help increase the likelihood of fair dealing.

Ordering using EC benefits buyers, but not sellers.

True False
Note: Sellers also benefit from increased accuracy and speed.

Electronic cash is not an important part of EC.

True False
Note: Electronic cash offers a large benefit to EC because of its flexibility.

Mobile commerce refers to transactions made using wireless devices.

True False
Note: This technology offers many applications and benefits.

An auction is characterized by the competitive nature by which the final price is reached.
True False
Note: This is the definition of an auction.

Bargaining power of suppliers is not one of Porter's five forces.

True False
Note: Bargaining power of suppliers is one of Porter's five forces.

Rivalry among existing competitors is one of Porter's five forces.

True False
Note: Rivalry among existing competitors is one of Porter's five forces.

Increasing self service is a benefit of EC.

True False
Note: Self-service benefits both buyers and sellers.

Virtual manufacturing involves pretending you are creating something.

True False
Note: Virtual manufacturing is the ability to run multiple plants as though they were at one location.

The time required for negotiation online is the same for all products because of the use of intelligent agents.
True False
Note: Negotiation time will vary based on the type of goods and the parties involved.

Chapter 3
Jeff wants to purchase online, but is concerned about a company's privacy policy. What online purchase decision aid should he use?
Shopbot Trust verification site Business rating site Shopping portals
Note: Shopbots are tools that help individuals find products and prices.

Trust verification sites evaluate a business's trustworthiness. How comprehensive is this evaluation?
Complete, verification guarantees trustworthiness. Moderate, generally verification indicates a trustworthy user. Poor, verification is offered to all. Poor, verification services only examine untrustworthy companies.
Note: No evaluation is complete, some TRUSTe sites have had major failings.

Which type of shopping software agent learns a user's preferences over time?
Aggregator Portal Real-time agent Comparison shopping agent Learning agent
Note: This is not the type of shopping software agent described.

Which of the following is an example of a general purpose pure-play e-tailer?

Store A does not have a physical location and sells a variety of products. Store B does not have a physical location and sells a specific type of products. Store C has a physical location and a Web site. A variety of products are sold. Store D has a physical location. A variety of products are sold.
Note: This is an example of a general purpose pure-play e-tailer.

Which of the following is not a typical service provided by online travel agents?
Purchase and reserve tickets Informational articles True bargains on airfare cost Currency conversion calculators
Note: This is a typical service.

Which of the following is not a change in the travel industry created by online travel agents?
More personalized services Increased convenience Increased understanding of available products Higher total trip cost due to lost services
Note: This has been the impact of online travel agents.

Which of the following is the most serious strategic threat to traditional travel agents?
Low prices Intelligent software agents Automated Services 24-hour service
Note: While this does hurt traditional agents, they still maintain an advantage in their knowledge and ability to help customers.

Which of the following is not a driver in the electronic job market?

Size of labor market Cost Search time Speed of communication

Note: This is not a driver in the electronic job market.

Which of the following is not one of the advantages of the electronic job market for employees?
Speed of communication Ability to search a large number of positions Ability to asses your market value Lack of Internet users
Note: This is an advantage of the electronic job market.

Which of the following is not a benefit of using the Internet to aid real estate transactions?
View properties online, saves time Sort properties by attributes to decrease number reviewed Find detailed information about properties Online services eliminate the need to visit houses
Note: This is a benefit of using EC in the real estate transaction process.

Which of the following companies does not trade stocks online?

Priceline.com Schwab.com E-Trade.com Datek.com

Note: This company offers reverse auctions, but does not trade stocks online.

Which of the following is not a capability of home banking?

Print new checks online Pay bills Get current account balances Transfer funds between accounts
Note: This feature is not yet available.

Which of the following is not an advantage of online banking?

Pay bills online Access anytime Personal interaction with staff Obtain account histories
Note: This is an advantage of online banking.

What is the likely effect on intermediation of the following market events: aggregation, complex search requirements, and new markets?
Disintermediation Cybermediation Reintermediation No effect
Note: This is not the likely effect on intermediation.

Content created by a publisher that must be read using a computer or similar handheld device is an example of what type of digital publishing?
Edutainment E-book P2P publishing Distance learning
Note: This is not the type of digital publishing described.

Digital goods are also referred to as hard goods.

True False
Note: Digital goods are also referred to as soft goods.

Shopbots are tools that rate businesses based on multiple criteria.

True False
Note: Business rating sites rate businesses based on multiple criteria.

Paying a yearly fee to access Salon.com's articles is an example of a subscription business model.
True False
Note: This is an example of a subscription model.

A pure-play e-tailer dedicates the majority of their capital to online sales, with offline sales lagging behind.
True False
Note: A pure-play e-tailer has no offline sales.

A niche e-tailer may be able to support an online effort that may not have enough customers in any particular local market.
True False
Note: A niche e-tailer can pull global customers to a very specific product offering.

Direct marketing attempts to bring customers into local stores.

True False
Note: Direct marketing bypasses stores and sells direct to the end user.

On-demand delivery services usually rely on third party shipping agents (like UPS).
True False
Note: ODDS generally rely on their own vehicles.

Virtual travel agents offer only a small subset of the services provided by a traditional travel agent.
True False
Note: Virtual travel agents provide almost all of the services provided by traditional travel agents.

Most online travel agents do not offer real travel bargains.

True False
Note: Buyers will usually have to go to a special site to get true bargains.

Some Web sites allow buyers to purchase travel at a deep discount if it is purchased at the last minute.
True False
Note: Americanexpress.com is an example.

The electronic job market has increased the number of individuals who advertise their availability.
True False
Note: The number of people listing their availability has increased.

Job seekers can both reply to ads and post their information on several online recruiting sites.
True False
Note: This a common practice on sites like monster.com and hotjobs.com.

