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This slide continues the discussion of the unique features of the Internet and e-commerce. Ask students what the effects are of the four features listed on this slide. Interactivity: Consumers engaged in dialog that dynamically adjusts experience to the individual. Consumer becomes co-participant in process of delivering goods to market. Information density: Greater price transparency. Greater cost transparency. Enables merchants to engage in price discrimination. Personalization/Customization: Personalized messages can be sent to individuals as well as groups. Products and services can be customized to individual preferences. Social technology: New Internet social and business models enable user content creation and distribution, and support social networks. * This Interactive Session looks at the online division of Turner Broadcasting System, which manages the online presence of sports leagues in conjunction with televised events. The case illustrates the ability of Internet-driven technologies to create new business models. * This slide introduces digital markets and discusses the effects of digital markets on the ways companies conduct business. Ask students to define the terms listed here, and also to explain how each of these effects (lowered information asymmetry, etc.) are created by digital markets. Information asymmetry: when one party in a transaction has more information that is important for the transaction than the other party Search costs: The effort to find suitable products Transaction costs: The cost of participating in a market Menu costs: Merchants’ costs of changing prices Price discrimination: Selling the same goods, or nearly the same goods, to different targeted groups at different prices. Dynamic pricing: The price of a product varies depending on the demand characteristics of the customer or the supply situation of the seller Disintermediation: The removal of organizations or business process layers responsible for intermediary step
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