1

[Link] (COMPUTERS) DEGREE COURSE (III YEAR)

E-COMMERCE - NOTES

UNIT-I:

E-Business and E-Commerce: Introduction, Potential Benefits, Limitations,

Classifications, Impact of E-Commerce on Business models. E-Commerce
Applications:Entertainment,E-Marketing,E-Advertising,SearchEngines,E-Banking,
Mobile Commerce, Online Trading, ELearning, E-Shopping.

UNIT-II:

ArchitectureFrameworkofE-Commerce:ApplicationServices,BrokerageandData
Management,Interfacelayers,securemessaging,Middlewareservicesandnetwork
infrastructure. Security Protocols: Open systems interconnection (OSI), TCP/IP, FTP,
HTTP,SMTP,S-
HTTP,SSL,NNTP,MessagingProtocols:BasicMailProtocol,SecurityEnhancedMailProtocol.
WebSecurityIssues,EncryptionTechniques:Symmetric and Asymmetric.

UNIT-III:

Consumer Oriented E-Commerce Applications, Mercantile Process Model: Consumers

Perspective and Merchant’s Perspective. Electronic Payment Systems: Advantages and
risks, Types of Payment System (Credit Cards, E-Cash, Smart-Cards).

UNIT-IV:

Electronic Data Interchange: Non EDI System, Partial EDI System, Fully Integrated
EDISystem,Prerequisites for [Link] EDI:Legal issues,Security issues,Privacy
issues.

UNIT-V:

E-Marketing Techniques:Search Engines, Directories, Registrations, Solicited targeted

E-mails, Interactive sites, Banners, Advertising, Spam Mails, E-mail, Chain letters.
Applications of 5P’s (Product, Price, Place, Promotion, People), EAdvertising
Techniques: Banners, Sponsorships, Portals, and Online Coupons.
*****
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UNIT-1
Meaningofbusiness:-

Abusiness(alsoknownasanenterpriseorfirm)isanorganizationengagedinthetrade of goods
, services , or both to consumers .

Meaningofbusiness:-

Ageneraltermthatreferstoanytypeofbusinessactivityontheinternet,including marketing,
branding, and research.

Branding:-Theprocessinvolvedincreatingauniquenameandimageforaproductinthe consumer’s
mind, mainly through advertising campaigns with a consistent theme.

Commerce:-Thebuyingandsellingofproductsandservicesbetweenfirms,usuallyindifferent status or
countries.

E-commerce:-e-commercemeansbuyingandsellingofproductsorservicesoverelectronic systems
such as the internet and other computer networks.

DifferencebetweenE-businessandE-commerce:-

Inbothcases,Estandsfor“Electronicnetworks“anddescribesthe applicationsof
Electronicnetwork technology–including internet andelectronicdatainterchange(EDI) –to
improve and change business process .
E-commerce covers outward- facing processes that touch customers , suppliers and
externalpartners,includingsales,marketing ,ordertaking,delivery,customerservice,purchasing of raw
materials ---.
E-business includesE-commerce but also covers internal process such as production ,
inventorymanagement,productsdevelopment,finance,humanresources,E-businessstrategyis more
complex , productivity and cost savings .
Ex:-E-bay, Amazon.
DefinitionofE-commerce:-
Or
WriteaboutE-commerce.
E-commercemeansbuyingandsellingofproductsorservicesoverElectronicsystemssuchas
internet and other computer networks.
 This use of Electronic transmission medium (Tele communication) to Engage in the
exchange, including buying and selling, of products and services either physically or digitally,
from location to location.
 ThekeyelementofE-commerceisinformation processing.
 Thisinformationprocessingactivityisintheformofbusiness transactions.
 Someofthebusinesstransactionsare :-
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1. Transactions between company and the consumer over networks for the purpose of
home shopping and home banking .
2. Transactionsbetweentradingpartners.
3. Transactionsforinformationdistribution.
2. ExplainactivitiesofE-commerce?
a) Increasingthespeedofservice delivery.
b) Useofcomputernetworkstosearchandretrieveinformationinsupportofhumanand corporate
decision –making.
c) Buyingandsellingofinformation,productsandservicesviacomputer network.
d) Fastercustomerresponseandimproveservicesquality.
e) Advertisingontheinternet.
f) Onlineelectroniccommercepaymentsi.e.,electronicfunds transfer.
3. GivesomepotentialbenefitsofE-commerce.
[Link]-commerceis
1. Theglobalnatureofthe technology.
2. Lowcost.
3. Opportunitytoreachhundredsofmillionsofpeople.
4. Interactivenature.
5. Varietyofpossibilities.
6. Rapidgrowthofthesupporting infrastructures.
Accordingtothesefeatures,E-commerce benefitsareclassifiedinto3 types.
 Benefitsto organization.
 Benefitsto consumers.
 Benefitsto society.
Benefitsto organization:-

FollowingarethebenefitsofEcommerceto organizations
1. E-commerceexpandsthemarketplacetonationalandinternationallevel.
2. E-commercedecreasesthecostofcreating,processing,distributing,storing,andretrieving
paper based information.
3. Abilityforcreationhighlyspecializedbusiness.
4. E-commercereducesthetimebetweentheoutlayofcapitalandthereceiptofproducts and
services.
5. E-commerceinitiatesbusinessprocessesreengineering projects.
Benefitsto consumers

ThefollowingarethebenefitsofE-commerce to consumer
1. E-commerceenablescustomertoshopordo\othertransactions24hrsaday,allyear round from
almost any location.
2. E-commerceprovidescustomers with morechoices they canselectfrom many vendors and
from many products.
3. Insomecases, especiallywithdigitizedproductsE-commerceallowsquickdelivery.
4. Customer can retrieve relevant and detailed information in seconds, rather than days
orweeks .
5. E-Commercefacilitatescompetition,whichresultsinsubstantialdiscounts
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6. E-Commerceallows consumers tointeractwith othercustomersandexchange ideas as well

as compare experiences.
BENEFITSTOSOCIETY:

ThefollowingarethebenefitsofE-Commercetosociety:

1. E-Commerceenablesmoreindividualstoworkathomeandtodolesstravellingfor shopping
resulting in less traffic on the roads and lower air pollution.
2. E-Commerceenablespeopleinruralareastoenjoyproductsandservicesthatarenot available
to [Link] includes opportunities to learn professions and earn college degrees.
3. E-Commercefacilitatesdeliveryofpublicservicessuchashealthcareeducationand
distribution of Government social services at a reduced cost and or improved quality.

CLASSIFICATIONSOFE-COMMERCE:

EXPLAINCLASSIFICATIONOFE-COMMERCE.

Ans:[Link] are six

typesof E-Commerce:
1. BUSINESS - TO - BUSINESS (B2B): It includes the IOS transactions and electronic
market transactions between organizations.
 IOS Transactions means Inter Organizational Information Systems refers to flow of
standard transactions information between business partners, such as placing orders,
building or paying.

