Ecommerce Module Mañabo With Answer Key

E-Commerce
Module
Mañabo, R.D.
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COURSE TITLE: E-COMMERCE
COURSE CODE: ITEW1
COURSE DESCRIPTION: This course introduces the concepts, vocabulary, and

procedures associated with E-Commerce and the Internet. The responsibilities for E-
Commerce business managers require a general understanding of basic business
management concepts as well as basic technical concepts. Emphasis will be on web-
based e-commerce services.
PRE-REQUISITE/CO-REQUISITE: CCS101
COURSE OBJECTIVES:
After the course, you are expected to:
 describe E-Commerce legal, ethical and social impact
 identify and apply relevant problem-solving methodologies
 understand the processes of developing and implementing information systems
COURSE CONTENTS:
Module 1: The Uprising is on the Move
Module 2: Infrastructure for E-Commerce Applications
Module 3: Concepts of Business and the Social Issues
MODULE 1
Module Title: THE UPRISING IS ON THE MOVE
Overview
This module will address topics related to the implementation of e-commerce,

business model elements and the e-commerce infrastructure. Topic1 describes e-
commerce, distinguishes e-business and e-commerce, and sets out various e-
commerce styles or models. Topic 2 outlines the main e-commerce market and revenue
models for both B2C and B2B businesses, and presents the basic business principles to
understand e-commerce firms including the structure of the industry, value chains and
firm strategy. Topic 3 focuses on the technology infrastructure which forms the basis for
all e-commerce.
Module Objectives
After Module 1, you are expected to:
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 understand why studying e-commerce is so significant.;
 defines e-commerce, explains how e-commerce differs from e-business,
describes the key technical building blocks underlying e-commerce and
recognizes significant current trends in e-commerce;
 identify and explain the specific features of e-commerce technology and address
the importance of its market; and
 recognize how e-commerce developed from its early years to today.
Coverage:
A. Topic 1: Introduction to E-Commerce
B. Topic 2: Elements of Business Models
C. Topic 3: E-commerce Infrastructure
A. Topic 1
Topic Title: Introduction to E-Commerce
Introduction:
Huge scientific and technical developments in the era of globalization have

brought changes to the world of commerce, manufacturing, banking and marketing.
Electronic commerce is expanding the business to domestic as well as international
markets. It reduces the cost of processed, distributed, and retrieved paper-based
material. E-commerce's importance is very high, because it reduces transaction costs.
Reduced cost of transaction contributes to empowerment of customers. In short, e-
commerce is creating a very big shift in trade and marketing.
E-Commerce is the method of purchasing and selling or sharing goods, services

and information via computer networks and internet. This is the use of technology to
automate business transactions and work flows. It is the transmission of information;
telephone lines, computer network, or other electronic means of goods, services, or
payments. It is an instrument that addresses the need of companies, consumers and
management to reduce service costs while rising service delivery speeds [1].
Topic Objectives
After Topic 1, you are expected to:

 understand why studying e-commerce is so significant.;
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 defines e-commerce, explains how e-commerce differs from e-business,
describes the key technical building blocks underlying e-commerce and
recognizes significant current trends in e-commerce; and
 identify and explain the specific features of e-commerce technology and address
the importance of its market.
Topic 1 Pre-test
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- Module 1: Topic 1 Pre-test
Name:__________________________________________ Score:_______________
Section:___________ Instructor: ____________________ Date:________________
a. List down 5 types of E-commerce
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
b. Enumerate 5 benefits of E-commerce in business
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
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Topic Contents
What is E-commerce?
E-Commerce plays a major role in nation's economic growth and development. It
is a purposeful operation that involves the planning, managing, promotion and
distribution of different goods and services as well. It makes the use of the Internet, the
world wide web (www), and software applications and apps operating on mobile devices
for business transactions. It is the use of electronic communications and digital
information processing systems to create, transform and redefine value-creating
relationships with, or between, organizations and individuals in business transactions.
It already affects large sectors like communications, service, finance, retail, and
holds promises in areas like education, health, transportation, and government. Not all
of the most sensitive but less visible impacts on everyday business practices can be
associated with the greatest effects.
The five primary revenue models used by e-commerce firms are:
 The advertising revenue model. Is a business approach which
emphasizes advertisement sales as a major source of income. In
mainstream television and print media as well as web media this
system is most common.
 The subscription revenue model. These are based on the concept of
selling a good or service to earn recurring subscription income monthly
or yearly
 The transaction fee revenue model. The organization earns fees for
approving or conducting transactions depending on the amount. The
revenue is created by the customer paying a fee for a transaction to a
platform operator through transaction fees.
 The sale revenue model. It is the profits a business earns from its
selling of products or service provision
 The affiliate revenue model. It supports both the original seller (by
broadening their scope and creating new sales) and the affiliate
(through commissions) by providing a continuous revenue stream. This
form of framework can be applied successfully to a recurring,
subscription company.
What is E-business?
E-business is the operation of electronic business processes. It involves
electronic business processes such as the procurement and selling of goods,
equipment and services, customer support, payment processing, controlling quality
management, business partners partnership, exchanging knowledge and running
automated employee services, recruiting and more.
Major benefits:
 global reach
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 reduced cost
 convenience
 higher productivity and efficiency
E-business covers internal processes including manufacturing, inventory control,

product creation, risk management, accounting, information management and human
resources. It's approach is more complex, more based on internal processes, and
targeted at cost reduction and performance, productivity and cost management
improvements.
Difference between E-commerce and E-business

E-business is a wider term than e-commerce. This applies to e-commerce
companies that rely on sales, as well as those that handle online operations in a
conventional manner. Such an e-business can run part of its internal processes online,
such as human resources, inventory management, accounting, risk management, etc.
If a business wishes to become an e-business, it needs to start selling products online
and handle some or all of the business activities or additional online sales.
It is a digital transaction and process facility within a company that includes
information systems under the control of a company [2].
Figure 1. The Difference Between E-commerce and E-Business
E-commerce Models
Building an e-commerce solution mainly requires designing and launching an e-
commerce platform. Identifying the e-commerce model is the first step in establishing an
e-commerce platform [2].
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Business-to-business (B2B)
The B2B model is expected to become the industry's largest value field
within a couple of years. The B2B model involves electronic transfers for
payments, sales, as well as other administrative tasks between houses. It
includes trading products such as subscriptions to companies, professional
services, manufacturing, and wholesale transactions.
Business-to-Consumer (B2C)
The B2C model involves transactions between business organizations and
consumers. It refers to any business entity that markets its goods or services
over the Internet to customers. These sites display information about the product
in an online catalog and store it in a database. The B2C model also includes
online banking, travel, and health information services
Consumer-to-Consumer (C2C)
The C2C model involves transaction between consumers. Here a
customer directly sells to another customer. Online auction Web sites that offer
advertisement and online sale of their goods to another customer. It is important,
however, that both seller and buyer have to register with the auction site.
Consumer-to-Business (C2B)
The C2B model includes a transaction between a customer and a
corporate organization. It is similar to the B2C model but the difference is that in
this case the seller is the customer and the buyer is the business organization.
Every person who has something to give either a service or a good can be
a customer in the C2B business model. The employee is compensated for the
work provided to the enterprises. The consumer can be:
 A webmaster/ blogger offering advertising service (through Google
Adsense program for example or amazon.com affiliation program)
 A photographer or a designer offering stock images to companies
by selling his artwork through Fotolia or istockphoto for example
 Any individual answering a poll through a survey site
 Any individual with connections offering job hiring service by
referring someone through referral hiring sites like jobster.com or
h3.com
Company in the C2B business model includes any organization that
purchases products or services from individual intermediaries. Here are some
examples of possible companies that might be such clients:
 Any company which wants to fill a job (through referral hiring sites
like H3.com founded by an ex Monster CEO, Josbster.com,
Jobmeeters.com, karmaone.org, JobThread.com, Forumjobs.com
and Yorz)
 Any company needing to advertise online (through Google Adwords
program for example)
 Any advertising agency which needs to buy a stock photo (through
microstock sites)
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The intermediary is the key factor as it provides the link between a
company that requires a service or a good person and a mass of people.
Intermediary typically acts as a platform for both buyers (businesses) and sellers
(individuals).
The intermediary plays two roles:
 In introducing a distribution platform it supports the goods and

services provided in individuals. It offers what people cannot do
themselves: extensive promotion, logistical and financial support,
technical expertise
 It provides buyers with interaction with a mass of individuals and is
responsible for money transfers and legal aspects
Mobile e-commerce (M-commerce)

This concept defines online sales purchases using wireless electronic
devices such as handheld, desktop or laptop computers. Such wireless apps
communicate with computer networks and are able to allow online transactions of
merchandise. Any kind of cash exchange is termed an e-commerce transaction.
Social e-commerce
It refers to an internet commerce that use networking websites like
Facebook, Instagram, and Twitter as platforms for product and service
advertising and sales. The degree to which customers engage with the
company's content by retweets, comments, and shares is measured by the
effectiveness of a social media campaign.
Benefits of social e-commerce [3]
1. Community Business metrics. The social media marketplace
promotes success assessment and evaluation. On Twitter, the
Facebook profiles, Instagram company accounts and tweets
have built-in metrics for views, contributions and scope.
Additionally, most social media posts allow you to calculate
traffic to your website through counts of website clicks. Other
simple metrics to assess a positive ROI that include your total
fan or follower numbers, likes, and overall feel of interactions.
2. Customer Engagement and Longevity. You're trying to sell
and promote your goods or services by using social commerce
for your business, but you're also trying to create good ties with
people. A business will create and sustain relationships that
strengthen trust and loyalty by taking this opportunity to connect
with prospects.
3. More Traffic and Sincere Contribution. Working actively to
build your social media audience is a great first step towards
eventually making conversions. One of the most important
social trade advantages is the dedication and scope that
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companies can get if they exchange material. By consistently
showing up in the updates of a follower list, you are taking part
in a important branding tool.
4. Superior rating of search engines. Social media e-commerce
has been shown to increase traffic to your website which will
ultimately affect your ranking on search engine results. Using
social media to share links to content on your website is an
effective way to drive traffic from social media users.
5. Consistent increase in audience. Across the world thousands
of new people enter social media sites every day. Millions are
involved on that already. Facebook has more than a billion
active users every month and several new users enter every
hour, according to statistics. For every company one of the most
critical considerations is how to attract and sell to its target
consumer market.
Local e-commerce
Local e-commerce is a type of e-commerce that aims to engage
consumers based on their current geographical location. A variety of online
marketing tactics are used by local retailers to attract shoppers to their shops.
Additional definitions and terminology include: knowledge asymmetry, menu
costs, marketplaces and market areas, transaction costs, cognitive resources,
business entry costs, search costs, price discovery, network externalities.
Understanding E-commerce
Digital computing and communications technology growth and mastery are at the
core of the newly evolving global digital economy that we call e-commerce. To grasp the
possible future of e-commerce, you need to have a clear understanding of the
information technology it relies on. This is a technologically induced phenomenon that
relies on a host of IT. These innovations underpin a host of complementary
technologies such as cloud computing, desktop computers, smartphones, tablet
computers, local area networks, relational and non-relational databases, client / server
computing, data mining, and fiber optic switches.
Although technology provides the infrastructure, it is the business application
which creates interest and excitement in e-commerce as the potential for extraordinary
return on investment. New technologies offer new ways for companies and
entrepreneurs to coordinate development and business transactions. New innovations
change current market strategies and plans. To better understand e-commerce, you
will need to familiarize yourself with some of the main business principles, such as the
essence of digital markets, digital products, business models, corporate and company
value chains, value networks, company structure, digital disruption and customer
behavior in digital markets, as well as basic financial analysis principles.
With billions of people now making worldwide use of the Internet, the effect of
Internet and e-commerce on society is important and global. E-commerce is
increasingly subject to the laws of nations and globalized organizations. To be effective,
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you'll need to consider the strains that global e-commerce brings on contemporary
society.
Figure 2. The Internet and the Evolution of Corporate Computing [2]
Features of E-commerce Technology

E-commerce technologies allow retailers to learn a great deal more about
customers and to be able to use this knowledge more efficiently than ever before. There
are unique features of e-commerce technology that signify new marketing and sales
opportunities that are available for delivery to segment and target markets as
interactive, personalized, and rich communications [2].
 Pervasiveness. It is available just about everywhere, at all times. It frees the

market from being bound to a physical space otherwise known as “market place”
and makes it possible to shop via mobile e-commerce from your desktop, at
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home, at work or even from your car. This refers to “marketspace” or extended
marketplace that is beyond traditional frontiers and removed from temporal and
geographical locations
 Global reach. E-commerce technology makes it much more efficient and cost-
effective for commercial transactions to cross ethnic, regional, and national
boundaries than is true in conventional trade. The total number of users or
customers an e-commerce business can obtain is a measure of its reach.
 Universal standards. E-commerce technology are shared by all nations around
the world.
 Richness. Large markets, regional selling forces and small retail stores have
great resources that they can provide customized, face-to-face service with audio
and visual indicators when making a sale or complexity and content of a
message.
 Interactivity. E-commerce technology that allows for two-way communication
between merchant and consumer.
 Information Density. E-commerce technologies vastly increase and quality of
information available to all market participants, consumers, and merchants alike.
Costs for information processing, storage, and communication drop significantly
while currency, accuracy, and timeliness greatly increase. Knowledge is getting
plentiful, cheap and reliable.
 Customization. E-commerce platforms allow for personalization: retailers may
tailor their marketing messages to particular individuals by adapting the message
to the name, preferences and past transactions of a person.
 Social technology. New Internet social and business models enable user
content creation and distribution, and support social networks.
----------End of Topic 1----------
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Module 1: Topic 1 Post-test
Name:_________________________________________ Score:_______________
Section:___________ Instructor: _______________ Date:________________
Identification: Read each statement below carefully and fill in the blank(s) with the correct
answer.
M-Ecommerce 1. It refers to personal digital assistants (PDAs) are used for buying
and selling of goods and services
Digital computing 2. It is the market application that creates curiosity and enthusiasm in
e-commerce as the potential for exceptional return on investment
E-business 3. E-business is the conduct of business process on the Internet.
Consumer-to- 4. Those are web-services which offer consumers the opportunity to
Business (C2B) set prices for the products they wish to purchase.
Business-to- 5. It is a business that is conducted between companies, rather than
business (B2B) between a company and individual consumer.
Affiliate revenue 6. A revenue-earning technique to market the goods of other
businesses and to charge commissions on any sale you make.
Social-ecommerce 7. The degree to which users use retweets, comments and shares to
interact with the contents of the business is determined by a social
media campaign's performance.
E-commerce 8. A type of business model that focuses on doing business
transactions via electronic networks like the Internet.
Subscription 9. It is one in which consumers pay a monthly fee to get continuing
model access to a specific product or service.
Local e-commerce 10. Local retailers use a range of online marketing strategies to draw
customers into their shops.
Case Study. Read Pandora’s Original Business Model Case Study at

https://www.termpaperwarehouse.com/essay-on/Pandora-Case-Study/497130
Questions:
1. Compare the original business model established by Pandora with its current business
model. What's the difference between the revenue models "free" and "freemium"?
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2. In the end, why did MailChimp succeed with a freemium model, but Baremetrics didn't?
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______________________________________________________________________
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B. Topic 2
Topic Title: Elements of Business Models
Introduction:
A business model is very important to ensure a company is properly set up and is

capable of running the company. The business model is the main component of a
business plan, and this is important when finding investors from individuals or banks
alike.
A business plan outlines the logic behind how a company captures, generates,
and produces profit. Such a model must be practical and cover all matters of concern,
i.e. provide the appropriate and sufficient requirements for the operation of a business.
The definition should be clear, detailed and appropriate, without oversimplifying the
complexities of how companies actually work.
Topic Objectives

 identify the key components of e-commerce business models; and
 understand key industry principles and e-commerce approaches.
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Topic 2 Pre-test
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Name:__________________________________________ Score:_______________
Article: How does Twitter Make Money? Twitter Business Model
Twitter was created by Jack Dorsey, Biz Stone, Noah Glass and Evan Williams in
2006. Currently, Twitter has more than 328 million monthly active users, making it the
ninth-largest social network in the world. Twitter has proven to be the largest source of
breaking news time and again. A social network’s valuation is dependent on the number
of users and the engagement of users. Unfortunately, Twitter’s user engagement is
decreasing and other social networks like WhatsApp and Instagram have left it far
behind in terms of the number of total users. Though it was being touted as a serious
competitor to Facebook in its early days, Facebook is currently the most popular social
network in the world.
Twitter business model is similar to the business model of other social networks. It
requires users to create a profile and then those users can post short status updates or
“tweets” under 280 characters. Registered users can post tweets, but those who are
unregistered can only read them. Users can post using the website, app or even SMS. It
is also called “SMS of the Internet”.
The users can follow other user accounts and then they can view the tweets of the
accounts they chose to follow. The users can share videos, images, and links through
their tweets. The users can also directly message each other.
Of late, Twitter has been shifting its focus to video content and content creators, as
video has far higher engagement than text or banner advertisements. To incentivize
video makers, Twitter shares revenue with them, where the creators get 70% of the cut
and the rest is kept by Twitter. This is better than the 55% cut offered by YouTube to
content creators.
In terms of value proposition, Twitter offers its various stakeholders the following
benefits:
 User Benefits. Users share content with the world, get real-time and relevant
content in return and also get to participate in conversations with people through
tweets or messages.
 Advertiser Benefits. Viral global reach, unique ad formats, real-time connect with
the audience.
 Data Partner Benefits. Access, search and analyze data and generate insights to
monetize.
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 Twitter has always tried to strengthen its business model through acquisitions
and partnerships instead of internal user or revenue growth
How does Twitter make money through advertising?

Almost 85% of Twitter’s revenue comes from advertising sales. Twitter annual
revenue from ads came out to be around US$ 400 million in 2015. An individual or
company can advertise on Twitter by either
 Promoting a tweet that will appear in people’s timelines

 Promoting an entire account
 Promoting a particular trend i.e. a hashtag-driven topic (e.g. #NotInMyName) that
is popular at a particular time
Photos and video previews are displayed in the posts alongside the text thus
enabling the advertisers to present their content to the target audience better. Before
2013, users had to click on the links posted to view the content.
Twitter charges the advertisers based on the amount of interaction that the tweets
generate. While the budget is set at the beginning of the campaign itself, the advertisers
pay on per-click or per-retweet basis. Advertisers can also participate in bidding to place
their content in a particular space. More than 65% of Twitter’s advertising revenue
comes from mobile devices.
How does Twitter make money through Data Licensing or “Firehose”?

What is data licensing? Well, Twitter sells its public data that it calls Firehose and
that amounts to around 500 million tweets each day to various companies. Companies
can utilize this data to analyze consumer trends and generate insights about brands and
companies. Since the tweets are public, consumers can also access this data. Because
of the volume of the data, companies can learn about their users in a detailed manner,
something that a normal user would not be able to. Of course, the data analysis tools
have to be sophisticated enough.
With sophisticated analysis, companies can learn detailed and specific

information about their users that, because of the volume of data, an ordinary user or
company would not be able to get. Though there is a slowdown in the advertising
revenues, the high-margin data licensing business is growing. In 2015, Twitter
generated US$ 32.2 million of revenues from data licensing.
Source: https://www.feedough.com/how-does-twitter-make-money/
1. What attributes or benchmarks can be used to measure a company's market

performance, like Twitter?
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2. Which are the most valuable things on Twitter?

