E-COMMERCE AND INTERNET MARKETING (PRELIMS) PLDT, cable and satellite companies, and the government,

all contribute toward the internal structure of the Internet. 

Introduction: Each organization on the Internet is responsible only for
            The Internet is rapidly becoming a key resource for maintaining its own network.  No single person, company,
locating information relevant to a particular field, engaging institution, or government agency controls or owns the
in professional discourse, accessing published material, and Internet.  The World Wide Web Consortium (W3C),
checking on tomorrow’s weather.  It has become the however, oversees research and sets standards and
foundation for tomorrow’s electronic community, providing guidelines for many areas of the Internet.  The mission of
access to government, media, scientists, and friends and the W3C is to contribute to the growth of the Web.  More
relatives.  Access to the internet is now becoming a than 350 organizations from around the world are
requirement of doing business for many enterprises.  members of the W3C, advising, defining standards, and
Commercial use of the Internet is one of its fastest growing addressing issues.
uses. Several factors have led to the dramatic increase in World Wide Web – It is a system of interlinked
the size of Internet including increased bandwidth, hypertext documents accessed via the Internet
relaxation of government restrictions, and less expensive
connection options.  One major factor which has led to the  
popularization of the Internet is the World Wide Web Internet – It is a global system of interconnected
(WWW), which provides a hypermedia layer over computer networks that use the standard Internet
information and resources available on the Internet. protocol suite (TCP/IP) to serve several billion
users worldwide
LESSON 1: BASICS OF THE INTERNET
 EVOLUTION OF THE INTERNET
The Internet links are computer networks all over
the world so that users can share resources and The Internet has its roots in a networking projects started
communicate with each other.  Some computers have by the Pentagon’s Advanced Research Projects Agency
direct access to all the facilities on the Internet such as the (ARPA), an agency of the US Department of Defense.
universities.  And other computers, example, privately-
owned ones, have indirect links through a commercial ARPA’s goal was to build a network that (1) allowed
service provider, who offers some or all of the Internet scientists at different physical locations to share
facilities.  In order to be connected to Internet, we must go information and work together on military and scientific
through service suppliers.  Many options are offered with projects and (2) could function even if part of the network
monthly rates.  Depending on the option chosen, access were disabled or destroyed by a disaster such as a nuclear
time may vary. attack.  That network is called ARPANET, became
functional in September 1969, linking scientific and
The Internet is what we call a met network, that is, academic researchers across United States.
a network of networks that spans the globe. It’s impossible
to give an exact count of the number of networks or users The original ARPANET consisted of four main computers,
that comprise the Internet, but it is easily in the thousands one each located at the University of California at Los
and millions respectively.  The Internet employs a set of Angeles, the University of California at Santa Barbara, the
standardized protocols which allow for the sharing of Stanford Research Institute, and the University of Utah.
resources among different kinds of computers that Each of these computers served as a host on the network. 
communicate with each other on the network.  These A host, most commonly known today as a server, is any
standards, sometimes referred to as the Internet Protocol computer that provides services and connections to other
Suite, are the rules that developers adhere to when computers on a network.  Hosts often use high-speed
creating new functions for the Internet. communications to transfer data and messages over a
network.  As researchers and others realized the great
The Internet is also what we call a distributed benefit of using ARPANET to share data and information,
system; there are no central archives.  Technically, no one ARPANET underwent phenomenal growth.
runs the Internet.  Rather, the Internet is made up of
thousands of smaller networks.  The Internet thrives and By 1984, ARPANET had more than 1,000 individual
develops as its many users find new ways to create, display computers linked as hosts.
and retrieve the information that constitutes the Internet. Today, more than 550 million hosts connect to the
Until 1995, NSFnet handled the bulk of the Internet.  Some organizations connected entire
communication activity, or traffic, on the Internet.  In 1995, networks to ARPANET to take advantage of its
NSFnet terminated its network on the Internet and high-speed communications.
resumed its status as a research network.  Today, the In 1986, the National Science Foundation (NSF) connected
Internet consists of many local, regional, national, and its huge network of five super computer centers,
international networks.  Numerous corporations, called NSFnet, to ARPANET.  This configuration of complex
commercial firms, and other companies such as IBM networks and hosts became known as the Internet.
provide networks to handle Internet traffic.  Both public
and private organizations own networks on the Internet. 
These networks along with telephone companies such as
CONNECTING TO THE INTERNET 1. AOL (America Online)
2. MSN (Microsoft Network)
Many home and small business users connect to the
Internet via high-speed broadband Internet service.  With AOL differs from many OSPs in that it provides gateway
broadband Internet service, computer or mobile device functionality to the Internet, meaning it regulates the
usually is connected to the Internet the entire time it is Internet services to which members have access.
powered on.  Example of broadband Internet service
include cable, DSL, fiber, radio signals, and satellite. AOL also provides free access to its services to any user
with a broadband Internet connection.
 Cable Internet service - provides high-speed Internet
When selecting an ISP or OSP for dial-up access, ensure it
access through the cable television network via a cable
provides at least one local telephone number.  Otherwise,
modem.
long-distance telephone charges will apply for the time we
 DSL (Digital Subscriber Line) - provides high-speed
connect to the Internet.
Internet connections using regular copper telephone
lines.  
 Fiber to the Premises (FTTP) - uses fiber-optic cable to
provide high-speed Internet access to home and Wireless Internet Service Provider
business users. Sometimes called a wireless data provider, it is a
 Fixed wireless - provides high-speed Internet company that provides wireless Internet access to desktop
connections using a dish-shaped antenna on house or and notebook computers and mobile devices, such as