2. BUSINESSTOCUSTOMERS(B2C):Theseareretailingtransactionswith individual
shoppers.

3. CUSTOMER TO CUSTOMER :In this transaction customer sells directly tocustomers

example : selling residential properties, cars, etc.,

4. NON BUSINESS E-COMMERCE: An increased no. of non-business institutions such

as academic institutions, not for profit institutions religious, organizations, social
organizational activities.

5. CUSTOMER TO BUSINESS (C2B): This category includes individuals who sell

products are services to organizations.

6. .INTRA BUSINESS E-COMMERCE: In this category includes all internal

organizational activities, usually preformed on intranets, that involves exchange ofgoods,
services are information.

4. WhatarethelimitationsofE-Commerce

ThelimitationsofE-Commercecanbegroupedinto1)Technical2)Non-Technical Categories.
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TechnicallimitationsofE-Commerceare
1. Thereisalackofsystemsecurity,reliability,standardsandsomecommunicationprotocols.
2. Thereisinsufficienttelecommunicationband width.
3. Softwaredevelopmenttoolsarechangingrapidly.
4. Itisdifficultytointegratetheinternetandsoftwarewithsomeexistingapplication data basis.
5. Some electronic commerce soft ware might not be fit without some network are may be
incompatible with some operating systems or other components.
NON-TECHNICALLIMITATIONS:
1. COST AND JUSTIFICATION: - The cost of developing E-Commerce in house is very
costly and made mistakes due to lack of experience may result in delays.
2. SECURITY AND PRIVACY: - these issues are especially important in the B2C area,
especially security issues which are privacy measures are constantly [Link]
Industry has a very long and difficult task of convincing customers that online
transactions are secure and they will keep.
3. Lack of trust and user resistance: - Customers do not trust on unknown faceless sellers,
paperless transactions and electronic money.

E-COMMERCEAPPLICATIONS:

EXPLAINE-COMMERCEAPPLICATIONS: O
R
ExplainbrieflyapplicationsofE-Commerce:

Ans:GloballyE-Commerceisapplied inthefollowing fields.

1. EMarketing 2.E-Advertising 3.E-Banking [Link] Commerce
5. E-Learning6.E-Shopping [Link]
9. Entertainment

1) E-MARKETING: E-MarketingalsoknownasInternet marketing,Online marketing, Web

[Link] is the marketing of products or services over the internet.

It is consider to be broad in scope because not refers to marketing on the internet

butalso done in Email and wireless media.

E-Marketing tiestogether the creativeand technical aspectsofthe internet, including design

development, advertising and sales.

Internetmarketingisassociatedwithseveralbusinessmodelsie.,B2C,B2B,C2C.

Internetmarketingisinexpensivewhenexaminetheratioofcosttothereachofthe target.
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2) E-ADVERTISING:It is also known as online advertising it is a form of promotion that

uses internet and world wide web to deliver marketing messages to attracts customers.
Example: Banner ads, Social network advertising, online classified advertising etc.,

The growth of these particular media attracts the attention of advertisers as a more
productive source to bring in consumers.

Anonlineadvertisementalsooffersvariousformsof animation.

The term online advertisement comprises all sorts of banner advertisement, email
advertising, in game advertising and key soon.

3) E-BANKINGORINTERNET BANKING:

Means any user with a personal computer and browser can get connected to his banks,
website to perform any of the banking [Link] internet banking system the bank has a
centralized data base i.e., web-enabled.

BestexampleforE-BankingisATM.

An ATM is an electronic fund transfer terminal capable of handling cash deposits,

transfer between ALCS, Balance enquiries, cash withdrawals, and pay bills.

SERVICESTHROUGHE-BANKING:

 Billpaymentservice.
 Fund Transfer
 Investingthroughinternet Banking
 Shopping
Customersshouldneversharepersonalinformation’slikepinnos.,passwords,etc., with
any one.
Throughinternetbanking,youcancheckyourtransactionsatanytimeofthe day, and
as many times as you want.

4) MOBILE-COMMERCE:MobileCommercealsoknownasM-Commerce,istheabilityto
conduct, commerce as a mobile device, such as mobile phone.

SERVICESARE:
1. Mobileticketing
2. MobileVouchers,Couponsand
3. Mobilecontractpurchaseanddeliverymainlyconsumesofthesaleofringtones,
wallpapers and games of mobile phones.
4. Local base services
Localdiscountoffers
Local weather
5. Informationservices
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News
Sports,Scores
6. MOBILEBANKING:Banksandotherfinancialinstitutionsusedmobilecommercetoallow their
customers to assess account information and make transactions, such as purchasing, withdrawals
etc.,
7. MOBILEBROWSING:Usingamobilebrowser
MOBILEBROWSING:Usingamobilebrowser-Awwwbrowseronmobiledevicecustomer
Awwwbrowseronmobiledevicecustomers can
shop online without having to be at their personal computer.

5) E-LEARNING:E-Learningcomprisesallformsofelectronicallysupportedlearningand
Learningcomprisesallformsofelectronicallysupportedlearningand
teaching.
E-Learning
Learning is essentially the computer and network
network-enabled
enabled transfer of skills and knowledge.
E-Learning applications and processes include webweb-based
based learning, computer-based
computer learning.
Content is delivered via. The internet, intranet/extranet, audio, or video tape, satellite TV, and
ED-ROM.
Computer-BasedLearning,sometimesabbreviatedtoCBL,referstotheuseofcom
BasedLearning,sometimesabbreviatedtoCBL,referstotheuseofcomputersasa
BasedLearning,sometimesabbreviatedtoCBL,referstotheuseofcom key
component of the education environment.
E-Learningisnaturallysuitedtodistanceandflexiblelearning,butcanalsobeused
Learningisnaturallysuitedtodistanceandflexiblelearning,butcanalsobeused conjunction
with face-to-face teaching.
E-Learningcanalsorefertotheeducationalwebsitesuchasthoseofferinglearningscenarios
Learningcanalsorefertotheeducationalwebsitesuchasthoseofferinglearningscenarios worst
and interactive exercises for children.
CommunicationtechnologiesareusedinE
CommunicationtechnologiesareusedinE-Learning.
Alearningmanagementsystem(LMS)issoftwareusedfordelivering,tracking,andmanaging training
/education.