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Topic Contents
What is business model?
Business model at its heart is a picture of how the company is making money. It's
an overview of how to offer value to clients at a suitable rate. It is a strategy for an
organization to produce income and revenues. It includes company elements and roles
like expenses. Owing to the pace of technological progress information technology is
still a completely different field. Business model can be considered as a combination
of three streams, the value stream, the logistical stream and the revenue stream [4].
The value streams
A value stream is the set of activities (the how) that create a value flow or
understand the value of product or service that the customer gets. Value streams are
established productive way to look at the organization's business processes, or rather to
look at the value flow without being confused by existing business process boundaries.
A value stream map is also generated to avoid confusion in the planning and execution
of a project, which shows operations, time, expense, and quality are given or consumed
in [5].
LEAN. In LEAN, Value Stream Mapping is a tool for evaluating the current state
and planning a future state for a series of events that carry a product or service to the
customer from the start.
Six Sigma. It is a data-driven approach designed to remove process flaws. The

target is to push six standard deviations from the mean to nearest specification mark.
Six sigma's scope ranges from manufacturing to transactional, and from product to
service. It was designed to optimize business processes by substantially reducing the
probability of mistake or a defect.
Lean focuses on reducing waste, while Six Sigma emphasizes reducing

variability. It achieves its goals by using fewer technological methods such as kaizen,
management of the workplace, and visual controls, whereas Six Sigma prefers to use
statistical data analysis, experiment design and hypothesis testing.
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The logistical stream
The logistical stream is raising transaction costs from both the viewpoint of the
seller and the buyer. E-commerce has a variety of ways to streamline the procurement
process. First, it removes inefficiencies in paperwork and coordination that arise in
ordering processes. Second, by using procurement strategies such as online bidding, it
reduces the degree of information asymmetry. Finally, this monopolistic tendency
process (the spread of power away from the center to local branches or government)
has allowed companies to shorten the supply chain.
The revenue streams
Revenue streams are the building block reflecting cash (not income, which is
revenue minus costs) from each consumer segment that a business produces. It can
have several pricing structures, such as fixed list prices, negotiating, auctioning,
dependent on the demand, dependent on volume or dependent on yield [6].
Eight Key Elements of a Business Model
There are 8 components that form a business model [2] [7]:
1. Value proposition
2. Revenue model
3. Market opportunity
4. Competitive environment
5. Competitive advantage
6. Market strategy
7. Organizational development
8. Management team
Value proposition
“Why should the customer buy from you?” It's the primary reason someone
would buy a prospect from you. Explains how the company solves or enhances
consumer issues, provides unique advantages, tells the perfect consumer why they
should buy from you and not from the competition.
Successful e-commerce value propositions:

 Personalization/customization
 Reduction of product search, price discovery costs
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 Facilitation of transactions by managing product delivery
Revenue model
“How will you earn money?” A revenue model is a financial profit generating
system. This determines which source of revenue to seek, the value to give, how to
price the value and who is paying for the value. This is a central component of a
business model for an organization.
Market opportunity
“What marketspace do you intend to serve and what is its size?” It defines what
market room the organization plans to fill and the size of that room. It essentially refers
to the expected market space of the enterprise and the total future financial resources
available to the enterprise in that market room.
Competitive environment
“Who else occupies your intended marketspace?” It identifies the direct and
indirect rivals in the same market room that do similar business. The additional details,
for example, includes how big they are, their net income, their market room share and
the price of their product.
Influenced by:
 Number and size of active competitors
 Each competitor’s market share
 Competitors’ profitability
 Competitors’ pricing
Competitive advantage
“What special advantages does your firm bring to the marketspace?” It identifies
the factors that differentiate the business from its competition, and that that motivate
consumers to purchase the product or service of the company. For instance, the
company's product or service may be cheaper or of better quality than its competitors.
It's a skill or role that helps you to perform better than competitors. In a
competitive market, this is considered the basis for productivity. In other words,
businesses that do not have any advantages can only compete on costs.
Market strategy
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“How do you plan to promote your products or services to attract your target
audience?” This defines how the company aims to reach the market to retain clients to
potential customers to retain a target audience such as marketing the goods and
services.
Marketing strategy is a portion of your marketing plan that details the overall
game plan on how the company can locate and retain buyers or clients. ... For your
sales and marketing activities, your marketing plan depends on what you want to
accomplish.
Marketing strategy ways include: social media, video tutorials, blogging,

Facebook ads, LinkedIn.
Organizational development
“What types of organizational structures within the firm are necessary to carry out
the business plan?” This illustrates what types of organizational processes need to be in
place within the company to ensure that it is running smoothly and that all the required
work is done. It is a mechanism that helps companies improve through strategy,
influence, leadership, control, or job redesign changes. For example, the process of
identifying all the roles within a company and the skills required to accomplish each job,
as well as the process of recruiting and hiring productive staff
Describes how firms will organize work
 Typically, divided into functional departments
 As company grows, hiring moves from generalists to specialists
Management team
It defines which kinds of experiences and perspectives are important to the

leader of the business. For example, a strong management team may not be able to
save a poor business model, but should be able to change the business model and
redefine the company, and a strong management team would also give external
investors good credibility.
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Figure 3. The Eight Key Elements of Business Model [8]
E-commerce Enabler
ECommerce enabler is a company that runs an online shopping platform that

enables various merchants to search, purchase and buy on the merchant's website. The
business provides clothes, technology, travel, lifestyle, food and drink, home and living,
and general goods deals and discounts [1] [2] [8].
B2B Business Models
B2B e-commerce relies heavily on the so-called electronic data interchange

(EDI) technology. It is the electronic exchange of business information using a
standardized format; a mechanism that enables one company to electronically send
information to another company, rather than through paper.
 E-Distributor. It refers to a company which directly supplies products and

services to individual businesses.
 E-Procurement. It creates and sells access to the online digital markets. B2B
service providers make money through transaction fees, charges depending on
the number of workstations using the service, or annual licensing fees. It delivers
a sophisticated range of sourcing and supply chain management tools to buying
firms that enable businesses to cut supply chain costs (application service
provider or ASP). Through reaching economies of scale it can give companies
even lower computing costs. Scale economies are efficiencies arising from a rise
in a company size.
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 Exchanges. It is an independent digital electronic marketplace where suppliers
and business buyers can exchange.
 Industry consortia. Industry consortia are vertical marketplaces owned
by industry which serve specific industries such as the automotive,
aerospace, chemical, floral or logging industries. Horizontal marketplaces,
by comparison, offer similar goods and services to a wide variety of
businesses. Vertical marketplaces supply a limited number of companies
with goods and services of specific interest to their businesses, whereas
horizontal marketplaces supply companies in different industries with a
similar form of product and service, such as marketing, financial, or
computing.
 Private Industrial Network. It is a digital network designed to organize
the flow of information between companies engaged together in business.
A single, large buying firm owns the network. By invitation, participation is
only for reliable, long-term direct input suppliers. Usually such networks
grow from an enterprise resource planning (ERP) system.
Table1. B2B Business Models [2]
B2C Business Models

 E-tailer. It refers to a retailer selling goods via electronic transactions on the
Internet.
Variations:
 Virtual merchant
 Bricks-and-clicks
 Catalog merchant
 Manufacturer-direct
22
 Community provider (social network). It provides an online community (social
network) in which people with common interests can transact, share content. The
revenue model is typically hybrid, combining advertising, subscriptions, sales,
transaction fees, and so on.
 Content provider. A supplier of information presents data for external
applications as one or more tables similar to those found in a relational database.
It employs a number of models, including advertisement, subscription; digital
products sales. It distributes quality of information such as digital news, music,
images, video, and artwork.
 Portal. It is a website or web page providing access or links to other sites. The
revenue models are advertising, referral fees, transaction fees, subscriptions for
premium services.
 Transaction broker. The same legal and ethical requirements apply to a

transaction broker as a real estate agent representing individual buyers and
sellers. The revenue model is the transaction fees.
Industries using this model:

 Financial services
 Travel services
 Job placement services
 Market creator. They use Internet technology to build markets which bring
together buyers and sellers. Sources of this include eBay, Inc. and
Liquidation.com. Providers of resources. By offering a service, service providers
make profits. The revenue model come from transaction fees, fees to merchants
for access. Examples are Uber, Airbnb, Priceline and eBay.
 Service provider. It refers to a company that provides its subscribers access to

the Internet. Online services examples include Google (Google Maps, Gmail, and
so on). Valuable, easy, time-saving and cost-effective alternatives to
conventional service providers are value propositions. The revenue models
include sales of services, subscription fees, advertising, sales of marketing data.
23
Table2. B2C Business Models [2]
---------End of Topic 2----------
24
Name:_________________________________________ Score:_______________
answer.
Six Sigma 1. This is a method that helps to increase efficiency and decrease
process variability contribute to reduction of defects and improvement
of income, productivity of employees and product or service quality.
Organization 2. The mechanism that helps companies improve through strategy,
development influence, leadership, control, or job redesign changes.
Content provider 3. It virtualizes access to shared data services, such as databases locally
or remotely.
E-tailer 4. It is a retailer that primarily uses the Internet as a medium for
customers to shop
Market 5. The expected market space of the enterprise and the total future
opportunity financial resources available to the enterprise in that market room.
Value stream 6. Developed a constructive way of looking at the business processes of
the enterprise, or rather, of looking at the value flow without being
confused by established business process boundaries.
Portal 7. A page on the internet that allows people to get useful information.
Service provider 8. A company that provides its subscribers access to the Internet.
Logistical stream 9. It removes inefficiencies in paperwork and coordination that arise in
ordering processes
Competitive 10. Identifies factors which distinct the business from its competition and
advantage which encourage customers to buy the company's product or service.
Essay.
Question (5 points each):
1. How is it usually better for a Community Provider to target a business opportunity than to
target a broad market segment?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
2. What are some of the different ways in which a firm can achieve a competitive
advantage?
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
25
B. Topic 3
Topic Title: E-commerce Infrastructure
Introduction:
Owing to the highly competitive digital marketing landscape, running an E-

commerce company is more difficult. The job of companies is to decide which tactics
can work best for their businesses, and then they need to be able to adapt and resolve
different obstacles in order to be successful.
The business aspect of e-commerce requires a fast and simple method of

shopping and checkout, and a stable infrastructure that supports it. Choosing the right
kind of infrastructure, backed by a collection of services that keep things secure and
easy, can make a big difference in e-commerce business success. In terms of speed
and responsiveness, the infrastructure directly influences the level of service
encountered by the machine users.
Topic Objectives

 identify the hardware and software technologies used for the development of an
e-business network within an enterprise and its partners; and
 Identify the hardware and software specifications needed to allow employees to
access the Internet and host e-commerce services.
26
Topic 3 Pre-test
--------------------------------------------------------------------------------------------------------------------
Name:__________________________________________ Score:_______________
a. Create a list of possible technology problems that an online retailer's clients face.
1. __________________________________________________
2. __________________________________________________
3. __________________________________________________
4. __________________________________________________
5. __________________________________________________
b. List the problems facing consumers of e-business software that are either
internal or external to the organization.
1. __________________________________________________
2. __________________________________________________
3. __________________________________________________
4. __________________________________________________
5. __________________________________________________
27
Topic Contents
The Internet
The Internet is a network of thousands of networks and millions of computers
linking companies, educational institutions, government agencies and individuals. Such
devices are running network applications that communicate through copper or fiber
optic cables, radio, or satellite. Internet access is made accessible by Internet Service
Providers (ISP). These organizations devote machines to operate as servers-that is,
they make information accessible to Internet users. Any internet machine is known by
a distinct IP address. IP Address is a specific set of numbers that specifies a location for
the device. A special Domain Name Server (DNS) device is used to assign the IP
Address its name, so the user can find a device by name [2] [9].
Social networking sites like Facebook, Twitter, Yahoo, Google+, Flickr and Orkut
are the numerous applications which use the Internet as a communication tool.
Including contact and information source, internet also acts as a platform for
entertainment. Internet facilitates the use of other resources such as e-mail, Internet
banking, marital resources, online shopping, online booking of flights, electronic
payment of bills, data sharing.
The Evolution of Internet
Innovation Phase, 1964–1974

 Creation of fundamental building blocks
 Packet switching, TCP/IP, Client-server computing
Institutionalization Phase, 1975–1995

 Large institutions (NSF, DoD) provide funding and legitimization creating
ARPARNET
Commercialization Phase, 1995–present
 Private corporations take over, expand Internet backbone and local service
Components of Internet
1. Packet switching.
Packet switching is a way of transmitting the data in packet form to a
network. The data is divided into small pieces of variable length, called
Packet, in order to transmit the file quickly and efficiently over the network
and reduce the transmission latency.
2. Client/server computing
When client/server computing, the clients request a resource, and that
resource is supported by the server. A server can serve multiple clients
simultaneously while a client has only one server in touch. Typically, both the
client and the server communicate via a computer network but they can often
reside on the same device. Its functions include storing of files, software
applications, access to printers and other peripherals.
28
3. TCP/IP communications protocol
The Transmission Control Protocol (TCP) establishes links between Web
computers that send and receive. It manages packet assembly at the
transmitting point and reassembles at the receiving end.
Layers:
 Network Interface Layer. It is responsible for placing packets on
and receiving them from the network medium.
 Internet Layer. responsible for addressing, packaging, and routing
messages on the Internet.
 Transport Layer. responsible for providing communication with the
application by acknowledging and sequencing the packets to and
from the application.
 Application Layer. provides a wide variety of applications with the
ability to access the services of the lower layers.
Domain Names and Uniform Resource Locator [2] [10]

The Domain Name System is operated by the Internet Organization for Assigned
Names and Numbers (ICANN). This is a non-profit company that establishes and
implements the domain names policies.
Domain name is the website address that people type to access the Website in
the browser URL bar. The Internet is a vast network of computers linked by a global
cable network. Every machine is able to communicate with other computers on this
network. For recognize these, an IP address is assigned to each device. This is a set of
numbers representing a particular device on the internet.
The domain names can be used in several different extensions. The most
famous of those is the.com. There are plenty of other choices
including .org, .net,.tv,.info,.io, and more.
Types of domains:
1. Top Level Domain or TLD - are generic domain extensions that are listed at
the highest level in the domain name system.
E.g. .org, .com, .net, .biz, .info, .agency
2. Country Code Top Level Domain or ccTLD - are country specific domain
names which end with country code extension. E.g. Phippines (.ph), India (.in)
3. Sponsored Top Level Domain or sTLD - is a category of TLDs that has a
sponsor representing a specific community served by the domain extension.
E.g. education (.edu), government (.gov)
Domain names trade is a multi-million-dollar market. Because domain names are

so cheap, smart entrepreneurs are always searching for ideas to get their own hands on
great domain names.
Address used by Web browser to identify location of content on the Web is called
uniform resource locator or URL.
29
Limitations of Current Internet
1. Bandwidth limitations - The internet today is slow and unable to easily transfer
and view large files, such as video and voice files. (slow peak-hour service)
2. Quality of service limitations - Not all data packets arrive in the right order at the
same time, which creates delay called latency.
3. Network architecture limitations - identical requests are processed individually
(i.e.. Downloading a music track). Future upgrades to the Internet infrastructure
would improve the way in which servers process information requests and thus
increase overall efficiency.
4. Wired Internet - copper and expensive fiber-optic cables. The Internet is primarily
based on physical cables which limit user mobility.
5. Language development limitations. The nature of HTML restricts the quality of
“rich” information that can be shared online. Future languages will enable
improved display and viewing of video and graphics.
Wireless Internet Access Network Technologies
Wireless internet enables wireless internet access through radio waves instead
of cables on a person's computer, laptop, smartphone or similar mobile device.
Although most wireless Internet solutions lack the high speed of landline broadband
Internet services such as cable and DSL, the gap is narrowed by emerging wireless
technologies such as EV-DO and WiMAX, with theoretical speeds of up to 100 Mbps
per 20 MHz.
Wi-Fi or Wireless Fidelity

 uses radio waves to provide wireless high-speed Internet and network
connections
 High-speed, fixed broadband wireless LAN (WLAN)
 Wireless access point (“hot spots”)
 Limited range but inexpensive
 For-profit Wi-Fi networks: Boingo, AT&T Wi-Fi Services
 Victor “Vic” Hayes – the father of Wi-Fi & Dr. John O’Sullivan (invented Wi-Fi)
WiMax or Worldwide Interoperability for Microwave Access
 High-speed, medium range broadband wireless metropolitan area network (e.g.,
Baltimore, Portland, Houston, Atlanta)
 is a wireless broadband networking system built on the IEE 802.16 standard that
delivers high speed connectivity over a wide region.
Bluetooth
 Personal connectivity between devices and to Internet
 Low-speed, short range connection
Internet Protocols
 HyperText Transfer Protocol (HTTP) is the Internet protocol used to transfer Web
pages
30
 Simple Mail Transfer Protocol (SMTP) is the Internet protocol used to send e-
mail to a server.
 Post Office Protocol 3 (POP3) is a protocol used by the client to retrieve mail
from an Internet server.
 Internet Message Access Protocol (IMAP) a more current e-mail protocol that
allows users to search, organize, and filter their mail prior to downloading it from
the server
 File Transfer Protocol (FTP) is one of the original Internet services. It runs in
TCP/IP’s Application Layer and permits users to transfer files from a server to
their client computer, and vice versa.
 Telnet is a network protocol that also runs in TCP/IP’s Application Layer and is
used to allow remote login on another computer.
 Secure Sockets Layer (SSL)/Transport Layer Security (TLS) are protocols that
operate between the Transport and Application Layers of TCP/IP and secure
communications between the client and the server. SSL/TLS helps secure e-
commerce communications and payments through a variety of techniques, such
as message encryption and digital signatures
Organizations that govern the internet

 Internet Corporation for Assigned Names and Numbers (ICANN)
which coordinates specific identifier systems on the Internet: IP
addresses, registers of protocol parameters and top-level domain systems
 Internet Assigned Numbers Authority (IANA)
which is based at ICANN and in charge of IP addresses
 Internet Engineering Task Force (IETF)
which is a collaborative international group of network operators, vendors
and researchers interested in the development of internet infrastructure
and Internet service
 Internet Research Task Force (IRTF)
which focuses on Internet evolution and has a range of long-term research
groups focused on various topics, such as Internet protocols, software,
software, and technology
 Internet Engineering Steering Group (IESG)
which is responsible for the technical management of the IETF operations
and the development of Internet standards
 Internet Architecture Board (IAB)
which helps define the overall architecture of the Internet and oversees
the IETF and IRTF
 Internet Society (ISOC)
that is a network of companies, government agencies and non-profits
monitoring Internet policies and practices Internet Governance Forum
(IGF)
 Internet Governance Forum (IGF)
which is a multi-stakeholder open forum for debate on issues related to
Internet governance
 World Wide Web Consortium (W3C)
31
which is a largely academic group that sets HTML and other programming
standards for the Web
 Internet Network Operators Groups (NOGs)
which are informal groups that discuss and attempt to influence matters
related to Internet operations and regulation
Internet and Web Features
The Internet and the Web produced a variety of powerful software applications
on which the e-commerce foundations are designed [2].
 Email. It is the most-used Internet program. Uses a set of protocols to

allow the transmission of messages containing text, images, sound, and
video clips from one Internet user to another. It also requires attachments,
which are files that are included in the letter. The files can be records,
pictures, sounds or clips of videos.
 Instant messaging (IM), unlike e-mail, allows you to send messages in

real time, one line at a time. E-mail messages have a time lag between
sending and receiving messages of several seconds to minutes.
 Search engines recognize Web pages that tend to match keywords,

which are often called queries, entered by a user and then include a list of
the best matches (search results).
 Online forum also known as a message board, a newsletter board, a

discussion board, a discussion group or simply a board or forum) is a
software application that enables Internet users to connect with each
other, but not in real time.
 Online chat enables users to communicate via computer in real time, that
is, simultaneously
 Streaming media enables live Internet video, music, photos, and other
large-bandwidth files to be transmitted to users in a number of ways
enabling the user to play back the files.
 Cookie is a tool used by a Web site to store information about a user.

When a visitor enters a Web site, the site sends a small text file (the
cookie) to the user’s computer so that information from the site can be
loaded more quickly on future visits.
 Blog is a personal web page usually containing from its author a

collection of chronological entries (new to old) and links to similar web
32
pages. The blog may include a blogroll (a compilation of links to other
blogs) and trackbacks (a list of entries in other blogs that lead to a first
blog post).
 Really Simple Syndication (RSS). It allows users to have digital content,

including text, articles, blogs, and podcast audio files, automatically sent
to their computers over the Internet.
 Podcast is an audio presentation, such as a radio show, audio from a

film, or even a personal audio presentation that is recorded as an audio
file and posted online.
 Wiki is a Web application that allows a user to easily add and edit content
on a Web page.
33
-------End of Topic 3-------
--------------------------------------------------------------------------------------------------------------------
-
Name:_________________________________________ Score:_______________
True or False. Indicate whether each claim is true or false.
True 1. Interactivity for product differentiation changes the nature of business

by raising the hazard of substitutes.
False 2. In almost all countries e-commerce has reduced price competition.
False 3. Scale economies are efficiencies arising from the flattening of an
organization’s hierarchy.
True 4. SaaS and PaaS providers may provide services at lower costs
increasing economies of scale.
True 5. Universal standards on the Internet will change the nature of industry
by reducing barriers to entry and increasing competition within an
industry.
False 6. On-demand service companies are distinguished by free resource
sharing between the business and customers.
True 7. Global reach shifts in the structure of the industry by reducing barriers
to entry while at the same time continuing to expand the market.
True 8. TheSeam is an example of industry consortium.
False 9. E-distributors offer its customers value chain management software.
True 10. New media alter the nature of the industry by changing programming
and editorial decisions towards customers and producing alternative
goods for entertainment.
answer.
TCP 1. It establishes links between Web computers that send and receive.
Top Level 2. These are generic domain extensions that are listed at the highest
Domain level in the domain name system.
NOGs 3. The informal groups that discuss and attempt to influence matters
related to Internet operations and regulation
Transport Layer 4. responsible for providing communication with the application by
acknowledging and sequencing the packets to and from the
application.
ICANN 5. A non-profit company that establishes and implements the domain
names policies.
Cookie 6. It is a tool used by a Web site to store information about a user.
Victor Hayes 7. He is the father of Wi-Fi.
IP address 8. This is a unique set of numbers representing a particular device on the
34
internet.
sTLD 9. It is a category of TLDs which has a sponsor representing a particular
group served by the extension of the domain.
URL 10. The address used by Web browser to identify location of content on
the Web.
Essay.
Question (5 points):
1. How e-commerce technology impacted the function of the travel industry?