business to communicate with a tower location via smart phones and portable media players, with built-in
radio signals. wireless capability (such as Wi-Fi) or to computers using
 A cellular radio network - offers high-speed Internet wireless modems or wireless access devices.
connections to devices with built-in compatible
technology or computers with wireless modems. Wireless modems, usually are in the form of a USB
 A Wi-Fi (wireless fidelity) network uses radio signals to flash drive or a card that inserts in a slot in a computer or
provide high-speed Internet connections to compatible mobile device, generally dial a telephone number to
or properly equipped wireless computers and devices. establish connection with the wireless Internet service
 Satellite Internet service provides high-speed Internet provider.  An antenna on or built into the computer or
connections via satellite to a satellite dish that device, wireless modem, or wireless access device typically
communicates with a satellite modem. sends signals through the airwaves to communicate with a
wireless Internet service provider.
ACCESS PROVIDERS
 How Data and Information Travel the Internet
An access provider is a business that provides individuals
and organizations access to the Internet free or for a fee. Computers connected to the Internet work
together to transfer data and information around the
For example, some Wi-Fi networks provide free access
world using servers and clients and various wired and
while others charge a per use fee.  Other access providers
wireless transmission media.  On the Internet, computer is
often charge a fixed amount for an Internet connection,
a client that can access data, information, and services on a
offering faster speeds or more services for higher rates.
variety of servers.  The inner structure of the Internet
Access providers are categorized as regional or national works much like a transportation system.  Just as interstate
ISPs, online service providers, and wireless Internet service highways connect major cities and carry the bulk of the
providers. automotive traffic across the country, several main
transmission media carry the heaviest amount of traffic on
ISP (Internet Service Provider) Internet.  These major carriers of network traffic are known
It is a regional or national access provider.  collectively as the Internet backbone.
 A regional ISP usually provides Internet access to a
The transmission media that make up the Internet
specific geographical area.
backbone exchange data and information at several
 A national ISP is a business that provides Internet
different major cities across the country.  That is, they
access in cities and towns nationwide.
transfer data and information from one network to another
 For dial-up access, some national ISPs provide both
until reaching the final destination.
local and toll-free telephone numbers. Due to their
larger size, national ISPs usually offer more services  
and have a larger technical support staff than regional
ISPs.  Examples of national ISPs are Globe and Smart. 
In addition to providing Internet access, an online
service provider.
Internet Addresses
(OSP) also has many members-only features such as instant
messaging or their own customized versions of a Web             The Internet relies on an addressing system much
browser.  The two more popular OSPs are: like the postal service to send data and information to a
computer at a specific destination.
            An IP address, short for Internet Protocol address, is 1.      Entertainment for Everyone – Entertainment is
a number that uniquely identifies each computer or device one of the foremost reasons why people prefer surfing the
connected to the Internet. Web. (online gaming, exploring lifestyle websites)
2.     Social Networking and Staying Connected –
            The IP address usually consists of four groups of Facebook, Twitter. These portals have become our means
numbers, each separated by a period.  The number in each to stay connected with friends and family and stay in
group is between 0 and 255. touch with the latest happening in the world.
            For example, the numbers 72.14.207.99 are an IP 3.      Online Services and E-commerce – We can
address.  In general, the first portion of each IP address perform all our financial transactions online through the
identifies the network and the last portion identifies the numerous monetary services. E-commerce is used for all
specific computer.  These all-numeric IP addresses are type of business dealing that involves the transfer of
difficult to remember and use.  Thus, the Internet supports money through the Internet. Online transaction of money
the use of a text name that represents one or more IP has become the norm with almost all kinds of business.  E-
addresses.  commerce, with its vast reach over a variety of products
and services, makes it possible to have the client’s orders
A domain name is the text version of an IP delivered at their doorsteps. (eBay, Lazada, Shoppee)
address.  As with an IP address, the components of a
domain name are separated by periods.  The text in the   
domain name up to the first period identifies the type of Disadvantages of the Internet
Internet server.
  1. Theft of Personal Information – The use of Internet for
banking, social networking, or other services, often
INTERNET TODAY makes our personal information vulnerable to theft.
The Internet is an unprecedented gateway to a vast wealth There are no fail-proof ways to securing names,
of knowledge and information, and its uses are virtually account numbers, addresses, photos, and credit card
unlimited.  The World Wide Web is deeply ingrained in our numbers from being stolen or misused by thieving
culture and everyday lives.  It is a source of news, facts and websites and individuals.  Unscrupulous hackers can
figures; a communication tool that allows millions of us to access our sensitive information through unsecured
connect with each other every second of every day; a way connections by planting phishing software
to bank, invest, and shop; and an educational and 2. Spamming – refers to sending unwanted ds, which
entertainment medium that allows people from all walks of serve no purpose and needlessly obstruct the
life to learn about the world and have fun doing it. computer system. Such illegal activities can be very
frustrating as it makes it slower to access our email
Especially promising are the marvelous advantages that the accounts and makes the entire service unreliable for
Internet offers children, including access to educational consumers.
materials, publications, online friendships, pen pals, 3. Malware Threats – One of the most annoying
subject-matter experts, and information on hobbies, games, problems with the Internet is the ease with which any
and sports.  There is no question that many of today’s kids malware can infect our computers. Internet users are
benefit enormously from online access often in ways often plagued by virus attacks that harm their
different from their parents’ use of it. computers and important files.  Virus programs are
inconspicuous and may get activated simply by clicking
 