6) ONLINE SHOPPING:-
Onlineshoppingistheprocesswherebyconsumerdirectlybuy
Onlineshoppingistheprocesswherebyconsumerdirectlybuygoodsorservicesfroma
goodsorservicesfroma sell in
real time, without an intermediary services over the internet .it is a form of E-
E commerce
An online shop, e-shop,
shop, ee-store,
store, internet shop web shop, web store, online store, or
virtual shop evokes the physical analogy of buying products or services in a shopping
center.
The process is called business
business-to-consumer
consumer (B2C) online shopping. When a business
buys from another business it is called business
business-to-business
business (B2B) online shopping.
In order to shop online, one must be able to have access to a computer, a bank account
and debit card.
Online shopping widened the target audience to men and women of the middle class.
Online shoppers commonly use credit card to make payments , however some systems
enable users to create accounts and pay by alternative means ,such as
1. Billingtomobilephonesand landline.
2. Cheque.
3. Debitcards.
4. Giftcards
5. Postalmoney order.
Online stores are usually available 24 hours a day, and many consumers have internet access
both at work and at home.
Online stores must describe products for sale with text, phones, and multimedia files .
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Oneadvantageofshoppingonlineisbeingabletoquicklyseekoutdealsforitemsor services with

many different vendors.
Anothermajoradvantageforretailersistheabilitytorapidlyswitchsuppliersand vendors without
disrupting users shopping experience.
7) SEARCH ENGINE:-
AwebsearchengineisdesignedtosearchforinformationontheWWWandFTPservers.
bsearchengineisdesignedtosearchforinformationontheWWWandFTPservers.
Thesearchresultsare generallypresentedin listofresultandareoftencalledhits.
Theinformationmayconsistofwebpages,images,information,andothertypesoffiles. Some
search engines also mine dataa available in database or open directories.
Search engines work by storing information about many web pages, which they retrieve from
the HTML it self.
Whenauserentersaqueryintoasearchengine(typicallybyusingkeywords),the
Whenauserentersaqueryintoasearchengine(typicallybyusingkeywords),theengine examines its
index and provides a listing of best matching according to its criteria.
Most search engines support the use of Boolean operator AND, OR, and NOT.
Somesearchengines,suchasGOOGLE,storeallorpartofthesourcepageaswellas information about the
web pages.
8) ONLINE TRADING:-

Anonlinetradingcommunityprovidesparticipantswithastructuredmethodfortrading bantering
(exchanging goods with goods) or selling goods and services.
These communities often have forums and chat rooms, designed to facilitate
communicationbetween
ommunicationbetween the members.
Aformaltradingcommunityconsistsofawebsiteornetworkofwebsitesthatfacilitatesand track made
transactions.
Whiletradinganyuseditemsonline,besuretoincludetheconditionandqualityoftheproduct so as the
receiver can determine its overall value.
A trading circle is a form of online trading design to facilitate viewing of television series
andepisode media.
9) ENTERTAINMENT:-

Theconventionalmediathathavebeenusedforentertainment
Theconventionalmediathathavebeenusedforentertainmentare
1. Books/magazines.
2. Radio.
3. Television/films.
4. Videogames.
Theinternetasanentertainmentmediaisnotaelasticbyitself,butratherauniqueinteractions of all of
the above media.
Computerbasedsystemshavebeenusedasanentertainmentmediumintheformofvideo games , CD ,
ROMs , etc..
Online books /newspapers, online radio, onli
online
ne television, online firms, and online games are
common place in internet where we can entertain.
Onlinesocial networkingwebsitesareoneof thebiggest sourcesofE
sourcesofE-entertainment
entertainment fortoday’s tech-
tech
savvy (who have knowledge interest in) generation.
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IMPACTOFCOMPUTERTECHNOLOGY
TECHNOLOGY:-

THEICDT MODEL:-
A model developed by ALBERT ANGETHRN called the information, communication,
distribution;transaction(ICDT)modelisusedasabasisfordiscussingtheinternetstrategyof
transaction(ICDT)modelisusedasabasisfordiscussingtheinternetstrategyof business.
Angrhrn’smodelisbasedonfourvirtual
Angrhrn’smodelisbasedonfourvirtualspaces

VIRTUALINFO VIRTUAL
RMATIONSPA
CE

TRADITIO
NAL
MARKET
PLACE

1. Virtualinformationspace::-
a) This space is where a firm displays information about their organization, products,
orservices.
b) This space is the easiest space for a business to enter and it is first step to enter into
amarket place.
ForE-commercemajorconcerns
commercemajorconcernsare:
i. Theinformationthatis displayedisaccuratea
displayedisaccurateacurrent.
ii. Customercaneasilyfindtheservicesand canreachtheinfo easily.
iii. Thesiteisaccessiblewithout
accessiblewithout long
longwait.
2. Virtualdistributionspace::-
i. Thisspaceisusedtodelivertheproductorservicesrequestedorpurchasedbythe consumer.
ForE-commerce,majorconcernsare
ii. Deliveryofproductsandservicesonlythelegitimate,approved
Deliveryofproductsandservicesonlythelegitimate,approvedcustomers.
customers.
iii. Reliabledeliveryofproduc
Reliabledeliveryofproductsandservices
3. Virtualtransactionspace:--
Thisspaceisusedtoinitiateandexecutebusinesstransactions,suchassalesorders. The
major concern contributing to these reluctances is data security.
Reliability of vendor.
Reputability of trading partner.
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Privacy concern by customers.

4. Virtualcommunicationspace
Virtualcommunicationspace:-
This space is used to enable relation
relation-ship-building
building , negotiation,and exchange of ideas
such as chat rooms , forums and communities .
ThreepillarsofE-commerce:-
ThethreeelectronicpillarsofE-commercewhichsupportopenmarketprocesses
commercewhichsupportopenmarketprocesses:
1) Electronicinformation.
2) Electronicrelationship.
3) Electronictransactions.
1) Electronic information is similar to virtual information space . The WWW is viewed as a“global
a
responsibility “, of documents and multimedia data , constructing an electronic information
pillar is easy most word processing software packages will easily convert the documents into a
web-readable
readable format ,in the website , the web page does not ffreezereeze or links do not head the
visitor to a dead end .
2) Electronic relationships is the central pillar and this is similar to virtual communicationplacing
communication
information on products and services offer on a web site does not mean that potential
customer or guests will visit that web site again , once they are visited .
3) The electronic transactions pillar is similar to virtual transactions space and also encompasses
e
virtual distribution space. Many business have built an electronic inf pillar and some have but
or are building an electronic community pillar and fewer have constructed electronic
transactions pillar.
Twoproblemsinconstructingthepillar
Twoproblemsinconstructingthepillarare:-
1) Engagingameaningfulsufficient,negotiable
agingameaningfulsufficient,negotiabledata.
2) Keepingdatatransactionsdata
Keepingdatatransactionsdatasecure.

OPENMARKET
Electronic
Information

Electronictransactions
Electronic
Electronic
Relationship

Existing
Market
Space
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ShortQuestion& Answers
1) DefineE-Business.
2) DefineE-commerce
3) WhatarethepotentialbenefitsofE
WhatarethepotentialbenefitsofE-commerce?
4) WhataretheapplicationsofE
WhataretheapplicationsofE-commerce?
5) ExplaintypesofE-commerce.
commerce.
6) ExplainlimitationsofE-commerce.
commerce.
7) ExplainDefineE-marketing,E
marketing,E-banking.
8) Explainsearchengines&mobile
Explainsearchengines&mobilecommerce.
LongQuestions
1) ExplainbenefitsofE-commercetoorganizations,consumers,society
commercetoorganizations,consumers,society.
2) ExplainimpactofE-commerceonbusiness
commerceonbusiness pedal.
3) ExplainICDImodel,threepillarofE
ExplainICDImodel,threepillarofE-commerce.
4) Explainterms
E-Advertising.
E-learning.
E-shopping.
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UNIT-3
CONSUMERORIENTEDAPPLICATIONS

MECANTILEPROCESSMODEL:-

MercantileprocessisaninteractionmodelbetweenconsumerandMerchantsforonline commerce.

