Security, Privacy and IP
Question One
There are allegations that the pharmaceutical company Merck & Co paid specialist nurses $500,000 to hunt through patient records for potential candidates for the firm's new anti-arthritis drug Vioxx. The allegations made in court that the local Merck marketing team provided incentives so that pharmacists would "tell suitable patients" to talk to their doctors about Vioxx.
Juanita Fernando, chair of the Australian Privacy Foundation's health committee, said recent news reports suggested some doctors were "selling or trading health records" to third parties without patients' knowledge or consent. http://www.australianit.news.com.au/story/0,24897,25517817-5013044,00.html
This has only come to light in the past few weeks, and seems like it will be hotly debated over the coming months, while evidence is being gathered. This will now be the subject of a class action in the Federal Court in Melbourne. I look forward to seeing the result of this, especially after the law suit that has already been brought against Merck & Co in relation to this very drug (Vioxx), claiming that it can induce Cardiac complications.
Obviously, there has been little done thus far, in relation to the privacy breach, due to the recentness of the claims. However, I believe that this may result in a tightening of privacy legislation in response.
Question Two
I have been using Turnitin this semester for all of my assignments. I have found it to be a useful resource for completion of assignments. Although, I find that the best aspect of using Turnitin, is the fact that it takes the guesswork out of plagiarism issues. Also, it ensures that the assignments we complete cannot be “ripped-off” by future students. Therefore, giving me peace of mind that the research and hard-work I have put in will not be compromised.
This seems like it ties in extremely well with the issue of privacy. I wouldn’t want anyone accessing my work and taking credit for it. As well an author would like to think that the ideas and concepts they write about, will not be reproduced, without authorization.
Friday, June 5, 2009
Tuesday, June 2, 2009
Week Ten Exercises
eBusiness Trust
Question One
Definitions:
Trust is not associative (non-symmetric): Just because one party trusts the other, does not mean that the level of trust is reciprocated by that other party.
Trust is not transitive: I believe this means that trust is not a gradual process, it is one or the other. You either do trust the other party or you do not. When applied to the online world, you either trust the website or seller you are dealing with or you do not trust them. It is not a case of, “I nearly trust this seller, and if they do not rip me off in the next transaction, then I will completely trust them.”
Trust is always between exactly 2 parties: I feel that this alludes to the two parties involved must be seen as equals, so as to be able to have full trust. If inequality exists, then there is always the possibility of the stronger positioned party taking advantage of the other. This element of doubt takes away the chance of trust being formed or maintained.
Trust will involve either direct trust or recommender trust: Recommender trust I believe is taking the words of others about a party, to form an opinion, or level of trust about another party. An example of this would be ratings of an eBay seller given by past buyers, and using these ratings to gauge if a seller should be trusted.
Question Two
Elements that have been incorporated to increase your trust in the sites:
http://www.eBay.com.au: Security Centre – Encourages buyers to believe that their details are safe. Seller Ratings – To give the buyer a sense of background information about the people they are dealing with. Feedback Forums – Another form of recommender trust. Policies Page – A user can then be made aware of what their obligations are. Buyer Protection – A sense of security, and that the website will look after the buyer.
http://www.anz.com.au: Security Alerts – To give the user a sense of the bank being at the forefront of online security. Antonia Kidman – Celebrity endorsement. Friendly Faces – People in the pictures look happy, so as to put the potential new customers at ease (better than putting photos of people crying, I guess). Security and Privacy Statement – To give the impression that they are looking after the customers best interests.
http://www.ozrural.com: Phone Number and Address – Nothing to hide image. History of the business – Can be used as a get to know you type facility, like the chat page, or to prove that it is not a fly by night business. Reviews – Check out other people’s opinions, to help credibility. Chat page – mentioned above.
http://www.paypal.com.au: Security Centre – Encourages buyers to believe that their details are safe. Dad and Son Photo - People in the pictures look happy, so as to put the potential new customers at ease. Product Disclosure Agreement – Another way to appear transparent and open with the client. Privacy Statement – To give the impression that your details will remain anonymous to other people. Feedback Page – A place to vent, if needed.
Question Three
A web site that I think looks untrustworthy, is any page that is not laid out well, gives this impression. One that does not have any reviews, or feedback. A website that does not disclose any information about security.
However, the website that I will highlight is www.mininova.org/, they lost my trust, when I caught a virus off their website. It was probably partly my fault, for not having the security settings on my computer at a high enough level, but I will never trust them again.
Question One
Definitions:
Trust is not associative (non-symmetric): Just because one party trusts the other, does not mean that the level of trust is reciprocated by that other party.
Trust is not transitive: I believe this means that trust is not a gradual process, it is one or the other. You either do trust the other party or you do not. When applied to the online world, you either trust the website or seller you are dealing with or you do not trust them. It is not a case of, “I nearly trust this seller, and if they do not rip me off in the next transaction, then I will completely trust them.”
Trust is always between exactly 2 parties: I feel that this alludes to the two parties involved must be seen as equals, so as to be able to have full trust. If inequality exists, then there is always the possibility of the stronger positioned party taking advantage of the other. This element of doubt takes away the chance of trust being formed or maintained.
Trust will involve either direct trust or recommender trust: Recommender trust I believe is taking the words of others about a party, to form an opinion, or level of trust about another party. An example of this would be ratings of an eBay seller given by past buyers, and using these ratings to gauge if a seller should be trusted.
Question Two
Elements that have been incorporated to increase your trust in the sites:
http://www.eBay.com.au: Security Centre – Encourages buyers to believe that their details are safe. Seller Ratings – To give the buyer a sense of background information about the people they are dealing with. Feedback Forums – Another form of recommender trust. Policies Page – A user can then be made aware of what their obligations are. Buyer Protection – A sense of security, and that the website will look after the buyer.
http://www.anz.com.au: Security Alerts – To give the user a sense of the bank being at the forefront of online security. Antonia Kidman – Celebrity endorsement. Friendly Faces – People in the pictures look happy, so as to put the potential new customers at ease (better than putting photos of people crying, I guess). Security and Privacy Statement – To give the impression that they are looking after the customers best interests.
http://www.ozrural.com: Phone Number and Address – Nothing to hide image. History of the business – Can be used as a get to know you type facility, like the chat page, or to prove that it is not a fly by night business. Reviews – Check out other people’s opinions, to help credibility. Chat page – mentioned above.
http://www.paypal.com.au: Security Centre – Encourages buyers to believe that their details are safe. Dad and Son Photo - People in the pictures look happy, so as to put the potential new customers at ease. Product Disclosure Agreement – Another way to appear transparent and open with the client. Privacy Statement – To give the impression that your details will remain anonymous to other people. Feedback Page – A place to vent, if needed.
Question Three
A web site that I think looks untrustworthy, is any page that is not laid out well, gives this impression. One that does not have any reviews, or feedback. A website that does not disclose any information about security.
However, the website that I will highlight is www.mininova.org/, they lost my trust, when I caught a virus off their website. It was probably partly my fault, for not having the security settings on my computer at a high enough level, but I will never trust them again.
Week Nine Exercises
Channel Conflict
Question One
There is a removal of traditional limitations of business and interaction between buyers and sellers has already changed. For example:
In the past there where the three L’s of retail sales, location, location, location. However, now there is no need for a retail outlet at all, and sellers can access buyers all over the world, via online shopping.
Buyers have a greater choice now, whereas in the past they were limited to what was available in their area, now they can compare price, quality and service from all corners of the globe.
Competition between sellers is also not limited to their area, and they now need to compete globally. Also, this can occur between retail outlets and online stores of the same brands. Competition is no longer reserved for between companies, but it now occurs within companies.
Question Two
Who owns the customer relationship? One would like to imagine (whichever side of the fence you are on) that you own the customer relationship. However, I still believe that at the end of the day, the buyer has ultimate control over the relationship, because they inevitably make the decision to buy or not to buy, and if they do who and how to buy the product or service.
However, in this sense I would imagine that if a company researches the habits of buyers and tabulates this information so as to be able to better market to their clients, then, they have full ownership of the customer relationship. It is not information that would be considered to be vitally sensitive thus requiring privacy law intervention. Therefore, I would surmise that if the individual companies take the time and effort to research this data, then it is their prerogative as to how to use it.