a seemingly harmless link.  Computers connected to
Advantages of the Internet the Internet are extremely prone to IP targeted virus
attacks that may end up crashing the system
1. Faster Communication – the Internet has been completely.
mankind’s greatest means of communication yet.  Internet virus can be of three types:
Newer innovations are only making it faster and more
reliable. (video conferencing, chat and messenger
1. The first type of virus affects files and goes directly
services)
for a particular file or file type.
2. Abundant Information Resources – the Internet is a
2. The second type harms system and executable
treasure trove of information; which offers knowledge
boot files.
on any given topic under the sun.
3. Lastly, there’s the macro virus, which is the most
3. Inexhaustible Education – The Internet has become an
common as well as the most harmless of them all.
essential propagator of knowledge, both through free
The macro virus simply keeps changing things like
as well as paid services. The credibility of this form of
symbols on word files.
education and whether it is safe, secure, and
trustworthy, is usually proven through the quality and Worms – the type of virus that can replicate
authenticity of content presented by each website.  and spread itself
The World Wide Web has become a remarkable
avenue for the academically unprivileged, to amass Trojan – when a virus is disguised as
greater and know-how on subjects. something else 
4. Age-inappropriate Content – Ex. Pornography – It sites.  WWW can handle different text formats and
is the lack of control over the distribution and unrestricted different methods of organizing information.
access of pornographic material that is detrimental to
children.             World-Wide Web (W3) is the universe of network-
accessible information, an embodiment of human
5. Social Isolation, Obesity, and Depression – The knowledge.  It is an initiative started at “CERN”, now with
biggest problem with having the Internet is, its ability to many participants.  It has a body of software, and a set of
create rifts between the real and virtual world. There is an protocols and conventions.  W3 uses “hypertext” and
addiction for everything that pertains to the web and that multimedia techniques to make the web easy for anyone
includes excessive surfing, online gambling, social to roam browse, and contribute to.
networking, and gaming addiction. The link between
 
obesity and the Internet is rather easy to understand.  The
more one sits in front of the computer, the lesser one Lesson Proper:
exercises.  It causes also depression.  It results also to
compulsive Internet use and excessive Internet use. LESSON 2: Hypertext
            The terminology of the World-Wide Web was
Introduction:
closely based on text.  So the basic element that a user
The phrase digital world is most commonly used in created or read was called a ‘page’ and a page contained
when defining citizenship, digital fluency, and digital text that the user saw and information that told the web
literacy. The digital world is the availability and use of server how to make the page look.  These instructions are
digital tools to communicate on the Internet, digital like the ‘markup’ used by printers and newspaper editors. 
devices, smart devices and other technologies. So Berners-Lee named the language Hypertext Mark-up
Language or html.  Berners-Lee wrote a language that
Humanities and education discussions of the
would instruct a computer which was continuously
'digital era' tend to create variations when categorizing and
connected to the Web, a ‘web-server’, to store the text file
defining the mass of mediated technologies and human
written by the user, and to give it an address of universal
interactions that are suggested as part of the digital
(now more commonly ‘uniform’) resource locator or URL. 
world. The phrase 'digital world' is used loosely as a mass
Unlike the linear medium of a book, each page could be
noun with many possible meanings and variations.
connected to any other by embedding URL addresses
Examples: An informal example is devices given to within the page.  These connections were conceived as
toddlers entering the digital era. Formal usage includes being a kind of link over the text and were name hypertext
educational policies referring to the digital world, especially links.
in standardizing digital access.  Children suffering a lack of
access to the digital world are part of the digital divide.
The One Laptop per Child program is an example of (digital Email and Webmail
world) inclusion for children living in poverty and suffering
as part of the digital divide. An early development of the World Wide Web was the
facility for sending text messages to a specified recipient. 
The phrase digital world was being used in These electronic mails or emails needed special programs
electrical engineering studies before the creation of that allowed text to be input, encoded using a standard
the World Wide Web. Originally it was used to describe the protocol such as Unicode, and sent via the Internet to the
prevalence of digital electronic devices as opposed to host computer specified in the email address.  The program
analogue electronic devices. Articles relating to education has to reverse this process so that received emails could be
in the digital world became more common in the 1990s. read.  The email has become the dominant method of
exchanging mail in many industry sectors, particularly in
            The World-Wide Web is a hypertext-based
the academic world.  Email is gradually replacing post for
information system.  Any word in a hypertext document
many professionals, but its advantages are also its major