______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
35
Module 1 Project
1. Choose a company active in e-commerce. Find details about the management
team and organizational structure of the company. Visit their website and explain
their business model based on the details that you can find there. Identify its
consumer value proposition, its business model, the marketplace in which it
operates, who its key rivals are, any competitive advantages that you think the
organization has, and what it seems to be its market strategy. Create a
PowerPoint or a Video presentation.
2. Select an e-commerce company that has participated in an incubator program
such as OmetVs, TwinSlash, Get Me Rank,Y-Combinator, Asper Brothers,
TechStars, DreamIt Ventures, SoftLoft or any of your options and write a brief
report on its business model and the sum and funding sources it has raised to
date. Include your views about potential prospects for success for the company.
3. Prepare a research report on the present and possible future impacts of e-
commerce technologies on the food industry (3 to 5 pages).
36
MODULE 2
Module Title: INFRASTRUCTURE FOR E-COMMERCE APPLICATIONS
Overview
This module will cover e-commerce growth and will continue to change the retail
industry and influence the behaviors of customers. Topic1 describes the emergence of
e-commerce, systems development life cycle or SDLC methodology, e-commerce
software and hardware, and functionality of the e-commerce business application
program. Topic 2 outlines the e-commerce security systems, e-commerce security
environment, social network, mobile platform, and cloud security issues, and protecting
internet communications. Topic 3 focuses on e-commerce payment systems.
Module Objectives

 explain the process to follow when developing a presence in e-commerce;
 defines the problems involved in choosing the hardware most appropriate for an
e-commerce platform; and
 identify how technology protects the e-commerce environment.
Coverage:
A. Topic 1: The Emergence of E-commerce
B. Topic 2: E-commerce Security Systems
C. Topic 3: E-commerce Payment Systems
A. Topic 1
37
Topic Title: The Emergence of e-commerce
Introduction:
Scrutinize in this section the essential considerations that a manager needs to

remember when creating an e-commerce. The focus should be on management and
company decisions that need to be taken first and are constantly being made. This
focuses on both small, medium and large businesses serving thousands of customers a
day, or even an hour.
Planning and actually creating a website involve vision. It includes not only a
mission statement but also target customer recognition, market space, strategic
analysis, an Internet marketing map, and a timeline for growth. Company in general
concept earns income on ads, subscriptions, transaction fees, sales, and affiliate
income. The market structure is defined in terms of your direct competitors, suppliers
and substitute products. Content is what search engines index as they browse through
all the latest and updated Internet sites. It is the most important basis for sales and
overall success for the company. [1].
Topic Objectives

 identifies the systematic approach of building an e-commerce site;
 identifies the basic features needed for business application program; and
 understand the significant factors associated with the creation of a mobile
website and mobile applications.
38
Topic 1 Pre-test
--------------------------------------------------------------------------------------------------------------------
Name:__________________________________________ Score:_______________
a. List down 5 E-commerce sites
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
b. Enumerate 5 characteristics of a good E-commerce site
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
--------------------------------------------------------------------------------------------------------------------
39
Topic Contents
Systematic Approach of Building an E-commerce

Throughout the years, with the rising of smartphone users, mobile apps have
brought about a change in the way E-commerce now operates. Customer expectations
should be shaping product choices. The consumers want technology that allows them to
easily identify what they want, display the product, buy the product, and then quickly get
the product from warehouses. All are carefully considered in production projects for the
website or mobile apps. Businesses that incorporate mobile in their strategy will attract
a new form of customer and connect one instantly.
Figure 4.
The E-commerce Site Building Puzzle [2]
A team of individuals who possess the skill sets required to develop and operate
a productive e-commerce website would have to come together on the organizational
and human resources fronts. This team will make important decisions on company
priorities and strategy, technology, website design, and social media policy. To prevent
the failures that have occurred at some businesses, the entire development plan needs
to be handled carefully. Decisions must be taken on hardware, software and
telecommunications infrastructure.
System Development Life Cycle (SDLC)
40
The systems development life cycle or SDLC is a methodology for understanding
the business objectives of any system and designing an appropriate solution [2]. For an
e-commerce platform, the five main phases involve are system analysis and planning,
system design, system construction, testing, implementation and maintenance.
 System Analysis and planning. Ensure the technology platform aligns with
the company. Identified a corporate plan and selected a business model for
strategic objectives, then a list of system functionalities and information
requirements. Business objectives are simply capabilities want for a site to
have. System functionalities are categories of functionality in the information
systems used to meet business goals. The information requirements for a
system are the elements of knowledge that the system must generate in order
to meet the business goals. Such listings need to be given to system
developers and programmers to meet the standards of managers.
Table 3. Business Objectives, System Functionalities, and Information Requirements for

a Typical E-Commerce Site [2]
 System Design. It refers to the description of the main components in a

system and their relationship to one another.
2 Components
1. Logical Design. This contains a data flow diagram explaining
the information flow at your e-commerce site, the retrieval tasks
41
to be performed, and the databases to be used. It also provides
a summary of the security and emergency backup protocols to
be placed in place and the controls to be included in the
program.
2. Physical Design. The conceptual architecture is converted into
physical components. For example, the physical design details
the actual server model to purchase, the software to use, the
size of the telecommunications connection that will be needed,
how the device will be backed up and secured from outsiders,
etc.
 System Construction. Options vary from outsourcing anything (including the

actual research and design of the systems) to constructing anything (in-
house). Outsourcing means that the organization employs an outsourcer to
provide the services involved in the building of the site rather than employing
in-house workers.
Website isn't a sales-oriented platform that needs a shopping cart,
WordPress is one of the least costly and commonly used platforms building
devices. WordPress is a blogging platform whose content management
framework is sophisticated. A content management system (CMS) is a
database software program designed specifically for the management of
structured and unstructured data and objects in a Web site environment. A
CMS offers a centralized control system for Web managers and designers to
handle Web site content. WordPress also has thousands of user-built plug-ins
and gadgets which you can use to expand a website's functionality
The organization wants to "co-locate" too. In a "co-location
agreement," a firm buys or rents a Web server (and has full control over its
operation), but locates the server in the physical facility of a provider. The
vendor has the facility, communications lines, and machinery in place. Co-
location grew with the spread of virtualization, where one server has multiple
processors (4 to 16) and with different operating systems can run several
websites at once [2].
 Testing. Testing whether the system is being outsourced or developed in-

house is needed. A complex e-commerce platform may have thousands of
paths through the web, each having to be recorded and then reviewed.
Unit testing includes one-on-one monitoring of the site's software
modules. System testing includes the platform as a whole being tested, in
the same way a normal user does be using the platform. Final acceptance
testing involves the key staff and managers in marketing, production,
distribution and general management of the business to personally use the
program as built on an Internet check or intranet server. This acceptance test
verifies that the system's business goals, as originally conceived, actually
work [2].
42
 Implementation and Maintenance. E-commerce sites are still experiencing
a phase of transition, enhancement and rectification. The annual cost of
device maintenance would typically be approximately parallel to the cost of
growth. A $40,000 e-commerce platform would likely require annual spending
of $40,000 to maintain. Very large e-commerce sites are experiencing several
economies of scale, such that, for example, a $1 million site would possibly
need $500,000 to $700,000 in maintenance budget [2].
E-commerce hardware and software

Business manager responsible for website development, need to learn some
basic hardware and software details. In e-commerce, a customer refers to a customer
who requests certain services, and the server refers to the business application which
provides the services.
 System architecture. Refers to the arrangement of software, machinery and
tasks in an information system needed to achieve a specific functionality.
 two-tier architecture. E-commerce system architecture in which a
Web server responds to web pages requests and a database server
provides backend storage of data [2]. The user interface operates on
the client in two-tiered client-server architecture, and the database is
stored on the server. The logic of business applications can run on
either the client or the server. The logic of user applications will run
either on the client or on the server. This allows the client processes to
run on specific machines independently from the server processes [1]
[11].
 multi-tier architecture. E-commerce network architecture in which the
Web server is connected to a middle layer usually comprising a series
of application servers performing different tasks, as well as a backend
layer of existing corporate systems [2]. It is a software architecture in
which dedicated functionality is provided by various software
components, arranged in thirds (layers). It consists of one or more
database servers, an application tier and interface features. [1] [11].
 Web application servers. It is used to host a website for e-commerce that
stored all the Html, JavaScript, PHP files, databases, media files which make
up the entire website. Those are software programs which provide the
specific business functionality that a website need. Database servers' basic
concept is to separate business applications from the details of presenting
Web pages to front end users and the details of connecting to back end
databases [2].
 Site management tools. It verifies that links on pages are still valid and also
identify orphan files.
 Dynamic page generation. The content of a Web page is stored in a
database as objects, rather than hard-coded in HTML. When a web page is
requested by the user, the content of that page will be retrieved from the
database.
43
Functionality of the e-commerce business application program
E-commerce merchant server software offers the basic features needed for
online transactions, including an online store, online shopping cart ordering and online
credit card processing.
 Online catalog. It refers to the list of products available on a Web site

 Shopping cart. This enables shoppers to set aside desired purchases in
preparation for checkout, review what they have selected, edit their choices as
required and then actually make the purchase by clicking a button
 Credit card processing. This verifies the credit card of the shopper and then at
checkout places the debit to the card and the credit to the account of the
company.
 E-commerce server suite. It provides an optimized environment that aims to
provide most or all of the features and capabilities that a sophisticated, customer-
centric site requires to grow. A built-in shopping cart that can view goods, handle
orders, and simple credit card transactions is an essential element of merchant
software packages.
 Analytics. Keep track of user activities on the web and the progress of Internet
advertisement campaign. Google Analytics will be used if there is an
advertisement on Google which offers good monitoring tools; such services
would also be offered by most hosting companies. Other computational
resources for open source use include Piwik, CrawlTrack, and Open Web
Analytics.
Resizing Hardware Platform
The Demand Side

The hardware platform applies to all the underlying computer equipment used by
the device to perform its e-commerce functions. Your target is to have enough platform
capacity to satisfy peak demand (avoiding a state of overload), but not so much platform
that you are wasting money [2].
A typical user-initiated web session is stateless, meaning that the server does not
need to maintain a constant, dedicated connection with the client. It usually begins with
a request for a link, then a server responds, and the session is terminated. The
sessions through last from one tenth of a second per user to one minute. However,
system efficiency is deteriorating as more and more users are demanding service at the
same time.
The Supply Side
44
Scalability is an important factor when choosing to host a Web site. Scalability
refers to a site's ability to rise in size as demand needs. There are three steps you can
take to satisfy the site's service demands: scale vertically the hardware, scale
horizontally the hardware and/or enhance the site's processing architecture. Vertical
scaling ensures the computing power of individual components is increased. Horizontal
scaling requires the use of several machines for sharing the workload.
Basic Business Considerations in E-commerce sites
Features that upsets the customers [2]

 Requiring user to view ad or Flash introduction before going to Web site content
 Pop-up and pop-under ads and windows
 Too many clicks to get to the content
 Links that don’t work
 Confusing navigation; no search function
 Requirement to register and log in before viewing content or ordering
 Slow loading pages
 Content that is out of date
Successful E-commerce Site Design [2]

 Functionality. Pages that work, load quickly, and point the customer toward your
product offerings
 Informational. Links that customers can easily find to discover more about
company and the products
 Easy to use navigation.
 Alternative navigation to the same content.
 Easy to purchase.
 Site works with the most popular browsers
 Avoids distracting, obnoxious graphics and sounds that the user cannot control
 Avoids backgrounds that distort text or make it illegible
Mobile Web Presence
45
Table 4. Systems Analysis for Building a Mobile Presence [2]
Unless the aim is to increase sales, advertise, or gather reviews on specific

items, both of which include an online product database, then a mobile website or
mobile web app is preferred because there is no need for high-speed interactions, and
these goals are often just an extension of the main desktop website [2].
---------End of Topic 1----------
Name:_________________________________________ Score:_______________
True 1. In the past decade, the costs of equipment, software, and

telecommunications infrastructure required to create a website have
declined drastically.
False 2. Generation of interactive web pages reduces menu costs.
False 3. A list server is an application server that is used to provide the product
information and prices database.
True 4. Social media is ideally suited to creating a continuous communication
with one's clients.
True 5. The annual cost of maintaining a Web site is likely to be as high as the
46
cost of growth.
False 6. Defining the technology platform is the first step in turning the
company's e-commerce strategy into a functional e-commerce site.
True 7. Web pages mainly provided static content prior to the growth of e-
commerce.
True 8. The software used on the Web server does not greatly affect how web
pages of a Web site appear on computers of users.
False 9. Upgrading a server from a single processor to multiple processors is
one example of horizontally scaling the site.
True 10. Using prebuilt models is one of the most cost-effective options when
designing a web site.
answer.
two-tier 1. It is the direct contact between the client and the server.
architecture
Systems design 2. It establishes an organizational strategy and selected a business
and planning model for strategic objectives, then a list of software features and
information needs.
Physical design 3. These are descriptions of the actual server model to purchase, the
software to use, the size of the telecommunications link to be required,
how to back up and protect the system from outsiders, etc.
Acceptance 4. This requires the main staff and managers in the company's
testing marketing, manufacturing, distribution and general management to
use the software as installed on an internet search or intranet server in
person.
Co-location 5. It refers to a license arrangement between and by the tenant and the
agreement client of the placement.
CMS 6. It is a software that makes content easier to develop, edit, organize,
and publish.
Logical design 7. It also outlines the security and emergency backup procedures to be
placed in place and the checks to be included in the system.
Demand side 8. The hardware architecture refers to all the underlying computing
equipment which the device uses to perform its e-commerce functions.
stateless 9. It means that the server does not need to maintain a constant,
dedicated connection with the client
Unit testing 10. Testing that includes one-on-one monitoring of the site's software
modules.
47
B. Topic 2
Topic Title: The E-commerce Security Systems
Introduction:
Scrutinize in this section the essential considerations that a manager needs to

remember when creating an e-commerce. Applications for e-commerce that manage
payments such as online banking, electronic transfers, debit and credit cards, PayPal or
other tokens are at risk of being targeted with greater implications of data loss or
modification. The e-commerce industry is gradually solving security issues on its
internal networks. Guidelines are available to read and enforce for the e-commerce
systems staff to protect systems and networks [12].
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With the rise of identity theft and impersonation, privacy has become a main
concern for consumers and any consumer concern must be treated as a major concern
for e-commerce providers. If a transaction is secure it is assumed to be safe from attack
or corruption. In this sense, the right of a person to keep his or her identity confidential
during a transaction is privacy. An anonymous transaction, using cash as a means of
payment, preserves privacy but the transaction is not protected. Credit cards on the
other hand offer insurance but not privacy.
Topic Objectives

 describes online security issues;
 understand the importance and scope of security E-commerce information
systems; and
 describes the information assurance security principles.
Topic 2 Pre-test
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Name:__________________________________________ Score:_______________
a. List down 5 E-commerce security issues
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
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4. ________________________________________________
5. ________________________________________________
b. Why and how are social networks being attacked? (5 points)
____________________________________________________________________________
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Topic Contents
E-commerce Security Environment

Security is one of the continuing issues restricting e-commerce customers and
organizations. E-commerce website includes an internal network which could connect
with the World Wide Web. E-commerce presented to the organization both external and
internal threats, as well as the website to which it relates. External threats to the e-
commerce website come from various sources that involve both the electronic economic
environment and the risks associated with external internet. Through DoS intrusion,
intruders pose a security threat to the network that can overpower the website or theft
private financial information after gaining access to the internal system via
vulnerabilities on the e-commerce site [12].
Information assurance which focuses on ensuring information and systems
availability, honesty, authentication, confidentiality, and non-repudiation. These steps
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can include ensuring information systems are restored by integrating capabilities for
security, identification, and reaction.
E-commerce Security Dimensions
Security in e-commerce has six main dimensions: integrity, non-repudiation,

authenticity, confidentiality, privacy and accessibility [2] [12].
Integrity refers to the ability to ensure that an unauthorized party has not in any
way altered the information being displayed on a website or distributed or received over
the Internet. For example, if an unauthorized party intercepts and alters the content of
an electronic communication, for instance by redirecting a bank wire transfer to another
account, the credibility of the message has been compromised, because the
correspondence no longer reflects what the original sender intended [2].
Non-repudiation refers to the ability to ensure participants in e-commerce do not

deny their actions online. For example, the availability of free email accounts with alias
names makes it easy for a person to post comments or submit a message and maybe
later deny that they do [2]. Repudiation implies rejection. Non-repudiation is also a legal
concept, which instructs players not to deny their acts in a transaction. The company
and the customer should be following through on the part of the deal they initiated. With
no live video, e-commerce will feel less secure because it occurs in cyberspace. Non-
repudiation offers yet another layer of protection for e-commerce. It indicates that the
contact between the two players actually reached the receivers. Therefore, a party
cannot refuse a signature, email, or purchase in that particular transaction [13].
Nonrepudiation involves several assurances, including providing proof of delivery from
the sender and
proof of sender and recipient identities and the identity of the delivery company [14].
Authenticity refers to the ability to recognize the identity of an individual or

organization you communicate with online [2]. Authentication is the act of positive
identification, coupled with a degree of confidence before the individual or station has
been positively identified to be granted specific rights or privileges [13].
Confidentiality refers to the right to ensure communications and data are only
available to those allowed to display them. Confidentiality is often confused with
privacy, which refers to an e-commerce seller being able to monitor the use of
information that a customer receives about himself or herself [2]. None other than the
online seller a customer has selected will access their personal information and account
data [13].
The ability to ensure that an e-commerce platform continues to work as expected

is reflected in accessibility [12]. Ensure that the user has access to systems and
information as needed, and that the site continues to work. Proper equipment, software,
and procedures ensure availability [14].
E-commerce Security Issues

51
These are common e-commerce security issues [13]:
 Lack of trust in the privacy and e-commerce security
 Counterfeit sites. Hackers of counterfeit sites can easily create fake
versions of legitimate websites without incurring any costs. Hence, the
business concerned could suffer significant harm to its reputations and
valuations.
 Malicious alterations to websites. A few fraudsters change a website's
content. They typically attempt to either attract traffic to a competing
website or to damage the image of the affected business.
 Theft of clients’ data. The e-commerce market is full of cases where
criminals have stolen personal data from consumers, such as emails and
credit card numbers.
 Damages to networks of computers. The perpetrators could damage
the online store of a company using worm attacks or viruses.
 Denial of service. Few hackers prevent the use of the online store by
legit users, causing a reduction in its functioning.
 Fraudulent access to sensitive data. The perpetrators can obtain
intellectual property and steal, destroy, or modify it to match their
malicious objectives.
 Malware, viruses, and online frauds [2]
Malicious code or "malware" contains a variety of threats including
viruses, worms, Trojan horses, ransomware, and bots. Any malicious code, also
called an exploit, is designed to take advantage of vulnerabilities in a computer's
operating system, web browser, applications or other software components.
A drive-by-download is malware that comes with a downloaded file that a
user request either intentionally or unintentionally. Drive-by is one of the most
popular computer-infection methods now.
A virus is a computer program which can replicate or copy itself, and
spread to other files. Besides the potential to replicate, most computer viruses
provide a "payload." The payload may be relatively benign, such as displaying a
message or image, or it may be highly destructive — destroying files,
reformatting the computer's hard drive, or causing unsatisfactory running of
programs.
A worm is a malware that is designed to spread from computer to
computer. Ransomware (scareware) is a type of malware that locks computer or
files (often a worm) to stop from accessing them. It is a malware that prevents
access to computers or files, and requires to pay a fine.
A Trojan horse seems harmless, but then does something different than
expected. The Trojan horse is not itself a virus since it does not replicate, but is
often a way for the introduction into a computer system of viruses or other
malicious code such as bots or rootkits (a software whose purpose is to subvert
control of the computer's operating system).
A backdoor is a feature of viruses, worms and trojans which enables an
attacker to access a compromised computer remotely. Downadup is an example
of a worm with a backdoor, while Virut, a virus that infects different types of files,
also includes a backdoor to download and install additional threats.
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Bots (short for robots) are a kind of malicious code that can be installed
covertly on your device while linked to the Internet. Botnets contain about 90
percent of the world's email, and 80 percent of the world's malware.
Botnets are clusters of captured computers used for malicious activities
such as sending spam, engaging in a DDoS attack, stealing computer
information and storing later analyzing network traffic.
Adware is typically used to call for pop-up ads to display when the user
visits certain sites. On the other hand, spyware can be used to obtain
information such as keystrokes of a user, copies of emails and instant messages
and even take screenshots.
A browser parasite is a program that can track and modify the browser
settings of a user, for example, by modifying the home page of the browser, or by
submitting information about the sites visited on a remote device.
Phishing is any complicated, online third-party attempt to obtain
confidential information for financial gain. Phishing attacks usually involve no
malicious code but rely instead on straightforward misrepresentation and fraud
 Uncertainty and complexity of the transactions online

In basic transaction operations online customers face confusion and
difficulty. This include payment, dispute settlement, and distribution. They're likely
to fall into the hands of fraudsters at those stages.
Hacking, Cybervandalism, Hacktivism, Data Breaches, and Cyberespionage
A cybercriminal is a person who uses technology to commit a crime against that

person that could be prosecuted. Usually, the offense includes illegally accessing one or
more computer systems to steal information, take it offline or both, either for malicious
purposes or for financial benefit. Computer networking involves hacking, and a hacker
can be considered a form of cybercrime [2] [14].
 Hacker is a person attempting to gain unauthorized access to a computer
system. The word cracker is usually used within the hacking community to
describe a hacker with criminal intent.
 Hackers have malicious intentions of disrupting, defacing or damaging sites
(cybervandalism) or stealing personal or corporate information which they may
use for financial gain or data breach.
 Cybervandalism is a damage or loss occurring in digital form. It produces
malware that destroys electronic files or elements that disrupt their usual use or
delete a disk drive that disables a computer device. It can have a dramatic effect
on companies, including consumers' ability to access services, and financial loss
or effects on brand or credibility.
 Types of Digital Vandalism
Damaging system elements. Cybervandalism that hit a business in
the form of a damaging item of a system to interrupt its usual use. A
distributed denial of service (DDoS) can occur when this happens.
A DdoS simply means that service was disrupted due to some sort
of digital vandalism from a company. This can be achieved by
53
cyber criminals creating and sending malware that disables
something from a co-worker
Damaging computer hardware. It happens when a disk drive is
removed to try to deactivate a computer device. This can happen
internally from a disgruntled employee or externally through a
hacker attempting to steal data or intellectual property from the
company. In this respect, the organization is not only experiencing
the loss of equipment that damages a computer system or network,
but also the loss of valuable information that can cause financial
harm
Defacing websites. Any time a cybercriminal updates or appears on
a website, it is considered as defacing a website.
 Hacktivism is a politically motivated cybervandalism and data theft. Corporate
security departments often use groupings of hackers called tiger teams to check
their own safety measures.
 white hats “good” hackers who help organizations locate and fix security
flaws
 black hats are hackers who engage in the same kinds of activities but
without pay or any buy-in from the targeted organization, and with the
intention of causing harm. They break into Web sites and reveal the
confidential or proprietary information they find.
 grey hats, hackers who believe they are pursuing some greater good by
breaking in and revealing system flaws. Grey hats discover weaknesses in
a system’s security, and then publish the weakness without disrupting the
site or attempting to profit from their finds.
 Data breach occurs whenever organizations lose control over corporate
information to outsiders. It is an event where sensitive or safe information is
exposed. It includes Social Security System number loss or theft, bank account,
debit or credit card numbers, personal health information, passwords, or email. It
can be accidental or intentional.
 Cyberespionage refers to the use of a computer network for illegal surveillance.
Espionage means having secrets without the knowledge holder's permission
Spoofing, Pharming, and Spam (Junk) Web Sites
Spoofing involves trying to hide a true identity by using an e-mail or IP address

from someone else. Sometimes spoofing a website involves pharming, automatically
redirecting a Web link to an address other than the intended one, with the site being
masked as the intended destination. Spam or junk websites are sometimes referred to
as link farms, too. These are sites which claim to provide some product or service, but
are in reality just a series of advertisements for other sites, some of which contain
malicious code.
54
Social Network, Mobile Platform, and Cloud Security Issues
Social networking can be the Internet's most important area, but being
transparent and social raises legitimate issues about privacy and protection.
Notwithstanding these justifiable security concerns over the Web, some of the reasons
that compromise a person's social media account are self-induced. Increase security of
social media account by logging out at all times when you step away from your
computer or laptop. It's best to go one step further and shut down the tab used to
access the account. Viruses and malware sometimes find their way through those
distracting but at times tempting advertisements on your computer. Nevertheless, if an
offer looks good to be true on the Web, then it is actually real don't click. It can be risky
to communicate and exchange details with people who you don't know. Do not allow
duplicate requests, but check with the 'true' person to see if the request is valid. All the
various games and devices are a part of the appeal of social media sites. Even though
a significant number of them are free, you give the app some degree of permission
regarding your details. Before agreeing to the terms, ensure that you know what the app
is viewing and sharing [15].
Security risks to mobile devices are on the rise. Kaspersky has detected nearly
3.5 million pieces of malware on more than 1 million user devices in 2014. By 2017,
Kaspersky's processing of in-lab detection technologies exceeded 360,000 malicious
files a day. And 78 percent of those files were malware programs, meaning that more
than 280,000 files of malware were detected per day many of which are targeting
mobile devices. Mobile applications are also the source of unintended data leakage.
"Riskware" apps, for example, present a real problem for mobile users who grant them
broad permissions but don't always check protection. Usually, these are free apps found
in official app stores that work as advertised, send personal and potentially corporate
data to a remote server, where advertisers and cybercriminals manipulate it. If wireless
hot spots are available nobody wants to burn through their cellular data, but free Wi-Fi
networks are typically unsecured. To be secure, make sparing use of free Wi-Fi on your
mobile device. And never use it to access private or confidential resources, such as
banking or credit card information. Network spoofing is when hackers set up fake
access points connections that look like Wi-Fi networks but are in fact traps in high-
traffic public places like coffee shops, libraries, and airports. In certain cases, attackers
allow users to build a "wallet" complete with a password to access certain free services.
Since mobile devices are still powered-on, most phishing attacks are front lines. A
broken cryptography can occur when developing apps use weak encryption algorithms,
or fail to implement strong encryption properly. In the first example, developers may use
common encryption algorithms to speed up the process of app creation, given their
known vulnerabilities. Any motivated attacker can then exploit the vulnerabilities to
break passwords and gain access [16].
Cloud computing includes an Internet network of remote servers. It provides
computer-based tools and frameworks for outsourcing that allow for specific services to
different customers, such as application-based systems. Employee negligence and
unauthorized access through abuse of employee credentials are two of cloud
computing's main security threats. The lack of visibility increases the security risk of the
public cloud which the result in unauthorized access to data, improper handling which
replication of data contributing to the removal of sensitive data from infrastructure.
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Application programming interfaces (APIs) help clients customize their experience in the
cloud. However, due to their nature, APIs can present a threat to cloud security. They
not only give businesses the opportunity to customize the functionality of their cloud
services to fit business needs; they also provide data identification, access, and efficient
data encryption. Because of complex networks and various third-party applications, the
cloud infrastructure is often vulnerable to device vulnerabilities. Once hackers –
exposed by an automated third-party program – are aware of the weakness, they can
easily use the loophole to penetrate the infrastructure [17].
Protecting Internet Communications

