QUIZ 1 (SECTION 3)- ANSWER

SECTION A:

(1) d (8) b

(2) c (9) b

(3) b (10) b

(4) a (11) c

(5) c (12) a

(6) d (13) b

(7) b (14) c

(15) d

SECTION B:

(1) Channel conflict refers to any situation in which the channel members are antagonistic due to
real or perceived differences in incentives, rewards, policies, or support. Provide one (1) example
of channel conflict. (3 marks)

Answer: Any example of adding a new, Web-based distribution strategy to an existing

distribution channel would suffice.

(2) Briefly explain two (2) e-commerce business models. (4 marks)

Answer:
Two from the following list:
1. Name Your Price – Customer sets the price he/she is willing to pay. EC company seeks a
company that is willing to sell the product or service at this price.
2. Find the Best Price – Customer specifies needs, then an EC intermediary matches the needs
against a database, locates the lowest price, and submits the information to the customer.
3. Affiliate Marketing – An arrangement whereby a marketing partner refers consumers to the
selling company’s Web site for a fee.
4. Group Purchasing – EC company aggregates orders from small to moderate sized companies
in order to exploit quantity purchasing discounts.
5. Electronic Tendering – Large organizational buyers issue needs via a reverse auction hosted
by an EC intermediary, which then solicits bids from potential suppliers.
6. Online Auctions – Online shoppers make consecutive bids through an EC intermediary and
the intermediary awards the product to the highest bidder.
7. Product and Service Customization – EC intermediaries create a product or service matching
the specifications of each buyer.
8. Electronic Marketplace or Exchange – EC intermediaries bring together potential buyers and
sellers via the Internet.
9. Supply Chain Improvers – EC intermediaries who improve the speed and efficiency of
existing supply chain relationships.
10. Online Direct Marketing – A manufacturer or retailer sells directly to consumers via the
Internet.
11. Viral Marketing – Online marketers use the Internet to spread word-of-mouth information
about products or services.

(3) According to Bakos (1998), market plays a central role in the economy. In the process,
they create economic values for buyers, sellers, market intermediaries, and for society at
large. Market (electronic or otherwise) has three main functions. List all of the functions.
(3 marks)

1. Matching buyers and sellers.

2. Facilitating the exchange of information, goods, services, and payments associated
with market transactions.
3. Providing an institutional infrastructure.

Reference: Electronic Marketplaces

(4) Define Downstream Supply Chain (2 marks) – The activities involved in delivering the
product to the final customer.

(5) Describe digital goods and the two (2) methods how they can be delivered to customers?
(3 marks)

Answer: Product that can be transformed to digital format and delivered over the Internet. Two
methods of delivering this product

a) Hard (physical) form– CD-ROM, DVD, newsprint

b) Soft form- Purchase CD-ROM containing software, instruction manual and
warranty card or pay for the software at a website and download into their
computer.