 Thisisnecessarytobuyandsellgoods,abuyer,aseller,andotherpartiesshouldfollow some
standard business processes.

 Theestablishmentofacommonmerchantprocess(orsetoffprocesses)ismustto
increase the convenience for customers.

 Awellestablishedstandardprocessusingprocessingcreditcardspurchasescontributed
more for the E-Commerce.

Therearethreetypesofmercantilemodels.

 Mercantilemodelsfromtheconsumer’s perspective
 Mercantilemodelsfromthemerchant’s perspective

MERCANTILEMODELSFROMTHECONSUMER’S PERSPECTIVE:-

Theonlineconsumerexpectsquality,convenience,value,lowpriceandcontrol.

Tomeettheseexpectations,thebusinessprocessmodelfromconsumer’sperspective grouped
seven activities into 3 phases.

Sevenactivitiesare

1) Product/servicesearch 1) Pre-purchase
2) Product selection determination
3)Negotiationsofterms

4) Placement of order 2)Purchases

5)Authorizationofpayment consumption
6)Receiptfor payment

7)Customerserviceandsupport 3)Postpurchase
interaction
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PRE-PURCHASEDETERMINATION:-

It includes search and discovery for a set of products in the large information space capable of
meetingcustomerrequirementandproductselectionfromthesmallersetofproductsbasedon attribute
(characteristics) comparison.

Consumershavetowatchforaneworexistinginformationregardingvariablesthatareimportant for the

purchase decision process.

Customersareof3types.
1) Impulsivebuyers:-Whopurchaseproducts quickly.
2) Patientbuyers:- Whopurchase productsaftermaking comparison.
3) Analyticalbuyer:-Whodosubstantialresearchbeforemakingthedecisionto
purchase products or services.

InthecontextofE-Commerce,informationsearchcanbeclassified into2 categories.

1) Organizationalsearch
2) Consumersearch

1. ORGANISATIONAL SEARCH:-

 Itisanactivitydesignedtobalancethecostofacquiringinformationwiththe
benefits of improved final decisions.
 As time to time changes information regarding product may be relatively less
valuable,sofirmororganizationrespondtohigh-paudinformationchangeby
constraining search process

2. CONSUMER SEARCH:-

Consumersearcharecategorizedinto2 types.
 Utilitarianmeanstaskrelatedandrelational,implyingthataproductispurchasedin
efficient manner.
 Hedonicvaluemeansforfunsakeandplayfulness,doesnotcompletethe task.

Infacilitatingbetterconsumersatisfactionandorganizationalsearch,intermediariescalled information
brokers or brokerages. Information brokerages are needed for 3 reasons.
 Comparisonshopping
 Reducedsearchcosts
 Integration

PURCHASECONSUMATION:-

 Afteridentifyingtheproductstobepurchased,thebuyerandseller mustinteracttocarryout
mercantile transaction.
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 Amercantiletransactionisdefinedastheexchangeofinformationbetweenbuyerandseller
followed by the payment.
 Dependingonthepaymentmodelmutuallyagreedon,theymayinteractbyE-Cash,or
transferring authorization for credit billing authorization (Visa, Master Cards)
 MercantileprocessusingdigitalcashorE-Cash.
 Mercantileprocessusingcredit cards.
 Basicmercantileprocessmodelforanytransactiononlinebusiness.

BasicMercantileprocessmodelforanytransactiononlinebusiness.

1) Buyercontactvendertopurchaseproduct,throughWWW,Email,Telephoneetc.
2) Venderstatesprice
3) Buyerandvender may ormaynotengagein negotiation.
4) Ifsatisfy,abuyerauthorizedpaymenttothevendorwithanencryptedtransactionforthe agreed
price.
5) Vendorcontactshisorherbillingservicetoverifytheencryptedauthorizationfor
authentication.
6) Billingservicedecryptsauthorizationandcheckbuyer’saccountbalanceandputholdonthe
amount of transfer
7) Billingservicegivesthevendorthe‘greenlight’todeliverproductsandsendsastandardize
message giving details of transactions for merchants records.
8) Onnotificationofadequatefundstocoverfinancialtransactions,vendordeliversthegoodsto
buyers.
9) [Link] tellsbillingserviceto
complete the transactions.
10) Alltheendofbillingcycle,buyerreceivea transactions.

MERCANTILEPROCESSUSINGDIGITALCASHORE-CASH:-

E-Cashinsimilartopapercurrencyandhas morebenefitsandeasilytransmittedelectronically. The

following are the mercantile protocol based on the use of e-cash.

1. Buyerobtainsanonymous(secret)e-cashfromissuingbank.

2. Buyercontactssellertopurchaseproduct.

3. Sellerstatestheprice.

4. Buyersendse-cashto seller.

5. SellercontactshisbankorbillingServicetoverifythevalidityofthee-cash.

6. [Link].

7. Sellerdeliverstheproducttobuyer.
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8. Sellerthentellbanktomarkthee-cashas

MERCANTILETRANSACTIONSUSINGCREDITCARDS:

Two major components comprise credit card transactions in the mercantile process:
ElectronicAuthorization and Settlement credit authorization processes at point-of-sale terminal. The
creditcardnumber is checkedagainst thedatabase andthetransaction is eitherapprovedor
denied,within few seconds.

Step-by-stepa/cofaretailtransaction follows:

Step1:Acustomerpresentsacreditcardforpaymentataretails location.

Step2:Thepoint-of-sales/wdirectsthe transactionoftotheLocalNetworkaccess point.

Step 3: The system verifies the source of the transactions and routes to the appropriate authorization
source.

Step4:Atretaillocationcollectsallcomplementtransactioninformationintoa‘batch’.

Step 5: The system gathers all completed transactions and processes the data in preparation for
settlement.

Postpurchaseinteraction:

Thisincludescustomerserviceandsupporttoaddresscustomercomplaints,productreturnsand product
defects.

:-InventoryIssues.
:-Database Access.

MERCANTILEMODELSFROMTHEMERCHANTS PERSPECTIVE

TheOrdertodeliverycyclefromtheMerchant’sperspectivehasbeenmanagedwithan
standardization & cost.

Tofullyrealizeandmaintainacompetitiveadvantageintheon-lineenvironment,acompanymust build a
robust vision of “order-to-delivery” cycle. This lads to a another cycle “Order Management Cycle”
(OMC) .

OMCincludeseightdistinct activities.

:-Orderplanning&Ordergeneration.
:-Cost estimation&Pricing.
:-OrderReceipt&Entry.
:-Orderselection&prioritization.
:-Orderscheduling.
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:-Orderfulfillment &Delivery.
:-OrderBilling&A/Cpaymentmanagement.
:-OrderService&Support.

OrderPlanning& Order Generation:

 TheBusinessprocessbeginswithan actualorderofplacedbythe customers.