can be specified as a pointer to a different hypertext
drawbacks: it is instantaneous and it is as easy to send an
document where more information pertaining to that word
email to many people as it is to one.  Sending an email
can be found.  The reader can open the second document
creates the expectation that there will be an immediate
by selecting the word (using different methods depending
response.  Not only is immediate response expected, but it
on the interface; in a mouse-based system, a user would
is expected from many people.  This new phenomenon of
probably place the mouse over the word and click the
interactivity has become a major problem for professionals,
mouse button); only the part of the linked document which
who spend more and more time dealing with emails and
contains relevant information will be displayed.
expurgating rubbish emails or ‘spam’.
            The second document may itself contain links to
HISTORY OF THE WEB
further documents.  The reader need not know where the
referenced documents are, because they will be obtained             Tim Berners-Lee inted the World-Wide Web in
and presented as they are needed. 1989, about 20years after the first connection was
established over what is today known as the Internet.  At
            World-Wide Web uses hypertext over the Internet: 
the time, Tim was a software engineer at CERN, the large
The linked documents may be located at different Internet
particle physics laboratory near Geneva, Switzerland.  Many 3. The Internet has become a great tool for avoiding the
scientists participated in experiments at CERN for extended hassles of the back, offering the chance to make the
periods of time, and then returned to their laboratories transactions quickly and safely.
around the world. 4. It also offers a powerful source for shopping and the
easiness of having products delivered straight to house,
            Tim’s proposal which specified a set of technologies should we decide do not want to go out.
that would make the Internet truly accessible and useful to 5. The widespread use of Internet has opened new areas
people in late 1989 was not accepted, however, Tim of jobs in all countries and expanded the availabilities
persevered by October of 1990, he had specified the three of working from home.
fundamental technologies that remain the foundation of 6. The Internet in one of the most valuable tools in
today’s Web. education since it provides an enormous amount of
information and is the greater source of reference for
1. HTML (Hyper Text Markup Language): The publishing educators and students.
format for the Web, including the ability to format
documents and link to other documents and  
resources.
Internet Evolution
2. URI (Uniform Resource Identifier): A kind of “address”
that is unique to each resource on the Web. The available material, programs, websites and
3. HTTP (Hypertext Transfer Protocol): Allows for the other services of the internet are multiplied every day,
retrieval of linked resources from across the Web. revolutionizing the technology being used.  Its applications
grow exponentially and it would be impossible to outline
Tim also wrote the first Web page editor/browser
everything in this booklet.  The most important aspect of
(‘World Wide Web”) and the first Web server by the end
the Internet evolution however, is that its exponential
of 1990, the first Web page was served.  By 1991, people
growth allows it to ease and transform people’s life and
outside of CERN joined the new Web community.  Very
increase their knowledge.
important to the growth of the Web, CERN announced in
April 1993 that the World Wide Web technology would be Preciousness of Time
available for anyone to use on a royalty-free basis.
            Some people say “time is money”.  Some others say
Tim Berners-Lee and other realized that for the that time are precious and should not be wasted. 
Web to reach its full potential, the underlying technologies Whatever applies to however, one thing is true: Todays
must become global standards, implemented in the same needs and demands of society have taken over our time
way around the world.  Therefore, in 1994, Tim founded that feels it’s not enough for doing everything we need to
the World Wide Web Consortium (W3C) as a place for be doing every day.  The appearance of the Internet saving
stakeholders to reach consensus around the specification matter came as a life saver for many tasks that would take
and guidelines to ensure that the Web works for everyone days to complete before.  The ability of the Internet to
and that it evolves in a responsible manner.  W3C standards store materials, its ability to calculate instantly almost
have enabled a single World Wide Web information and anything, and its worldwide application databases had
people, and an increasingly-rich set of capabilities: Web 2.0 made tasks much easier and less time consuming in
(personal and dynamic), Web 3.0 (a semantic Web of linked almost every industry on the planet.
data), Web services, voice access, mobile access,
accessibility for people with disabilities and for people Internet Bank
speaking many languages, richer graphics and video, etc.  The advanced technologies of the Internet
The Web Foundation supports the work of W3C to ensure managed to free people from the hassles of losing an
that the Web and the technologies that underpin it remain enormous amount of time waiting in the line to be served
free and open to all. at the bank branches.  Internet banking is the easy way of
  dealing with bank transactions that can be done including
bill payments and transfers.  Internet banking is
convenient also in that it is available twenty-four hours a
day.