Question Three
If you purchase something from a retail outlet is it then ok for you to get email promotions or is it SPAM? This is a sensitive issue, and I personally feel that SPAM is one of the major blights on the Internet. I guess by releasing your information to these companies you have to some degree (sometimes unwillingly) given them permission to contact you. In my experience, I have found that the large majority of companies will offer you the option of being contacted in the future via email, and to me this is the best way for this sort of SPAM to be distributed. Also, I feel that random SPAM is useless, and personally, counterproductive, as I make a point of never using the products or services of a company that has sent me random SPAM that I have not authorized. If I have allowed the company to send me email offers, then I can accept that or reject it. The choice is still left up to the individual. My advice, use a SPAM filter.
Question Four
I believe that buying keywords is ingenious and should be applauded for its foresight. This is just marketing at its purest level, seeing an edge and taking it on. However, it can be a little frustrating when you are searching for a topic online that just happens to be a big brand, and it takes you ages to scroll through all the brand sites to get to what you need. I feel that buying keywords by companies is a little immoral though all the same, but I still say if the opportunity is there, you have to take it. The search engine providers are the ones that need to be asked this question. Do they believe that this practice is immoral? I bet they say it is fair game!
I never knew this:
Coke is the solid carbonaceous material derived from destructive distillation of low-ash, low-sulfur bituminous coal. www.wikipedia.org/wiki/Coke_(fuel)
Question One
There is a removal of traditional limitations of business and interaction between buyers and sellers has already changed. For example:
In the past there where the three L’s of retail sales, location, location, location. However, now there is no need for a retail outlet at all, and sellers can access buyers all over the world, via online shopping.
Buyers have a greater choice now, whereas in the past they were limited to what was available in their area, now they can compare price, quality and service from all corners of the globe.
Competition between sellers is also not limited to their area, and they now need to compete globally. Also, this can occur between retail outlets and online stores of the same brands. Competition is no longer reserved for between companies, but it now occurs within companies.
Question Two
Who owns the customer relationship? One would like to imagine (whichever side of the fence you are on) that you own the customer relationship. However, I still believe that at the end of the day, the buyer has ultimate control over the relationship, because they inevitably make the decision to buy or not to buy, and if they do who and how to buy the product or service.
However, in this sense I would imagine that if a company researches the habits of buyers and tabulates this information so as to be able to better market to their clients, then, they have full ownership of the customer relationship. It is not information that would be considered to be vitally sensitive thus requiring privacy law intervention. Therefore, I would surmise that if the individual companies take the time and effort to research this data, then it is their prerogative as to how to use it.
Question Three
If you purchase something from a retail outlet is it then ok for you to get email promotions or is it SPAM? This is a sensitive issue, and I personally feel that SPAM is one of the major blights on the Internet. I guess by releasing your information to these companies you have to some degree (sometimes unwillingly) given them permission to contact you. In my experience, I have found that the large majority of companies will offer you the option of being contacted in the future via email, and to me this is the best way for this sort of SPAM to be distributed. Also, I feel that random SPAM is useless, and personally, counterproductive, as I make a point of never using the products or services of a company that has sent me random SPAM that I have not authorized. If I have allowed the company to send me email offers, then I can accept that or reject it. The choice is still left up to the individual. My advice, use a SPAM filter.
Question Four
I believe that buying keywords is ingenious and should be applauded for its foresight. This is just marketing at its purest level, seeing an edge and taking it on. However, it can be a little frustrating when you are searching for a topic online that just happens to be a big brand, and it takes you ages to scroll through all the brand sites to get to what you need. I feel that buying keywords by companies is a little immoral though all the same, but I still say if the opportunity is there, you have to take it. The search engine providers are the ones that need to be asked this question. Do they believe that this practice is immoral? I bet they say it is fair game!
I never knew this:
Coke is the solid carbonaceous material derived from destructive distillation of low-ash, low-sulfur bituminous coal. www.wikipedia.org/wiki/Coke_(fuel)
Wednesday, May 20, 2009
Strange eBay Sale Items
Unusual sale items
In May 2006, the remains of U.S. Fort Montgomery, a stone fortification in upstate New York built in 1844, were put up for auction on Ebay. The first auction ended on June 5, 2006, with a winning bid of $5,000,310. However, the sale was not completed, and the fort and lands surrounding it remain for sale and have been relisted on the site several times since.
In February 2004, a scrapped F/A-18 Hornet fighter jet was listed on eBay by Mike Landa, of Landa and Associates, with a starting bid of $1,000,000. He was the legal owner of the plane after purchasing it from a scrap yard and also offered to have the plane restored for flying condition for a Buy It Now price of $9,000,000. Landa also told potential buyers that maintenance of the plane would cost roughly $40,000 a month for just 2 to 3 hours of flying time. The FBI told Landa that he could only sell the plane to an American citizen residing in the United States, and that the plane must not leave US airspace. The auction ended without a sale.
In December 2005, a brussels sprout cooked on Christmas Day was listed by "crazypavingpreacher" (Andrew Henderson of Darlington, England). It sold for £99.50 on 4 January 2006. The sprout had been frozen and was sent by first class post in insulated packaging to the buyer, "5077phil". The listing was reported in the Daily Star, making the front page (and was followed by a series of "copycat" listings of various vegetables). The proceeds of the sale were donated to Tearfunda major Christian relief and development agency working in the third world. This sprout was the first cooked brussels sprout to be sold on ebay.
In January 2006, a British man named Leigh Knight sold an unwanted brussels sprout left over from his Christmas dinner for £1550 in aid of cancer research.
In May 2006, a Chinese businessman named Zhang Cheng bought a former Czech Air Force MIG-21 fighter jet from a seller in the United States for $24,730. The seller, "inkgirle", refused to ship it. It is not known whether he was refunded.
In June 2005, the wife of Tim Shaw, a British radio DJ on Kerrang! 105.2, sold Tim's Lotus Esprit sports car with a Buy It Now price of 50 pence after she heard him flirting with model Jodie Marsh on air. The car was sold within 5 minutes, and it was requested that the buyer pick it up the same day.
In May 2005, a Volkswagen Golf that had previously been registered to Joseph Ratzinger (then a cardinal, who had since been elected pope and chose the regnal name Benedict XVI on April 19, 2005) was sold on eBay's German site for €188,938.88 ($277,171.12 USD). The winning bid was made by the GoldenPalace.com online casino, known for their outrageous eBay purchases.
A seaworthy 16,000-ton aircraft carrier, formerly the British HMS Vengeance, was listed early in 2004. The auction was removed when eBay determined that the vessel qualified as ordnance, even though all weapons systems had been removed.
Water that was said to have been left in a cup Elvis Presley once drank from was sold for $455. The few tablespoons came from a plastic cup Presley sipped at a concert in North Carolina in 1977.
A Coventry University student got £1.20 for a single cornflake.
A man from Brisbane, Australia, attempted to sell New Zealand at a starting price of $.01AUD. The price had risen to $3,000 before eBay closed the auction.
An Australian newspaper reported in December 2004 that a single piece of the Kellogg's breakfast cereal Nutri-Grain sold on eBay for AUD$1,035 because it happened to bear a slight resemblance to the character E.T. from the Steven Spielberg movie. Apparently the seller went on to make even more money in relation to the sale for his appearance on a nationally televised current affairs program.
One of the tunnel boring machines involved in the construction of the Channel Tunnel was auctioned on eBay in 2004.
A group of four men from Australia auctioned themselves to spend the weekend with the promise of "beers, snacks, good conversation and a hell of a lot of laughs" for AU$1,300
Disney sold a retired Monorail Red (Mark IV Monorail) for $20,000
The German Language Association sold the German language to call attention to the growing influence of Pidgin English in modern German.
In late November 2005, the original Hollywood Sign was sold on eBay for $450,400.
In February 2007, after Britney Spears shaved all of her hair off in a Los Angeles salon, it was listed on eBay for $1million USD before it was taken down.
In September 2004, the Indiana Firebirds arena football team was auctioned off, first in a regular auction that failed to reach the reserve price, and again as a "Buy it Now" item for $3.9 million.
Bridgeville, California (pop. 25) was the first town to be sold on eBay in 2002, and has been up for sale 3 times since.
