Social Networking, Mobile Commerce, and Online Auctions - PowerPoint Presentation

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Social Networking, Mobile Commerce, and Online Auctions - PPT Presentation

Chapter 6 Cengage Learning 2015 Learning Objectives In this chapter you will learn How social networking emerged from virtual communities How companies use social networking tools in online ID: 736639

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Slide1

Social Networking, Mobile Commerce, and Online Auctions

Chapter 6

Learning Objectives

In this chapter, you will learn:

How social networking emerged from virtual communities

How companies use social

networking tools in online business activitiesAbout mobile technologies that are now used to do business onlineHow online auctions and auction-related businesses are conducted online

2Slide3

Introduction

Case study: StarbucksViews social media as an extension of the customer relationship

Integrates mobile technology by accepting payments from mobile phones

Provides mobile device app to let customers manage loyalty program benefits

Serves as a social media observer rather than actively advertising© Cengage Learning 2015

3Slide4

From Virtual Communities to Social Networks

Online Web communities

Not limited by geography

Individuals and companies with common interests

Meet online and discuss issues, share information, generate ideas, and develop valuable relationships

Companies make money by serving as relationship facilitators

Combine Internet’s transaction cost-reduction potential with a communication facilitator role

4Slide5

Virtual Communities

Virtual community (Web community, online community)

Gathering place for people and businesses

No physical existence

Early virtual communitiesBulletin board systems (BBSs)Revenue source: monthly fees and selling advertisingUsenet newsgroupsMessage posting areas on usenets

Virtual Communities (cont’d.)

Current forms

Web chat rooms

Sites devoted to specific topics or general exchange of information, photos, videos

People connect and discuss common issues, interestsConsiderable social interactionRelationship-forming activities

Similar to physical communities© Cengage Learning 20156Slide7

Early Web Communities

1985: WELL (“whole earth ‘lectronic link”)

Monthly fee to participate in forums and conferences

1999: bought by Salon.com

1995: Beverly Hills Internet virtual community siteOffered webcams, free Web site spaceGrew into GeoCitiesRevenue source: advertising, pop-up pages1999: purchased by Yahoo! ($5 billion)

Closed in 2009© Cengage Learning 20157Slide8

Early Web Communities (cont’d.)

1995-2001

Tripod and Theglobe.com offered advertising-supported virtual communities

These early communities evolved into social networking sites of today

8Slide9

Social Networking Emerges

As the Internet and Web grew:

New experience of sharing online communication faded

Specific common interests formed a basis for interaction

Social networking sites allow individuals to:Create and publish a profileCreate a list of other users with whom they share a connection (or connections)Control that listMonitor similar lists made by other users

Social Networking Emerges (cont’d.)

Early social networking sites

Six Degrees (1997)

Friendster (2002)

Had features found in today’s social networking sitesTribe.netMySpace (dominant prior to 2008)© Cengage Learning 2015

10Slide11

Social Networking Emerges (cont’d.)

Current social networking sites

Facebook

Google+

YouTube Inclusion of videoGREE, mixi (Japan)Orkut (Brazil, India)QQ, WeChat, Weibo (China)

Social Networking Emerges (cont’d.)

Dedicated to facilitating business contacts

Twitter

Users send short messages (tweets) to other users who sign up to follow their messagesBasic idea behind social networkingPeople invited to join by existing membersSite provides directory (without contact information)

Communication does not occur until intended recipient approves the contact© Cengage Learning 201512Slide13

FIGURE 6-1 Social networking Web sites

FIGURE

6-2 Leading social networking sites around the world

Social Networking Emerges (cont’d.)

Some social networks focused around specific interests or capabilities

Flickr

InstagramCafeMomSnapchat© Cengage Learning 2015

15Slide16

Web Logs (Blogs) and Microblogs

Web sites containing individual commentary on current events or specific issues

Form of social networking site

Twitter: microblog

Very informal; tweets limited to 140 charactersEarly blogs focused on technology topicsBlogs can be used as a political networking toolStarting with 2004 election

Communicating messages, organizing volunteers, raising money, meetups© Cengage Learning 201516Slide17

Web Logs (Blogs) and Microblogs

(cont’d.)

