Ch. 10: Social Networks, Auctions & Portals

Question 1

social network

Answer 1

involves a group of people, shared social interaction, common ties among members, and people who share an are for some period of time

Question 2

online social network

Answer 2

an area online, where people who share common ties can interaction w/one another

Question 3

How has the Internet affected offline social networks?

Answer 3

removes the geographic and time limitations

Question 4

What are 3 ways to measure the influence/business potential of a site?

Answer 4

1. number of unique visitors
2. time spent on a site (engagement) which leads to more time to display ads
3. amount of advertising revenue generated (to measure business potential)

Question 5

What are 5 type of social networks?

Answer 5

1. general
2. practice
3. interest
4. affinity
5. sponsored

Question 6

network fatigue

Answer 6

caused by spending too much time keeping up with close and distant friends on many social networks + fear of privacy of posts

Question 7

Why have online auction growth slowed?

Answer 7

shift of preferences for a “buy-now” fixed price model

Question 8

auctions

Answer 8

markets in which prices are variable and based on competition among participants who are buying/selling products + services

Question 9

dynamic pricing

Answer 9

the price of the product varies depending directly on the demand characteristics of the customer and the supply situation of the seller

Question 10

fixed pricing

Answer 10

one national price for everyone (can be conducted globally and continuously at a low cost)

Question 11

C2C auctions

Answer 11

the auction house acts as an intermediary market maker, providing a forum where consumers can discover prices and trade

Question 12

B2C auctions

Answer 12

the auction house sells goods its owns or controls using various dynamic pricing models

Question 13

What are 7 benefits of auctions?

Answer 13

1. liquidity
2. price discovery
3. price transparency
4. market efficiency
5. lower transaction costs
6. consumer aggregation
7. network effects

Question 14

liquidity

Answer 14

sellers can find buyers (and vice versa)

Question 15

price discovery

Answer 15

efficiently develop prices depending on supply and demand

Question 16

price transparency

Answer 16

allows every to see bidding prices

Question 17

market efficiency

Answer 17

reduced prices (increase in customer welfare)

Question 18

lower transaction costs

Answer 18

lower cost of selling and purchasing

Question 19

consumer aggregation

Answer 19

consumers motivated to purchase something are all gathered in one market space

Question 20

network effects

Answer 20

the larger the auction site, the more valuable

Question 21

What are 5 costs of auctions for consumers and businesses?

Answer 21

1. delayed consumption costs (auctions last a couple days)
2. monitoring costs (check in on bidding)
3. equipment costs (must have computer)
4. trust risks (fraud)
5. fulfillment costs (shipping)

Question 22

What are 4 types of auctions

Answer 22

1. English auction
2. Dutch Internet auction
3. name you own price
4. demand aggregator

Question 23

English auction

Answer 23

highest bidder wins (seller-biased since buyers compete)

Question 24

Dutch Internet auction

Answer 24

public ascending price; final price is lowest successful bid that sets price for all higher bidders

Question 25

name your own price

Answer 25

users specify what they are willing to pay for goods and services (fixed price)

Question 26

demand aggregators

Answer 26

suppliers or market makers who group unrelated buyers into a single purchase in return for offering a lower purchase price
-dynamically adjusted discount prices based on high-volume purchases

Question 27

objective of auctions for consumers

Answer 27

receive greatest value for lowest cost

Question 28

objective of businesses

Answer 28

maximize revenue by finding true market value of products and services

Question 29

What are 10 factors to consider in an auction?

Answer 29

1. type of product (unique w/difficult price discovery)
2. product life cycle (beginning/end of maturity)
3. channel mgmt. (don’t interfere)
4. type of auction (more buyers, less sellers)
5. initial pricing (low initial price to draw customers)
6. bid increments (keep low to attract bidders)
7. auction length (longer = higher prices, however will plateau)
8. # of items (volume discount)
9. price allocation rule (fair)
10. closed vs. open bidding (close allows for price discrimination on part of sellers)

Question 30

herd behavior

Answer 30

tendency to bid higher for items based on the higher bids of others

Question 31

Examples of fraud and abuse in auctions

Answer 31

bid rigging/manipulation
price matching/non-payment
shill feedback/bidding
feedback extortion/transaction non-performance
transaction interference/non-selling seller

Question 32

What 3 services provided by portals?

Answer 32

1. search and navigation of the web
2. e-commerce purchasing
3. content

Question 33

Name 3 ways in which portal marketspace is differentiated.

Answer 33

1. a few general-purpose mega portals.
2. second-tier general-purpose portals
3. third-tier specialized vertical market portal

Question 34

goal of general-purpose portals

Answer 34

attempt to attract a very large general audience and retain them by providing in-depth vertical content (sports, stocks, etc.)

Question 35

vertical market portals

Answer 35

attempt to attract highly focused, loyal audiences with a deep interest in either community or specialized content

Question 36

What did general portal sites lack therefore limiting their growth.

Answer 36

well-developed search engines (but they had content)