Chapter 1 Notes

Terms

1. E-commerce- the practice of engaging in transactions online

2. Extranets- Internet links between suppliers and purchasers

3. Intranets- Internet links that operate within a business

4. Internet- Global network of computer networks that use a common interface for communication.

5. E-business- The process of using information technology to support a fuller operation of business.

6. Marketing- the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services that create exchanges that satisfy individual and organizational needs.

7. Relationship Marketing- the strategy a business uses to hold desirable customers over a long period of time.

8. Lifetime Value of a Customer (LVC)- An estimate of the potential lifetime profit of a customer.

9. Economic Welfare- The net benefit an economic system provides to a society.

10. Ethical Dilemma- When a proposed action benefits certain individuals, businesses, or societies, but at the same time has negative consequences for others.

11. Constituencies- People involved with or served by an organization.

Four Layers of the Internet Economy

Layer One- the Internet infrastructure layer- Layer One includes companies with products and services that help create an IP-based network infrastructure.

Layer Two- Internet Applications Layer- Layer two builds off layer one and includes products and services that make it technologically feasible to perform business activities online.

Layer Three- Internet Intermediary Layer- Layer Three allows the investments in infrastructure to turn into business transactions by facilitating the meeting of buyers and sellers over the Internet.

Layer Four- Internet Commerce Layer- Layer Four includes the sale of products and services to consumers or businesses over the Internet.

Changes Due to E-Business Systems

1. Customized products

2. Increased price pressure resulting in lower prices

3. Shorter channels of distribution dominated by facilitators

4. Extranet-enhanced supply chain management

5. Nonlinear promotions

6. Electronic transfer of funds

7. Database information management systems and CRM (customer relationship marketing)