In April 2005, American entrepreneur Matt Rouse sold the right to choose a new middle name for him. After receiving an $8,000 "Buy It Now" bid, the Utah courts refused to allow the name change. He currently still has his original middle name "Jean".
In 2004, a partially eaten, 10-year-old grilled cheese sandwich said to bear the image of the Virgin Mary sold on eBay for $28,000.
In January 2008, four golf balls were auctioned on eBay after being surgically removed from the carpet python which had inadvertently swallowed them whilst raiding eggs in a chicken enclosure. The story attracted considerable international attention and the balls eventually sold for more AUD$1,400. The python recovered and was released.
In May 2008, Paul Osborn of the UK listed his wife Sharon for sale on eBay, alleging that she had an affair with a coworker.
In June 2008, Ian Usher put up his "entire life" on auction. The auction included his house in Perth, belongings, introduction to his friends, and a trial at his job. When bidding closed, his "life" sold for $384,000.
In August 2008, Dr Richard Harrington, Vice President of the UK Royal Entomological Society, announced that a fossilized aphid he bought for £20 from a seller in Lithuania, was a previously unknown species. It has been named Mindarus harringtoni after Dr Harrington. He had wanted to name it Mindarus ebayi, but this name was disallowed as being too flippant. The 45-million-year-old aphid, preserved in a piece of Baltic amber, is now housed in the Natural History Museum in London.
In October 2008, amidst the 2008–2009 Icelandic financial crisis one seller had put up Iceland for sale. Auction started with 99 pence but had reached 10 million pounds (US $17.28 million). However, singer Björk was "not included" in the sale. The notice read Located in the mid-Atlantic ridge in the North Atlantic Ocean, Iceland will provide the winning bidder with — a habitable environment, Icelandic Horses and admittedly a somewhat sketchy financial situation. Bidders' questions included: "Do you offer volcano/earthquake insurance?"
In November 2008, a Swedish man put a digitally hand-drawn picture of a 7-legged spider onto eBay. The picture stemmed from the email of an Adelaide man, who owed a utility company $233.95. Instead of paying the money back, he drew them a picture of a 7-legged spider, which he valued at $233.95. On eBay, the bidding price started at $233.95, and it was finally sold at US$10,000. Both the e-mail exchange and the picture have become internet hits.
In 2003, New Zealand internet activist Bruce Simpson constructed a cruise missile with parts purchased from eBay and other online stores.
http://go.microsoft.com/fwlink/?linkid=68919
In May 2006, the remains of U.S. Fort Montgomery, a stone fortification in upstate New York built in 1844, were put up for auction on Ebay. The first auction ended on June 5, 2006, with a winning bid of $5,000,310. However, the sale was not completed, and the fort and lands surrounding it remain for sale and have been relisted on the site several times since.
In February 2004, a scrapped F/A-18 Hornet fighter jet was listed on eBay by Mike Landa, of Landa and Associates, with a starting bid of $1,000,000. He was the legal owner of the plane after purchasing it from a scrap yard and also offered to have the plane restored for flying condition for a Buy It Now price of $9,000,000. Landa also told potential buyers that maintenance of the plane would cost roughly $40,000 a month for just 2 to 3 hours of flying time. The FBI told Landa that he could only sell the plane to an American citizen residing in the United States, and that the plane must not leave US airspace. The auction ended without a sale.
In December 2005, a brussels sprout cooked on Christmas Day was listed by "crazypavingpreacher" (Andrew Henderson of Darlington, England). It sold for £99.50 on 4 January 2006. The sprout had been frozen and was sent by first class post in insulated packaging to the buyer, "5077phil". The listing was reported in the Daily Star, making the front page (and was followed by a series of "copycat" listings of various vegetables). The proceeds of the sale were donated to Tearfunda major Christian relief and development agency working in the third world. This sprout was the first cooked brussels sprout to be sold on ebay.
In January 2006, a British man named Leigh Knight sold an unwanted brussels sprout left over from his Christmas dinner for £1550 in aid of cancer research.
In May 2006, a Chinese businessman named Zhang Cheng bought a former Czech Air Force MIG-21 fighter jet from a seller in the United States for $24,730. The seller, "inkgirle", refused to ship it. It is not known whether he was refunded.
In June 2005, the wife of Tim Shaw, a British radio DJ on Kerrang! 105.2, sold Tim's Lotus Esprit sports car with a Buy It Now price of 50 pence after she heard him flirting with model Jodie Marsh on air. The car was sold within 5 minutes, and it was requested that the buyer pick it up the same day.
In May 2005, a Volkswagen Golf that had previously been registered to Joseph Ratzinger (then a cardinal, who had since been elected pope and chose the regnal name Benedict XVI on April 19, 2005) was sold on eBay's German site for €188,938.88 ($277,171.12 USD). The winning bid was made by the GoldenPalace.com online casino, known for their outrageous eBay purchases.
A seaworthy 16,000-ton aircraft carrier, formerly the British HMS Vengeance, was listed early in 2004. The auction was removed when eBay determined that the vessel qualified as ordnance, even though all weapons systems had been removed.
Water that was said to have been left in a cup Elvis Presley once drank from was sold for $455. The few tablespoons came from a plastic cup Presley sipped at a concert in North Carolina in 1977.
A Coventry University student got £1.20 for a single cornflake.
A man from Brisbane, Australia, attempted to sell New Zealand at a starting price of $.01AUD. The price had risen to $3,000 before eBay closed the auction.
An Australian newspaper reported in December 2004 that a single piece of the Kellogg's breakfast cereal Nutri-Grain sold on eBay for AUD$1,035 because it happened to bear a slight resemblance to the character E.T. from the Steven Spielberg movie. Apparently the seller went on to make even more money in relation to the sale for his appearance on a nationally televised current affairs program.
One of the tunnel boring machines involved in the construction of the Channel Tunnel was auctioned on eBay in 2004.
A group of four men from Australia auctioned themselves to spend the weekend with the promise of "beers, snacks, good conversation and a hell of a lot of laughs" for AU$1,300
Disney sold a retired Monorail Red (Mark IV Monorail) for $20,000
The German Language Association sold the German language to call attention to the growing influence of Pidgin English in modern German.
In late November 2005, the original Hollywood Sign was sold on eBay for $450,400.
In February 2007, after Britney Spears shaved all of her hair off in a Los Angeles salon, it was listed on eBay for $1million USD before it was taken down.
In September 2004, the Indiana Firebirds arena football team was auctioned off, first in a regular auction that failed to reach the reserve price, and again as a "Buy it Now" item for $3.9 million.
Bridgeville, California (pop. 25) was the first town to be sold on eBay in 2002, and has been up for sale 3 times since.
In April 2005, American entrepreneur Matt Rouse sold the right to choose a new middle name for him. After receiving an $8,000 "Buy It Now" bid, the Utah courts refused to allow the name change. He currently still has his original middle name "Jean".
In 2004, a partially eaten, 10-year-old grilled cheese sandwich said to bear the image of the Virgin Mary sold on eBay for $28,000.
In January 2008, four golf balls were auctioned on eBay after being surgically removed from the carpet python which had inadvertently swallowed them whilst raiding eggs in a chicken enclosure. The story attracted considerable international attention and the balls eventually sold for more AUD$1,400. The python recovered and was released.
In May 2008, Paul Osborn of the UK listed his wife Sharon for sale on eBay, alleging that she had an affair with a coworker.
In June 2008, Ian Usher put up his "entire life" on auction. The auction included his house in Perth, belongings, introduction to his friends, and a trial at his job. When bidding closed, his "life" sold for $384,000.
In August 2008, Dr Richard Harrington, Vice President of the UK Royal Entomological Society, announced that a fossilized aphid he bought for £20 from a seller in Lithuania, was a previously unknown species. It has been named Mindarus harringtoni after Dr Harrington. He had wanted to name it Mindarus ebayi, but this name was disallowed as being too flippant. The 45-million-year-old aphid, preserved in a piece of Baltic amber, is now housed in the Natural History Museum in London.
In October 2008, amidst the 2008–2009 Icelandic financial crisis one seller had put up Iceland for sale. Auction started with 99 pence but had reached 10 million pounds (US $17.28 million). However, singer Björk was "not included" in the sale. The notice read Located in the mid-Atlantic ridge in the North Atlantic Ocean, Iceland will provide the winning bidder with — a habitable environment, Icelandic Horses and admittedly a somewhat sketchy financial situation. Bidders' questions included: "Do you offer volcano/earthquake insurance?"