Retailers embracing blogs

Way to engage visitors not ready to buy from site

Marketing and supply managers saw social networking benefits of enhancing B2B relationshipsParticipatory journalismCNNBlogs can become businesses in themselves

Must generate financial support (fees, advertising)© Cengage Learning 201517Slide18

Location-Aware Mobile Social Networks

Mobile devices transmit their location to Web sitesSites use location information to provide customized advertising and other services

Examples

Foursquare

FacebookGoogle+© Cengage Learning 2015

18Slide19

Business Uses of Social Networking

Types of use by businessesThinly-veiled advertising

Building brand awareness

Establishing trust

Announcing new products or servicesGathering information about customers and potential customersExample: Brooks RunningContributes to social media discussions dedicated to fitness

Business Uses of Social Networking (cont’d.)

Example: Campbell’s SoupDiscussion areas focusing on what soup can do for the family

20Slide21

Figure 6-3 Social media strategies for businessSlide22

Social Shopping Sites

CraigslistStarted as information resource for San Francisco residents

Expanded to other major cities

Free advertising in most categories

EtsyBuy and sell handmade itemsPoshmarkWomen’s clothing social shoppingSite optimized for mobile phone users

Idea-Based Social Networking

Social networking sites form communities based on connections among people

Idea-based virtual communities

Communities based on connections between ideas

Idea-based networkingParticipating in idea-based virtual communitiesExamples: del.icio.us, 43 Things

Virtual Learning Networks

Distance learning platforms for student-instructor interaction (Blackboard)

Tools include:

Bulletin boards, chat rooms, drawing boards

Massive Open Online Courses (MOOC)CourseraUdacitySome university programs available entirely onlineLow completion rate

Open-Source Software

Software available for download at no costAn example of successful social networking

Community devoted to the creation, improvement, and maintenance of the software

Some software devoted to development of virtual learning communities

MoodleuPortal© Cengage Learning 2015

25Slide26

Revenue Models for

Social Networking Sites

Late 1990s

Revenue created by selling advertising

Used by virtual communities, search engine sites, Web directories1998Purchases and mergers occurredNew sites used advertising-only revenue modelIncluded features offered by virtual community sites, search engine sites, Web directories, other information-providing and entertainment sites

Web portal goal: every Web user’s doorway to Web© Cengage Learning 201526Slide27

Revenue Models for

Social Networking Sites (cont’d.)

Advertising-supported social networking sites

Smaller sites with specialized appeal

Can draw enough visitors to generate significant advertising revenueExample: I Can Has Cheezburger siteRecall from Chapter 3Sites with higher number of visitors can charge more

Stickiness: important element in site’s attractivenessRough measure of stickinessTime user spends at the site© Cengage Learning 201527Slide28

Mixed-Revenue and Fee-For-Service Social Networking Sites

Most social networking sites use advertising

Some charge a fee for some services

Examples: Yahoo! All-Star Games package, Yahoo! premium e-mail service

MonetizingConverting site visitors into fee-paying subscribers or purchasers of servicesConcern: visitor backlashExamples

The Motley Fool and TheStreet.com© Cengage Learning 201528Slide29

Fee-Based Social Networking

Google Answers site

Early attempt to monetize social networking

Questions answered for a fee

Google operated service from 2002 to 2006

Similar free servicesYahoo! Answers, Amazon (Askville)Uclue (paid researchers earn 75 percent of total fee)Advocates claim better qualityFee-based Web sites can generate revenue by providing virtual community interaction© Cengage Learning 201529Slide30

Microlending Sites

Function as clearinghouses for microlending activity

Microlending

Practice of lending very small amounts of money

Lend to people starting or operating small businesses (especially in developing countries)Microlending key elementWorking within social network of borrowersBorrowers support each other, element of pressure to repay

Examples: Kiva and MicroPlace© Cengage Learning 201530Slide31

Crowdfunding Sites

Small businesses can sell partial ownerships to investorsExamples: Kickstarter, IndieGoGo

Reduces risk to individual investors

Small amounts of money invested

Reward-based crowdfundingInvestors pay in advance for products and servicesTo be delivered when funds raisedUsed by artists and charitable organizationsTo help complete a specific project

Internal

Social Networking

Provide social interaction among organization’s employees

Run on organization’s intranet

Save money by replacing printed distributionProvide easy access to employee informationGood for geographically dispersed employees

Adding wireless connectivity© Cengage Learning 201532Slide33

Mobile Commerce

Short messaging service (SMS)

Usually called texting

Mobile phone users send short text messages to each other

2008: United States developments allowing phones as Web browsersHigh-speed mobile telephone networks grew dramaticallyManufacturers offered range of smart phones with Web browser, operating system, applicationsPotential for mobile commerce (m-commerce)

Mobile Phones

Japan and Southeast Asia mobile commerce

Much larger online business activity

Had high-capacity networks before U.S.