 Orderplanningleadstotheordergenerationordergeneratedinsendingpersonalizede-mail to
customer (cold calls), Create WWW page.

Costestimation& pricing:

-Pricingisthebridgebetweencustomers’needsandcompany capabilities.
-Pricing attheindividualorderleveldependsonanunderstandingthevaluetothecustomersthat is
generated by each orders.
-Evaluatingthecostoffillingeach order.

OrderReceipt&Entry:

Afteracceptableprice,thecustomersentertheorderreceiptandentryphaseofOMC.
Theseordersaretakenbycustomerservicerepresentatives,whoareinconstantcontractwith customers.

OrderSelection& Prioritization:

Customerservicerepresentativesareresponsibleforchoosingwhichorderstoacceptandwhichto decline.
*Notallcustomerordersarecreated equal.
*Thedesirable ordersarethosethatfitthecompany’scapabilitiesandgivesgood profit.
*Companies can make gains by the way they handle order prioritization- i.e decide which orders to
execute faster.

Orderscheduling:

Duringtheorderschedulingphasetheprioritizationordersgetslottedintoanactualproductionor operation
sequence.
Thistaskiswillbecomedifficultbecauseofthedifferentdepartmentshavingconflating goals.

OrderfulfillmentandDelivery.

Duringthisphasetheactualproductorserviceisdelivered.
*Orderfulfillmentinvolvesmultiplefunction&Locations.
*Insomebusiness,fulfillmentincludesthirdpartyvendors.

OrderBillingandAccount Payment:
 17

Aftertheorderhasbeenfulfilledanddeliversbillingistypicallyhandledbythefinancedepartment. This
department gets the bill out effectively efficiently and close collect very quickly.

CustomerService&Support:
Customerserviceinvolvesinstallationofaproduct,repairmaintenance.

Thisservicegivescustomersatisfactioncompanyprofitableyear.

ElectronicPaymentSystems:

Definition: Electronic payment is a financial exchange that takes place online between buyers and
sellers. The content of this exchange is usually as encrypted credit card numbers, electronic cheques
[Link] are:
1. [Link].
2. Reducedoperationalandproceedingcost.
3. Increasingonlinecommerce.

Advantages:-
1. Privacy.
2. Integrity.
3. Compatibility.
4. Goodtransaction efficiency.
5. Acceptability.
6. Convenience.
7. Mobility.
8. Lowfinancial risk.
9. Anonymity.

1) [Link]
locations 24 hours day, 7 days a week.

2) E-paymentshavereducedtheamountoftimespentonbillmanagementorpaymentbyabout 60%.

3) Comparedtothe costofpostage,checkwritinghas anyonlinepaymentcansavethemoney.

4) E-paymentsaresecure.
RisksinElectronicpayment systems:-

Therearethreemajorrisksintheoperationofthepaymentsystem,theyare
1) Fraudormistake.
2) Privacyissues.
3) CreditRisk.

1) FraudorMistake:
 18

All electronic payment systems need some ability to keep automatic records. Once
information has been captured electronically, it is easy and inexpensive to maintain.
Theneedforrecordkeepingforpurposeofriskmanagementlikefraudoranysortof mistake.

2) PrivacyIssues:

Theelectronic [Link]
shouldbeprotectedasmuchaspossibleprivacymustbemaintainedagainstunauthorized
persons. For any type of transaction trusted third-parties will be needed for all tenacity
and good faith.

3) ManagingCreditRisk:

Creditorsystematicriskisamajorconcerninnetsettlementsystemsbecauseabank’s failure to
settle its net position could lead to a chain reaction of bank failures.

TYPESOFPAYMENTSYSTEM

Electronic payment systems are mainly used in banking, retail, health –care, online
markets, etc., Electronic payment system also called as Electronic Funds Transfer (EFT)
It is defined as “ any transfer of funds initiate through an electronic terminal telephonic
instrumentorcomputerorauthorizeafinancialinstitutiontodebitorcreditanaccount”

EFT(ElectronicFundsTransfer)canbecategorized intothreetypes.

1) Banking&Financial payment.
2) Retailingpayments.(CreditCards&Debit Cards)
3) Onlineelectronicpayments.
E-cash,Electroniccheques,SmartCards,Credit cards.

ElectronicCash(E-cash)

E-cashisanewconceptinon–linepaymentsystembecauseitcombinescomputerizedconvenience with
security and privacy. E-cash presents some interesting characteristics that should make it an
attractive alternative for payment over the internet.

PropertiesofE-cash:

TherearefourpropertiesofE-cash
:-MonetaryValue
:- Interpretability
:-Irretrievabilityand security

E-cashmusthaveamonetaryvalue;itmustbebackedbycash,bank-authorizedcreditorabank certified cashier

cheque. When e-cash created by one bank is accepted by other others.
 19

E-cash must be Interpretable i.e. this can be cleared in multiple banks, because multiple banks are
required with an international clearing house that handles the exchangeability issues because all
customers are not going to be using the same bank or even be in the same country.

E-cash must be storable and retrievable from any place telephone or personal communicationsdevice
and with- draw from and deposit in to banking A/C. E-cash should not be easy to copy, this includes
preventing or detecting duplication.

RiskInvolvesin E-Cashare:

1) Timeforelectronicmoneyis valid.
2) Howmuchcanbestoredonandtransferredby electronic money.
3) [Link] time.

TomakepurchasingusingE-cash:
1) Establishmentofan account
2) Maintainingenoughmoneyin thea/ctomakethepurchase.

WorkingofE-cash:

E-cashisbasedoncryptographicsystemscalled“DigitalSignatures”.Thismethodinvolvesapairof numeric
keys (Very large no’s)
- Oneforlocking (enclosing)
- Anotherforunlocking (decoding)
- Encodingkeyiskept privateandthedecodingkeyismadepublic.

These digital signatures are very secured way for e-cash.

Electroniccashfulfillstwomain functions:
1) Asamediumof exchange.
2) Asastoreof value.

Digitalmoneyis aperfectmediumofexchangee-cash wouldbeallowedtorealizeit’spotentialfor bypassing the

transaction costs of the foreign exchange marked.

OperationalRisks:

1) Thetimeoverwhich givenelectronicmoneyis valid.

2) Howmuchcanbe storedonandtransferredbyelectronic money.
3) [Link] madeduringagivenperiodor time.

LegalIssues:

Electroniccashwillforcebankersandregulatorstomaketouchchoicesthatwillshapetheformof lawful
commercial activity related to electronic commerce.
 20

1. [Link] the
OTPP a customer information profile.

2. Topurchaseinon-linetheconsumerrequeststheformthemerchantbyquotingOTPPaccount
number.

3. ThemerchantcontactswithOTPPpaymentserverwiththecustomer’saccountn.o

4. TheOTPPpaymentserververifiesthecustomer’saccountnumberforthevendorandcheckfor
stuffiest funds.

5. TheOTPPpayment [Link]
message in one of three ways. Yes I agree to pay; No; I will not pay;

6. IftheOTPPpaymentserversgetayesfromthecustomer,themerchantisinformedandthe
customer is allowed to download the material immediately.