In November 2008, a Swedish man put a digitally hand-drawn picture of a 7-legged spider onto eBay. The picture stemmed from the email of an Adelaide man, who owed a utility company $233.95. Instead of paying the money back, he drew them a picture of a 7-legged spider, which he valued at $233.95. On eBay, the bidding price started at $233.95, and it was finally sold at US$10,000. Both the e-mail exchange and the picture have become internet hits.
In 2003, New Zealand internet activist Bruce Simpson constructed a cruise missile with parts purchased from eBay and other online stores.
http://go.microsoft.com/fwlink/?linkid=68919
Monday, May 18, 2009
Week Eight Exercises
Online Auctions
Question One
eBay's business model, is to put people in contact with one another, rather than selling products itself, to be in the business of connecting people — not selling products to them. Rather, they've created a person-to-person marketplace on the Internet
Every time there’s a sale, eBay takes a cut of the action. As a result, eBay’s market value is now worth more than Bloomingdale’s, Macy’s, Sears, and Toys ‘R Us combined. “It was an entirely new idea that took advantage of the Net," says Whitman. “There’s no land-based analog for eBay. We hold no inventory, we ship no product.” . http://www.cbsnews.com/stories/2002/10/30/60II/main527542.shtml
eBay generates revenue from a number of fees. The eBay fee system is quite complex; there are fees to list a product and fees when the product sells, plus several optional fees, all based on various factors and scales. http://en.wikipedia.org/wiki/EBay
The lure of a bargain, combined with the excitement of a Las Vegas gamble, is what brings in millions of Internet customers. The loyalty and enthusiasm of devoted eBay users all over the country is what has helped build eBay into the powerhouse it is today. http://www.cbsnews.com/stories/2002/10/30/60II/main527542.shtml
eBay can attribute most of its success to the fact that they have very low overheads, whilst continuing to rake in large amounts of revenue. eBay does not require a lot of operational costs, as it is purely a buyers/sellers introduction service.
Question Two
This question seems to be a trick question, because if you look at the revenue raised by these companies, you notice that Amazon actually raised more than double the revenue of eBay last year, and Yahoo dragged in a very tidy $7,208,500,000 US in revenue last year. http://money.cnn.com/magazines/fortune/fortune500/2009/snapshots/10867.html
If that is not successful, I don’t want to succeed!
However, I guess the usual cornerstone measurement of success is profit, and on this side of things eBay has the other two licked. This is as I mentioned above, due to the ability of eBay to maintain low overheads to maximise profits on revenue generated.
Question Three
eBay has implemented many tools and information for buyers and sellers to educate themselves about the best way to conduct themselves during an auction. For example, all eBay buyers and sellers are evaluated by the peers they do business with, so everyone has a ranking and anyone can read their feedback trail. If there are problems, eBay has a section of its Web site called Security Center where members can lodge complaints and bring eBay in as a mediator. http://www.pcworld.idg.com.au/article/2192/online_auction_providers_grapple_fraud?fp=2&fpid=1
Legitimate auctions pulled quite regularly and, although it is frustrating, it should make buyers more confident when they purchase items sold through drop of stores. eBay simply can't police all auctions and so the big sellers accounts get micro-managed while the little seller can put up a listing for a conterfeit item and not get caught. http://blog.auctionbytes.com/cgi-bin/blog/blog.pl?/pl/2007/5/1179681903.html
NORWALK, Calif. -- One of eBay Inc.'s official tenets is that "people are basically good." George Fawrup wants to find the eBay users who are altogether bad.
For the last 2½ years, Mr. Fawrup, a veteran California police detective, has been battling one of the Internet era's signature crimes: online-auction fraud. Most of the fraudsters use eBay, the Internet's biggest auction site, and they get craftier by the year. http://online.wsj.com/article_email/SB109148425481880978-IdjgYNplaB3opuuZ3qGcKiEm4.html
By the research I have done online, there seems to be literally 1000’s of people who are less than impressed by the implementation of “Fraud Filter’s” on eBay. These people target their anger mostly toward Rob Chesnut, Vice President of eBay's Trust & Safety Department.
Police crack eBay scam
"POLICE have cracked a Ballarat eBay fraud scam which netted more than $12,000 in three months.
Unsuspecting eBay users from all parts of Australia were lured into paying for Nokia mobile phones they were never going to receive.
A Ballarat man has been jailed for six months over his part in the scam.
eBay - a website where people bid online for items - covers users for losses when their auctions run the full term." http://ebay-fraud.blogspot.com/
Question Four
eBay are trying to make people who use their facilities feel like they are part of a community, as opposed to being on one side of the fence or the other, and pigeon-holing people as either sellers or buyers. This way people who use the site do not just view themselves in one light, and may be more inclined to participate in both sides of the transactional process. eBay can benefit from this by generating more sales and activity on their site.
Question Five
A brand name vendor has the opportunity to reach a huge market on an online auction site such as eBay. One that would otherwise, be mostly unattainable. If the brand name vendors had their own versions of eBay, then they would simply become a competitor and become lost in the crowd.
Also, the brand name vendors would only have people visit their site that are specifically searching for their product. On eBay the brand name vendors can obtain exposure to customers that may just be browsing, and then take an interest in their product. A sort of passing trade, if you will.
Question One
eBay's business model, is to put people in contact with one another, rather than selling products itself, to be in the business of connecting people — not selling products to them. Rather, they've created a person-to-person marketplace on the Internet
Every time there’s a sale, eBay takes a cut of the action. As a result, eBay’s market value is now worth more than Bloomingdale’s, Macy’s, Sears, and Toys ‘R Us combined. “It was an entirely new idea that took advantage of the Net," says Whitman. “There’s no land-based analog for eBay. We hold no inventory, we ship no product.” . http://www.cbsnews.com/stories/2002/10/30/60II/main527542.shtml
eBay generates revenue from a number of fees. The eBay fee system is quite complex; there are fees to list a product and fees when the product sells, plus several optional fees, all based on various factors and scales. http://en.wikipedia.org/wiki/EBay
The lure of a bargain, combined with the excitement of a Las Vegas gamble, is what brings in millions of Internet customers. The loyalty and enthusiasm of devoted eBay users all over the country is what has helped build eBay into the powerhouse it is today. http://www.cbsnews.com/stories/2002/10/30/60II/main527542.shtml
eBay can attribute most of its success to the fact that they have very low overheads, whilst continuing to rake in large amounts of revenue. eBay does not require a lot of operational costs, as it is purely a buyers/sellers introduction service.
Question Two
This question seems to be a trick question, because if you look at the revenue raised by these companies, you notice that Amazon actually raised more than double the revenue of eBay last year, and Yahoo dragged in a very tidy $7,208,500,000 US in revenue last year. http://money.cnn.com/magazines/fortune/fortune500/2009/snapshots/10867.html
If that is not successful, I don’t want to succeed!
However, I guess the usual cornerstone measurement of success is profit, and on this side of things eBay has the other two licked. This is as I mentioned above, due to the ability of eBay to maintain low overheads to maximise profits on revenue generated.
Question Three
eBay has implemented many tools and information for buyers and sellers to educate themselves about the best way to conduct themselves during an auction. For example, all eBay buyers and sellers are evaluated by the peers they do business with, so everyone has a ranking and anyone can read their feedback trail. If there are problems, eBay has a section of its Web site called Security Center where members can lodge complaints and bring eBay in as a mediator. http://www.pcworld.idg.com.au/article/2192/online_auction_providers_grapple_fraud?fp=2&fpid=1
Legitimate auctions pulled quite regularly and, although it is frustrating, it should make buyers more confident when they purchase items sold through drop of stores. eBay simply can't police all auctions and so the big sellers accounts get micro-managed while the little seller can put up a listing for a conterfeit item and not get caught. http://blog.auctionbytes.com/cgi-bin/blog/blog.pl?/pl/2007/5/1179681903.html
NORWALK, Calif. -- One of eBay Inc.'s official tenets is that "people are basically good." George Fawrup wants to find the eBay users who are altogether bad.