NTT DoCoMo, Japan’s largest phone companyPioneered mobile commerce in 2000U.S. mobile commerce beginning in 2008Introduction of smart phones and high-capacity networksSmart phone examples: Apple iPhone, Android

Tablet Devices

Smaller than laptop computer, larger than phoneConnect to the Internet wirelessly

Phone carrier service or local network

Can switch between two modes automatically

PhabletsLarge phones with high-resolution screensBy 2016:More tablets sold annually than personal computers

FIGURE

6-5 Actual and projected sales of personal computers, tablet devices, and mobile phones (in millions of units)

36Slide37

Tablet Devices (cont’d.)

Mobile commerce browser display options

Wireless Application Protocol (WAP)

Allows Web pages formatted in HTML to be displayed on small-screen devices

Display a normal Web page on the deviceMade possible by increased screen resolutionExample: Apple iPhoneTouchscreen controls now prevalent

Mobile Device Operating Systems

Apple and BlackBerry use proprietary operating systems

HTC, Motorola, Nokia

At one time created their own operating systems and software applications

Now use a standard operating system provided by a third partyMost common third-party operating systemsAndroid, Windows Phone

Mobile Device Operating Systems (cont’d.)

Android operating system

Most popular and fastest growing third-party operating system

Developed by Google

Open sourceSmart phone operating system Cannot be deleted/switched by userOperating system modificationsJailbreaking (Apple iphone’s operating system)

Rooting (Android operating system)© Cengage Learning 201539Slide40

FIGURE

6-7 Smartphone operating systems: U.S. market sharesSlide41

Mobile Apps

Common operating systems emergenceOccurred due to a change in the way software applications developed and sold

Old U.S. mobile phone company revenue strategy

Control application software (apps)

Apple turned old revenue strategy on its headAT&T agreed to be sole carrier for iPhoneApple Apps for iPhone online storeIndependent developers create apps and sell them

Mobile Apps (cont’d.)

Apple AppStore, Google PlaySome mobile apps are sold for a fee

Games, puzzles, productivity tools, reference works

Typically range from $1 to $5 each

Mobile Apps (cont’d.)

Mobile phones used for online banking

Physicians using smart phones

To read EKGs

To manage diabetic patientsPhones’ global positioning satellite (GPS) service capabilitiesAllow mobile business opportunities

Mobile Payment Apps

Mobile walletsMobile phones function as credit cards

Japan’s NTT DoCoMo phones combine capabilities

Generate significant business

Widespread credit card use in U.S. but limited use of mobile phone payments2011: Phone readers offered by American Express, Visa, MasterCardGoogle Wallet for Android phones introduced2014: Starbucks reported 12% of customers paying through mobile app

Online Auctions

Business opportunity perfect for the WebAuction site revenue sources

Charge both buyers and sellers to participate

Sell advertising

Targeted advertising opportunities availableOnline auctions capitalize on Internet’s strengthBring together geographically dispersed people sharing narrow interests

45Slide46

Auction Basics

Auctions date from Babylon in 500 B.C. Common activity of 17th century England

Auction: seller offering item for sale

Bids: price potential buyer willing to pay

Bidders: potential buyersPrivate valuations: amounts buyer willing to payAuctioneer: manages auction processShill bidders: work for seller or auctioneerMay artificially inflate price

46Slide47

Auction Basics (cont’d.)

English auctionsBidders publicly announce successively higher bids

Item sold to highest bidder (at bidder’s price)

Also called ascending-price auction

Open auction (open-outcry auction)Bids publicly announcedMinimum bid Beginning priceReserve price (reserve)If not met, item removed (not sold)

47Slide48

Auction Basics (cont’d.)

Yankee auctionMultiple item units offered for sale (bidders specify quantity)

Highest bidder allotted bid quantity

Remaining items allocated to next highest bidders until all items distributed

Bidders pay lowest successful bidder price

48Slide49

Auction Basics (cont’d.)

Dutch auctionsOpen auction

Bidding starts at a high price

Drops until bidder accepts price

Also called descending-price auctionsSeller offers number of similar items for saleCommon implementationUse a clock (price drops with each tick)Bidders stop the clock and take items at the given priceIf items remain, the clock is restarted

49Slide50

Auction Basics (cont’d.)

First-price sealed-bid auctionsSealed-bid auctions

Bidders submit bids independently

Prohibited from sharing information

First-price sealed-bid auctionHighest bidder winsIf multiple items auctioned, next highest bidders awarded remaining items at their bid price

50Slide51

Auction Basics (cont’d.)