7. TheOTPPwillnotdebitthebuyer’saccountuntilifreceivesconformationofpurchasecompletion.

CLIENT MERCHANTS
SERVER
BROWSER

PAYMENT
SERVER
 21

PAYMENTSERVER

BANK THIRDPARTY
SERVER

CREDITCARD,DEBITCARD,D
CASH
IGITAL

ShortQuestions:

1) Mercantileprocess.
2) WhatisElectronicPaymentsystem?
3) ExplainEFT(Electronicfundstransfer)
4) E-cash.
5) E-cheque
6) Smart–cards
7) ElectronicPulses
8) CreditCard

LongQuestions:

1) Explainconsumer–orientalapplications.
2) Explaintypesofmercantileprocessmodels.
3) Explainmercantilemodelsfromtheconsumer’sperspective.
4) Explainmercantilemodelsfromthemerchant’sperspective.
5) ExplainE-cash&E-cheques.
6) Explainrisksinelectronicpaymentsystems.
7) Explainin aboutcreditcard systems.
8) Explaindigitaltokenbasedelectronicpaymentsystems(E-cash,E-cheques).
 22

UNIT-4
EDI-ELECTRONICDATAINTERCHANGE

INTRODUCTION

[Link],
invoices, etc. between applications. The exchange involves no paper, no human intervention and
takesplaceinamatterof seconds. [Link] requires
a network connection between the two companies exchanging business documents.
EDI has provided great value to trading partners especially those in certain “EDI – ENABLED”
industries such as retail, automotive, and petroleum. The advent of the internet has created a
[Link]
provides the communications. Capabilities of EDI over a Value-Added network at a much lowerprice.

BUSINESSSYSTEMSAREOF3 TYPES:-
1. NON-EDISYSTEMS
2. PARTIALLYEDISYSTEMS
3. FULLYINTEGRATEDSYSTEMS

NON-EDI SYSTEMS:-

EDItodayismostwidelyusedinlargebusinessandbysmallercompaniestradingwithlarger businesses.
The entire non- EDI process requires the use of multiple clerks by both the customer and
vendor to complete the transaction. The typical clerks involved in the buying cycle are Inventory
control,purchasing,receiving,accountspayable,etc..Thetypicalclerksinvolvedinthesellingcycle are
sales order processing, credit, warehouse, shipping, accounts receivable and cash receipts.

EXAMPLEFORNON-EDI SYSTEMS
SELLING BUYING
PREPARESALES OEDER PURCHASEREQUISITION
SALES ORDER COPY SENT TO SEARCHVENDORFILES
WAREHOUSEORPLACEDONBACK OR
ORDER. SELECTAVENDOR
AFTERGOODSARESHIPPED,INVOICEIS PREPAREPURCHASEORDER
PREPARED.
MAILINVOICETOCUSTOMER MAILPURCHASEORDERTOVENDOR
RECEIVEINVOICE& VERIFY ACCURACY
PREPARECHECKANDMAILCHECK.
Fromtheaboveexample,asmanyas elevenclerksareinvolvedintheprocessfromstarttofinish.
 23

VALUE–ADDEDNETWORKS(VANS)
TheEDIfeaturesareimplementedintheorganizationthroughthirdpartynetworkservices, generally
called Value-Added-Networks.(VAN).The services provided by most VANS include

1. EDItranslations/w
2. Securityassurancesofdata
3. Reliabilityofservicesdueto multiple
4. Telecommunicationlinks
5. EDIsystemsdevelopmentassistance
6. Employeetraining sessions.

ROLEOFVAN

1. Toexecuteonlyauthorizedtransactionswith validtrading partners.

2. To enable the VAN to distinguish authorized transactions and valid trading partners.
[Link]
outsourcing function and serve as a messaging station for trading partners. Messaging can be
tranmitted from one party's VAN to the other party's VAN.

VAN
CompanyA COMPANY'S Company B
(Vendor) AAND B (Customeror
TRADING partner)
AGREEMENT

[Link] immediate
back to the requesting partner with out needing to contact to the vendor.
IfVANdoesnothavetherequesteddata, [Link] data
from the vendor, it sends back to the trading partners.
 24

PARTIALLYINTEGRATEDEDISYSTEMS

InpartiallyIntegrated system,theprocessbeginsthesameasin anon–EDIsystem.

ExampleforPartiallyIntegratedEDISystems

PURCHASING SELLING

Purchasingrequisition purchaseorderis electronically

Retrievedandsalesorderisautomatically generates.

Searchvendor files VAN notification to pull goods from

VAN warehouseissentelectorbackorder notice
&
is generated.
Selectavendor

Log on to system and fill out goodsareshippedinvoiceisprepared.

Electronic purchase order

Receive invoice & verify accuracy aftergoodsareshippedinvoiceisprepared.

Prepare check & remittance advice Mail Invoice to customer

Mailcheck

Somesteps aredonemanuallylikesearchingforvendor&selectinga vendor.

Afterselecting,[Link] order,sales order [Link].

Thenagainpreparingcheck,mailingcheck,underpurchasingandshippinggood,invoicemailingto customer
are done manually.

Advantages:-

1. Thetimefromapprovingapurchaseordertoreceiptofthepurchaseorderandpreparationof the
sales order by the vendor is typically reduced by as much as 3-7 days.
2. [Link] clerkstoperformtheentirecycleare reduced.
3. Thepossibilityofclericalerrorsisalsoreducedasintheamountofpaperworkgeneratedby
duplicate copies.

FULLYINTEGRATEDEDISYSTEMS

FullyintegratedEDIsystemsencompasselectronicdatasharingthroughoutallaspectsofthe
purchasing and payment cycles.
1. TheprocessingoftheactualpaymentandremittanceadviceiscalledFinancialEDI.
2. FullyintegratedEDI,includingfinancialEDI,providesfirmswiththegreatestbenefitsin terms
of speed and accuracy.
3. PaymentsystemalsodidinElectronictransfers funds.
 25

[Link] [Link] retrives

determine purchase purchseorderandsalesorder is
requirements automaticcally generated.
[Link] [Link]
determineappropriate goods
vendor.
[Link] [Link]
check inventory availability quantities.
and prices.
[Link] vendor [Link]
customer
VAN
[Link](purchase order) (steps:3,4,5,6,7,9,10,12,13are [Link] electronic
donethroughvan) notification of funds
transferredandremittanceadvi
ce.
[Link]
[Link]
and goods received.
[Link] transfers
fundsandremittanceadvice

PRE-REQUISITESOFEDI
PlanningforEDIimplementationisanimportantfactorforsuccess. The
step required for EDI is:-
1. IdentifyorganizationalneedsforEDI
2. Weighthecostand benefitsof EDI
3. IdentifyEDIbusinesspartners
4. Obtaintopmanagementapproval
5. FormanEDIprojectteam
6. Education& training
7. Decideon EDI standards
8. Decideontheconnection options
9. Implementationplanning.