For the last 2½ years, Mr. Fawrup, a veteran California police detective, has been battling one of the Internet era's signature crimes: online-auction fraud. Most of the fraudsters use eBay, the Internet's biggest auction site, and they get craftier by the year. http://online.wsj.com/article_email/SB109148425481880978-IdjgYNplaB3opuuZ3qGcKiEm4.html
By the research I have done online, there seems to be literally 1000’s of people who are less than impressed by the implementation of “Fraud Filter’s” on eBay. These people target their anger mostly toward Rob Chesnut, Vice President of eBay's Trust & Safety Department.
Police crack eBay scam
"POLICE have cracked a Ballarat eBay fraud scam which netted more than $12,000 in three months.
Unsuspecting eBay users from all parts of Australia were lured into paying for Nokia mobile phones they were never going to receive.
A Ballarat man has been jailed for six months over his part in the scam.
eBay - a website where people bid online for items - covers users for losses when their auctions run the full term." http://ebay-fraud.blogspot.com/
Question Four
eBay are trying to make people who use their facilities feel like they are part of a community, as opposed to being on one side of the fence or the other, and pigeon-holing people as either sellers or buyers. This way people who use the site do not just view themselves in one light, and may be more inclined to participate in both sides of the transactional process. eBay can benefit from this by generating more sales and activity on their site.
Question Five
A brand name vendor has the opportunity to reach a huge market on an online auction site such as eBay. One that would otherwise, be mostly unattainable. If the brand name vendors had their own versions of eBay, then they would simply become a competitor and become lost in the crowd.
Also, the brand name vendors would only have people visit their site that are specifically searching for their product. On eBay the brand name vendors can obtain exposure to customers that may just be browsing, and then take an interest in their product. A sort of passing trade, if you will.
Sunday, May 17, 2009
Week Seven Exercises
Digital Automata
Question One
Cybertwin could possibly used to answer basic questions, as in most good webpages “FAQ” sections. However, it seems pretty hard to accept that a Cybertwin could stand alone to answer all questions that may be asked of it. Also, it is not exactly practical to train a Cybertwin or Machine to answer your course questions, as you would have to program it to give the right answers, and this would be more time-consuming than actually doing the course work yourself. For basic menial tasks or questions, it could become quite a useful tool, as far as not having to use more valuable human time with these lesser tasks.
Question Two
The Turing test is a proposal for a test of a machine's ability to demonstrate intelligence. It proceeds as follows: a human judge engages in a natural language conversation with one human and one machine, each of which tries to appear human. All participants are placed in isolated locations. If the judge cannot reliably tell the machine from the human, the machine is said to have passed the test. http://en.wikipedia.org/wiki/Turing_test
The Chinese Room argument comprises a thought experiment and associated arguments by John Searle (1980), which attempts to show that a symbol-processing machine like a computer can never be properly described as having a "mind" or "understanding", regardless of how intelligently it may behave.Searle argues that without "understanding" (what philosophers call "intentionality"), we cannot describe what the machine is doing as "thinking". Because it does not think, it does not have a "mind" in anything like the normal sense of the word, according to Searle. Therefore, he concludes, "strong AI" is mistaken.http://en.wikipedia.org/wiki/Chinese_Room
Question Three
As I mentioned earlier Virtual Agents can be utilized for customer service over the Web, in a “FAQ” capacity. Also, with a huge amount of programming, the virtual agent would be able to appease a large amount of customer questions, even to the point of not needing a customer service team, but only a customer service person, to maintain the “knowledge” of the virtual agent.However, there is still the Human element, which seems to be a variable that even human’s struggle to understand. Therefore, you can almost guarantee that human’s will conceive a question or request that the virtual agent, will not understand. Also, the virtual agent still relies on human input to ensure that it stays current in its “intelligence”.
Question One
Cybertwin could possibly used to answer basic questions, as in most good webpages “FAQ” sections. However, it seems pretty hard to accept that a Cybertwin could stand alone to answer all questions that may be asked of it. Also, it is not exactly practical to train a Cybertwin or Machine to answer your course questions, as you would have to program it to give the right answers, and this would be more time-consuming than actually doing the course work yourself. For basic menial tasks or questions, it could become quite a useful tool, as far as not having to use more valuable human time with these lesser tasks.
Question Two
The Turing test is a proposal for a test of a machine's ability to demonstrate intelligence. It proceeds as follows: a human judge engages in a natural language conversation with one human and one machine, each of which tries to appear human. All participants are placed in isolated locations. If the judge cannot reliably tell the machine from the human, the machine is said to have passed the test. http://en.wikipedia.org/wiki/Turing_test
The Chinese Room argument comprises a thought experiment and associated arguments by John Searle (1980), which attempts to show that a symbol-processing machine like a computer can never be properly described as having a "mind" or "understanding", regardless of how intelligently it may behave.Searle argues that without "understanding" (what philosophers call "intentionality"), we cannot describe what the machine is doing as "thinking". Because it does not think, it does not have a "mind" in anything like the normal sense of the word, according to Searle. Therefore, he concludes, "strong AI" is mistaken.http://en.wikipedia.org/wiki/Chinese_Room
Question Three
As I mentioned earlier Virtual Agents can be utilized for customer service over the Web, in a “FAQ” capacity. Also, with a huge amount of programming, the virtual agent would be able to appease a large amount of customer questions, even to the point of not needing a customer service team, but only a customer service person, to maintain the “knowledge” of the virtual agent.However, there is still the Human element, which seems to be a variable that even human’s struggle to understand. Therefore, you can almost guarantee that human’s will conceive a question or request that the virtual agent, will not understand. Also, the virtual agent still relies on human input to ensure that it stays current in its “intelligence”.
Sunday, April 19, 2009
Week Six Exercises
Digital Markets
Question 1
a) What experiences have you had with shopping online?
I have purchased many things online, from Ebay, a number of direct manufacturers, service providers, software subscriptions, and bookings of non-online services (tickets to sporting events). Most have been excellent, and (touch wood) I have not had any compromise of security, or lost money.
b) Describe a good experience.
I purchased basketball shoes from a manufacturer in China. It was an excellent experience due to a number of factors. I found the website by a Google search, of the product I was looking for. Once I had entered their website, I found a heap of other products that I was interested in. Their website allowed me to view the product I wanted, and had a number of pictures for each item, that you could open if desired. It had an easy payment process, using a shopping cart style of online purchasing. They were that good that I have since purchased products another three times from them, each time it is a hassle-free experience, and I buy with confidence.
If anyone is interested in this website........................
Too bad, they shut down!!! Makes me think either, I may have been one of the lucky ones, they sold their product too cheaply, another victim of the economic crisis, or the sweat-shop was shut down.
c) What did you like about the online store you used?
The purchasing process was easy to follow and well explained.
Their products were easy to scroll through, as their website was well laid out and easy to navigate.
The product was delivered quicker than they had estimated.
The price was reasonable, and there were no hidden costs.
I wasn’t ripped off!
d) Describe a bad experience.
Emirates flight bookings. They might be one of the best airlines to fly with, when they are not scraping the tail of the plane on the runway, but the Emirates website is appalling when trying to book a flight. I tried unsuccessfully for three days late last year to book a flight online, in the end I gave up and drove to the local Emirates office.
e) What problems did you have with the online store?
Apart from the website timing-out on a regular basis, during the booking process, the main problem was that once all of the details were entered, flight booked, seat picked out, meals specified, and extra requests made, when it came time to confirm the payment, the website would crash. I spoke to a number of other people who had tried to book flights with Emirates, and all of them said they had the same problem. This problem may have been rectified since, but it was a fine waste of my time, and as a result I will not use Emirates online booking facility again.
However, I must make a few things clear. Firstly, I (and the other people I spoke to) used the Middle-East website, and this may be the only one with this problem. Also, all other aspects of the website are great, it is easy to navigate, a lot of useful information available, and the online check-in feature is great. Finally, Emirates is an excellent airline, with unparalleled in-flight service.
f) What features make an online store more appealing?
Ease of use, timely processing of transactions, uncluttered pages, comprehensive and appropriate information about the product or service that is for sale, unambiguous instructions for purchasing process, and easy to find on a basic search.
g) What features make an online store less appealing?