Second-price sealed-bid auctionSame as first-price sealed-bid auction

Except highest bidder awarded item at second-highest bidder price

Commonly called Vickrey auctions

William Vickrey: 1996 Nobel Prize in EconomicsFindings:Yields higher seller returnsEncourages all bidders to bid private valuation amountsReduces tendency for bidder collusion

51Slide52

Auction Basics (cont’d.)

Open-outcry double auctionsExample: Chicago Board of Trade auctions of commodity futures and stock options

Buy and sell offers shouted by traders in trading pit

Each commodity, stock option traded in own pit

Quite frenziedDouble auctions (either sealed bid or open outcry)Good for items of known quality traded in large quantitiesNo item inspection before bidding

52Slide53

Auction Basics (cont’d.)

Double auctionsBuyers, sellers submit combined price-quantity bids

Auctioneer matches sellers’

offers

to buyers’ offers Starts with lowest price and then goes upStarts with highest price and then goes down until all quantities offered are soldOperation format: Sealed bid or open-outcryExample: New York Stock Exchange

53Slide54

Auction Basics (cont’d.)

Reverse (seller-bid) auctionMultiple sellers submit price bids

Auctioneer represents single buyer

Bids for given amount of specific item to purchase

Prices go down as bidding continuesUntil no seller willing to bid lowerMost involve businesses as buyers and sellers

54Slide55

FIGURE

6-8

Key characteristics of seven major auction types

Online Auctions and

Related BusinessesOnline auction business: rapidly changing

Three auction Web site categories

General consumer auctions

Specialty consumer auctionsBusiness-to-business auctionsVarying opinions on categorizing consumer auctionsBusiness-to-consumerConsumer-to-consumerConsumer-to-business

56Slide57

General Consumer Auctions

eBay

Registration required, seller fees, rating system

Seller’s risk: buyer uses stolen credit card; buyer fails to conclude transaction

Buyer’s risk: no item delivery; misrepresented itemMost common auction format: English auctionSeller may set reserve priceBidders listed: bids not disclosed (until auction end)Continually updated high bid amount displayedPrivate auction option available

57Slide58

General Consumer Auctions (cont’d.)

Minimum bid incrementAmount by which one bid must exceed previous bid

Proxy bid

Bidder specifies maximum bid

May cause bidding to rise rapidlyeBay storesIntegrated into auction siteSellers generate additional profits

58Slide59

General Consumer Auctions:

The Lock-In EffecteBay established itself early

Economic structure is biased against new entrants

Markets become more efficient as number of buyers and sellers increase

Consumers more likely to patronize established sitesExample: Japanese general consumer auctionYahoo! first to enter marketNow dominates (more than 90% market share)eBay maintains low market share (less than 3%)

59Slide60

Group Shopping and Coupon Sites

Group shopping sitesAlso known as group purchasing site

Seller posts item with tentative price

Individual buyers enter bids

Agreement to buy one unit (no price provided)Site negotiates with seller for lower pricePosted price decreasesAs number of bids increases (only if number of bids increases)Result: buyers force seller to reduce priceSimilar to consumer reverse auction

60Slide61

Group Shopping and Coupon Sites (

cont’d.)

Well-suited product types

Branded products, well-established reputations

Produces buyer confidence of good bargainHigh value-to-size ratio, non-perishable

DisadvantagesDifficulty attracting sellers’ interestWell-suited companiesFind no advantage; fear sites cannibalize product sales; are reluctant to offend current distributorsMercata and LetsBuyIt sites closedSuccessful sites: Groupon, LivingSocial, Gilt

61Slide62

Business-to-Business Auctions

Evolved to meet specific existing need

Excess inventory disposal (manufacturing)

Two methods

Liquidation specialists: find buyers for unusable itemsLiquidation brokers: firms that finds buyers for itemsOnline auctionsLogical extension of these inventory liquidation activities to a new and more efficient channel (Internet)Example: GoIndustry Dove Bid site

62Slide63

Business-to-Business Auctions (

cont’d.)

Used to fill temporary employment openings

Example: nursing

Employers operate their own shift auctions

63Slide64

Business-to-Business Reverse Auctions

Example: Owens Corning purchases

Examples: Agilent, Bechtel, Boeing, Raytheon, Sony

Need for trust and long-term supplier relationships

Make reverse auctions less appealingIf suppliers refuse to participate:Impossible to conduct reverse auctions