BENEFITS OF INTERNET USE

International Market
1. The Internet has an enormous amount of publications
The Internet enables us to buy anything we need
added on it every day and it’s evolving as the most
from the comfort of own house.  Many supermarkets take
powerful source of information.
online orders and deliver the stock within the day at our
2. Use of the Internet has made jobs easier and
doorstep.  Many consumer stores offer online purchases
oversimplified tasks that would take an enormous
about almost anything we can imagine.  Online shopping
amount of time before.
can save time and money since it offers a wide range of
specials in much cheaper prices than what we will find in Over the past decade or so, the web has been
the actual stores. embraced by millions of businesses as an inexpensive
channel to communicate and exchange information with
  prospects and transactions with customers.
Unemployment Agent Web Applications
Another benefit that the internet has brought into             From a technical view-point, the web is a highly
our lives is that ever since the internet has been programmable environment that allows mass
introduced, new areas of jobs and careers have opened up customization through the immediate deployment of a
to the public.  Web designing, computer technician and large and diverse range of applications, to millions of global
programmer, are among the many that are found at their users.  Two important components of a modern website
peak demand for employers.  Alost every company are flexible web browsers and web applications; both
nowadays, needs to have a website that promotes its available to all and sundry at no expense.
products and patents that web designers are among the
most highly requested professionals needed. Housewives,             Web browsers are software applications that allow
mothers and disabled people, can now have a chance to users to retrieve data and interact with content located on
work from their house and earn money that would Web pages within a website.  Web pages may also run
otherwise be difficult to obtain. client-side scripts that “change” the Internet browser into
an interface for such applications as web mail and
Treasure Bank interactive mapping software. (example, Yahoo Mail and
The biggest benefit of the internet can be found in Google Maps).
the educational sector.  Educators can obtain learning             Most importantly, modern websites allow the
material from it, prepare courses online and deliver capture, processing, storage and transmission of sensitive
audio/visual information to students.  For Instructors, it is customer data for immediate and recurrent use.  And, this
a valuable source for referencing material and enhancing is done through web applications.  Such Web applications
the knowledge of their students.  The Internet provides a as webmail, login pages, support and product request
great place for conferencing and collaborating with forms, shopping carts and content management systems,
students from all over the world.  Students can search for shape modern websites and provide business with the
information regarding their school courses via electronic means necessary to communicate with prospects and
libraries who offer a great variety of journals and scientific customers.  These are all common examples of web
articles.  The resources available over the net cover almost applications.
every aspect of the school curriculum and students have a
valuable machine for enhancing their knowledge and Web applications – are computer programs
expanding their assigned work. allowing website visitors to submit and retrieve data
to/from a database over the Internet using their preferred
  web browser.  The data is then presented to the user within
BROWSING THE WEB their browser as information is generated dynamically (in a
specific format, example, in HTML, using CSS) by the web
            A Web browser, or browser, is application software application through a web server.
that allows users to access and view Webpages or access
Web 2.0 programs.  To browse the Web, we need a For the more technically oriented, Web
computer or mobile device that is connected to the applications query the content server (essentially a content
Internet and has a Web browser.  The more widely used repository database) and dynamically generate web
Web browsers for personal computers are Internet documents to serve to the client (people surfing the
Explorer, Firefox, Opera, Safari, and Google Chrome.  With website).  The documents are generated in a standard
an Internet connection established, we start a Web format to allow support by all browsers (example: HTML or
browser.  The browser retrieves and displays a starting Web XHTML).
page, sometimes called the browser’s home page.  The JavaScript – is one form of client side script that
initial home page at any time.  Another use of the term, permits dynamic elements on each page (Example: an
home page, refers to the first page that a Web site image changes once the user hovers over it with a mouse).
displays.  Similar to a book cover or a table of contents for a
Web site, the home page provides information about the The Web browser is key, it interprets and runs all
Web site’s purpose and content.  Many Websites allow scripts etc. while displaying the requested pages and
personalizing the home page so that it contains areas of content.  Another significant advantage of building and
interest to us.  The home page usually contains links to maintaining web applications is that running client side. 
other documents, Webpages, or Websites.  A link, short for Web applications are quickly deployed anywhere at no cost
hyperlink, is a built-in connection to another related Web and without any installation requirements (almost) at the
page or part of a Web page. user’s end.  Web applications may either be purchased off-
the-shelf or created in-house.
WEB APPLICATIONS OR WEBSITE WIDGETS
How do Web Applications Work?
The Figure below details the three-layered web application remain open to allow communication with legitimate
model.  The first layer is normally a web browser or the traffic and therefore constitute a major vulnerability.
user interface; the second layer is the dynamic content  Web applications often have direct access to backend
generation technology tool such as Java services (JSP) OR data such as customer databses and, hence, control
Active Server Pages (ASP), and the third layer is the valuable data and are much more difficult to secure.
database containing content (example news) and Those that do not have access will have some form of
customer data. script that allows data capture and transmission.  If a
hacker becomes aware of weaknesses in such a script,
The Figure below shows how the initial request is triggered he may easily reroute unwitting traffic to another
by the user through the browser over the Internet to the location and illegitimately hive off personal details.
web application server.  The web application accesses the
 Most web applications are custom-made and,
databases servers to perform the requested task updating
therefore, involve a lesser degree of testing than off-
and retrieving the information lying within the database. 
the-shelf software. Consequently, custom applications
The web application then presents the information to the
are more susceptible to attack.
user through the browser.
 
Web Security Issues
Web applications, therefore, are a gateway to databases
Despite their advantage, web applications do raise a
especially custom applications which are not developed
number of security concerns stemming from improper
with security best practices and which do not undergo
coding.  Serious weaknesses or vulnerabilities, allow
regular security audits.  In general, “Which parts of a
hackers to gain direct and public access to databases in
website we thought are secure are open to hack attacks?”
order to churn sensitive data.  Many of these databases
and “what data can we throw at an application to cause it
contain valuable information (example: personal and
to perform something it should not do?”
financial details) making them a frequent target of hackers. 
Although such acts of vandalism as defacing corporate
websites are still commonplace, nowadays, hackers prefer Introduction:
gaining access to the sensitive data residing on the
database server because of the immense pay-offs in selling Computer Network is a pivotal element of electronic
the data. commerce.  The availability of the internet fueled the
growth of e-commerce for both consumer market and
In the framework described, it is easy to see how a hacker business market.  Networks can be categorized in Local
can quickly access the data residing on the database area networks (LANs) and wide area networks (WANs).  The
through a dose of creativity and. With luck, negligence or Internet is the world’s largest public WAN.  Today’s
human error, leading to vulnerabilities in the web networks are built using standard hardware and software
applications. components.  The communications over the networks are
As stated, websites depend on databases to deliver the governed by various protocols.  TCP/IP protocol is the
required information to visitors.  If web applications are not foundation of all Internet applications, such as FTP, email
secure, i.e., vulnerable to, at least one of the various forms and HTTP.
of hacking techniques, then entire database of sensitive Lesson Proper:
information is at serious risk.
LESSON 3: NETWORKS
Some hackers, for example, may maliciously inject code
within vulnerable web applications to trick users and A network is a collection of computers, servers,
redirect them towards phishing sites.  This technique is mainframes, network devices, peripherals, or other devices
called Cross-Site Scripting and may be used even though connected to one another to allow the sharing of data. An
the web servers and database engine contain no example of a network is the Internet, which connects
vulnerability themselves. millions of people all over the world. Below is an example
image of a home network with multiple computers and
Recent research shows that 75% of cyber-attacks are done other network devices all connected.
at web application level.