Online trading and investing in stocks is one of the fastest growing areas of EC.
True False
Note: This area is one of the fastest growing in EC.

Online banking is purely an expense for banks, it offers no advantage other than to retain current customers.
True False
Note: Cyberbanking provides several advantages to banks including reducing costs (fewer branch locations) and finding new customers (no longer limited by location).

Online publishing only seeks to digitize materials that have traditionally been available in print.
True False
Note: Online publishing is also concerned with using new types of media and creating media as it is requested.

Chapter 4
Which of the following is not an organizational buyer?

Student purchasing school supplies Employee purchasing desks for the company Computer reseller purchasing CD drives Government employee purchasing red tape
Note: This is an example of an individual buyer.

Which of the following is not a part of the EC Consumer Behavior Model?

Independent variables Intervening variables Dependant variables Decider variables

Note: This variable is a part of the model.

Which of the following is not an environmental variable in EC purchasing?

Cultural variables Climate variables Psychological variables Social variables

Note: This is an environmental variable in EC purchasing.

What are the two most cited reasons for not purchasing online?

Security and price Security and reputation Security and quality assessment Price and quality assessment
Note: A combined total of 50% of users cited security and quality assessment as reasons for not purchasing online.

Janice and Tony decided to buy the new computer system Paul suggested after careful analysis. Janice directed Rich, her assistant, to order the system. In this example, what purchasing role does Rich play?
Initiator User Buyer Decider
Note: Paul is the initiator.

Janice and Tony decided to buy the new computer system Paul suggested after careful analysis. Janice directed Rich, her assistant, to order the system. In this example, what purchasing role does Janice play?
Initiator User Buyer Decider
Note: Paul is the initiator.

A Web site asks users to fill out a questionnaire about themselves. The Web site then personalizes to the user and makes recommendations. What type of personalization is being used?
Content-based filtering Rule-based filtering Constraint-based filtering Learning-agent technology
Note: This filter would use information on product preferences to personalize for the user.

Which of the following is the most popular online customer service tool?

FAQs Chat rooms E-mail Call centers

Note: This is a helpful tool, but not the most popular.

Web mining hopes to accomplish all of the following except:

Discover previous unknown patterns. Refine knowledge about known patterns. Determine characteristics of specific users. Predict trends and behavior
Note: This is a goal of web mining.

Mark is using an intelligent agent to help him determine which CD to purchase. What type of agent is he using?
Negotiation Merchant brokering Auction support Product brokering
Note: Mark is not ready to purchase yet, so he cannot negotiate the price.

Julie is using an intelligent agent to help her find the best price on a CD she would like to purchase. What type of agent is she using?
Negotiation Merchant brokering Auction support Product brokering
Note: Julie is purchasing in a B2C environment, so she cannot negotiate the price.

What is not a benefit of an FAQ?

FAQs allow the customer to quickly find answers to questions. The answers can change dynamically based on the questions. The merchant is able to avoid questions by answering common ones up front. The merchant is able to answer questions at a lower cost.
Note: This is a benefit of an FAQ.

Which of the following advertising methods involves the use of games?

Advergaming Banner ads Pop-ups Classified ads

Note: This is the method described.

What is the proper order for the steps in market research?

Research Methodology, Problem Definition, Data Collection and Analysis, Results and Recommendation. Problem Definition, Data Collection and Analysis, Research Methodology, Results and Recommendation Research Methodology, Data Collection and Analysis, Problem Definition, Results and Recommendation Problem Definition, Research Methodology, Data Collection and Analysis, Results and Recommendation
Note: The correct order is: Problem Definition, Research Methodology, Data Collection and Analysis, Results and Recommendation.

Which is not a characteristic of permission marketing?

Spamming Sign-up Incentives Permission

Note: This is not a feature of permission marketing.

Individual buyers are more important than organizational buyers.

True False
Note: Organizational buyers do the majority of purchasing online.

A consumer who purchases an item for a business can be described as an organizational buyer.
True False
Note: This is the definition of an organizational buyer.

Companies that sell to intermediaries do not care about the final customer's satisfaction.
True False
Note: Many times these companies try to assist in the customer's satisfaction.

Someone being influenced by friends is an example of a social environment variable.

True False
Note: The other variables include cultural and psychological variables.

The most cited reason for not purchasing online is price.

True False
Note: Security is the most cited reason not to buy online. Price is generally an incentive.

The person who first suggests a purchase is the Initiator.

True False
Note: The other roles include influencer, decider, buyer and user.

Customer loyalty is the most significant contributor to profitability.

True False
Note: Customer loyalty helps companies grow their sales and profits.

Learning agent technology is a nonintrusive way to personalize web content by watching a user's actions.
True False
Note: This technology uses cookies or other methods to "learn" about the user's preferences.

Market segmentation increases the size of the group you are selling to.

True False
Note: Market segmentation decreases group size by focusing on specifics.

Psychographic segmentation involves dividing customers based on where they live.

True False
Note: Psychographic segmentation divides customers based on lifestyle factors.

Conducting research online is not always ideal, because the demographics of Internet users are not the same as the general population.
True False
Note: Web users are generally better educated and wealthier than the general population.

Intelligent agents are capable of more sophisticated tasks than search engines.
True False
Note: Intelligent agents can perform a wealth of functions beyond what a search engine is capable of.

Merchant brokering agents help users decide which product to purchase.

True False
Note: Merchant brokering agents help users find appropriate merchants, not products.

Negotiation agents are most commonly used in a B2B setting.

True False
Note: Since B2B settings (especially markets) generally support variable pricing, agents can work in this arena.

Online market research is generally less expensive than traditional market research.
True False
Note: Because information can be gathered quickly and without human intervention, online market research is generally less expensive.