There are a range of techniques available for protecting Internet communications
confidentiality, the most important of which is encryption of messages.
 Encryption is the process of transforming plain text or data into cipher text
which nobody other than the sender and the receiver can read. The purpose
of encryption is to (a) secure stored information, and (b) secure the
transmission of information.
 Cipher text is a text encrypted and thus cannot be read by someone other
than the sender and the receiver.
 Key (cipher) is any method used to convert plain text to cipher text
 Substitution cipher every occurrence of a given letter is replaced
systematically by another letter
 Transposition cipher the ordering of the letters in each word is changed in
some systematic way
 Symmetric key encryption or secret key encryption. both the sender and the
receiver use the same key to encrypt and decrypt the message.
 Two mathematically connected digital keys are used in public key
cryptography: a public key, and a private key. The owner keeps the private
key safe, and the public key is widely disseminated. A message can be
encrypted and decrypted using both keys. If the key is used to encrypt a
message, however, the same key cannot be used to unencrypt the message.
 Digital envelope is a technique that uses symmetric encryption for large
documents, but public key encryption to encrypt and send the symmetric key.
 Digital certificate is a digital document issued by a trusted third-party
institution known as a certification authority (CA) that contains the name of
the subject or company, the subject’s public key, a digital certificate serial
number, an expiration date, an issuance date, the digital signature of the
certification authority (the name of the CA encrypted using the CA’s private
key), and other identifying information.
 Public Key Infrastructure (PKI) refers to the CAs and digital certificate
procedures which all parties accept. After signing into a "safe" site, the URL
will start with "https" and a closed lock icon appears on your browser. This
means a digital certificate issued by a trusted CA is available on the site.
Presumably, it is not a spoof site.
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Table 5. A Simple Case of Public Key Cryptography [2]
The sender encrypts a message using the recipient's public key, and then sends
it over the internet, in the simplest use of public key cryptography. The receiver is the
only person who can decrypt this letter, using his / her private key. This simple case,
however, does not provide for honesty or an objective message [2].
A hash function is an algorithm that produces a number with a fixed length called
a hash or a digest message. A hash function can be simple, and count the number of
digital 1s in a message, or it can be more complex, and produce a 128-bit number
reflecting 0s and 1s, 00s and 11s, and so on [2].
The sender encrypts the entire block of cipher text once more using the private
key of the sender to ensure the authenticity of the message, and to ensure non-
repudiation. This creates a digital signature (also known as an e-signature) or cipher
text that can be sent over the Internet [2].
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Table 6. Public Key Cryptography with Digital Signature [2]
A more practical use of public key cryptography uses hash functions and digital
signatures both to ensure the message is secure and to authenticate the sender. The
only person who might have sent the above message using his / her private key is the
owner or the sender. This gets the message authenticated. The hash function ensures
the message in transit has not been altered. As before, the receiver, using his / her
private key, is the only one who can decode the message [2].
The Drivers of E-commerce Security Management
The effectiveness of an e-commerce security policy and system depends on

senior management engagement and participation. Many types of protection are
common, because they are inconvenient, restrictive, time-consuming, and expensive.
When required, security procedures cannot be a top organization’s priority [14].
The creation of an organizational EC security strategy, as well as procedures for
common security and e-commerce operations such as access control and customer
data protection, is an important safety activity. Customer should: know that data is being
collected and when it is being collected; allow data collection; have knowledge and
control over how data is being processed and used; and be told that the collected
knowledge is not to be shared with other organizations. You can: create policies and
procedures to maximize incentives, but have consumer protection; inform workers and
others on what is appropriate and what is not appropriate.
---------End of Topic 2----------
Name:_________________________________________ Score:_______________
True 1. Privacy activists endorse advertising networks as they protect

individual users' privacy.
False 2. A cyberwar happens when computers are set up to target other
computers within the same organization or another.
True 3. The effectiveness of the policy and system of e-commerce protection
depends on the commitment of the senior management.
False 4. Botnet is a program which appears to have a useful purpose but which
contains a secret purpose which poses security risk.
False 5. General controls are intended to protect unique applications.
True 6. Viruses in the network can reach through unsecure ports and
compromise the entire network.
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True 7. A malicious hacker who may represent a serious problem for a
corporation best describes a cracker.
True 8. Risk is best defined by the likelihood that vulnerability will be known
and used.
False 9. A detection system for intrusion uses the public Internet to carry
information, but remains private with the use of encryption,
authentication, and access control to verify the identity of someone
using the Internet.
False 10. Detection mechanisms are acts that would lead offenders to abandon
the concept of targeting a specific device.
answer.
Adware 1. Usually, when the user visits other pages, it is used to call for pop-up
advertising to turn up.
Black hats 2. They are hackers engaged in the same kinds of activities but without
pay or any buy-in from the targeted company, with the intention of
causing harm.
Phishing 3. These are attacks that normally require no malicious code but rather
rely on clear misrepresentation and fraud.
denial of service 4. A service has been disrupted due to some kind of digital vandalism
(DDoS) from a business created by cyber criminals developing and sending
malware that disables a coworker
Ransomware 5. It is a kind of malware which locks computers or files to stop accessing
(scareware) them.
Encryption 6. It is the method of converting plain text or data into cipher text which
cannot be read by anyone other than the sender and the receiver.
Cloud computing 7. It provides computer-based tools and outsourcing frameworks that
allow for specific services for various customers, such as application-
based systems,
Data breach 8. It is an occurrence for the disclosure of confidential or secure
information.
Spam/Junk 9. These are sites that appear to have some product or service but are in
mails reality only a series of advertisements for other pages, some of which
contain malicious code.
Digital Signature 10. It is an electronic, authenticated verification stamp on digital
information such as e-mail addresses, macros or electronic documents
originating from the signer and has not been changed.
Essay.
Question (5 points):
1. Give an example of security breaches, as they apply to each of the six e-commerce
security dimensions. For example, what would be an incident relating to privacy?
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C. Topic 3
Topic Title: The E-commerce Payment Systems
Introduction:
The concept for e-commerce has changed the way business is conducted in a
digital world. It is not all electronic online payment. There are many application areas
such as banking, advertising, including electronic distribution, sales, marketing,
production, management, and distribution portals.
Electronic Payment is a financial exchange between buyers and sellers which

takes place online. The content of this transaction is typically some type of digital
financial instrument such as encrypted credit card numbers, electronic checks or digital
cash backed up by a bank or intermediary, or through a legal tender. The payment
processes a bank offers to a business have dramatically changed. The Organization will
60
now deposit money directly into the bank account of its workers. Those transfers are
made via Automated Transfer Houses.
Topic Objectives

 identifies forms of payments;
 explains anti-fraud tools; and
 describes electronic payment system requirements.
Topic 3 Pre-test
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Name:__________________________________________ Score:_______________
a. List down 5 E-commerce security issues
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
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5. ________________________________________________
b. Why and how are social networks being attacked? (5 points)
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Topic Contents
Payment Systems
There are five main forms of payment systems: cash, transfer checks, credit
cards, stored value and balance accumulation [2].
 Cash. In terms of number of transactions, it is legal tender specified by a
national authority to reflect interest, is the most common form of payment. The
main characteristic of cash is that it is immediately convertible into other types of
money without any other entity being intermediated. Cash is portable, doesn't
require verification, and gives instant buying power to those who own it. It lets
you make micropayments. Cash use is "free" because neither retailers nor
customers pay a transaction charge to use it. It needs no supplementary
properties, such as special hardware or account life, and it imposes very low
cognitive demands on the user. It does not have a float (the time between the
transaction and the final payment for the transaction); is gone when it is spent.
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 Checking transfer. It represents funds transferred directly to a merchant or
other person via a signed draft or checking from a consumer's checking account.
Checks may be used for both large and small transactions, but they are not
commonly used for micropayments. Checks have some float, and interest can be
gained on unspent balances. It also poses security risks for merchants: They can
be stolen more easily than cash, so it requires authentication.
 Credit cards. It represents an account that extends credit to customers, allows

consumers to buy goods while postponing payment and allows consumers to
make purchases with one instrument to several vendors. Payment card
companies such as Visa and MasterCard are non-profit organizations that set
guidelines for issuing banks such as Citibank that actually issue credit card
transactions and process them.
 Stored value. It refers to an account created by depositing funds into an account

and from which funds are paid out or withdrawn as needed. Debit cards
immediately debit a checking or other demand-deposit account.
 Accumulating Balance. Accounts which incur spending and to which

consumers make frequent payments incur balancing systems. Traditional
examples include utility, telephone, etc.
E-commerce Payment Systems
 Online Credit Card Transactions
Since electronic payment is the dominant type of credit and debit cards, it
is important to understand how they function and to identify the strengths and
limitations of this payment system. Digital credit card transactions are handled in
almost the same manner as in-store payments are, with the only variations being
that online retailers never see the actual card being used, no card image is taken
and there is no signature. Digital purchases by credit card most closely mimic
purchases via Mail Order-Telephone Order (MOTO). Such types of purchases
are often referred to as Cardholder Not Present (CNP) transactions, and are the
main reason why customers can later challenge charges. Because the merchant
never sees the credit card or receives a hand-signed payment document from
the client, the merchant faces the possibility that the transaction will be
disallowed and reversed, even if the merchant has already delivered the products
or downloaded a digital product from the consumer. A merchant account is
essentially a bank account that allows businesses to accept payments by credit
card and collect funds from those transactions. [2].
 Credit Card E-commerce Enablers
Companies who have a merchant account also need to buy or create a

means to manage the electronic transaction; acquiring the merchant account is
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just one step in a two-part process. Today, providers of Internet payment
services or payment gateways provide both a merchant account and the
technological resources required to process online transactions of credit cards.
 Alternative Online Payment Systems
Online stored value payment system allows customers to make

immediate, electronic payments to retailers and other persons based on the
value held in the online account.
 Mobile Payment Systems or Smartphone Wallet
Mobile payment is a specific term for smartphone powered payment that

requires the use of Near Field Communication or NFC, Bluetooth and QR codes
for mobile wallets. Digital wallet tends to apply to online services while
smartphone emphasis is on e-wallets and mobile wallets. Mobile payment
technology can include mobile banking applications, with individual banks
developing apps.
NFC allows communication without physical contact between a phone and
a payment terminal, allowing for the exchange of small pieces of data through
radio waves.
 Digital Cash and Virtual Currencies
Digital cash an alternative payment system in which unique, authenticated

tokens represent cash value. That is, there's no way to get buyer information
when a digital cash amount is sent from a customer to a seller. This is one of the
main distinctions between credit card and digital cash systems. The main
distinction is the possibility of reusing a digital cash certificate.
Electronic Billing and Payment
Electronic billing presentment and payment (EBPP) systems are systems

which allow monthly bills to be delivered online and paid for. EBPP services enable
customers to display bills remotely and pay for them via transfers from bank or credit
card accounts through electronic funds [2].
The following table aims to restart some of the key aspects or functionalities
obtained from various sources that need to be tackled by electronic payments in order
to be easily incorporated into the applications for online commerce.
Major players in the EBPP marketspace include:

 Biller-direct systems, which were originally created by large utilities to facilitate
routine payment of utility bills, but which are increasingly being used by other
billers.
 Consolidators, which attempt to aggregate all bills for consumers in one place
and ideally permit one-stop bill payment.
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 Infrastructure providers, which support the biller-direct and consolidator business
models.
Acceptance In order to be successful, the payment infra-structure must be

largely accepted.
Anonymity Customers’ identity must be protected.
Conversion Digital money should be convertible to other types of financial
founds.
Efficiency Transactions costs must be near zero
Flexibility Different types of payments should be supported
Integration To support the actual applications, proper interfaces should be
created for its integration
Reliability Should always be available to avoid potential points of failure.
Scalability Should permit the new costumers and merchants’ entrance
without affecting the infrastructure.
Security Support the financial transactions security over open networks
Usability Payment should be as easy as in the real world.
Broader market People not eligible for credit cards could use these systems giving
a widespread acceptance
Trust Consumers and merchants must have a high degree of
confidence on the system trusting that payment are conducted in
proper way.
Table 7. Electronic Payment System Requirement [18]
Requirements for on-line payment systems [19]

Any online payment systems' success or failure depends not only on technical
issues, but also on the acceptance of the user. Acceptance by the user is dependent on
a number of issues such as advertising, market position, user preferences etc. And
when someone thinks about the functionality of online payment systems, they do not
only worry about technological issues but also about user acceptance.
Atomicity. Atomicity guarantees that either the on-line payment transaction of
the user will be completed or it will not happen at all. If the current on-line payment
transaction fails then the last stable state should be recoverable. This feature is similar
to the transactional database systems in which a transaction is either committed or re-
rolled.
Anonymity/Privacy. Anonymity means that no disclosure should be made of the
identification, privacy or personal details of individuals using online payment methods.
In some payment methods online, the payment information of the person can be traced.
In the case of transactions using debit card, it is easy to find out the specifics of the
transaction as that information is registered at the seller and databases of the bank. But
other electronic payment schemes, such as debit cards, are not anonymous. Anonymity
can be low in some other payment systems as the attempts to get the user 's
purchasing data can be more costly than the information itself. Several countries have
privacy laws to guarantee the user's privacy and protect the financial institutions from
abuse of personal information.
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Reliability. Even online payment forms, as in any other company operation, the
user expects a system which is reliable and efficient. Any payment through online
despite its advanced technological features, system would fail if it fails allow users, and
pass usability checks. There are many reasons that could render the system unreliable
to users. Some of these are threats to safety, poor maintenance and unexpected
breakdowns.
Scalability. As users are increasingly accepting online payment methods,
demand for online payment infrastructure will also rise rapidly. Payment systems can
manage user add-on without any deterioration in performance. The payment systems
need a good number of central servers to provide the necessary level of service without
any deterioration of the performance. The central servers are essential for processing or
verifying the payment transactions. The rising demand for central servers limits on-line
payment systems' scalability.
Security. Security is one of the key concerns of online payment methods and it
is one of the critical issues that decides on the general acceptance of any form of
payment online. The Internet is an open network without any centralized control and
online payment systems should be protected from any security risks in order to ensure a
safe and reliable service for users. They want to be sure that their money transaction is
safe and secure when users pay online. On the other hand, banks and payment firms
and other financial institutions want their money, financial information and user
information to be kept safe in order to protect it against potential misuse.
Usability. Usability is an important feature of an interactive product as payments
made on-line. The online payment systems should be easy to use and user friendly.
Any online payment system with complicated procedures, complex payment processes
and other related payment environment complications cannot be accepted by users.
Poor usability of web shopping or payment methods might also discourage shopping
online. Some of the online payment systems allow users to make payments with
minimum authorization and inputs of information to make online payments simple and
user-friendly.
Broader market/Interoperability. Different users prefer different Online payment
technologies payment schemes. The various payment systems use different currencies
and the payment systems should promote interoperability between them. If there is an
interoperable payment system, it is open and allows other systems interested parties
must join without limiting themselves to a given currency. There should be some form of
shared agreement between different online payment systems to provide the
interoperability in the real-life situation. Interoperability can be accomplished by open
standards for the protocols and networks for data transmission. An interoperability
program will gain more popularity and a high degree of applicability compared to the
payment systems run individually. It's not always easy to get interoperability between
different payment systems because of the rapid technological changes.
Macro Payment Systems [19]
Macro payment systems support higher value payments. In these payment

systems, the protection standards are more stringent because of large cash
transactions. These are based on real-world payment tools and have minimum
overhead transactions imposed by issuing banks. These overhead transactional and
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heavy use of computationally expensive cryptographic operations prevent these
payment systems from being used for paying small amounts.
A. Card Based Payment Systems. Varieties of payment systems are available.
Some are Card-based while others are oriented towards electronic
instruction. Generally speaking, such payments relate to an established
account arrangement with both payer and payee to a financial institution. The
three widely used card-based online payment systems are Credit Card Based
Payment Systems, Debit Card Based Payment Systems and Stored Value
Card Based Payment Systems.
Credit-card based payment systems have been in use since the early
1960s. There are five parties involved in the credit card transaction. These
are
as follows:
 Cardholder is the customer who holds the credit card.
 Merchant is the person who sold the item.
 Issuing Bank, which issues the credit card and operates a card
account to which payments can be charged.
 Acquiring Bank, which handles the merchant’s receipts. A merchant
who wish to accept payments must register with the acquiring bank.
 Credit Card Network, which is a co-operative venture between the
 Affiliated card issuers. It links the issuing, acquiring banks and co-
ordinates the exchange of information, flow of funds between them.
e.g. Visa Card or MasterCard.
Stored value cards are magnetic stripe cards or computer chips

charged with fixed values that can be spent or transferred to individuals or
merchants in a manner similar to spending paper money. A stored value
card may, in addition to cash, allow other value items, such as purchase
points, phone time etc. If they have an embedded microchip, some stored
value cards can be smart cards too. The integrated chip can store value,
and perform other functions such as authentication of consumers. Cash
replacement cards, phone cards, gift cards etc. can come in the form of
stored value cards. These cards can store one-time fixed amounts of
electronic money or interact with the charging devices that increase the
amount available.
B. Electronic Check Payment Systems. Each check is usually generated and
digitally signed by the payer in Electronic Check Payment Systems before
being passed over the network to the payee for verification. Before sending it
to the network bank, the payee endorses the check by applying yet another
digital signature. It is possible to use existing financial networks to clear
electronic checks between the payer and the bank of the payee. The check
should be cleared online to ensure the funds are available during a purchase.
The digital signatures ensure there is full identification of each party.
Electronic Exchequers have a payment model similar to that of credit card
schemes. A digitally signed check is transferred to an acquiring bank with the
issuing bank through the payee for permission and clearing. Like in online
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credit card payments, all parties are required to create and verify digital
signatures.
C. Account Transfer Payment Systems. In this form of payment, the payer
authorizes the transfer of funds from one account to another, much of the
time at the same network banks. These payment systems not only support
customer-company payments but also customer-customer payments. The
password should be reasonably strong enough to protect against any
potential attacks. Some of the commercial applications of account transfer
payment systems are PayPal, Yahoo Pay Direct and Prepay.
Payment Security Plan
The key steps in developing a security plan are:
 Perform a risk assessment—an assessment of the risks and points of vulnerability.