 Websites and related web applications must be

Network topologies and types of networks
available 24 hours a day, 7 days a week, to provide the
required service to customers, employees, suppliers The term network topology describes the relationship of
and other stakeholders. connected devices in terms of a geometric graph. Devices
 Firewalls and SSL provide no protection against web
are represented as vertices, and their connections are
application hacking, simply because access to the
represented as edges on the graph. It describes how many
website has to be made public – all modern database
systems may be accessed through specific ports and connections each device has, in what order, and it what
anyone can attempt direct connections to the sort of hierarchy.
databases effectively bypassing the security
mechanisms used by the operating system. These ports
Typical network configurations include the bus  The chance of redundant connections is high,
topology, mesh topology, ring topology, star topology, tree which adds to the high costs and potential for
topology and hybrid topology. reduced efficiency.
Network topology a topology is the physical configuration A ring topology is a network configuration where device
of a network that determines how the network's computers connections create a circular data path. Each networked
are connected. Common configurations include the bus device is connected to two others, like points on a circle.
topology, linear bus, mesh topology, ring topology, star Together, devices in a ring topology are referred to as a ring
topology, tree topology and hybrid topology.  network.
Bus topology is a network setup where each computer and Advantages of a ring topology
network device is connected to a single cable or backbone.
Depending on the type of computer network card, a coaxial  All data flows in one direction, reducing the chance
cable or an RJ-45 network cable is used to connect them of packet collisions.
together.  A network server is not needed to control network
connectivity between each workstation.
Advantages of bus topology
 Data can transfer between workstations at high
 It works well when you have a small network. speeds.
 It's the easiest network topology for connecting  Additional workstations can be added without
computers or peripherals in a linear fashion. impacting performance of the network.
 It requires less cable length than a star topology.
Disadvantages of a ring topology
Disadvantages of bus topology
 All data being transferred over the network must
 It can be difficult to identify the problems if the pass through each workstation on the network,
whole network goes down. which can make it slower than a star topology.
 It can be hard to troubleshoot individual device  The entire network will be impacted if one
issues. workstation shuts down.
 Bus topology is not great for large networks.  The hardware needed to connect each workstation
 Terminators are required for both ends of the to the network is more expensive than Ethernet
main cable. cards and hubs/switches.
 Additional devices slow the network down.
 If a main cable is damaged, the network fails or Star topology is one of the most common network setups.
splits into two. In this configuration, every node connects to a central
network device, like a hub, switch, or computer. The central
A mesh topology is a network setup where each computer network device acts as a server and the peripheral devices
and network device is interconnected with one another. act as clients. In a star topology setup, either a coaxial or RJ-
This topology setup allows for most transmissions to be 45 network cable is used, depending on the type
distributed even if one of the connections goes down. It is a of network card installed in each computer. The image
topology commonly used for wireless networks. Below is a shows how this network setup gets its name, as it is shaped
visual example of a simple computer setup on a network like a star.
using a mesh topology.
Advantages of star topology
Advantages of a mesh topology
 Centralized management of the network, through
 Manages high amounts of traffic, because multiple
the use of the central computer, hub, or switch.
devices can transmit data simultaneously.
 Easy to add another computer to the network.
 A failure of one device does not cause a break in
 If one computer on the network fails, the rest of
the network or transmission of data.
the network continues to function normally.
 Adding additional devices does not disrupt data
transmission between other devices. Disadvantages of star topology
Disadvantages of a mesh topology
 The cost to implement is higher than other  May have a higher cost to implement, especially
network topologies, making it a less desirable when using a switch or router as the central
option. network device.
 Building and maintaining the topology is difficult  The central network device determines the
and time consuming. performance and number of nodes the network
can handle.
  If the central computer, hub, or switch fails, the
entire network goes down and all computers are 4. Campus Area Network (CAN)
disconnected from the network. Larger than LANs, but smaller than metropolitan area
networks (MANs, explained below), these types of
A tree topology is a special type of structure where many networks are typically seen in universities, large K-12 school
connected elements are arranged like the branches of a districts or small businesses. They can be spread across
several buildings that are fairly close to each other so users
tree. For example, tree topologies are frequently used to
can share resources.
organize the computers in a corporate network, or the
information in a database. 5. Metropolitan Area Network (MAN)
A hybrid topology is a type of network topology that uses These types of networks are larger than LANs but smaller
than WANs – and incorporate elements from both types of
two or more differing network topologies. These topologies
networks. MANs span an entire geographic area (typically
can include a mix of bus topology, mesh topology, ring
a town or city, but sometimes a campus). Ownership and
topology, star topology, and tree topology.
maintenance is handled by either a single person or
Examples of network devices company (a local council, a large company, etc.).

 Desktop computers, laptops, mainframes, and 6. Wide Area Network (WAN)

servers Slightly more complex than a LAN, a WAN connects
 Consoles and thin clients. computers together across longer physical distances. This
 Firewalls allows computers and low-voltage devices to be remotely
 Bridges connected to each other over one large network to
 Repeaters communicate even when they’re miles apart.
 Network Interface cards The Internet is the most basic example of a WAN,
 Switches, hubs, modems, and routers. connecting all computers together around the world.
 Smart phones and tablets. Because of a WAN’s vast reach, it is typically owned and
 Webcams maintained by multiple administrators or the public.