1. IdentifyorganizationalneedsforEDI:-

* First,studythecompany'sexistingworkflowandhowitcanbe improvedusingEDI.
* Thisstudyshouldattempttocoverthewholerangeofdataandinformationflowthroughtheentire
company and not be limited to know EDI applications.

1. [Link] and benefitsof EDI:-

 26

 AfteridentifyingtheareaswhereEDIimplemented,weighthebenefitsofEDIagainst the
costs of setting up the system.
 ThecostofEDIimplementationgoesbeyondstartupcostsofacquiringtheEDIs/w and
h/w components and training.
 OngoingcostssuchasVANcharges,maintenanceandsupportcostsneedalsotobe taken
into account.

2. IdentifyEDIbusinesspartners:-

 Inthisphase,identifythebusinesspartnerswithwhomtoimplementEDI.
 Uponidentificationofbusinesspartners,discusswiththemaboutthepossibilityof
establishing an EDI link.

4. ObtaintopmanagementApproval

[Link] EDI
implementation ensures that the EDI implementation is a overall company
[Link]
resources required for the implementation.

5. FormaEDIprojectteam:-

 EDIimplementationinvolvesthosepersonnelwhoareexpertsintheirbusinessareas.
 AnEDIprojectteamneedstobeformedtoensurethattherequirementsofallparties are
addressed.
 EDIprojectteamcanbeheadedeitherbyanin-houseexpert(withIT&EDI
experience) or by external consultants.
 Theprojectteamwillcoordinateoverallprojectactivities,plantheimplementation

6. Education&Training:-

 Training&educationprogrammedcanalsobeusedasapowertooltodemonstrate senior
management support of EDI.
 EDItrainingprogrammednearertothedateofimplementationcouldcoverspecific areas
of user operation & how to use the system.

7. DecideonEDIstandards:-

 Itisnecessaryfororganizationstoadaptacommonsetofstandardsfor
communications.
 Thesetofstandardsto beadoptedinEDIimplementationnededto beagreedbyyou and
the businesses partners.

8. Decideontheconnection options:-

 Decidebuildingaownproprietarynetworkorselectinga thirdpartyVAN.
 27

 IdentifytheappropriateVAN.

9. Implementationplanning:-

 AfterVANSidentified,andtheEDIapplicationsprioritizedimplementationplanning
comes next.
 Atthisstage,decisionwillbetakentoimplementandwhichapproachshouldbetakenfor full
implementation.

EDI:LEGAL,SECURITYANDPRIVACYISSUES
InEDI,Tradingis donebetweencountries and corporations.

 InEDI,legalissues andcomputersecurityare important.

 CompaniesthatdealwithEDIshouldtaketheservicesofalawyer duringthedesignofEDI
applications, so that evidentiary/admissibility safeguards are implemented.

Thereare3types ofcommunicationswhenconsideredforEDI issues:

1) Instantaneous:-Ifthepartiesarefacetofaceoruseaninstantaneouscommunicationmedium such
as telephone.
2) Delayedwithpostalservice:-Themailboxruleprovidesthatanacceptancecommunicatedvia postal
service mail is effectively communicated when dispatched or physically deposited.
3) Delayedwithnonpostalservice:-EX:-Couriers, telegram

 Messagingsystemscombinefeaturesofdelayedandinstantaneous
 Messagingdelayisafunctionofthespecificapplications,messagerouting,networks
traversed, system configuration and other technical factors.

Onewayoflegal&securityissueisDigitalsignatures. The

technical uses of digital signatures are :-

1. Messagesaretime-stampedordigitallynotarizedtoestablishdatesandtimesatwhicha
recipient hard access or even read a particular message.
2. Thesesignaturesaretoreplacehandwrittensignatures,asitissamelegalstatusas
handwritten signatures.
3. Digitalsignaturesshouldhavegreaterlegalauthoritythanhandwritten signatures.
 28

Importantquestions

1. EXPLAINVAN.
2. EXPLAINTYPESOFEDI.
3. EXPLAINPREREQUISITESOFEDI.
OR
EXPLAINEDI IMPLEMENTATION
4. EXPLAINSECURITY,LEGAL,ANDPRIVACYISSUESINEDI.

SHORTANSWERS

1. DEFINEEDI
2. WRITEANOTEONN0N-EDISYSTEMS
 29

UNIT-5
InternetMarketingTechniques:

Internetmarketingtechniquesareof2 types:

1) PassiveTechniques.
2) AggressiveTechniques.

1) PassiveTechniques:Passivetechniques areconsideredtobethosemethodsthatrequirethe user

to ‘pull’ the information from the website.

2) AggressiveTechniques:Aggressivetechniquesareconsideredtobethosetechniquesinwhich the
website “pushes” the information on to the customer regardless of whether the consumers is
interested or not.

Someofthemarketingtechniques:
 Solicited,targetede-mail.
 Interactivesites.
 Banneradvertising.
 Off-lineadvertising.
 Unsolicitedtargetede-mail.
 SpamMail.
 E-mail,chainletters.

Solicited,TargetedE-mail:

E-mail marketing has become a popular medium because of its relatively low-cost and the ability to
sendHTMLmessagescontainingfullcolorpicturesofproducts,aswellaslinkstoorderfrompages. The
transmit hal of an e-mail message to a solicited, targeted list is a method used tovisitors to a website
that requires acts by both the website and the visitor. This mechanism allows a business to maintain
regular contract with customers and drive traffic to websites or other products.

Becausetheuserrequeststheinformationthistypeofinternetmarketingtechniqueisconsideredto be
“pulled” by the consumer with the help of the website.

ThisTechniqueiscomesunderpassive Techniques.

InteractiveSites:

Somesitesmayexhibitinitiativetoattractinitialandsubsequentvisitorstothereattractinitialand subsequent
visitors to their site by providing general information in an interactive fashion.
 30

Banner Advertising:

OnlineBanneradvertising,off-lineadvertisingonecomesunderaggressiveadvertisingtechniques.
Online banner advertising a service sold. Internet marketing firms. Can be very effective. A major
advantage is that the banner’s effectiveness, in terms ofa visitors to site is easily monitored.

Off-LineAdvertising:

Themethodusedtopromotewebsiteisoff-lineadvertising,suchastelevision,radio [Link]
advertising mechanisms are also relatively more costly than previously mentioned methods.

Unsolicited,TargetedE-mail:

The method of on-line advertising that unsolicited, targeted email advertising to past visitor or
[Link] advertising isaggressiveinthatthevisitororcustomerdoesnotspecifically request
additional sales or promotion items. When conducted properly, these methods can be effective.

Spam mail:

Even more aggressive factices to attract customers is the sending ofunsolicited e-mail
[Link]-mailaddressmaybe
purchased or traded with another business.

Theon–lineeqvalentofjunk-mail-thatissentoutrepeatedlyisreferredtoas spam mail.

Spam is referred to as “Postage due marketing “ because the thousands of messages sent reside on
therecipientshostcomputersuntiltheyaredeleted, andthestorageofsuchmessagescostbusiness money.