 Develop a security policy—a set of statements prioritizing the information risks,
identifying acceptable risk targets, and identifying the mechanisms for achieving
these targets.
 Create an implementation plan—a plan that determines how you will translate
the levels of acceptable risk into a set of tools, technologies, policies, and
procedures.
 Create a security team—the individuals who will be responsible for ongoing
maintenance, audits, and improvements.
 Perform periodic security audits—routine reviews of access logs and any unusual
patterns of activity.
Card Frauds and Anti-fraud Tools
In the online world, merchants are held liable for fraudulent transactions.
Managing online frauds continues to be a significant problem for online merchants. The
list of anti-fraud tools are as follows:
 Address Verification: compare the entered shipping address with the card
address; possible false positives
 Manual review: staff to manually review some orders
 Automatic decision models: rules to determine if a transaction is fraudulent
 Card verification number: ask for the number on the back of the card
 Card association additional verification services: Verified by Visa,
SecureCode, etc.
 Negative lists: maintain a negative list of IPs, names, addresses, etc.
E-Banking
E-Banking provides a cheap alternative to branching to extend a bank's customer

base, and many banks use e-banking to increase their customer support. Many banks
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have started internet websites and many are planning to offer banking services over the
internet.
Banking as an enterprise can be divided into wholesale retail, domestic and

international, trust and investment. These forms of retail and investment banking are
most affected by technological advances online and are the ones that would most
benefit from e-commerce.
The online banking transactions provided checks for orders, interrupted check
payments or registered a change in email.
Analysis of Credit Card Based Payment systems
Credit card payment services currently provide the most realistic and common
forms of payment for on-line purchases using counter-electronic payment methods.
Credit card purchases reduce the risks and costs of managing cash and checks. Online
payment credit cards have a large user base and benefit from familiarity and user-
friendliness, and also allow international payments. Another benefit of the safe credit
card model is that the user does not need to be registered with the payment provider, so
only transportation of the credit card number is required in encrypted form, for example.
One of the main advantages of the credit-debit model is the audit capability of the
transactions that is certainly a desired feature from the merchants and banks' point of
view. Another important benefit to note is that the credit card organizations already have
business experience in managing similar systems and many of them already have very
large customer bases. On-line credit-card payments can be risky. Some customers may
find that many entries were made without their consent or even their knowledge at all
when the credit card statement arrives. There's an understanding about fraud and other
security concerns about credit card e-payments. During transmission the information
can be intercepted or changed. The information may be stored on vendor servers, and
hackers who may later sell the information or use the information to make illegal
transactions may fall victim to it. Dishonest vendors may sell the information.
Cardholders are normally asked to provide additional information, such as its name and
address which can be used to verify its identity. If things like that require physical
delivery, they must be shipped to the address attached to card. This allows for limited
protection from bogus orders to do so. This obviously increases the risk borne by
merchants. There are some security risks associated with using credit cards to make
payments across computer networks Network traffic attackers may intercept messages
and capture credit card details, as well as any related verification information (name,
address, etc.).
Analysis of Stored Value Payment Systems [19]
A stored-value card holds a temporary account balance on a smart card, rather

than actual electronic tokens. The card holds securely trusted bank keys, used to
digitally sign messages that pass between cards. Value transfer happens when the
payer's card gives the payee 's card or terminal a signed instruction to pay.
Advantages of Stored Value Payment Systems
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Flexibility in adding applications giving extra value to consumers.
Over the counter and Internet transactions possible.
Low costs and ideal for low value transactions.
Can be used for on line and off line transactions.
Immediate transfer of funds.
Cash balances remain high because of unspent balances in the cards.
Transactions are easily processed via existing POS equipment.
Mobile source of money.
Transaction times are typically faster than for credit card or debit card
payments.
 Increased consumer convenience.
 Secure with the use of passwords/pins.
 Risk is limited to the value of the cash sent on the network.
 Electronic transactions are faster and more accurate than counting and
collecting cash or manually processing paper checks.
 No new or expensive investment in hardware is required.
 Each transaction is tracked electronically on a central database.
Drawbacks of Stored Value Payment Systems
 Hardware specifications pose a problem.
 Does not allow micro merchants.
 Uses proprietary currencies thus depend on issuing companies
 to honor their individual cash.
Analysis of Electronic Account Transfer Payment Systems [19]

Electronic account transfer systems have a broad user base and network, and
banks have well-established on-line banking procedures and security systems.
International payments and micro-payments remain a challenge and the relatively low e-
banking offer for online transactions in many countries shows that these systems will
need further growth in order to become widespread payments.
Analysis of Electronic Cash Payment Systems [19]

Electronic cash is a bit string, and can be copied as many times as you want. In
these situations, the Double Spending Security service will help. This service may be
based on conditional anonymity, with the provision that if a customer is trustworthy and
only spends one coin once, his identity cannot be discerned. The retailer deposits the
payment after the item has been shipped in an off-line environment and the only thing
one can do is to track repeated spending and locate the guilty customer so they can be
prosecuted. Using encryption is an easy way to secure Electronic Cash from being
stolen by eavesdropping. The size of the Electronic cash database could evidently
become very large and unmanageable. The serial numbers of those coins can be
removed after the expiry date by using the expiry dates with coins. Coins which expired
are not accepted as legal tender. The bank host machine needs an internal scalable
structure to be able to cope with the database size.
Advantages:
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 Secure with the use of encryption.
 Reduced fraud.
 Reduced check inventory security risks, reduced risk of theft, loss or damage to
checks in the postal system.
 An advantage of the electronic currency model is that the payments offer
(possibly full) anonymity to the user, which may encourage some potential users
to start using the payment mechanism.
 Eliminates the third party
 Electronic cash offers the greatest possibilities for electronic trading.
 Allows micro-merchant payments which are perfect for low value transactions.
 Once received, it has value immediately.
 Reduced cash handling, check handling, or credit card processing.
 Faster value into the bank and elimination of collection risks, checks
 and credit cards can be rejected or “bounced.”
 Reduced debt-collection efforts, check-processing costs, and postage fees,
postage-paid and return envelopes.
 Reduced efforts to replace lost or destroyed payments, transfers to unclaimed
property.
 Software solution. No extra hardware required
Drawbacks:
 Costs are too high for low value transactions.
 Does not allow micro- merchants.
 Only sender’s bank can issue value for the check.
 Slow method, no immediate transfer of funds.
 No immediate confirmation.
 No guarantee of payment upon receiving a check.
 No anonymity.
 Not portable
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Assignment
Read Blockchain vs. PayPal: Understanding the Difference and Evolution at

https://coincentral.com/blockchain-vs-paypal/
Answer the following:
1. What are the pros and cons of Blockchain Payments? PayPal?
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______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
2. How blockchain technology can help human resource?
____________________________________________________________________________
____________________________________________________________________________
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____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Name:_________________________________________ Score:_______________
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True 1. An online management firm aggregates, bundles and resells content
or software from various outlets to third-party websites
True 2. Although Internet-enabled cell phones can access the Web at any time
and from anywhere, there is a very limited amount of information they
can actually handle at one time.
False 3. Accumulated digital balance payment systems enable consumers to
make instant, online payments in a digital account to merchants and
other individuals based stored value.
False 4. Peer-to-peer payment systems are the principal electronic commerce
payment systems.
True 5. Complex e-commerce software has Web-based capabilities to process
credit card transactions.
False 6. The electronic payment system in which users make online
micropayments and transactions, accumulating on their credit card or
telephone bill a debit balance is called digital cash.
False 7. Digital wallet payment systems allow consumers to make instant
online payments to merchants and other individuals based on the
digital account value stored.
True 8. Internet content providers create revenue by providing digital content
over the Web.
True 9. Smart card is an electronic payment system that uses a plastic credit
card size card that stores digital information and that can be used
instead of cash for online payments.
False 10. Stored value system extends the functionality of existing checking
accounts so they can be used for online shopping payment.
answer.
Cash 1. It is legal tender specified by a national authority to reflect interest, is

the most common form of payment.
Efficiency 2. Transactions costs must be near zero.
Near Field 3. It allows communication between a phone and a payment terminal
Communication without physical contact, allowing for the exchange of small pieces of
or NFC data via radio waves.
Conversion 4. Digital money should be convertible to other types of finance.
Electronic billing 5. It enables customers to display bills remotely and pay for them via
presentment and transfers from bank or credit card accounts through electronic funds
payment (EBPP)
Online stored 6. It enables customers to make instant, electronic payments to retailers
value payment and other persons on the basis of the online account value held.
system
Consolidators 7. Seek to consolidate all consumer bills in one spot, and hopefully allow
one-stop payment of bills.
Trust 8. Consumers and traders must have a strong degree of trust in the
system that payment is carried out in a proper manner
Infrastructure 9. It supports the biller-direct and consolidator business models.
providers
Float 10. It is the time between transaction and final transaction payment.
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Module 2 Project
1. Watch the video “What Is a Smart City?” at youtube.com/watch?v=Br5aJa6MkBc
(3:28 min), and discuss the issues of smart cities.
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2. Researching the state of the art of false posting and fraudulent comments on
famous blogs. Study the steps of defense. Write a summary report.
3. Have a search on Google for "Institutional Identity Theft." Compare theft of
institutional identity with theft of personal identity. How does an organization
secure itself from identity theft? Write a report.
4. Enter ftc.gov and identify some of the typical types of fraud and scams on the
Internet. Listen of them.
MODULE 3
Module Title: CONCEPTS OF BUSINESS AND THE SOCIAL ISSUES
Overview
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This module will cover. Topic1 describes e-commerce marketing and advertising
concepts. Topic 2 outlines Digital Commerce Marketing and Advertising Strategies and
Tools. Topic 3 focuses on ethical, social, and political issues in e-commerce.
Module Objectives

 explain the underlying principles of customer behavior and purchasing decisions;
 identify and explain the basic marketing and advertisement strategies and tools
for digital commerce; and
 identify the legal, social, and political e-commerce issues.
Coverage:
A. E-commerce Marketing and Advertising Concepts
B. Digital Commerce Marketing and Advertising Strategies and Tools
C. Ethical, Social, and Political Issues in E-commerce
A. Topic 1
Topic Title: E-commerce Marketing and Advertising Concepts
Introduction:
In the field of industry, e-commerce has brought in a new idea and this concept is
growing quite rapidly and is almost putting an end to the conventional business
techniques. It is used to identify businesses that are run over the Internet. It explains
how Web technologies such as shopping carts, e-mails, online sites, electronic data
interchange (EDI), and instant messaging are used by businesses. In addition to
offering an easy way to exchange goods and services, e-commerce has also provided
the most secure and convenient way to carry out the transactions involved in that trade.
Once a company wants to move into e-commerce, it must first define and
establish factors that will help it sell its goods and services effectively through the
internet. The approaches would decide how the business will build its e-market
structure, priorities and resources in relation to demand.
Topic Objectives

 understand how consumers behave online;
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 identifies and describes the main technologies that support online marketing; and
 understand the cost and benefits of online marketing communications.
Topic 1 Pre-test
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Name:__________________________________________ Score:_______________
a. List down five (5) reasons why people buy online
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
b. List down five (5) reasons why people don’t buy online
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
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Topic Contents
Consumers Online: The Internet Audience and Consumer Behavior

There is a strong change in control from the marketer to the customer, because
the user is empowered to make educated choices based on knowledge that is readily
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available on the Internet. With customers being co-creators, marketers will take a more
participatory, personalized and user-focused approach to success.
Understanding Internet Audience

There are five steps that help understand internet audience.
Understanding Google Analytics. Google Analytics tests the ROI of ads and
tracks the Flash, video and social networking sites and apps. The data from Google
Analytics is derived from the metrics for the link and page. In 2005, Google acquired
Urchin and created the freemium web analytics package, Life changed for digital
marketers. This changed the way we worked, because we no longer expended
resources simply attempting to increase our visitors; instead we could begin to
understand them – the sites they looked at and how long they expended on the web. If
your company is B2B or B2C, it is a must to use conversion monitoring. Tracking
ecommerce allows data on product prices, purchase date, and billing locations to be
obtained. And goals will provide useful insight into the path the users take to the desired
location if set up with the optional funnels – this may be an inquiry form or a landing
page for some value added content [20]
Heat mapping and scroll mapping. Comprising more about in-page activity,
however, can put an all-new perspective on what is valuable content. Through heat
mapping tools we can gain that insight. There are many on the market-Crazy Egg is our
favorite because it shows where everyone clicked, whether or not it was on a
connection. We may compare web and mobile versions of a web with Crazy Egg.
Menus and site architectures usually can differ, so it's useful to understand how
audiences respond to both. In addition, we can drill and see how users from different
channels, browsers-including new and returning visitors-interact with the site [20].
User testing. Just being close to a digital project and the process of
development can judge how usable a website is. Using a remote platform for usability
testing like What Users Do is a highly effective way to get normal people to test a
website. What users do can match the users with your chosen demographic – how old
they are, their gender, and even their profession – by vetting the people who subscribe
to test websites. The company boasts you just need five tests to fully understand user
behavior [20].
User surveys. Online surveys are often used to collect feedback about a user
experience. A standard survey may consist of a series of questions designed to
determine the interest of a participant-in this case, how they perceive their online
experience. The benefits of online survey include: (1) To meet a much wider audience
than consumer testing – you should obtain a wider sample size. (2) To have an
appreciation of the experience of end users and to be able to change the online
experience accordingly. It is crucial that you know exactly what you want from the
survey. User surveys help measure the conclusions you made from the information
gathered in steps one to three, so you should balance the questions in order to get a
finite answer [20].
A/B Testing. The final step is to bring what you have learned from your research
on user behavior into action. That doesn't mean you 're trying to interpret your website
and building a whole new experience, significant changes can be difficult to track, so
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you're in a worse position than you began. Using tools such as Google Analytics and
Crazy Egg, it is easy to assess the impact on the design of what, say, a change to a
button, introduction of a new color, or a new menu item may have.
Figure 5. Understanding Internet Audience [20]
Online Consumer Behavior Process
In the search stage, they may be looking for product reviews or customer
comments according to Figure 5. They'll find out which brand or company is best suited
to their expectations. Well-organized website structure and attractive design during this
stage are important things to persuade consumers to be interested in buying a product
or service.
Stage 1. The most useful characteristic of internet is that it supports the pre-purchase
stage as it helps customers compare different options.
Stage 2. During the purchasing stage, product assortment, sale services and
information quality seem to be the most important point to help consumers decide what
product they should select, or what seller they should buy from.
Stage 3. Post-purchase behavior will become more important after their online
purchase. Consumers sometimes have a difficulty or concern about the product, or they
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might want to change or return the product that they have bought. Thus, return and
exchange services become more important at this stage.
Factors of Online Customer Behavior [20]
The first elements to identify are factors that motivate customers to buy products
or services online. They are divided into two categories − external factors and internal
factors.
 The External Factors are the ones beyond the control of the customers. They
can divide into five sectors namely demographic, socio-economic, technology
and public policy; culture; subculture; reference groups; and marketing.
 Internal Factors are the personal traits or behaviors which include attitudes,
learning, perception, motivation, self-image.
 The Functional Motives is related to the consumer needs and include things
like time, convenience of shopping online, price, the environment of shopping
place, selection of products etc.
 The Non-Functional Motives related to the culture or social values like the
brand of the store or product.
Filtering Elements
Using these three factors, customers filter their buying choices and decide on the
final selection of stores they are willing to buy from. They use the knowledge to filter
their buying options through three factors such as security, privacy, and trust and
trustworthiness [20].
Internet Traffic Patterns: The Online Consumer Profile

Internet traffic is the flow of data over the Internet. It is used to describe the web
traffic, the amount of data that a particular website visitor sends and receives. The
traffic evolution has reflected changes in user preferences, but their demand trends tend
to be the same as in previous years. The expectations regarding an increased Internet
traffic on streaming media; proven total traffic is dominant in streaming media.
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Table 8. What’s New in Online Marketing and Advertising [2]
Intensity and Scope of Usage
Internet intensity is described as the incorporation of the Internet into the

company's international marketing activities and business processes, such as marketing
and advertising, online sales, and after-sales services. The Internet has been shown to
have a positive impact on firms' international marketing activities through improved
information, awareness and network growth. It has been shown that the Internet has a
positive influence on companies' international marketing activities through enhanced
information, knowledge and network development. The Internet is mainly used by
international companies to search for market information and develop long-term
relationships and indirectly affect international performance by acquiring new knowledge
of the market. Internet usage refers to the use of Internet technology by companies
such as e-mail, websites, intranets and extranets customers and suppliers. Internet
intensity is defined by as the integration of the Internet into international marketing
activities and business processes of the firm, such as marketing and advertising, online
sales, and after sale service.
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Demographics and Access [2]
The slowing growth rate in the US Internet population is compensated for in part
by an increasing intensity and scope of use. Overall, over 80% of adult Internet users in
the US report logging on in a typical day. They also spend more time online –over 2
hours per day. In 2013, mobile smartphones and tablets are major access points to the
Internet and online commerce. About 143 million people, almost 60% of US Internet
users, access the Internet using a mobile device. The demographic profile of the
Internet –and e-commerce –has changed greatly since 1995. Up until 2000, single,
white, young, college-educated males with high incomes dominated the Internet. This
inequality in access and usage led to concerns about a possible “digital divide”.
Demographic similarities and differences can be assessed by looking at: gender, age,
ethnicity, community type, income level, and education.
Gender. Fairly equal percentage of men and women users (85%).
Age. Young adults (18-29) make up the age group with the highest Internet
usage rate (98 per cent). Also, teens (12-17) have a very high online percentage of their
age group (97 per cent). Adults are also well represented in the 30-49 category (92 per
cent). Another fast-growing online community is the 65 and over class, of which 56
percent are now using the Internet.
Ethnicity. Variations across ethnic groups are not as broad as those between age
groups. There were significant differences between ethnic groups in 2004 but this has
fallen back.
Income level. Around 96% of households with income rates above $75,000 have
access to the Internet, compared to just 76% of households earning less than $30,000;
Education. Of those individuals with or less high school education, 59 percent
were online in 2013, compared with 96 percent of those with a college degree or more.
In summary, the "digital divide" has also moderated, but it still exists alongside the
dimensions of employment, education, age and ethnicity.
In 2013, some 85 million US households had broadband access in their homes,
among many internet problems. There is a more educated and affluent broadband
public. Internet-based consumer purchases are influenced by "neighborhoods" where
others buy online. Social network membership has a major impact on the development
of new independent music, but less impact on already well-known items.
Consumer Behavior Models

Consumer behavior analysis is a branch of the social sciences that seeks to
model and understand human behavior in a marketplace. Customer behavior models
aim to anticipate or "explain" what the customers are buy, and where, when, how much,
and why. The expectation is that if consumers can understand the decision-making
process, companies will have a much better idea of how to market and sell their
products. Consumer behavior online parallels consumer behavior offline with some
obvious differences. First, it's important to understand why people choose the internet
channel to make transactions (see Table 9).
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Figure 6. General Model for Consumer Behavior (SOURCE: Adapted from Kotler and
Armstrong, 2009.) [2]
The Online Purchasing Decision

It also needs to consider the process that purchasers follow when making a
purchase decision, and how the Internet environment affects the decisions of
consumers. The consumer decision process consists of five stages: awareness of need,
search for more information, evaluation of alternatives, the actual purchase decision,
and post-purchase contact with the firm [2].
The use of the internet for retail shopping has expanded enormously in recent
years and has had a profound influence on many consumers ' shopping process. Online
purchasing behavior is a type of behavior that consumers show when visiting an e-tailer
's websites in order to browse, pick and purchase products and services to suit their
needs and wishes. It's essentially an action that the buyer represents during the internet
purchasing process. Every customer, while shopping online, wants convenience, speed,
price advantages, facility for product comparison etc. It's not that traditional shopping
methods don't offer those features. But the conceptions of those features have changed
among buyers due to changes in lifestyle. Now people find it hard to shop from
traditional channels because of their changed lifestyle [21].
Various factors which influences the behavior of consumers while buying are
culture, social norms, psychological factors, and background demographic factors.
Culture, along with various other factors, gives birth to traditions, values, norms and
attitudes of the clients. It is a part of every society and is a major cause of people's will
and behavior. In assessing the impact of culture on buying behavior, marketers are
required to pay utmost attention. Each culture is a mixture of different subcultures
including nationalities, geographical regions, religions, ethnic groups etc. A subculture is
a group of individuals with common beliefs and patterns of behavior that are distinct
from the subcultural communities surrounding them. Every society has some form of
social class that's important to the marketers because people's buying behavior is
similar in a given social class. Social class can be defined as a division of society with
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similar interests among the members. Consumer social characteristics or social
norms are also recognized as a determinant, which has a prominent influence on
consumer behavior. Reference groups, family, position, and status are important social
factors. Reference groups refer to a group of people that affects a person as an
individual is a member of that group or wants to become a member of that group. The
different reference groups are family members, friends, co-workers of the neighbor,
religious groups, professional groups, aspiration group etc. Psychological factors
affecting consumer behavior include
'motivation,' 'perception,' 'learning' and 'attitude' can be explained as a desire generated
by an unsatisfied need. When the need intensity is very high it becomes motive. The
decision as to the quantity of information to be searched for and the size of the
expenditure to be made on the commodity, brand, store of consumer goods is affected
by buyer motives. Perception of a commodity leads to thinking, and analysis leads to
practice. Thus, perception plays an important role in communicating a specific action
towards a commodity being purchased. Consumer learning is a continuum mechanism
whereby a customer is learning something new on a regular basis. What a customer
has observed from the world or previous experience is a contributing factor to a
product's purchasing behavior. Attitude determines everybody's life and it affects how
everybody responds to certain people, things or events and reacts to them. By
analyzing its attitude, a marketer gets great help in knowing consumer reaction. As a
consumer's attitude puts its effect on use pattern, consumption frequency, customer
preference [21].
Table 9. Why Consumers Choose the Online Channel [2]
Website features in the online model, along with consumer skills, product
characteristics, attitudes towards online purchasing, and perceptions about web
environment control come to the fore. The characteristics of websites include latency
(delay in downloads), navigability, and trust in the security of a website. It is well
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known, for example, that consumer behavior can be influenced by store design, and
that understanding consumers' precise movements through a physical store can boost
sales if goods and promotions are arranged along the most likely consumer tracks.
Figure 7. Model of Online Consumer Behavior [2]
Consumer skills refers to the knowledge consumers have about (which increases
with experience) how to conduct online transactions. Product characteristics refers to
the idea that certain goods can be easy to use. Described, packaged and shipped over
the Internet while others are unable to. These factors, combined with traditional factors
such as brand, advertising, and firm capabilities, lead to specific attitudes about buying
on a website (trust in the website and favorable customer experience) and a sense that
the consumer can control his or her website environment. Clickstream behavior refers
to the transaction log as defined by consumers. They travel across the Web, from a
search engine to a range of pages, then to a single site, then to a single page and finally
to a purchasing decision.
Trust, Utility, and Opportunism in Online Markets