7. Storage-Area Network (SAN)

Types of Networks in Use Today As a dedicated high-speed network that connects shared
pools of storage devices to several servers, these types of
networks don’t rely on a LAN or WAN. Instead, they move
1. Personal Area Network (PAN) storage resources away from the network and place them
The smallest and most basic type of network, a PAN is into their own high-performance network. SANs can be
made up of a wireless modem, a computer or two, phones, accessed in the same fashion as a drive attached to a
printers, tablets, etc., and revolves around one person in server. Types of storage-area networks include converged,
one building. These types of networks are typically found in virtual and unified SANs.
small offices or residences, and are managed by one person
or organization from a single device.
8. System-Area Network (also known as SAN)
2. Local Area Network (LAN) This term is fairly new within the past two decades. It is
We’re confident that you’ve heard of these types of used to explain a relatively local network that is designed to
networks before – LANs are the most frequently discussed provide high-speed connection in server-to-server
networks, one of the most common, one of the most applications (cluster environments), storage area networks
original and one of the simplest types of networks. LANs (called “SANs” as well) and processor-to-processor
connect groups of computers and low-voltage devices applications. The computers connected on a SAN operate
together across short distances (within a building or as a single system at very high speeds.
between a group of two or three buildings in close
proximity to each other) to share information and 9. Passive Optical Local Area Network (POLAN)
resources. Enterprises typically manage and maintain LANs. As an alternative to traditional switch-based Ethernet
Using routers, LANs can connect to wide area networks LANs, POLAN technology can be integrated into structured
(WANs, explained below) to rapidly and safely transfer cabling to overcome concerns about supporting traditional
data. Ethernet protocols and network applications such as PoE
(Power over Ethernet). A point-to-multipoint LAN
architecture, POLAN uses optical splitters to split an optical
3. Wireless Local Area Network (WLAN) signal from one strand of single mode optical fiber into
Functioning like a LAN, WLANs make use of wireless multiple signals to serve users and devices.
network technology, such as Wi-Fi. Typically seen in the
same types of applications as LANs, these types of networks 10. Enterprise Private Network (EPN) These types of
don’t require that devices rely on physical cables to connect networks are built and owned by businesses that wants to
to the network.
securely connect its various locations to share computer network hardware to configure or setup the internet
resources. technology is known as internet network architecture. 
Different types of devices or the hardware is required to
11. Virtual Private Network (VPN) set-up the internet network architecture.  It can operate
By extending a private network across the Internet, a VPN with the both networks such as wired or either wirelessly.
lets its users send and receive data as if their devices were
connected to the private network – even if they’re not. There are lots of components that are involved in
Through a virtual point-to-point connection, users can maintaining the architecture of the internet technology. 
access a private network remotely. Some important parts that are used to configure the
networking of the internet technology are as follows:
Network Security for E-commerce Systems Satellite
Network security – refers to the security of operating A major part of the internet network architecture is the
systems and servers.  Hackers can gain portions of control satellite.  Satellite plays a vital role in catching and
over the operating systems or servers by exploring flaws in distributing the signals over the network and the users use
operating system and server software.  Software vendors the internet network to search different types of
usually respond to security holes quickly in patches. information at any time.
Network Adapters
Firewall There are different types of network adapters that are used
to configure or setup the internet technology on one’s
Firewall software restricts access by network protocols and operating system.  First install the network adapters in the
IP addresses.  For Web applications, the typical firewall system then install its software for the sake of its proper
configuration is to place public Web server outside the working or compatibility.  Some common network
firewall and rest of servers (such as database, email server, adapters that are used for access of the internet are LAN
FTP and etc.)  inside the firewall, and configure the firewall cards or modems etc.
to allow only HTTP access for incoming requests.
Routers
Virtual Private Network (VPN)
As this technology also operates wirelessly so some
For geographically dispersed organizations who do not components that are used to configure the internet
want to use expensive private networks, they can use network technology wireless router plays an important
encryption technology and software to create a Virtual role and it is also the main part of the architecture.  It is
Private Network (VPN).  Network traffic is encrypted while defined as the device that is used to transmit data from one
traveling through the Internet. place to another in the form of packets that are called as
Private Network data packets is known as router.  These data packets are
also called data gram.
The physical network that carries network traffic is not part
of the Internet.  This option offers additional security with Access Points (AP)
extra cost. A special type of routing device that is used to transmit
the data between wired and wireless networking device is
called as AP.  It is often connected with the help of wired
Internet Network Architecture devices such as Ethernet.  It only transmits or transfers the
data between wireless internet technology and wired
In the field of computer networking there are different
internet network technology by using infra-structure mode
types of technologies that are used for the sake of
of network.  One access point can only support a small
information which is used for the sake of the benefit of the
group of networks and works more efficiently.  It is
humanity.  One of these technologies is the internet
operated less than hundred feet.
technology.  It is that type of technology that is required to
search any kind of information at any place.  Internet Clients
technology operates with the help of networks such as
wired networks and wireless networks.  But if one Any kind of device such as personal computers, note
compares the wired technology with the wireless books, or any kind of mobile devices which are inter linked
technology, then wired internet technology has more with wireless network area referred as a client of internet
reliable and the faster networking as compared to wireless network architecture.
internet technology.
The process of route parts of the computer hardware in Bridges
computer networking is called as computer architecture. 
But when those architectural techniques are used in the A special type of connectors which is used to establish
field of internet networking technology, it is referred as connections between wired network devices such a
internet network architecture.  It is defined as the wireless LAN.  It is called as bridge.  It acts as a point of
arrangement of different types of parts of computer or the control in internet network architecture.
Two components are also some time play as important role common routing policies. Each sub network is assigned a
in internet network architecture: globally unique 16-digit identification number (known as
the AS number or ASN) by the Internet Assigned Numbers
1. Basic Service Set (BSS) Authority (IANA).
2. Extended Service Set (ESS)
Autonomous systems were introduced to regulate
  organizations such as Internet service providers (ISP),
educational institutions and government bodies.  These
ROUTERS systems are made up of many different networks but are
A router is a computer networking device that forwards operated under the umbrella of a single entity for easy
data packets toward their destinations through a process management.  Large enterprises tend to have large network
known as routing.  Routing occurs at layer 3 of the OSI infrastructures with many smaller networks, dispersed
seven-layer model.  Routing is most commonly associated geographically but connected using a similar operating
with the Internet Protocol, although other less-popular environment.
routed protocols remain in use.  In the original 1960-era of Border Gateway Protocol (BGP) is the protocol that
routing, general-purpose computers served as routers.  addresses the routing of packets among different
Although general-purpose computers can perform routing autonomous systems to connect them.  BGP uses the ASN
modern high-speed routers are highly specialized to uniquely identify each system.  This is particularly
computers, generally with extra hardware added to important when routing and managing routing tables for
accelerate both common routing functions such as packet external networks or autonomous systems around their
forwarding and specialized functions such as IPsec borders.
encryption.  Other changes also improve reliability, such as
using battery rather than mains power, and using solid- Autonomous System Numbers
state rather than magnetic storage.  Modern routers have
Autonomous System Numbers (ASNs) are globally unique
thus come to resemble telephone switches, whose
numbers that are used to identify autonomous systems
technology they are currently converging with and may
(ASes) and which enable an AS to exchange exterior routing
eventually replace.  The first modern (dedicated,
information between neighbouring ASes.  An AS is
standalone) routers were the Fuzzball routers.
connected group of IP networks that adhere to a single and
Functionality of Router clearly defined routing policy.

