MT4500, Internet Marketing, Fall 2000, Exam 3

MT4500, Internet Marketing, Fall 2000, Exam 3
This exam is a closed book, closed notes exercise. Questions are both multiple choice and short answer. A small percentage of the questions come from in-class lecture material. The majority of the test material comes from the text. The point values for each question are given on the test. The test total is 100 points.

Short Answer Limit your response to the space provided.
Essay 1. (Lecture material) 10 points.
The npr story on Internet Pricing Strategy relates an example where the use of an on-line, instant price comparison service results in no real monetary savings (between on-line vendors) on the purchase of a popular novel. This outcome seems to run contrary to the initially presumed purpose for shopping on the web ? economy. Explain the how and why of this outcome.Essay 2. (Lecture material) 10 points.
The diagram given to the left was taken from the General Pricing Model used in class. It demonstrates the solution point within the classic micro economic pricing model. What is this point and how is it achieved?

Essay 3. (Lecture material) 10 points.
Describe the similarities and differences of rapid prototyping and rapid release programs.

Multiple Choice Please the most appropriate response.

Question 1. 5 points.

The recognition of ?Internet Time? is more than simply the compression on time due to the speed of the web. It is an important component of new product strategy. As a consequence
A. many technology companies have begun ?pulsing? their new product introductions (via ?time pacing?) rather than await changes in technology or changes in customer needs/wants.
B. the ?return to lifetime profits? has begun to decline for even the most advanced technology firms.
C. the actual rate of new product development has slowed.
D. an entire industry has been created in less than 2 years.
Question 2. 5 points.
The traditional model for new product development was
A. slow, expensive and time consuming.
B. less time consuming than webbed means, but was unable to detect potential ?loser? product ideas or categories.
C. non-linear (that is non sequential).
D. dependent on a processing technique that demanded that only a few generated ideas could be evaluated.
Question 3. 5 points.
Modularity in Design (breaking new product development into subsystems) allows for more rapid development of new products by
A. sequentially aligning these subsystems for processing by groups, one after the other until the entire process is completed.
B. trading off flexibility for precision in terms of screening and analysis
C. allowing third party suppliers to determine the feasibility of any given project.
D. allowing for parallel processing whereby several related ideas can be developed simultaneously.
Question 4. 5 points.
Beta test results are generally biased. This is because
A. the products are typically rough versions of the expected finished product and are therefore of little usefulness in evaluating the true functionality of the product.
B. the selection process for participants favors the ?early adopters? who do not necessarily represent the final consumers in terms of knowledge or usage.
C. the participants are limited to employees who are in essence paid to offered positive evaluations.
D. industry practice influences both the performance of the product and the subsequent evaluation.
Question 5. 5 points.
Site Visit Duration is the on-line equivalent to time in store for bricks and mortar merchants. It is an important concept because
A. user commitment and loyalty are inversely related to visit duration (an inverse relationship is one where as one variable increases the other decreases).
B. it measures the time (generally in number or fractions of minutes) that the user actually spends viewing the site?s content.
C. it is a direct proxy measure for the value that a user places on the site.
D. the opportunity to engage the visitor erodes as the visitors becomes more involved with the site?s offerings (this is called attention transferal).
Question 6. 5 points.
Building traffic through the use of search engines requires that you rank high on searches. This mean
A. that you include proper keywords and descriptions within your Meta tags, page title and content.
B. include the portal?s banner ad in a location of prominence on your initial page.
C. provide complete and detailed description to the engine?s editors to assure correct category placement.
D. avoid third party hosting of your site.
Question 7. 5 points.
Electronic word of mouth
A. isn?t a very important concern for most web sites since liability laws protect the site from any injurious comments that are published on the net.
B. results exclusively from loyal users.
C. is particularly important on the web since the net amplifies the power and accelerates the speed of user feedback.
D. is non-existent since the web is not a verbal medium.
Question 8. 5 points.
Tracking which medium is driving traffic to a site requires
A. an understanding of the consumption behavior that motivates occasional visitors to become loyal repeat users.
B. advanced computer software that interprets the site?s content into logical segment ? attractions.
C. the use of unique identifiers or the use of different Web addresses.
D. supporting promotions via billboards, radio advertising, even placement of the url on shopping bags.
Question 9. 5 points.
Web sites and other Internet content have ?high jointness of supply?. This means
A. the supply chain that is involved with delivering content is basically shared, that is a distributed network is required to deliver the material.
B. Metcalf?s law is in force. The extent of the site?s reach is dependent on the numbers of members that are available to receive or connect that site.
C. that these types of applications have high initial cost with low to non-existent incremental costs.
D. that most all Internet content is delivered via some form of alliance. An alliance is a joint venture with multiple vendors partnering to provide the content.
Question 10. 5 points.
On line communities provide natural mirrors for several types of existing physical communities. Among these are
A. trade shows, professional forums, and supply chain networks.
B. B to B sourcing agreements, resource routing chains, and preferred vendor lists.
C. catalog distribution centers, bulk breaking centers, and transportation dispatchers.
D. sites of existing trade Marts and Shows such as Dallas, Atlanta, and New Orleans.
Question 11. 5 points.
The most important determinant of price sensitivity is the
A. total expenditure effect
B. price quality effect.
C. inventory effect.
D. unique value effect.
Question 12. 5 points.
The primary difficulty with traditional auctions is they are
A. infrequent in their occurrence and they are ineffective in getting a high price when compared with list pricing.
B. bound by the integrity and talent of the persons responsible for conducting the auction (the auctioneers).
C. temporally and geographically bounded.
D. antiquated and not appropriate for the modern society.
Question 13. 5 points.
Price bundling requires
A. a situation where the number of alternative offerings is so large that they can not be adequately considered by the average consumer. This is the ?evoked set? problem.
B. that a the product have a margin span that is large enough to create an incentive for increasing volume. Moreover that bundle can be targeted at the average customer thereby increasing demand for the bundled products.
C. an inelastic demand function (or portion of the demand function) and a cost structure where there is no incremental costs.
D. at least 20 products or services to overcome the initial attraction inertia that most customers have toward multiple purchases.
Question 14. 5 points.
At one point in the npr story, the person being interviewed (an e-commerce Professor at UC Berkley) states that in the future prices on the web will reflect more what the customer is willing to pay, rather than simply the lowest prices. (The example he used had to do with two different sites for a travel agent.) This is because
A. the classic demand curve demonstrates that individuals are always willing to buy more if the price is less.
B. instant price comparison services will always be able to identify the lowest priced alternative.
C. information will always cause products and services to become more homogenous.
D. individuals have a varied need for differing levels of service.

MT4500, Internet Marketing, Fall 2000, Exam 3 9.4 of 10 on the basis of 1968 Review.