Various types of trust play a significant role in promoting purchasing behavior.
The confidence of consumers in systems such as the Internet, and institution-based
confidence in third-party mechanisms such as escrow services make e-commerce
smooth. Additionally, interpersonal confidence willingness to be vulnerable to a
company that offers a particular product or service is crucial in a customer-company
relationship. When one party gives money to a web shop, one party hands control to the
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other party and must wait and see if the web shop fulfills the contract as promised. The
trusting disposition of a consumer and the company's trustworthiness both impact on
trust. The latter depends on the aptitude, benevolence and perceived integrity,
perceptions relating to a company's competence and morality. Belief in the other party 's
trustworthiness makes acts of trust more possible [22]. Consumers need to trust a
dealer before making a purchase. Sellers can build confidence among online
consumers by building strong reputations for honesty, fairness, and the delivery of
quality products as a brand's core elements [2].
---------End of Topic 1----------
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Name:_________________________________________ Score:_______________
True 1. Sellers can create trust among online customers by creating strong reputations
for integrity, fairness and the provision of quality goods as the core elements of a
brand.
True 2. Consumer behavior online parallels consumer behavior offline.
False 3. Consumer skill is the idea that certain goods can be easy to use.
False 4. Perception is a continuum mechanism whereby a customer is learning something
new on a regular basis.
True 5. The Internet has a positive impact on the foreign marketing practices of the
companies.
False 6. E-commerce monitoring does not require data to be collected on product prices,
the date of purchase and the billing locations.
False 7. Well-organized website layout and attractive design are essential items at this
stage to deter customers from being involved in buying a product or service.
True 8. Social class can be defined as a division of society with similar interests among
the members.
True 9. Consumer faith in platforms like the Internet and institution-based trust in third-
party structures like escrow services make e-commerce smooth.
False 10. Culture defines the life of everyone and it influences how everyone responds to,
and reacts to, other individuals, objects, or events.
answer.
User survey 1. A standard survey may consist of a series of questions designed to
determine the interest of a participant-in this case, how they perceive their
online experience
Internet traffic 2. It is used to characterize the web traffic, the amount of data sent and
received from a single user to the website.
Filtering elements 3. They use the knowledge to filter their buying options through three factors
such as security, privacy, and trust and trustworthiness.
Internet intensity 4. It is described as the incorporation of the Internet into the company's
international marketing activities and business processes, such as
marketing and advertising, online sales, and after-sales services.
Clickstream behavior 5. It refers to the transaction log as defined by consumers.
Web features 6. The characteristics of websites include delay in downloads, navigability,
and trust in the security of a website
Internal Factors 7. These are the personal traits or behaviors which include attitudes,
learning, perception, motivation, self-image.
Reference groups 8. It refers to a group of people who affect a person as an individual is a
member of that group or who would like to become a member of that
group.
Consumer behavior 9. It is a branch of the social sciences that seeks to model and understand
analysis human behavior in a marketplace.
Internet usage 10. It refers to the use of Internet technology by companies such as e-mail,
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websites, intranets and extranets customers and suppliers.
B. Topic 2
Topic Title: Digital Commerce Marketing and Advertising Strategies and Tools
Introduction:
The digital commerce marketing principle is based on the various existing search
engines. Digital marketing uses these search engines to reach directly prospective
consumers who are likely to purchase the goods of the business which are sold online.
The search engines also help companies identify other organizations who are willing
and capable of doing business with them by using the internet.
Digital marketing and e-commerce are not mutually exclusive. E-commerce
websites may use all of the digital platforms to promote a product and develop its
business. E-commerce marketing is the act of driving knowledge and action against a
company that electronically sells its product or service. To draw customers and
promote online transactions, e-commerce marketers may use social media, digital
content, search engines and e-mail campaigns.
Topic Objectives

 understand the digital marketing roadmap;
 differentiate the different types of display advertising; and
 identifies online marketing metrices.
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Topic 2 Pre-test
--------------------------------------------------------------------------------------------------------------------
Name:__________________________________________ Score:_______________
a. List down five (5)
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
b. List down five (5)
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
--------------------------------------------------------------------------------------------------------------------
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Topic Contents
Digital Commerce Marketing and Advertising Strategies and Tools
Internet marketing has four features which distinguish it from traditional

marketing channels. The Internet marketing can be more personalized, participatory,
peer-to - peer, and cooperative compared to conventional print and television
marketing. Not all forms of internet marketing have those four characteristics [2].
The Digital Marketing Roadmap

Digital marketing roadmap is fine, as all digital platforms on the market are easy
to overpower. This roadmap will help you figure out not just what you should be doing
but what you shouldn't be doing.
Table 10. The Digital Marketing Roadmap
Table 10 shows these five main platforms, key elements within each type, some
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examples, and the primary marketing function in each situation. Here are some
common marketing channels and how you would use them to build an online store to
give you a sense of what an ecommerce marketing strategy looks like.
Email Marketing. Email marketing is one of the oldest forms of digital marketing
and it has special importance in the ecommerce marketing field, believe it or not. It can
be automated the best aspect about email marketing. Automation means you can set
up an effective drip campaign for subscribers who are segmented in the purchaser's
journey by interest or stage and let your email campaign do its magic [23]. One of the
first and most successful forms of online marketing messaging was direct e-mail
marketing (e-mail marketing messages sent directly to interested users). Direct e-mail
marketing messages are sent to an opt-in audience of Internet users who have
expressed an interest in receiving messages from the advertiser at one time or another.
By sending e-mail to an opt-in audience, advertisers were targeting interested
consumers [2].
Even though email can still be an effective marketing and advertising tool, it
faces three main challenges: spam, software tools used to control spam that eliminate a
great deal of email from user inboxes, and poorly targeted email lists purchased. Spam
is unsolicited commercial e-mail (sometimes called "junk" e-mail) and spammers are
people who send unsolicited e-mail to a mass audience that doesn't have it. In most
civilized societies, spammers tend to market pornography, fraudulent deals and
services, scams and other products not widely approved. Legitimate direct email
marketing opt-in doesn't grow as fast as behaviorally targeted banners, pop-ups, and
search engine advertising because of the explosion in spam. [2].
Affiliate Marketing. Affiliate marketing is a promotional form where a company

pays a commission to other websites (including blogs) to send customers to its website.
Affiliate marketing generally involves pay-for-performance: only if users click on a link or
purchase a product will the affiliate or affiliate network get paid [2]. Affiliates create
interest in goods through old-fashioned (yet effective) marketing tactics, unlike most
social media influencers. We also use paid ads, digital marketing, and other ways to
drive traffic to their web pages — it's like making a team compete for you [23].
Influencer Marketing. Marketing influencer focuses on those people or brands

that influence your target market. The word is widely used to describe Instagram
accounts with several thousand followers, but it may also indicate that your target
audience follows or belongs to a celebrity or culture [23].
Social Media Marketing. Brands, publishers, contractors and growing

companies are launching all the pages on today's most popular social networks to
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communicate with their customers and post content that attract the audience. E-
commerce websites are highly visual to show off the product, so your social media
success depends on using pictures to drive attention and traffic to your product pages.
Instagram is an excellent e-commerce site, because it allows you to post sharp product
pictures and expand the scope of the company beyond its purchase page [23].
Search Engine Marketing. Search engine marketing (SEM) refers to the use of
search engines to build and sustain brands. Search engine advertising refers to the use
of search engines to support direct sales to online consumers [2]. SEM includes both
search engine optimization (SEO) and paid advertising. While SEO relies on your
knowledge of Google's ranking algorithm to optimize content, SEM may include pay-per
- click (PPC) campaigns, display campaigns, or product-specific ad campaigns (think
Google Shopping), allowing you to pay for top spots on the search engine results
pages. PPC campaigns on Google ensure that potential buyers can see a link to your
page when they enter search terms which suit your campaign terms. But because every
time a person clicks on your result, you are paying Google, the payoff to you should be
high. That's why ecommerce marketers often register with Google AdWords and use
PPC campaigns to promote their product pages. The campaign places searchers right
in front of the product of the company when they click on a paying outcome, thus raising
the probability that the searcher will make a purchase before leaving the website [23].
Types of Search Engine Advertising [2]
Organic search. It is the inclusion and ranking of sites depends on

a more or less unbiased application of a set of rules imposed by the
search engine.
Paid inclusion. It is for a fee, guarantees a Web site’s inclusion in

its list of sites, more frequent visits by its Web crawler, and
suggestions for improving the results of organic searching.
Keyword advertising. It refers to merchants purchase keywords

through a bidding process at search sites, and whenever a
consumer searches for that word, their advertisement shows up
somewhere on the page.
Network keyword advertising (context advertising). It was

introduced by Google as its AdSense product in 2002. Its
publishers accept ads placed by Google on their Web sites, and
receive a fee for any click-throughs from those ads. Advertising
networks connect online marketers with publishers by displaying
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ads to consumers based on detailed customer information
Search engine optimization. It is the process of improving the

ranking of Web pages with search engines by altering the content
and design of the Web pages and site. By carefully selecting key
words used on the Web pages, updating content frequently, and
designing the site so it can be easily read by search engine
programs, marketers can improve the impact and return on
investment in their Web marketing programs.
Social search. It is an attempt to use your social contacts (and

your entire social graph) to provide search results. In contrast to the
top search engines that use a mathematical algorithm to find pages
that satisfy your query, social search reviews your friends’ (and
their friends’) recommendations, past Web visits, and use of Like
buttons.
Search Engine Issues [2]
Link farms are website communities that connect to each other,

thereby improving their ranking in search engines that use a
PageRank algorithm to determine a site's "usefulness." JCPenney,
for example, was found to be the top-ranking retailer for a wide
range of clothing items during the 2010 holiday season. Upon
investigation, it was discovered that this arose from the hiring of a
search engine optimization firm by Penney to build thousands of
websites related to the JCPenney website. As a result, the website
of JCPenney became the most popular (linked) website brand
section, such as skirts, shirts and trousers.
Content farms are companies that produce large amounts of text

content for various Web pages designed to attract viewers and
search engines. Web farms benefit from attracting large numbers of
readers and exposing them to advertisements on their pages. The
content is not typically original, but is artfully copied from legitimate
content sites or summarized from them.
Click fraud occurs when a competitor clicks on results and ads on

the search engine, forcing the advertiser to pay for the click even if
the click is not legitimate. Competitors may employ offshore
companies to conduct fraudulent clicks or employ botnets for
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process automation. Click fraud can easily run up a large merchant
bill, and will not result in any sales growth.
Blogs. Blogging is a cost-effective way for small businesses to push traffic to

their platform, increase inbound marketing activities and draw more prospect
customers. Regularly blogging is one of the most successful ways to create brand
recognition while delivering relevant and useful content to your target audience [23].
Video Marketing. YouTube has more than one billion active users and is likely
to have your target audience somewhere in there. It's also the second-biggest search
engine on Google. If you're looking for a massive, captive audience, YouTube is where
you'll find that. Use widely searched keyword words to decide your subjects, then share
videos that apply to your product and are helpful to your audience [23].
Game Marketing. It is a technique which is almost exclusively used by large

companies. The global scope of video games means foreign brands will take full
advantage of their presence in games
Smartphone sites, tablet sites and apps. With around 6 billion mobile
subscribers, or 87 per cent of the world, is the mobile market substantially penetrated
globally? Population of s. There are 325 million smartphone subscribers in the United
States, a penetration rate of 103 per cent. Rapid smartphone adoption continues,
accounting for more than 50 percent of mobile phones in the U.S. currently with
anticipated further gains in penetration. The smartphone is effectively a powerful mobile
computer, and its adoption and evolving use, together with tablets and e-readers, leads
to new consumer behavior and information consumption expectations. There are
currently 600 million users use Facebook on cell phones, and Facebook expects even
more cell use and greater interaction as smartphones expand further. Consumer
services, including Facebook, Pandora and YouTube, among many others, are racing
to monetize their mobile user base, which is very significant and fast growing. Mobile
apps continue to expand and the mobile advertising market has finally started off as
advertisers, brands, marketers and publishers are rushing to deliver targeted messages
to mobile users. Likewise, retailers adapt to shopping for smartphone and tablet
research and mobile usage in-store while mobilizing their websites to maximize the
experience of mobile customers and industry. The mobile industry is dynamic,
competitive and growing and rapidly changing. We are in the early stages of a
technological revolution brought on globally by more affordable mobile devices and
Internet access [24].
Sponsorships. A sponsorship is a paid effort to tie the name of an advertiser to specific

information, an event, or a venue in a manner that reinforces its brand in a positive yet
95
not overtly commercial way. Companies will spend around $1.9 billion on marketing
sponsorships in 2013. Targeted advertising (or advertisements) is a popular type of
sponsorship, in which editorial advertising is paired with an ad message to make the
message more relevant and appealing to its intended audience [2].
Ad exchanges take the online advertising market a step further by aggregating the
supply side of advertising slots available at publishers across several ad networks, and
establishing a real-time bidding process (RTB) where marketers can bid for slots
based on their marketing criteria [2].
Viral Marketing. It is a form of social marketing that involves getting clients to pass on
the marketing message from a company to friends, family and colleagues. It's the online
version of word-of - mouth advertising, which is spreading even faster and more than in
the real world. In the offline world, word of mouth is next to television, the second most
important means by which consumers find out about new products. And the most critical
factor in the buying decision is the face-to - face suggestions made by parents, friends
and colleagues.
The Website as Marketing Platform
Customer experience refers to the overall interaction a customer has with a

company, including product quest, briefing, purchase, use, and after-sales service. The
definition of "consumer experience" is broader than the conventional concept of
"customer satisfaction" in that it encompasses a much wider spectrum of impacts,
including the cognitive, affective, mental, social and physical connection of the customer
to the firm and its goods. Multiple distribution outlets should usually be interested in the
entirety of client experience [2].
Traditional Online Marketing and Advertising Tools
Online advertising, on a website, online service or other interactive medium, a

paid message. Ad targeting, delivering consumer messages to particular population
subgroups in an attempt to increase the probability of a purchase is as old as
advertising itself, but it could only be achieved with even less specificity before the
Internet, definitely not down to the level of individuals. Ad targeting is also the
foundation of price discrimination: the right to charge varying prices for the same good
or service for specific types of customers. With online advertising it is theoretically
possible to charge a different price for each customer [2].
Display Ad Marketing
Display advertising is defined as an online advertising mode where advertisers
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use banner ads to advertise their product on websites, apps or social media along with
other visual ad formats. Display ads are a profitable promotional tool for advertisers
searching for ways to attract and retain clients. They make liberal use of visual media to
capture people's attention in the form of messages, pictures, or even videos. Typically,
you can spot advertisements in specified corners of web pages and social media sites,
and they are generally shown as a banner ad (graphic or text). All campaigns ranging
from simple-text to attractive-video campaigns can be grouped under display
advertising. The most popular advertisement campaigns on display use a creative mix
of photos, text, gifts and videos to stand out on the internet and deliver their message to
the target audience. Marketers can play around to create engaging display ads with
language, design, shapes and banner sizes [25].
Lead generation marketing uses multiple e-commerce presences to generate leads

for businesses that can later be contacted and converted to customers via sales calls,
e-mails, or other means. All internet marketing strategies aim to build leads in one way.
But lead generation marketing is a specialized subset of the Internet marketing industry
that provides consulting services and software tools for companies to collect and
manage leads, and to convert these leads to customers [2].
The Display Advertising Targeting Process [25]
Some of the most important aspects of display advertising is its ability to reach
different audience parts that suit criteria based on the requirement of the advertiser. The
targeting feature of display advertising ensures that your ad reaches the right audience
and ad spending is not wasted on a demographic that is not interested in your product
or service. The variety of options available when showing ad targeting can be
overwhelming; it is important to have clarity about the type of audience that you want to
cater for, and select from available targeting options accordingly. Here are some of the
steps you can take to optimize this feature:
1. Define your demographic: You can segment the audience based on their
basic demographic details like age, gender, interests, etc.
2. Identify target keywords: This allows you to reach the target demographic
based on selected keywords as per your product or service. The display ad
network will match your keywords with words/phrases present in the
publisher’s site where your ad will be displayed.
3. Zero-in on the topic: This feature lets you choose a group of websites that fit
a specific topic/category within which your business operates.
4. Formulate the ideal placement: You can choose the website you want your
display ads to run on. For example, if you’re targeting customers of a specific
car variant, you can display the ads on articles related to that model, or even
97
on a product review page.
5. Show ads based on interest: Google collects data on its users’ behavior, and
depending on what users are searching for, you run display ads that resonate
with specific interest areas. For example, a car enthusiast may be
researching tires, car stereo systems, etc. Interest-based display ad targeting
will place your ad on all relevant webpages.
6. Retarget based on past behavior: Also known as retargeting, this display ad
targeting feature lets you target users who have already visited your website,
thereby reinforcing the brand’s impact and recall.
Types of Display Advertising [2] [25]
Successful display advertising management depends on visuals to communicate

the campaign 's central message to the public. The goal is to ensure that when visiting a
website or social media network, users are automatically drawn into an ad. So, here are
a few different ways to experiment with when outlining the content management plan for
displays.
Figure 8. Types of Display Advertising [25]

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Banner ads are the most common format for displaying advertisements, as they clearly
stand out on any webpage. They are named for their banner-like design. They are
nothing more than image-based, hyperlinked ads in a stripe form. They are usually
positioned at the top of a webpage in order to attract the attention of the user
immediately [25]. They are also the least effective and the lowest cost form of online
marketing. A banner ad shows an advertising advertisement at the top or bottom of a
computer screen, in a rectangular enclosure. A banner ad in a written newspaper is
similar to a conventional ad but it does have some additional advantages. This takes
potential buyers directly to the Web site of the advertiser when clicked, and the site
where the ad appears will monitor the actions of the user on the web. The ability to
identify and track the user is a key feature of online advertising. Flash video and other
animations appear in banner ads. Although the terms banner ads and display ads are
often used interchangeably, it is important to note that banner ads are just one form of
display ads [2].
Rich media. Given that approximately 30 per cent of Internet users find traditional
banner advertising distracting, advertisers are exploring more innovative ways of
displaying their ads. The use of rich media is one such new tactic involving the use of
interactive elements such as video, audio and clickable elements to make the ad more
engaging [25]. These are ads that use animation, sound, and interactivity, using
JavaScript, Flash, HTML5, and Java. Rich media advertisements are expected to
account for about $2 billion in online advertising spending in 2013 (about 5 per cent of
total online advertising). They are much more effective than plain banner advertising.
For example, one research report analyzing 24,000 different rich media ads with over
12 billion impressions served in North America between July and December 2011 found
that exposure to rich media ads boosted advertiser site visits by almost 300 per cent
compared to standard banner ads. Through either direct clicking on the ad, typing the
advertiser's URL, or searching, viewers of rich media ads that included video were six
times more likely to visit the advertiser's web site [2].
Interstitial ads. These are advertisements that appear as a separate website until you
go to the original page you wanted to visit on the internet. They are effective at catching
the attention of the user as they fill the entire screen [25]. An interstitial ad (interstitial
means "in between") is a way to put a full-page message about a user's current pages
and destination pages. Usually interstitials are inserted into a single website and
displayed as the user moves from one page to the next. Typically, the interstitial is
contained in its own browser window and will automatically move to the page requested
by the user after allowing sufficient time to read the ad. It is also possible to deploy
interstitials over an advertising network and appear as users move between websites
[2].
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As the Web is such a busy place, people need to find ways to deal with over-
stimulation. One means of coping is called filtering of sensory inputs. That means
people are learning to filter out the vast majority of the messages that come to them.
Internet users quickly learn to identify banner advertising or something that looks like a
banner ad at any point, and filter out most of the advertising that are not especially
relevant. Interstitial advertisements, like tv commercials, seek to make audiences slave
to the ad. Typical interstitials last 10 seconds or less and compel the user to view the ad
for that period of time [2].
Video Ads are slightly more expensive but worth it, when it comes to displaying
advertising costs. Platforms such as YouTube and Instagram have made it easy for
advertisers to run video advertisements, gaining significant interest and dedication [25].
Video ads are TV-like ads that appear as in-page video advertisements, or before,
during, or after a variety of content [2].
Table 11. Types of Video Ads
Social, Mobile, and Local Marketing and Advertising

Social marketing and social marketing / advertising involves using online social
networks and communities to build brands and drive revenue from sales. There are
several types of social networks, ranging from Facebook and Twitter to social apps,
social games, blogs, and forums (websites that attract people who share an interest or
skill community). Companies invested about $4.2 billion on social media in 2013 and
Ad, expected to rise to some $6.45 billion by 2015. It is the fastest-growing form of
online marketing, alongside mobile marketing. Nevertheless, it represented only 10
percent of all online marketing in 2013 and is still dwarfed by the amount spent on
advertising and display advertising for search engines [2].
There are four features of social marketing and advertising that are driving its
growth [2]:
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 Social sign-on: Signing in to various Web sites through social network pages like
Facebook. This allows Web sites to receive valuable social profile information
from Facebook and use it in their own marketing efforts.
 Collaborative shopping: Creating an environment where consumers can share
their shopping experiences with one another by viewing products, chatting, or
texting. Instead of talking about the weather, friends can chat online about
brands, products, and services.
 Network notification: Creating an environment where consumers can share their
approval (or disapproval) of products, services, or content, or share their
geolocation, perhaps a restaurant or club, with friends. Facebook’s ubiquitous
“Like” button is an example. Twitter tweets and followers are another example.
 Social search (recommendation): Enabling an environment where consumers
can ask their friends for advice on purchases of products, services, and content.
While Google can help you find things, social search can help you evaluate the
quality of things by listening to the evaluations of your friends or their friends. For
instance, Amazon’s social recommender system can use your Facebook social
profile to recommend products.
Facebook networks that specialize in blogs have some flexibility in placing ads, as
do blog networks that are collections of a small number of popular blogs, managed by a
central management team, and that can provide marketers with a wider audience. The
online gaming marketplace is expanding rapidly as users can play games on
smartphones and laptops, as well as PCs and laptops. The aim of game advertising is
both to brand and to drive customers to buy moments at restaurants and retail stores
[2].
Mobile Marketing and Advertising