The opposite of what I have mentioned above. There is also the loss of being able to touch, hear, smell and sometimes see the product you are buying. However, more importantly for me is the fear of the products or services I have paid for not being delivered, the product not being to the standard that I was lead to believe, and the possible loss of credit card security.
h) Should we expect to see the prices of goods and services rise or fall due to the migration of consumers online?
I cannot see any reason why it would drive prices up or down. However, that being said online consumers will have the ability in the future, to simply snub expensive or high mark-up retailers. As a result of this, I think you will find a far more even and narrow distribution of pricing on like items. The impact should then be squared entirely on the retailers to bring their pricing into line, or pay the price (lack of business). This can only be good for the consumer in regards to value for money, but on the flip-side larger companies with bigger buying power will ultimately eliminate smaller retailers that cannot compete in a price war. Then, down the track does that really help the consumer? I think not.
Question 2
a) The dispersion of prices (that is, the spread between the lowest and highest price for a particular product) will narrow.
As outlined in the MIT paper (Smith, 1999), “Price dispersion is typically seen as arising from high search costs or from consumers who are imperfectly informed of prices. Given these factors, it is natural to assume that if search costs are lower in Internet markets and if consumers are more readily informed of prices, price dispersion on the Internet should be lower than it is in comparable conventional markets. However, this hypothesis is not supported by existing evidence. Both Bailey (1998a, 1998b) and Brynjolfsson and Smith (1999) find that price dispersion is no lower in Internet markets as compared to conventional markets. Brynjolfsson and Smith find that prices for identical books and CDs at different retailers differ by as much as 50% and price differences average 33% for books and 25% for CDs. The authors attribute their findings to several factors, including market immaturity and heterogeneity in retailer attributes such as trust and awareness.”
In my opinion, I believe that the dispersion of price will narrow over time. However, this is driven by the customers desire to force this to happen. While there are people out there that do not take the time to shop around for the best price on given items, Web-traders will be able to maintain charging higher prices, on easy to find websites.
b) The importance of brand names will decrease.
I believe that this statement is false, and actually I think that the issue of brand names will become even more important. Personally, I feel safer buying a product from a trusted retailer online than I do when purchasing from another company for the first time. I feel that trust, in not only the product being purchased, but also in the ability of the company supplying the product, to deliver a pleasant purchasing experience, is paramount.
This is supported by the findings of (Smith, 1999), “Having a conventional world brand name may signal trust and soften price competition. Shankar, Rangaswamy, and Pustateri (1998) use survey data to show that prior positive experience with a brand in the physical world can decrease price sensitivity online. Brynjolfsson and Smith (1999) show that retailers with established conventional-world brand names are able to charge a price premium of 8-9% over prices at pure-play Internet retailers.”
c) Price competition will make all products cheaper.
According to (Smith, 1999), “The Bertrand model of price competition represents the extreme view of market efficiency. The Bertrand model assumes that products are perfectly homogeneous, consumers are informed of all prices, there is free market entry, a large number of buyers and sellers, and zero search costs. This setting yields pure price competition: the retailer with the lowest price receives all sales and as a result all prices are driven to marginal cost. Given the stark assumptions in the Bertrand model, it is not surprising that the existence of price dispersion — different prices charged for the same good at the same time — is one of the most replicated findings in economics (see Pratt, Wise, and Zeckhauser 1979; Dahlby and West 1986; Sorensen 1998 for example).”
There are a number of factors other than price competition to consider when assuming that this will decrease prices, such as product trust, consumer awareness, convenience, price discrimination and shopping experience. With these factors taken out of the equation, I guess you could say that price competition in a vacuum will make products cheaper. However, it is not so clear cut, and price competition has many other factors counter-acting it.
d) Digital markets will become dominated by a handful of mega-sites, like Amazon.com.
I believe that this is unlikely, due to the fact that there will be more than enough market share to be had by multiple companies. Also, if someone has a bad experience with one or more of these sites, they will need an alternative. Also, these mega-sites may eventually become cumbersome to navigate, due to a lack of specialisation, and in that scenario it may be more viable for customers to use specialist websites for their shopping, similar to boutique shops as opposed to large chain outlets.
e) How do you think the balance of power between buyers and sellers will change?
I believe that the power has and always will be with the buyer. After all is said and done, it is still the buyer who has the decision of ‘to buy’ or ‘not to buy’. For this reason, the buyers always have the power to keep a business running or send them out of the market. Even in digital markets this does not change, if goods are too expensive, or the service is not as good as it should be, the buyer has the choice and ability to buy the product elsewhere.
For the seller, it is the same as it always has been, it is all about providing quality goods or services, at a reasonable price, with good support, effective advertising, provide a pleasant shopping experience, and position yourself well in the market place (in digital markets, this means easy to find). After all this is done, sellers still have to hope that the buyers will respond, and sellers also need a little bit of luck.
f) Prices are clustered online.
As I explained in a), price dispersion still seems to be quite broad in online markets. Therefore, I would have to refute the statement that “Prices online are clustered”, it appears to be quite the opposite given the research collected in (Smith, 1999).
g) Online prices are elastic. (i.e. immune to change up and down with demand)
As outlined by (Smith, 1999), “Three studies analyze different aspects of price sensitivity in Internet markets. First, Goolsbee (1998) uses survey data to analyze how sensitive customers are to local sales tax rates. He finds that online consumers are highly sensitive to local tax policies: consumers who are subject to high local sales taxes are much more likely to purchase online (and presumably avoid paying the local sales tax). While this study does not specifically test price elasticity between Internet firms, it does point to a high degree of price sensitivity between the total cost of a good online and the total cost in a conventional outlet. For differentiated goods, measuring price elasticity to infer efficiency requires more interpretation. In differentiated goods markets, price sensitivity could be lower online than in conventional outlets for two reasons. First, lower online search costs may allow consumers to more readily locate products that better meet their needs (Alba et al 1997). Second, evaluating products online may lead to “missing information” regarding the characteristics of the product (Degeratu, Rangaswamy, and Wu 1998) and missing information may lead consumers to rely more heavily on other signals of quality, such as brand. Either of these factors could soften price competition — however, they have opposite outcomes with respect to efficiency. Two empirical studies analyze price sensitivity in electronic markets for differentiated goods. Degeratu, Rangaswamy, and Wu (1998) compare the price sensitivity of groceries sold through conventional and electronic outlets. They find that price sensitivity is lower among online grocery shoppers than it is for conventional-world shoppers. In a related study, Lynch and Ariely (1998) test customer price sensitivity by manipulating the shopping characteristics in a simulated electronic market for wine. The authors find that consumers will tend to focus on price when there is little other information available to differentiate products. However, providing better product information to customers softens price competition and increases product-customer fit.”
After analysing this text, it is somewhat indicated that online prices are a little more elastic than in conventional markets. This is mainly due to the ambiguity of the descriptions often given of products, which usually makes customers revert to price-based decisions. Also, the ease of finding goods on the internet quite often outweighs consumers desire to look any further for better pricing.
g) Online prices are generally transparent (the extent to which prices for a given product or service are known by buyers in the marketplace.).
This seems to ring true in my experience. However, there is nothing stopping an online store from opening up many ‘dummy’ competitor stores, and using them as a comparison, to make their original online stores price look extremely cheap. For this and many other reasons, it is still a case of ‘caveat emptor’ (let the buyer beware). Consumers still need to make themselves aware of the value of the products they are purchasing, before they start buying online.
Question 3
a) What types of m-commerce services does your cell phone provider offer?
I use Telstra pre-paid. I am only guessing at some of the services offered, but they include, Bpay, Mobile recharge, mobile internet access. There are possibly many more. However, I do not know of what they are.
b) Which of these services do you use?
I use the mobile recharge facility, and the Bpay services.
c) What types of transactions do you perform through your cell phone or other wireless device?
The one and only transaction I perform through my cell phone is, credit recharge for my pre-paid account. I used to perform banking transactions via phone banking. However, now I find it much easier to do online at home, only if it was urgent and I was not near a computer, would I conduct banking over the phone.
d) What types of transactions would you like to perform, but are currently unable to?
I have no great desire to be able to perform any transactions that are not already available to me. Therefore, I am more than happy with the services currently available. However, in the future I am sure that there will be many more services made available that I will take advantage of. This seems quite strange though, seeing as I do not even know that I need them yet, but undoubtedly will utilise them.
e) What is your opinion of wireless advertising/mobile marketing?