E-mailchainletters:

Anotherlow-cost,aggressiveadvertisementtechniqueusedontheinternetise-mailchairletters.E- mail
chair letters typically require that a user visit site and register.
Marketing(Web– Basedmarketing):

Thewwwprovidesan [Link]–based electronic

commerce is providing marketers with an exciting new marketing channel.

Marketingistheprocessofplanningandexecutingtheconception,pricing,promotion,and distribution of
ideas, goods and services to create exchanges that satisfy individual and organizational goals.

Thewwwpresentsanewvenueformarketerstouseandwithitcomesnewguidelines. Web

based marketing consider two issues.

 31

1) Determinewhetherweb-basedmarketingis(1)Evolutionary-alteringanexistingfirm’s
business model.
(2)Revolutionary-forminganeworganizationtorealizetheopportunityofmarketingonthe web.

2) Considerhowthevariousweb-basedmarketingtechniquescansupplementcurrent
marketing initiatives.

TheFive“P”sAppliedToInternet Marketing:

Acustomerorientedvaluechairthatplacesthecustomerasthecenterofattention,withinformation follows
passing from a business to its customer for all facts of its operations except for own procurement
where the firm inter faces with its suppliers.
Thefive“P”sofmarketingare:

1) Product
2) Pricing
3) Place& Distribution
4) Promotion
5) Personalization

Salesand
marke
ting

Service Procure
Product ment
Promotio Customer
personali
zation

Our Product
bound ion
logistic Product

Figure:TherelationshipofthefivePsandtheconsumer-orientedvaluechain.
 32

Product:

Productisagoodor servicethatabusinessofferstoitscustomerswithoutaperfectproducttooffer, a
business cannot survive. The produce component in the marketing is related to the production
section of the consumers –oriented value chain.

Pricing:

Thepricingofa“good” referstotheprocessesinvolvedindeterminingtheamounttochangefora specific

physical good or service pricing models aretypically used to determine a firms price.

Becauseofthedevelopmentofsearchenginescustomersareeasilyabletocomparepricesofmany goods
offered for sale on the internet. On-line quotation are a popular method for selling items on the
internet an interesting method of pricing goods on the internet is throughoffers made by consumers.

Place(Distribution):

Placeis frequentlyreferredtoasout boundlogisticsorDistribution.

TheDistributiontaskentailsmovingtheproductfromtheproducertothe customer.

Theproductmaytraveldirectlyfromtheproductstothecustomeroritmaybechanneled intermediaries
such as whole sales or retailers.

E-commerceinvolvingthesaleofphysicalgoodscanbeveryusefulinexchanginginformation between
business and delivery companies.

Thephysicalinternetitselfusalsoadeliverychannelfordigitalproductslikesoftwaredataor multimedia
fill.

Promotion:

Thesalesandmarketingfunctionunderthetraditionalmarketingcategorycalledpromotion.
Thesuccessfulpromotionofaproductrequiresthatataminimumapositivemessagebereceivedby potential
customers. This message can be communicated many ways.

1) Paidadvertisingchannels.
2) Newstoriesandpress releases.
3) Wordof mouth.
4) Consumerspersonalexperiences.
5) Packaging.

Anotheraspectofpromotionisthesharingofinformationwith customers.
 33

Personalization:

The internet is leading marketers to a fundamental paradigm shift from mass marketing to
[Link]–
efficient to mass marketing personalized services.

Personalizationontheinternetreferstotheabilityofcustomerstoreceivepersonalizedinformation (ex:
sales advertisements or coupons) or visit a website.

ONLINEADVERTISINGMECHANISMS

[Link] common
sources of revenue come from allowing advertisers to pay for banners on their sites is to be listed as site
sponsors.

DifferentTechniquesinonlineAdvertisingare:

1) Banners.
2) Sponsorships.
3) Portals.
4) OnlineCoupons.

Banners:

Accordingtointerestadvertisingbureau(IAB),themustpopularformofon-lineadvertisingis banner
advertising.
Banneradvertisingisusedtoattractvisitorstoasite.
Banneradvertisingcontainingtextandgraphicthatareplacedonthescreensofsearchengines,web browser
software and websites to attract the attention of www users.
Banner advertisingisoftwo types
 Clickthrough advertisement.
 Notclick-thoroughadvertisement.
Clickthroughadvertisementcontainhypertextlinkstothesiteaboutwhichthebanneris advertising.
NonClickthroughadvertisementswhichdoesnotcontainhypertext linkstothesite. Banner
advertising is typically measured and priced accordingtotwo features.

 CPM-Costperthousandimpressions.
 CTR-Clickthroughrate.

CPM-animpressionreferstoeachtime apageisviewedthatis displayingthe banner.

CTR-theclickthroughrateisconsideredtobemoreimportantbymanyadvertiserssinceit measures the
no. of users ”delivered”to a site.

Firmsarealsointerestedintrackingwhethervisitorstheymakeapurchasefromthesite. So
software tracking devices are available for tracking such items.
 34

Sponsorships:

[Link]
bannerin thatabusinessgetstodisplayamessagetypicallyjustalogo,onasite aclick-
thorough may be allowed.

Sponsorshipstypicallyallowthefirmsbanner tostayonasiteforalongerperiodoftimeor for a

certain no. of days.

Sponsorshipsareagoodmechanismforgeneratingbrandrecognition’s.

Portals:
Aportalisreferred toasitethatservesthe“postofentry”[Link] to give
web users the information they need as they first enter the www.

Customizedpagesareanoption,[Link] types sell

advertising space on their sites.

Onlinecoupons:

Online coupons areprintedfor usein stores or requestedandsent viaportal mail for usein
storeswhenthevisitorexpensestheproduceinwhichtheyareinterestedthestoremailsthe
coupons to them.

On-linecouponsarealsodistributedfromsitesthatspecializeindistributingsuchcouponsfor
businesses that subscribe to their services.

Anotherwayofon-lineAdvertising mechanisms:

 Directories
 Searchengines

Directories:
Directoryserviceson thewwwprovidean indexthatlistsandprovideslinks websites.
Thesitesmaybe listed inoneof manyways:Alphabeticallyorbysubject,category,orregion.
Websitescanberegisteredatnochargetoanoofdirectoryservicessuchasinfoseekinternet mall,
the yellow pages and yahoo.

Registeringwithmultipledirectoriesisimportantinordertocast aswideanetaspossibleand
because users are traversing the net using many different directories.

SearchEngines:

Usingsearchengines isamorepopularmetoffindingsitesthanthe useof directories.

WebsearchenginestakeuserdifferentstringsandBooleanexpressionsandreturnalistof closely
matched websites in the order of the closeness of match.
 35

Searchenginesperiodically“crawl”throughtheinternetlookingfornewpagesandupdation their
exciting databases.

ImportantQuestions

Short:
1) Explain(1)searchengines(2)directories.
2) Explainbanners.
3) Explainsponsorshipsportalsonlinecoupons.
4) Explainwebbasedmarketing.

Long:
1) Explaine-markingtechniques.
2) Explain5p’sofinternet marketing,
3) Explaine-advertisingtechniques.