There are a range of factors that push marketers to the smartphone and tablet
mobile platform including much more powerful apps, faster networks, local wireless
networks, rich media and video advertisements, and increasing demand for local
advertising from small businesses and consumers. Most notably, mobile is where the
eyeballs are now, and will eventually be in the future: at least some time from mobile
devices, 143 million people access the Internet. Mobile marketing, though still in its
infancy, includes the use of display banner ads, rich media, video, games, e-mail, text
messaging, in-store messaging, Quick Response (QR) codes and couponing. More
than 90 percent of retail marketers had plans for 2012 mobile marketing campaigns,
and mobile is now a necessary part of the regular marketing budget. Search engine
advertisement was the most popular mobile advertising format in 2013, accounting for
more than 50 percent of all mobile advertising spending, and not surprising because
search is the second most common smartphone application (after voice and text). Ads
on search engines can be further optimized for the mobile platform by displaying ads
based on user's physical location. Display ads are also a common format which
accounts for around 45% of mobile ad spending. Display advertising may be used as
part of a mobile website, or as part of apps and games inside. Mobile messaging
generally involves text messaging via SMS to consumers who offer coupons or flash
marketing [2].
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Customer Retention Strategies
Personalization, One-to-One Marketing, and Behavioral Targeting (Behavioral
Advertising) No Internet-based marketing technique has been more popular and
academic than "one-to-one" or "personalized marketing" comments. One-to-one
marketing (personalization) segments the market based on individuals (not groups),
based on a precise and timely understanding of their needs, targeting specific marketing
messages to these individuals, and then positioning the product to competitors as being
truly unique. One-to-one marketing is the ultimate form of market segmentation,
targeting, and positioning – where individuals are the segments. Since the development
of systematic market research and mass media in the 1930s the movement toward
market segmentation has continued. E-commerce and the Internet, however, differ in
that they enable personalized one-to-one marketing to take place on a mass scale [2].
Behavioral targeting of ads involves the use of consumers' online and offline
behavior to adjust the advertising message delivered online, often in real time
(milliseconds from the first URL entered by the consumer). The aim is to increase
marketing and advertisement efficiency, and to increase the revenue streams of
companies that are in a position to target visitors behaviorally. The online advertising
industry, led by Google, has introduced a new name for behavioral targeting because
"behavioral targeting" as a label has somewhat unfavorable connotations. They call it
interest based advertising. Ad exchanges make it possible for advertisers to retarget
ads at individuals as they roam across the Internet. Retargeting ads involves showing
the same or similar ads to individuals across multiple Web sites. Retargeted ads are
nearly as effective as the original ad [2].
There are four methods used by online advertisers to conduct target ads: search
engine queries, data collection on individual browsing history online (clickstream
monitoring), data collection from social network sites, and increasing integration of
these online data with offline data such as income , education, address, buying
patterns, credit records, driving records, and hundreds of other personal descriptors tied
to specific, identifiable persons. Google, Microsoft, Yahoo, Facebook, and legions of
small and medium-sized marketing firms that use their data, or collect data from
thousands of websites using web beacons and cookies, routinely engage in this level of
integration of both "anonymous" and identifiable information [2].
Customization changing the product, not just the marketing message, according
to user preferences. Customer co-production in the Web environment, takes
customization one step further by allowing the customer to interactively create the
product. Frequently asked questions (FAQs), a text-based listing of common
questions and answers, provide an inexpensive way to anticipate and address customer
concerns. Adding an FAQ page on a Web site linked to a search engine helps users
track down needed information more quickly, enabling them to help themselves resolve
questions and concerns. Real-time customer service chat systems (in which a
company’s customer service representatives interactively exchange text-based
messages with one or more customers on a real-time basis) are an increasingly popular
way for companies to assist online shoppers during a purchase. Automated response
systems send e-mail order confirmations and acknowledgments of e-mailed inquiries,
in some cases letting the customer know that it may take a day or two to actually
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research an answer to their question. Automating shipping confirmations and order
status reports are also common. [2].
Pricing Strategies
In this world, newly empowered consumers will shop around the scenario (and
around the clock) with minimal effort, using intelligent shopping agents and the almost
limitless product and price details available on the Internet, driving prices down to their
marginal costs and pushing intermediaries out of the market as customers started
negotiating directly with producers. The result was supposed to be an instance of the
"Law of One Price": one world price for each product would emerge with complete
price transparency in a perfect information market place. Of course, "Frictionless
Commerce" will mean the end of brand-based marketing. Pricing (making goods and
services a value) is an integral part of marketing strategy. Price and quality together
define value for the consumer. E-commerce product pricing has proven very difficult for
both entrepreneurs and investors to grasp. In traditional firms, traditional goods prices
such as books, drugs, and automobiles are usually based on their fixed and variable
costs, as well as on the demand curve of the market (the quantity of goods that can be
sold at different prices). The costs of building the production facility are fixed costs.
The costs involved in running the production facility are variable costs – mostly labor.
In a competitive market with indistinct goods, prices tend towards their marginal costs
(the incremental cost of producing the next unit) once the manufacturers have paid the
fixed costs for entering the business. Price discrimination is the selling products to
different people and groups based on their willingness to pay. If some people really
want the product, sell it to them at a high price. Versioning is one solution to the
problem of free information goods is versioning creating multiple versions of the goods
and selling essentially the same product to different market segments at different prices.
Bundling offers consumers two or more goods for a reduced price.
The Revolution in Internet Marketing Technologies [2]
 transaction log records user activity at a Web site

 registration forms gather personal data on name, address, phone, zip code, e-
mail address, and other optional self-confessed information on interests and
tastes
 shopping cart database captures all the item selection, purchase, and payment
data
Databases, Data Warehouses, Data Mining, and Big Data
Databases, data centers, data mining, and the array of marketing decision-
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making methods that are loosely called profiling are at the root of the Internet marketing
revolution. Profiling uses a number of tools to give each user a digital image. This
image may be quite inaccurate, even primitive, but can be as detailed as a character in
a novel as well. The quality of a consumer profile depends on the amount of data used
to create it, and the software and hardware analytical power of the firm. A database is a
software application that stores records and attributes. A database management
system (DBMS) is a software application used by organizations to create, maintain,
and access databases. The most common DBMS are DB2 from IBM and a variety of
SQL databases from Oracle, Sybase, and other providers. Structured query language
(SQL) is an industry-standard database query and manipulation language used in
relational databases. Relational databases such as DB2 and SQL represent data as
two-dimensional tables with records organized in rows, and attributes in columns, much
like a spreadsheet. The tables and all the data in them can be flexibly related to one
another as long as the tables share a common data element. A data warehouse is a
database that collects a firm’s transactional and customer data in a single location for
offline analysis by marketers and site managers. Data mining is a set of analytical
techniques that look for patterns in the data of a database or data warehouse, or seek
to model the behavior of customers. Web site data can be “mined” to develop profiles of
visitors and customers. A customer profile is simply a set of rules that describe the
typical behavior of a customer or a group of customers at a Web site. Customer profiles
help to identify the patterns in group and individual behavior that occur online as
millions of visitors use a firm’s Web site. The simplest type is query-driven data
mining, which is based on specific queries. For instance, based on hunches of
marketers who suspect a relationship in the database or who need to answer a specific
question, such as “What is the relationship between time of day and purchases of
various products at the Web site?”, marketers can easily query the data warehouse and
produce a database table that rank-orders the top 10 products sold at a Web site by
each hour of the day. Model-driven data mining involves the use of a model that
analyzes the key variables of interest to decision makers. For example, marketers may
want to reduce the inventory carried on the Web site by removing unprofitable items
that do not sell well. A financial model can be built showing the profitability of each
product on the site so that an informed decision can be made. Big data usually refers to
data in the petabyte and exabyte range in other words, billions to trillions of records, all
from different sources. Big data are produced in much larger quantities and much more
rapidly than traditional data. Hadoop is an open source software framework managed
by the Apache Software Foundation that enables distributed parallel processing of huge
amounts of data across inexpensive computers.
Online Marketing Metrics
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 Impressions number of times an ad is served
 click-through rate (CTR) the percentage of people exposed to an online
advertisement who actually click on the banner
 view-through rate (VTR) measures the 30-day response rate to an ad
 hits number of http requests received by a firm’s server
 page views number of pages requested by visitors
 stickiness (duration) average length of time visitors remain at a site
 unique visitors the number of distinct, unique visitors to a site
 reach percentage of the total number of consumers in a market who will visit a
site
 loyalty percentage of purchasers who return in a year
 recency average number of days elapsed between visits
 acquisition rate percentage of visitors who register or visit product pages
 conversion rate percentage of visitors who purchase something
 browse-to-buy ratio is the ratio of items purchased to product views
 view-to-cart ratio is the ratio of “Add to cart” clicks to product views
 cart conversion rate ratio of actual orders to “Add to cart” clicks
 checkout conversion rate ratio of actual orders to checkouts started
 abandonment rate % of shoppers who begin a shopping cart, but then fail to
complete it
 retention rate % of existing customers who continue to buy
 attrition rate % of customers who purchase once, but do not return within a year
 conversation ratio number of comments produced per post
 applause ratio number of Likes or Shares per post
 amplification number of re-tweets or re-shares per post
 sentiment ratio is the ratio of positive comments to total comments
 open rate % of customers who open e-mail
 delivery rate % of e-mail recipients who received e-mail
 click-through rate (e-mail) % of e-mail recipients who clicked through to the offer
 bounce-back rate percentage of e-mails that could not be delivered
The Costs of Online Advertising
 cost per thousand (CPM) advertiser pays for impressions in 1,000 unit lots
 cost per click (CPC) advertiser pays pre-negotiated fee for each click an ad
receives
 cost per action (CPA) advertiser pays only for those users who perform a specific
action
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--------- End of Topic 2 ----------
Name:_________________________________________ Score:_______________
True 1. Profiling uses a number of tools to give each user a digital image
False 2. Content farms occurs when a competitor clicks on results and ads on the
search engine, forcing the advertiser to pay for the click even if the click is
not legitimate.
True 3. Banner ads are the most common format for displaying advertisements,
as they clearly stand out on any webpage.
False 4. Paid inclusion and ranking of sites depend on a more or less unbiased
application of a set of rules imposed by the search engine.
True 5. Lead Generation Marketing provides consulting services and software
tools for businesses to collect and manage leads and convert them into
customers.
False 6. Search engine optimization refers to the use of search engines to support
direct sales to online consumers
False 7. Video marketing is a technique which is almost exclusively used by large
companies.
True 8. Advertisements is an editorial advertising is paired with an ad message to
make the message more relevant and appealing to its intended audience
True 9. Multiple distribution outlets should generally be interested in the full
customer experience.
False 10. Under display ads, all promotions ranging from plain text to glamorous
video promotions cannot be grouped.
answer.
Ad targeting 1. The foundation of price discrimination: the right to charge varying

prices for the same good or service for specific types of customers.
Game marketing 2. It is a technique which is almost exclusively used by large companies.
Advertising 3. It connects online marketers with publishers by displaying ads to
networks consumers based on detailed customer information
retention rate 4. The percentage of existing customers who continue to buy.
data warehouse 5. It is a database that collects a firm’s transactional and customer data
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in a single location for offline analysis by marketers and site
managers.
Price 6. The selling products to different people and groups based on their
discrimination willingness to pay.
Interstitial ads. 7. These are advertisements that appear as a separate website until you
go to the original page you wanted to visit on the internet.
Customization 8. The changing the product, not just the marketing message, according
to user preferences
Viral marketing 9. It's the online version of word-of - mouth advertising, which is
spreading even faster and more than in the real world.
acquisition rate 10. The percentage of visitors who register or visit product pages.
Assignment
List and briefly describe the following marketing tools.
Facebook marketing tools
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Pinterest’s marketing tools
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Topic 3
Topic Title: Ethical, Social, and Political Issues in E-commerce
Introduction:
Defining the rights of individuals to communicate their ideas and ownership rights
of copyrights owners are only two of the many legal, social and political problems posed
by the rapid growth of e-commerce. The ethical, social and political concerns posed in
e-commerce provide a structure for organizing the issues and making recommendations
to managers responsible for running e-commerce businesses within generally agreed
criteria of suitability. Understanding ethical, social, and political issues in the Internet of
e-commerce and its use in e-commerce has raised pervasive ethical, social, and
political issues on a massive scale for computing. We live in an "information society,"
where power and wealth are increasingly dependent on knowledge and information as
core assets. In fact, controversies over information are often disagreements over power,
wealth, influence, and other things that are thought to be worthwhile. Like other
technology such as steam, energy, telephones and television, it is possible to use the
Internet and ecommerce to gain social benefits. The same technologies can, however,
be used to commit crimes, rob the environment, and threaten cherished social values.
There was very little interstate crime before automobiles, and very little federal authority
over crime. Likewise, with the Internet: very little "cybercrime" existed before the
Internet. The commercial development of the Internet benefits many business firms and
individuals, but this development also demands a price from individuals, organizations
and societies. Those who seek to make ethical and socially responsible decisions in this
new environment must take careful consideration of these costs and benefits [26].
Topic Objectives

 understand why e-commerce raises ethical, social, and political issues;
 describe the different methods used to protect online privacy; and
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 understand the various forms of intellectual property and the challenges involved
in protecting it.
Topic 3 Pre-test
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Name:__________________________________________ Score:_______________
a. Name five personal information collected by web sites about their visitors.
1. ________________________________________________
2. ________________________________________________
3. ________________________________________________
4. ________________________________________________
5. ________________________________________________
b. Briefly explain your position on this issue “YouTube does not violate the intellectual
property rights of copyright owners” (5 points).
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Topic Contents
Ethical, Social, and Political Issues in E-commerce

The major ethical, social, and political issues that have grown around e
commerce over the past seven to eight years can be broadly grouped into four key
dimensions: knowledge rights, property rights, governance, and public safety and
welfare. Some of the ethical, social and political issues that have arisen in each of these
areas include: Information rights: What rights do individuals have on a public
marketplace or in their private homes to their own personal information when Internet
technology makes collection of information so pervasive and efficient? What rights do
individuals have to have access to information about companies and other
organizations? Property rights: How can conventional intellectual property rights be
enforced in a world of the Internet where exact copies of protected works can be made
and easily circulated in seconds worldwide? Governance: Should the Internet and e-
commerce come under public law? And if so, what jurisdiction does the law-making
bodies have-state, federal and/or international? Public safety and welfare: What
efforts should be made to ensure Internet and ecommerce channels are equitably
accessible? Should governments be responsible for ensuring the Internet access for
schools and colleges? Are such content and practices online-for example, pornography
and gambling-a danger to public safety and welfare? Should mobile trading of moving
vehicles be allowed? [2] [26]
The Internet and e-commerce launch is having an effect on people, cultures and
political institutions. Such impacts can be divided into four moral dimensions: property
rights, information rights, governance, and public safety and welfare. Business firms
then discover that they can make a business out of aggregating these musical tracks-or
creating a mechanism for sharing musical tracks-even though in the traditional sense
they don't "own them." At first the record companies, courts and Congress were not
prepared to cope with the online digital copying attack. Courts and legislative bodies will
have to make new laws and come up with new judgements as to who owns digital
copies of copyrighted works and under what conditions such works can be "shared." In
just this one area of social impact, it may take years to develop new understandings,
laws and acceptable behavior. Meanwhile, as an individual and as a manager, you will
have to decide what to do with your company in legal "grey" areas, where there is a
110
conflict between ethical principles, but no clear-cutting guidance. In this sort of situation
how can you make good decisions? [26]
Basic Ethical Concepts: Responsibility Accountability, and Liability [26]
Ethics is at the center of online social and political discussions. Ethics is the
analysis of values that can be used by individuals and organizations to assess the right
and wrong course of action. In ethics it is believed that people are free moral agents
who can make choices.
It may be difficult to expand ethics from individuals to business companies, and

even entire societies, but it is not impossible. Their decisions may be judged against a
range of ethical standards as long as there is a decision-making body or person (such
as a board of directors or CEO in a business company or a governing body within a
society). If you understand some basic ethical principles, you'll improve your ability to
reason about broader social and political debates. In western culture, the concepts of
capacity and duty are shared by all ethical schools of thought: responsibility, account-
liability.
Responsibility means that the actions they take are the responsibility of the
individuals, organizations and societies as free moral agents. Accountability means
that people, organizations and societies should be held accountable for the
consequences of their actions to others. The third definition-responsibility-applies the
principles of transparency to the field of law. Liability is a characteristic of legal
processes in which a body of law is in effect that allows people to recover the harm that
certain entities, institutions or organizations have done to them. Due process is a
feature of law-governed societies and refers to a process in which laws are known and
understood, and the ability to appeal to higher authorities to ensure that the laws are
applied correctly.
Analyzing Ethical Dilemmas [26]
In general, legal, social, and political issues pose themselves as dilemmas. A

dilemma is a situation where at least two actions are diametrically opposed, one of
which promotes a desired outcome. Faced with a situation which appears to pose
ethical dilemmas, how do you evaluate the situation and justify it? The following is a
process, which should help in five steps. Identify the facts, and clearly describe them.
Find out who has done what, where, when, and how to who. In many instances, the
errors in the initially reported facts will surprise you and you will often find that simply
getting the facts straight helps define the solution. It also helps get the two parties
involved to agree on the truth of an ethical dilemma.
Defines the conflict or dilemma and identifies the greater value of the order
involved. Higher values are always referenced in ethical, social and political questions.
Otherwise no discussion will take place. The parties to a dispute all claim to pursue
higher values (e.g., liberty, privacy, property protection, and the -enterprise system). For
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instance, Double Click and its supporters argue that tracking consumer movements on
the Web increases market efficiency and the wealth of society as a whole. Opponents
argue that this alleged efficiency is at the expense of individual privacy, and Double
Click should discontinue or offer Web users the option of not taking part in such
tracking.
Identify interested parties. Each ethical, social, and political issue has
stakeholders: players in the game who are involved in the result, who are in control of
the situation, and who are generally outspoken. Find out these groups' identities, and
what they want. This will be useful later when designing a solution. Identification of the
choices you can fairly take. You can find that none of the options satisfy all of the
involved interests, but some options do a better job than others. Sometimes, reaching a
"good" or ethical solution may not always be a balance of implications for stakeholders.
Identify the potential consequences of your options. Some options may be

ethically correct, but disastrous from other points of view. Other options may work in this
one instance, but not in other similar instances. Always ask yourself, “what if I choose
this option consistently over time?” Once your analysis is complete, you can refer to the
following well established ethical principle to help decide the matter.
Privacy and Information Rights [26]
The Internet and the Web provide an ideal setting for invading millions of users '
personal privacy on a scale unprecedented in history. Maybe no other recent problem
has posed as much widespread social and political concern as preserving the privacy of
more than 160 million US Web users alone. The main ethical concerns related to
ecommerce and privacy include: under what circumstances would we violate other
people's privacy? What legitimates the infiltration of unobtrusive monitoring, market
research or other means into other lives?
The major social issues relating to e-commerce and privacy relate to the
development of "privacy exception" or privacy standards, as well as public attitudes. In
what ways do we allow people as a community to believe that they are in "private
territory," as opposed to public view? The main political issues concerning e-commerce
and privacy concern the development of statutes governing the relationships between
record keepers and individuals.
The Concept of Privacy
Privacy is an individual's fundamental right to be left alone, free from surveillance

or intervention by other persons or organizations, including the state. Privacy is a girder
that protects independence: social and political independence is diminished and even
lost without the privacy needed to think, write, prepare, and communicate freely and
without fear. Privacy of the information is a subset of privacy. The right to privacy of
information includes both the claim that certain information should not be collected by
governments or business firms at all, as well as the claim of individuals to control
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personal of whatever information is collected about them. The concept of privacy lies at
the core of individual control over personal information. Due process also plays a key
role in the concept of privacy [26].
Legal Protections
Privacy privileges in the United States, Canada, and Germany are expressly
provided in, or can be extracted from, founding documents such as constitutions, as
well as unique laws. There is also common law protection of the privacy in England and
the United States, a body of court decisions involving torture or personal injury.
Throughout the United States , for example, four tortures related to privacy have been
described throughout court decisions involving allegations of injury to individuals caused
by other private parties intrusion into solitude, public exposure of private information,
publicity putting a person in a false light, and use of a person's name or likeness (mostly
concerning celebrities) for a commercial purpose. In the United States, the right to
privacy against government interference is specifically secured by the First Amendment
protections of freedom of expression and association and the Fourth: the first protects
against arbitrary search and seizure of personal or home records, and the Fourteenth
Amendment's guarantee of due process. In addition to common law and the
Constitution, there are both federal laws and state laws that shield people from
government interference and in some cases establish privacy rights vis-à - vis private
entities such as financial institutions, education, and media [26].
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Table 12. Unique Features of E-Commerce Technology and Their Potential
Ethical, Social, and/or Political Implications [2]
Candidate Ethical Principles [2]