I despise it. I find it to be without doubt the most annoying marketing ploy that has ever been conceived thus far. The type I detest the most, is when the advertising is indiscriminent, and the services or products offered to me, have no appeal what so ever. If the advertising is structured, so as to analyse the searches made online and then market products akin to these keywords, then I find it is not so annoying, because the products and services are things I am actually interested in. The idea of mass-marketing without any consideration for the audience, to me means that the company is lazy, and has conducted no market research, therefore I will not purchase anything from them.
Further research
Chris Anderson, the editor of Wired Magazine, wrote a book called 'The Long Tail'. Anderson's theory of 'The Long Tail' has been widely acclaimed, but there has also been recent research which questions it's veracity. Conduct your own research about 'The Long Tail', and state your opinion in favour or against the theory. It is also worth reading about Pareto's Principle, the 80/20 Rule. How do the two relate to each other?
The phrase the Long Tail was first coined by Chris Anderson in an October 2004 Wired magazine article to describe the niche strategy of businesses, such as Amazon.com or Netflix, that sell a large number of unique items, each in relatively small quantities. Anderson elaborated the Long Tail concept in his book The Long Tail: Why the Future of Business Is Selling Less of More.
A frequency distribution with a long tail (the concept at the root of Anderson's coinage) has been studied by statisticians since at least 1946. The distribution and inventory costs of these businesses allow them to realize significant profit out of selling small volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. The group that purchases a large number of "non-hit" items is the demographic called the Long Tail.
Given a large enough availability of choice, a large population of customers, and negligible stocking and distribution costs, the selection and buying pattern of the population results in a power law distribution curve, or Pareto distribution. This suggests that a market with a high freedom of choice will create a certain degree of inequality by favouring the upper 20% of the items ("hits" or "head") against the other 80% ("non-hits" or "long tail"). This is known as the Pareto principle or 80–20 rule.
http://en.wikipedia.org/wiki/The_Long_Tail
The Pareto principle (also known as the 80-20 rule, the law of the vital few and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes. Business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of the land in Italy was owned by 20% of the population. It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients." Mathematically, where something is shared among a sufficiently large set of participants, there will always be a number k between 50 and 100 such that k% is taken by (100 − k)% of the participants. However, k may vary from 50 in the case of equal distribution to nearly 100 when a tiny number of participants account for almost all of the resource. There is nothing particularly special about the number 80, but many systems will have k somewhere around this region of intermediate imbalance in distribution.
http://en.wikipedia.org/wiki/Pareto_principle
From the explanations of the two theories above, I have concluded that both have an essential element, whereby they hypothesise that a small percentage of your overall clients will produce the largest proportion of your sales. Also, that a smaller percentage of your products stocked, will produce the larger proportion of your overall sales.
Question 1
a) What experiences have you had with shopping online?
I have purchased many things online, from Ebay, a number of direct manufacturers, service providers, software subscriptions, and bookings of non-online services (tickets to sporting events). Most have been excellent, and (touch wood) I have not had any compromise of security, or lost money.
b) Describe a good experience.
I purchased basketball shoes from a manufacturer in China. It was an excellent experience due to a number of factors. I found the website by a Google search, of the product I was looking for. Once I had entered their website, I found a heap of other products that I was interested in. Their website allowed me to view the product I wanted, and had a number of pictures for each item, that you could open if desired. It had an easy payment process, using a shopping cart style of online purchasing. They were that good that I have since purchased products another three times from them, each time it is a hassle-free experience, and I buy with confidence.
If anyone is interested in this website........................
Too bad, they shut down!!! Makes me think either, I may have been one of the lucky ones, they sold their product too cheaply, another victim of the economic crisis, or the sweat-shop was shut down.
c) What did you like about the online store you used?
The purchasing process was easy to follow and well explained.
Their products were easy to scroll through, as their website was well laid out and easy to navigate.
The product was delivered quicker than they had estimated.
The price was reasonable, and there were no hidden costs.
I wasn’t ripped off!
d) Describe a bad experience.
Emirates flight bookings. They might be one of the best airlines to fly with, when they are not scraping the tail of the plane on the runway, but the Emirates website is appalling when trying to book a flight. I tried unsuccessfully for three days late last year to book a flight online, in the end I gave up and drove to the local Emirates office.
e) What problems did you have with the online store?
Apart from the website timing-out on a regular basis, during the booking process, the main problem was that once all of the details were entered, flight booked, seat picked out, meals specified, and extra requests made, when it came time to confirm the payment, the website would crash. I spoke to a number of other people who had tried to book flights with Emirates, and all of them said they had the same problem. This problem may have been rectified since, but it was a fine waste of my time, and as a result I will not use Emirates online booking facility again.
However, I must make a few things clear. Firstly, I (and the other people I spoke to) used the Middle-East website, and this may be the only one with this problem. Also, all other aspects of the website are great, it is easy to navigate, a lot of useful information available, and the online check-in feature is great. Finally, Emirates is an excellent airline, with unparalleled in-flight service.
f) What features make an online store more appealing?
Ease of use, timely processing of transactions, uncluttered pages, comprehensive and appropriate information about the product or service that is for sale, unambiguous instructions for purchasing process, and easy to find on a basic search.
g) What features make an online store less appealing?
The opposite of what I have mentioned above. There is also the loss of being able to touch, hear, smell and sometimes see the product you are buying. However, more importantly for me is the fear of the products or services I have paid for not being delivered, the product not being to the standard that I was lead to believe, and the possible loss of credit card security.
h) Should we expect to see the prices of goods and services rise or fall due to the migration of consumers online?
I cannot see any reason why it would drive prices up or down. However, that being said online consumers will have the ability in the future, to simply snub expensive or high mark-up retailers. As a result of this, I think you will find a far more even and narrow distribution of pricing on like items. The impact should then be squared entirely on the retailers to bring their pricing into line, or pay the price (lack of business). This can only be good for the consumer in regards to value for money, but on the flip-side larger companies with bigger buying power will ultimately eliminate smaller retailers that cannot compete in a price war. Then, down the track does that really help the consumer? I think not.
Question 2
a) The dispersion of prices (that is, the spread between the lowest and highest price for a particular product) will narrow.
As outlined in the MIT paper (Smith, 1999), “Price dispersion is typically seen as arising from high search costs or from consumers who are imperfectly informed of prices. Given these factors, it is natural to assume that if search costs are lower in Internet markets and if consumers are more readily informed of prices, price dispersion on the Internet should be lower than it is in comparable conventional markets. However, this hypothesis is not supported by existing evidence. Both Bailey (1998a, 1998b) and Brynjolfsson and Smith (1999) find that price dispersion is no lower in Internet markets as compared to conventional markets. Brynjolfsson and Smith find that prices for identical books and CDs at different retailers differ by as much as 50% and price differences average 33% for books and 25% for CDs. The authors attribute their findings to several factors, including market immaturity and heterogeneity in retailer attributes such as trust and awareness.”
In my opinion, I believe that the dispersion of price will narrow over time. However, this is driven by the customers desire to force this to happen. While there are people out there that do not take the time to shop around for the best price on given items, Web-traders will be able to maintain charging higher prices, on easy to find websites.
b) The importance of brand names will decrease.
I believe that this statement is false, and actually I think that the issue of brand names will become even more important. Personally, I feel safer buying a product from a trusted retailer online than I do when purchasing from another company for the first time. I feel that trust, in not only the product being purchased, but also in the ability of the company supplying the product, to deliver a pleasant purchasing experience, is paramount.
This is supported by the findings of (Smith, 1999), “Having a conventional world brand name may signal trust and soften price competition. Shankar, Rangaswamy, and Pustateri (1998) use survey data to show that prior positive experience with a brand in the physical world can decrease price sensitivity online. Brynjolfsson and Smith (1999) show that retailers with established conventional-world brand names are able to charge a price premium of 8-9% over prices at pure-play Internet retailers.”
c) Price competition will make all products cheaper.
According to (Smith, 1999), “The Bertrand model of price competition represents the extreme view of market efficiency. The Bertrand model assumes that products are perfectly homogeneous, consumers are informed of all prices, there is free market entry, a large number of buyers and sellers, and zero search costs. This setting yields pure price competition: the retailer with the lowest price receives all sales and as a result all prices are driven to marginal cost. Given the stark assumptions in the Bertrand model, it is not surprising that the existence of price dispersion — different prices charged for the same good at the same time — is one of the most replicated findings in economics (see Pratt, Wise, and Zeckhauser 1979; Dahlby and West 1986; Sorensen 1998 for example).”
There are a number of factors other than price competition to consider when assuming that this will decrease prices, such as product trust, consumer awareness, convenience, price discrimination and shopping experience. With these factors taken out of the equation, I guess you could say that price competition in a vacuum will make products cheaper. However, it is not so clear cut, and price competition has many other factors counter-acting it.
d) Digital markets will become dominated by a handful of mega-sites, like Amazon.com.
I believe that this is unlikely, due to the fact that there will be more than enough market share to be had by multiple companies. Also, if someone has a bad experience with one or more of these sites, they will need an alternative. Also, these mega-sites may eventually become cumbersome to navigate, due to a lack of specialisation, and in that scenario it may be more viable for customers to use specialist websites for their shopping, similar to boutique shops as opposed to large chain outlets.
e) How do you think the balance of power between buyers and sellers will change?
I believe that the power has and always will be with the buyer. After all is said and done, it is still the buyer who has the decision of ‘to buy’ or ‘not to buy’. For this reason, the buyers always have the power to keep a business running or send them out of the market. Even in digital markets this does not change, if goods are too expensive, or the service is not as good as it should be, the buyer has the choice and ability to buy the product elsewhere.
For the seller, it is the same as it always has been, it is all about providing quality goods or services, at a reasonable price, with good support, effective advertising, provide a pleasant shopping experience, and position yourself well in the market place (in digital markets, this means easy to find). After all this is done, sellers still have to hope that the buyers will respond, and sellers also need a little bit of luck.
f) Prices are clustered online.
As I explained in a), price dispersion still seems to be quite broad in online markets. Therefore, I would have to refute the statement that “Prices online are clustered”, it appears to be quite the opposite given the research collected in (Smith, 1999).
g) Online prices are elastic. (i.e. immune to change up and down with demand)
As outlined by (Smith, 1999), “Three studies analyze different aspects of price sensitivity in Internet markets. First, Goolsbee (1998) uses survey data to analyze how sensitive customers are to local sales tax rates. He finds that online consumers are highly sensitive to local tax policies: consumers who are subject to high local sales taxes are much more likely to purchase online (and presumably avoid paying the local sales tax). While this study does not specifically test price elasticity between Internet firms, it does point to a high degree of price sensitivity between the total cost of a good online and the total cost in a conventional outlet. For differentiated goods, measuring price elasticity to infer efficiency requires more interpretation. In differentiated goods markets, price sensitivity could be lower online than in conventional outlets for two reasons. First, lower online search costs may allow consumers to more readily locate products that better meet their needs (Alba et al 1997). Second, evaluating products online may lead to “missing information” regarding the characteristics of the product (Degeratu, Rangaswamy, and Wu 1998) and missing information may lead consumers to rely more heavily on other signals of quality, such as brand. Either of these factors could soften price competition — however, they have opposite outcomes with respect to efficiency. Two empirical studies analyze price sensitivity in electronic markets for differentiated goods. Degeratu, Rangaswamy, and Wu (1998) compare the price sensitivity of groceries sold through conventional and electronic outlets. They find that price sensitivity is lower among online grocery shoppers than it is for conventional-world shoppers. In a related study, Lynch and Ariely (1998) test customer price sensitivity by manipulating the shopping characteristics in a simulated electronic market for wine. The authors find that consumers will tend to focus on price when there is little other information available to differentiate products. However, providing better product information to customers softens price competition and increases product-customer fit.”
After analysing this text, it is somewhat indicated that online prices are a little more elastic than in conventional markets. This is mainly due to the ambiguity of the descriptions often given of products, which usually makes customers revert to price-based decisions. Also, the ease of finding goods on the internet quite often outweighs consumers desire to look any further for better pricing.
g) Online prices are generally transparent (the extent to which prices for a given product or service are known by buyers in the marketplace.).
This seems to ring true in my experience. However, there is nothing stopping an online store from opening up many ‘dummy’ competitor stores, and using them as a comparison, to make their original online stores price look extremely cheap. For this and many other reasons, it is still a case of ‘caveat emptor’ (let the buyer beware). Consumers still need to make themselves aware of the value of the products they are purchasing, before they start buying online.
Question 3
a) What types of m-commerce services does your cell phone provider offer?
I use Telstra pre-paid. I am only guessing at some of the services offered, but they include, Bpay, Mobile recharge, mobile internet access. There are possibly many more. However, I do not know of what they are.
b) Which of these services do you use?
I use the mobile recharge facility, and the Bpay services.
c) What types of transactions do you perform through your cell phone or other wireless device?
The one and only transaction I perform through my cell phone is, credit recharge for my pre-paid account. I used to perform banking transactions via phone banking. However, now I find it much easier to do online at home, only if it was urgent and I was not near a computer, would I conduct banking over the phone.
d) What types of transactions would you like to perform, but are currently unable to?
I have no great desire to be able to perform any transactions that are not already available to me. Therefore, I am more than happy with the services currently available. However, in the future I am sure that there will be many more services made available that I will take advantage of. This seems quite strange though, seeing as I do not even know that I need them yet, but undoubtedly will utilise them.
e) What is your opinion of wireless advertising/mobile marketing?
I despise it. I find it to be without doubt the most annoying marketing ploy that has ever been conceived thus far. The type I detest the most, is when the advertising is indiscriminent, and the services or products offered to me, have no appeal what so ever. If the advertising is structured, so as to analyse the searches made online and then market products akin to these keywords, then I find it is not so annoying, because the products and services are things I am actually interested in. The idea of mass-marketing without any consideration for the audience, to me means that the company is lazy, and has conducted no market research, therefore I will not purchase anything from them.
Further research
Chris Anderson, the editor of Wired Magazine, wrote a book called 'The Long Tail'. Anderson's theory of 'The Long Tail' has been widely acclaimed, but there has also been recent research which questions it's veracity. Conduct your own research about 'The Long Tail', and state your opinion in favour or against the theory. It is also worth reading about Pareto's Principle, the 80/20 Rule. How do the two relate to each other?
The phrase the Long Tail was first coined by Chris Anderson in an October 2004 Wired magazine article to describe the niche strategy of businesses, such as Amazon.com or Netflix, that sell a large number of unique items, each in relatively small quantities. Anderson elaborated the Long Tail concept in his book The Long Tail: Why the Future of Business Is Selling Less of More.
A frequency distribution with a long tail (the concept at the root of Anderson's coinage) has been studied by statisticians since at least 1946. The distribution and inventory costs of these businesses allow them to realize significant profit out of selling small volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. The group that purchases a large number of "non-hit" items is the demographic called the Long Tail.
Given a large enough availability of choice, a large population of customers, and negligible stocking and distribution costs, the selection and buying pattern of the population results in a power law distribution curve, or Pareto distribution. This suggests that a market with a high freedom of choice will create a certain degree of inequality by favouring the upper 20% of the items ("hits" or "head") against the other 80% ("non-hits" or "long tail"). This is known as the Pareto principle or 80–20 rule.
http://en.wikipedia.org/wiki/The_Long_Tail
The Pareto principle (also known as the 80-20 rule, the law of the vital few and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes. Business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of the land in Italy was owned by 20% of the population. It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients." Mathematically, where something is shared among a sufficiently large set of participants, there will always be a number k between 50 and 100 such that k% is taken by (100 − k)% of the participants. However, k may vary from 50 in the case of equal distribution to nearly 100 when a tiny number of participants account for almost all of the resource. There is nothing particularly special about the number 80, but many systems will have k somewhere around this region of intermediate imbalance in distribution.
http://en.wikipedia.org/wiki/Pareto_principle
From the explanations of the two theories above, I have concluded that both have an essential element, whereby they hypothesise that a small percentage of your overall clients will produce the largest proportion of your sales. Also, that a smaller percentage of your products stocked, will produce the larger proportion of your overall sales.
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