In many cultures, these are the ethical principles with deep roots that have
survived throughout the recorded history.
 The Golden Rule: Do unto others as you would have them do unto you. Putting
yourself into the place of others and thinking of yourself as the object of the
decision can help you think about fairness in decision making.
 Universalism: If an action is not right for all situations, then it is not right for any
specific situation (Immanuel Kant’s categorical imperative). Ask yourself, “If we
adopted this rule in every case, could the organization, or society, survive?”
 Slippery Slope: If an action cannot be taken repeatedly, then it is not right to
take at all. An action may appear to work in one instance to solve a problem, but
if repeated, would result in a negative outcome. In plain English, this rule might
be stated as “once started down a slippery path, you may not be able to stop.”
 Collective Utilitarian Principle: Take the action that achieves the greater value
for all of society. This rule assumes you can prioritize values in a rank order and
understand the consequences of various courses of action.
 Risk Aversion: Take the action that produces the least harm, or the least
potential cost. Some actions have extremely high failure costs of very low
probability (e.g., building a nuclear generating facility in an urban area) or
extremely high failure costs of moderate probability (speeding and automobile
accidents). Avoid the high failure cost actions and choose those actions whose
consequences would not be catastrophic, even if there were a failure.
 No Free Lunch: Assume that virtually all tangible and intangible objects are
owned by someone else unless there is a specific declaration otherwise. (This is
the ethical “no free lunch” rule.) If something someone else has created is useful
to you, it has value and you should assume the creator wants compensation for
this work.
 The New York Times Test (Perfect Information Rule): Assume that the results
of your decision on a matter will be the subject of the lead article in the New York
Times the next day. Will the reaction of readers be positive or negative? Would
your parents, friends, and children be proud of your decision? Most criminals and
unethical actors assume imperfect information, and therefore they assume their
decisions and actions will never be revealed. When making decisions involving
ethical dilemmas, it is wise to assume perfect information markets.
 The Social Contract Rule: Would you like to live in a society where the principle
you are supporting would become an organizing principle of the entire society?
For instance, you might think it is wonderful to download illegal copies of
Hollywood movies, but you might not want to live in a society that does not
respect property rights, such as your property rights to the car in your driveway,
or your rights to a term paper or original art.
Privacy and Information Rights
114
In the business context, privacy is a sensitive problem. It is easier to capture the
data using digital systems and new data mining computational techniques. E-
commerce sites collect the huge amount of data pertaining to consumer tastes, their
purchasing habits and the high-volume items they scan [27].
Privacy is an individual's moral right to be left alone, free from surveillance or

interference by other individuals or organizations, including the state. Privacy is a
girder that supports independence: social and political independence is diminished
and even lost without the privacy needed to think, write, prepare, and communicate
freely and without fear. Information privacy is a subset of privacy. The right to
information privacy involves both the argument that governments or business
companies will not collect such information at all, and the argument of individuals to
monitor the use of whatever information is collected about them. Individual control
over personal information is at the core of the privacy concept. Implicit in the claim to
control one’s own personal information is the claim to be able to edit and even delete
personal information from the Web. This is often called “the right to be forgotten” [2].
Use of personal data
Many e-commerce sites are doing foolish things with their personal data
from the customer's side. According to a survey, 92 percent of respondents
said that while e-commerce site is responsible for keeping personal data
private, they disclose personal things in practice [27].
 The user’s data is reuse for finding sales to existing customers and to
know their interest patterns.
 This data is used for aggregation and resale
Kinds of privacy concerns [27]
 Consumers are concerned about unauthorized access due to security

breaches.
 They are concerned about secondary use – the reuse of their personal
data such as sharing the data with third parties.
Data privacy issues in E-commerce [27]

 Intellectual property re-selling. The e-commerce companies are
openly reselling their customers' intellectual property. This is also a
question of the privacy of the person using online trading sites and
sharing their personal belongings without knowing the reselling rights.
 Web activity correctness. E-commerce providers do not have the
means to monitor malicious web activities and their impacts.
 Integrity of server machine. The e-commerce sites don't provide the
client with the mechanism to verify server machine integrity.
115
 Buyer’ stricking. Social engineering strategies are used to tricking the
shopper to get the full value from the device under attack. The
attackers collect the credential information and use them against the
victim's online activities, such as asking about the user's favorite book
is a common challenge query used by various websites for
authentication and account login.
 Snooping the buyer’s computer. One of the easiest ways to get
control of customer credentials is to get control of the online e-
commerce user's computer. As millions of computers are linked every
minute to the Internet, many of the users are unaware of the
vulnerabilities of the security function and the network. In addition,
software and hardware vendors do not pay adequate attention to direct
devices and system security issues, they are using. In this environment
snooping the e-commerce client's machine is very simple.
 Sniffing the network. Network sniffing is a thorough control of data
between the shopper 's device and the hosting company's server. The
attacker collects buyer data or steals personal information including
credit card numbers, personal interest, pattern of purchase and so on.
 Passwords guess. In general practice the assumption about the
password of the customer. The password assumption results in
successful performance via manual and automated mechanisms.
Manual approach is harder and has less success rate, and only
successful outcomes if the attacker has clear knowledge of the victim
such as what they want, basic information about his / her family name,
or the particular pattern that the victim uses commonly.
For the protection of data privacy, following steps are important [27].
 Alter password quickly. There are many chances to use some tactics
to cheat online users. To protect user data privacy, online users need
to follow the practice of swiftly changing the password.
 Avoid the same password at multiple sites. Never use already-used
password. The same password is used by many e-commerce site
users for multiple e-commerce sites. If someone gets their account
credentials from any other site, this gives them a chance to access
their account.
 Use the service of FAQs. Before beginning the online phase an
attentive analysis of FAQs is helpful. Before placing the order at least,
one should read FAQs for a lot of information that the user may not be
aware of.
 Check site authenticity. Get the support from the search engine
(Google, Bing, Query, Yahoo) to ensure the site 's authority. This will
help to authenticate the site for the users’ reliability.
 Check site URL. Check the website address before the transaction
commences. If the users don't check the URL properly and place the
order at any similar e-commerce site that looks like original, after a
116
while it can cause users problems. The user will double check the URL
address of the pages, and then proceed to purchase.
 Avoid private data disclosure. The managers of the E-commerce site
must avoid disclosing private data to the other business information
site. Many users willingly upload to the e-commerce site and share
their private data. This provides an incentive for the E-Commerce
platform to use the private data for any other purposes without
notifying its original customer.
 Fair data collection. A fair data-gathering mechanism is important.
Cookies are generally used by the Internet for data mining. This
collection is not fair and is suited to any user's data privacy. The data
user must be aware of what personal data is being collected, and what
is the intention of using it.
 Lawful collection of private data. A lawful mechanism for data
collection needs to be followed. All the data collected should be used
for the purpose of substance.
 Personal data utilization. The use of personal data is of considerable
importance and should only be used for the purpose it is collected. It
should be erased once the motive for which data was collected has
been completed.
 Data disclosure. Personal data shall never be revealed to the individual
and shall in effect be obtained without the main purpose.
 Personal data accuracy. The data owner is responsible for taking all
possible measures to ensure accuracy and reliability of the data,
ensuring it is up to date.
 Time for personal data retention. Personal data shall never be retained
for a long period of time without significant intention.
 Duties of a data user. A registered user of data is a person who
controls, maintains and processes personal data.' Nobody else but
data user has the right to access personal information.
 Rights of the users. The data originator has the right to access and
prevent the person who causes the damage from collecting the data.
Nondisclosure of data must be strictly prohibited.
Information Collected at E-commerce Sites
Some of this data constitutes personally identifiable information (PII),

which is defined as any data that can be used to identify, locate, or contact an
individual. Other data is anonymous information, composed of demographic and
behavioral information, such as age, occupation, income, zip code, ethnicity, and
other data that characterizes your life such as Web browsing behavior without
identifying who you are.
The Internet’s Major Information-Gathering Tools and Their Impact on

Privacy [2]
117
 Smartphones and apps. Used to track location and share photos,
addresses, phone numbers, search, and other behavior to marketers.
 Advertising networks. Used to track individuals as they move among
thousands of Web sites.
 Social networks. Used to gather information on user-provided content
such as books, music, friends, and other interests, preferences, and
lifestyles.
 Cookies and Super Cookies. Used to track individuals at a single site.
Super Cookies are nearly impossible to identify or remove.
 Third-party cookies. Cookies placed by third-party advertising networks.
Used to monitor and track online behavior, searches, and sites visited
across thousands of sites that belong to the advertising network for the
purpose of displaying “relevant” advertising.
 Spyware. Can be used to record all the keyboard activity of a user,
including
 Web sites visited and security codes used; also used to display
advertisements to users based on their searches or other behavior.
 Search engine behavioral targeting (Google and other search engines).
Uses prior search history, demographics, expressed interests, geographic,
or other user-entered data to target advertising.
 Deep packet inspection. Uses software installed at the ISP level to track
all user clickstream behavior.
 Shopping carts. Can be used to collect detailed payment and purchase
information.
 Forms. Online forms that users voluntarily fill out in return for a promised
benefit or reward that are linked with clickstream or other behavioral data
to create a personal profile.
 Site transaction logs. Can be used to collect and analyze detailed
information on page content viewed by users.
 Search engines. Can be used to trace user statements and views on
newsgroups, chat groups, and other public forums on the Web, and profile
users’ social and political views. Google returns name, address, and links
to a map with directions to the address when a phone number is entered.
 Digital wallets (single sign-on services). Client-side wallets and software
that reveal personal information to Web sites verifying the identity of the
consumer.
 Digital Rights Management (DRM). Software (Windows Media Player) that
requires users of online media to identify themselves before viewing
copyrighted content.
 Trusted Computing Environments. Hardware and software that controls
the viewing of copyrighted content and requires user’s identification, e.g.,
Amazon Kindle.
Profiling and Behavioral Targeting
118
Profiling is the creation of digital images that characterize individual
behavior online and in groups. Anonymous profiles identify individuals as
belonging to highly specific and targeted groups, such as 20- to 30-year-old
males, with college degrees and income greater than $30,000 a year, and
interested in high-fashion clothing (based on recent use of the search engine).
Personal profiles add a personal e-mail address, postal address, and/or phone
number to behavioral data. Deep packet inspection is another technology
where every keystroke is recorded Each Internet user's ISP level, and then use
that information to make suggestions, and target ads. While advertising networks
are limited, and even Google is not the universe of search, deep ISP-level packet
inspection actually captures the universe of all Internet users [2].
Intellectual Property Rights
The big ethical problem concerning e-commerce and intellectual property

is how we (as individuals as well as business professionals) can handle property
belonging to others [2]. More than any other platform, e-commerce often involves
the sale of IP based goods and services and their licensing. Online companies
should therefore make sincere efforts to ensure that their activities are free from
IP risks that might slow down or actually kill their businesses [28].
The intellectual property law protects a company's or an individual's
business interests and entities from unfair competition. Coming to the digital
economy and e-commerce, in the absence of IP laws and practices, everything
from music, software, design and so on could be robbed, duplicated or
distributed around the globe without paying the owners for their one-of-a-kind
creation and work. In addition, IP is also involved in the functioning of e-
commerce, as components such as software, chips, networks, designs, routers,
to name a few, are all forms of IP that need to be protected to enable the Internet
to function. All e-commerce and online businesses are based on licensing of their
products or patents. Because a variety of technologies are needed to create a
product, most online businesses either outsource some component development
or share technology through licensing agreements. Focused on e-commerce,
corporations consider IP as their most valuable asset and also own patent
portfolios and trademarks to increase the value of their online businesses [28].
What are the different elements of protection for E-Commerce? [28]

 Patents/utility models can be used to protect E-Commerce systems,
search engines, or any other technical tools on the Internet.
 Copyrights or Patents can protect software and text-based HTML code
used on websites.
 Copyrights can be exclusively used to protect the design and creative
design of websites including text, images, graphics, audios, and videos.
 Sui generis database laws or copyrights can provide protection to
databases.
 Trademarks can protect the names, logos, symbols, and other signs which
are posted on websites.
119
 Industrial Design Protection can be given to screen displays, graphic user
interfaces, web pages, and computer-generated graphic symbols.
 Any mark that reflects the name and character of the business can be
registered as a trademark.
 Online business methods can be filed for Patent Protection.
Copyright law protects original forms of expression such as writings, art,

drawings, photographs, music, motion pictures, performances, and computer
programs from being copied by others for a minimum of 70 years [2].
Fair Use Doctrine permits teachers and writers to use copyrighted

materials without permission under certain circumstances. The fair use doctrine
draws upon the First Amendment’s protection of freedom of speech (and writing).
Journalists, writers, and academics must be able to refer to, and cite from,
copyrighted works in order to criticize, or even discuss them. Professors are
allowed to clip a contemporary article just before class, copy it, and hand it out to
students as an example of a topic under discussion. However, they are not
permitted to add this article to the class syllabus for the next semester without
compensating the copyright holder [2].
The Digital Millennium Copyright Act (DMCA) of 1998 was the first major
effort to adjust the copyright laws to the Internet age. A cyberlocker is an online
file storage service dedicated to sharing copyrighted material (often movies)
illegally [2].
Patent grants the owner an exclusive monopoly on the ideas behind an
invention for 20 years. Trademark a mark used to identify and distinguish goods
and indicate their source [2].
Internet and Trademark Law [2]
 Cybersquatting - Registering domain names similar or identical to

trademarks of others to extort profits from legitimate holders.
 Cyberpiracy - Registering domain names similar or identical to
trademarks of others to divert Web traffic to their own sites. Cyberpiracy
involves the same behavior as cybersquatting, but with the intent of
diverting traffic from the legitimate site to an infringing site.
 Metatagging - Using trademarked words in a site’s metatags. The use of
trademarks in metatags is permitted if the use does not mislead or
confuse consumers. Usually this depends on the content of the site. A car
dealer would be permitted to use a famous automobile trademark in its
metatags if the dealer sold this brand of automobiles, but a pornography
site could not use the same trademark, nor a dealer for a rival
manufacturer. A Ford dealer would most likely be infringing if it used
“Honda” in its metatags, but would not be infringing if it used “Ford” in its
metatags.
120
 Keywording - Placing trademarked keywords on Web pages, either
visible or invisible. The permissibility of using trademarks as keywords on
search engines is also subtle and depends (1) on the extent to which such
use is considered to be a “use in commerce” and causes “initial customer
confusion” and (2) on the content of the search results.
 Linking - Linking to content pages on other sites, bypassing the home
page. Linking refers to building hypertext links from one site to another
site. This is obviously a major design feature and benefit of the Web. Deep
linking involves bypassing the target site’s home page and going directly
to a content page.
 Framing - Placing the content of other sites in a frame on the infringer’s
site. Framing involves displaying the content of another Web site inside
your own Web site within a frame or window. The user never leaves the
framer’s site and can be exposed to advertising while the target site’s
advertising is distorted or eliminated. Framers may or may not
acknowledge the source of the content.
The challenge in intellectual property ethics and law is to ensure that

developers of intellectual property are entitled to enjoy the benefits of their
inventions and creations, while also allowing their creations and designs to be
disseminated and used by the broadest possible public. Protections from
widespread piracy of intellectual property eventually lead to limits on distribution,
and fees to authors for the use of their works which can slow down the process
of distribution in itself.
Governance [2]
Governance has to do with social control: who will control e-commerce, that
elements will be controlled, and how will the controls be implemented. There are
three basic ways to achieve a rationing of bandwidth using the pricing
mechanism: cap plans (also known as “tiered plans”), usage metering, and
“highway” or “toll” pricing. Each of these plans have historical precedents in
highway, electrical, and telephone pricing.
 cap pricing - Putting caps on bandwidth usage, charging more for
additional usage in tiers of prices
 speed tiers - charging more for higher speed Internet service
 usage-based billing - charging on the basis of metered units of Internet
service
 congestion pricing - charging more for peak hour Internet service
 highway (toll) pricing charging service providers like Netflix for their use of
the Internet based on their bandwidth use
121
---------End of Topic 3----------
Name:_________________________________________ Score:_______________
True 1. Link exchanges will trigger penalties and e - commerce entrepreneurs

are discouraged in hoping to increase their SEO traffic.
False 2. A district technology specialist downloads and caches educational and
non-educational web pages for school internet trainings using a legal
copy of the Web whacker program. He violates copyright law by
copying these pages onto the school's server.
False 3. Privacy campaigners support advertising networks because they
protect individual users ' privacy.
False 4. A patent entitles the inventor to make, use, sell and import his / her
invention. In other words, a patent confers on the inventor the right to
use the invention meaning, the right to produce, use, sell, and import
the invention.
True 5. Any product which can be digitized and distributed digitally would
benefit from digital assets legislation.
False 6. The local Blockbuster Video store owner supports the school every
Friday by donating to the school one videotape rental-free. In the
multipurpose room, the video is shown to reward the students with
perfect attendance that week. This is fair use.
True 7. A student doing a multimedia report finds out how to copy from a CD-
ROM encyclopedia the QuickTime movie of Kennedy's "We shall go to
the moon." He delivers the study to his classmates, then posts it on
the LAN of the school. That is to be used fairly.
True 8. Responsibility principle means that individuals, organizations, and
societies should be held accountable to others for the effects of their
actions.
True 9. Liability is a characteristic of political systems where a body of law is in
122
place that allows people to seek damages that certain entities,
processes, or organizations do to them.
False 10. Downloading a music track owned by a record company without
paying for it is an example of trademark law.
answer.
Keywording 1. It is a descriptive term used to denote the content of a document in an

information retrieval system.
Cyberpiracy 2. It includes the same actions as copyright infringement but in an effort
to redirect traffic from the legitimate site to an infringing site.
Cap pricing 3. Putting caps on bandwidth use, charging more for further use in price
ranges.
Fair use 4. Any copying of copyrighted material for a specific and "transformative"
purpose, such as reporting, criticizing or parodying a work that is
copyrighted.
Deep packet 5. Evaluates the data portion and the packet header transmitted through
inspection the inspection point, avoiding any non-compliance with the protocol,
spam, viruses, intrusions and any other specified conditions to prevent
the packet from going through the inspection point.
Cybersquatting 6. Registering domain names similar to or identical to other trademarks
to extortion the profits of legitimate owners.
Data disclosure 7. Personal data shall never be revealed to the person and shall be
accessed without the principal intent in place.
Cookies 8. It is used to track individuals at a single site.
Golden rule 9. Putting yourself in someone else's place and thinking of yourself as
the object of the decision can help you think about fairness in making
decisions.
Site transaction 10. Can be used to gather and analyze detailed information about user
logs viewed page content.
Essay
Name some of the drawbacks to the five techniques used in the data mining Internet marketing.
____________________________________________________________________________
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123
Module 3 Project
1. Visit your Facebook page and take a look at the advertisements seen on the
right. What is being advertised, and how do you think it is relevant to your
interests or to your behavior online? Create a list of advertisements in your news
feed. Are these advertisements suitably targeted at you with regard to your
demographics, preferences and past purchases? Go to at least two websites,
and Like a product or like it. Do you see marketing messages relating to your
Likes on Facebook within the next 24 hours?
2. Create a social media marketing video of your school indicating program
offerings.
3. Create a social media marketing video of your school under the “new normal”.
4. Go to http://www.strategicbusinessinsights.com/vals/presurvey.shtml. Take the
survey to find out which category of lifestyle you fit into. Then write a one-page
paper describing how your e-commerce usage impacts your lifestyle and values.
How does your lifestyle affect your online consumer behavior?
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124
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125
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TED Talk / Animation / Sample Simulations / Multimedia Attachments:
How Wi-Fi works

https://www.youtube.com/watch?v=37R6RSJgRn8
Wi-Max to LTE
https://www.youtube.com/watch?v=HyRPloseTUc
Google Data Center Efficiency Best Practices

http://www.youtube.com/watch?v=voOK-1DLr00
How to Prevent Identity Theft

https://www.youtube.com/watch?v=qBDCnKfExw4
Data Protection and Privacy

https://www.youtube.com/watch?v=6vNxslcf9AE
Suggested Readings:
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MODULE 1
Pandora’s Original Business Model Case Study

https://www.termpaperwarehouse.com/essay-on/Pandora-Case-Study/497130
How does Twitter Make Money? Twitter Business Model

https://www.feedough.com/how-does-twitter-make-money/
Google Data Center Efficiency Best Practices

https://drive.google.com/file/d/0B01860rVC2VaVHdfNVNaRENvVHM/view
MODULE 2
Rise of M-Commerce: Mobile Ecommerce Shopping Stats & Trends in 2020

https://www.businessinsider.com/mobile-commerce-shopping-trends-stats
Blockchain in HR: Challenges, Applications and the Future of Work

https://www.digitalhrtech.com/blockchain-hr-challenges-applications-future-of-work/
MODULE 3
Online vs Traditional Marketing

https://www.youtube.com/watch?v=d4aijRJFOq4
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Techniques and Practical Examples of Data Mining in Marketing

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Ecommerce Module Mañabo With Answer Key

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E-Commerce

COURSE CODE: ITEW1

COURSE DESCRIPTION: This course introduces the concepts, vocabulary, and

Module Title: THE UPRISING IS ON THE MOVE

This module will address topics related to the implementation of e-commerce,

After Module 1, you are expected to:

C. Topic 3: E-commerce Infrastructure

Topic Title: Introduction to E-Commerce

Huge scientific and technical developments in the era of globalization have

E-Commerce is the method of purchasing and selling or sharing goods, services

After Topic 1, you are expected to:

a. List down 5 types of E-commerce

b. Enumerate 5 benefits of E-commerce in business

E-business covers internal processes including manufacturing, inventory control,

Difference between E-commerce and E-business

Figure 1. The Difference Between E-commerce and E-Business

The intermediary plays two roles:

 In introducing a distribution platform it supports the goods and

Mobile e-commerce (M-commerce)

Figure 2. The Internet and the Evolution of Corporate Computing [2]

Features of E-commerce Technology

 Pervasiveness. It is available just about everywhere, at all times. It frees the

----------End of Topic 1----------

Module 1: Topic 1 Post-test

Case Study. Read Pandora’s Original Business Model Case Study at

Topic Title: Elements of Business Models

A business model is very important to ensure a company is properly set up and is

After Topic 2, you are expected to:

Article: How does Twitter Make Money? Twitter Business Model

How does Twitter make money through advertising?

 Promoting a tweet that will appear in people’s timelines

How does Twitter make money through Data Licensing or “Firehose”?

With sophisticated analysis, companies can learn detailed and specific

1. What attributes or benchmarks can be used to measure a company's market

2. Which are the most valuable things on Twitter?

What is business model?

The value streams

Six Sigma. It is a data-driven approach designed to remove process flaws. The

Lean focuses on reducing waste, while Six Sigma emphasizes reducing

The revenue streams

Eight Key Elements of a Business Model

There are 8 components that form a business model [2] [7]:

Successful e-commerce value propositions:

Marketing strategy ways include: social media, video tutorials, blogging,

It defines which kinds of experiences and perspectives are important to the

ECommerce enabler is a company that runs an online shopping platform that

B2B Business Models

B2B e-commerce relies heavily on the so-called electronic data interchange

 E-Distributor. It refers to a company which directly supplies products and

Table1. B2B Business Models [2]

B2C Business Models

 Transaction broker. The same legal and ethical requirements apply to a

Industries using this model:

 Service provider. It refers to a company that provides its subscribers access to

---------End of Topic 2----------

Topic Title: E-commerce Infrastructure

Owing to the highly competitive digital marketing landscape, running an E-

The business aspect of e-commerce requires a fast and simple method of

After Topic 3, you are expected to:

The Evolution of Internet

Innovation Phase, 1964–1974

Institutionalization Phase, 1975–1995

Domain Names and Uniform Resource Locator [2] [10]

Domain names trade is a multi-million-dollar market. Because domain names are