A router must be connected to at least two networks, or it To identify each autonomous system, a ‘globally unique’
will have nothing to rout.  A special variety of router is the number is assigned to them from a centralized authority so
on-armed router used to route packets in a virtual LAN that there are no duplicate numbers.  Globally Unique
environment.  In the case of a one-armed router the means exactly that.  Within the entire internet all around
multiple attachments to different networks are all over the the globe, the AS number should be unique.
same physical link.  A router which connects end-users to
the internet is called Edge Router.  A router which serves to
transmit between other routers is called Core Router.  A
router creates and/or maintains a table, called a “routing
table” that stores the best routes to certain network
destinations and the “routing metrics” associated with
LESSON 4: INTERNET MARKETING
those routes.  In recent times many routing functions have
been added to LAN switches, creating “Layer 2/3 Switches” Being Digital
which route traffic at near wire speed.  Routers are also
now being implemented as Internet gateways, primarily for What does it mean?
small networks like those used in homes and small offices.  • Something is digital when all of its properties and
This application is mainly where the internet connection is information are stored as a string of zeros and
an always on broadband connection like cable modern or ones
DSL.  These are not “routers” in the true sense, but the • Each zero and each one is called a bit
terminology has been confused with network address – A bit is a single piece of information
translation. – “A bit has no color, size, or weight, and it
can travel at the speed of light.” Nicholas
Negroponte - MIT Media Lab
Being Digital
AUTONOMOUS SYSTEMS Digital Benefits for Marketing
In autonomous system (AS) is a network or a collection of • Three factors make the translation from atoms to
networks that are all managed and supervised by a single bits very powerful
entity or organization.  An AS is a heterogeneous network – Moore’s law
typically governed by a large enterprise.  An AS has many – The ability to create digital environments
different sub networks with combined routing logic and – Convergence
 • Let’s take a closer look at each factor
Digital Environments Are Participatory
To Understand How Moore’s Law Plays Out, Let’s Take A • Digital environments encourage participation
Look At Some Recent Headlines • Users input requests and other information
Moore’s Law • Software systems
– retrieve relevant information
Each new generation of chips (released about every 18 – enable customized responses and
months) packs 2x components into the same surface area experiences
to create 2x power
Digital Environments Are Spatial
HEADLINE • Digital technologies enable the creation of virtual
Name of Publication – Date spaces
• Current connection speeds and bandwidth limit
Insert excerpts from a current article out of the business
widespread use of virtual spaces for marketing
press (e.g. Wall Street Journal, Wired News, Business 2.0, or
purposes
Fast Company) that talks about increasing miniaturization. I
• Spatial elements are being used to provide
usually take excerpts out of the lead paragraph, and
familiarity and comfort to users
highlight keywords. I’ve found articles in the business press
on semiconductor innovation at major US research
Digital Environments Are Encyclopedic
universities, for example, that nicely illustrate Moore’s law.
• Digital information can be stored cheaply
Moore’s Law Makes it Cheap to Substitute Marketing Bits • So, it’s possible to archive huge amounts of
for Marketing Atoms information and make it available
– movie databases
 Sales Calls – online technical help & solutions
 Energy
 Newsprint
 Time Digital Convergence

Where do the savings come from?  Interactive MultimediaExperience

Opportunities forSaving o Content
o Computing
 Software Distribution o Communications
 Corporate Intranets
 Online Customer Support Convergence
 Net Surveys Adds Flexibility
 User Manuals
 Internet capabilities augment traditional power of
mass market media
 DTV means that Net marketing will grow
dramatically

Digital Environments
Digital Technologies Fundamentally Change Everything
• Digital environments are
– procedural Marketing ProcessesThat Can Be Digitized
– participatory
– spatial  Understand Markets & Customers
– encyclopedic  Involve Customers in Design Process
• Each of these properties creates opportunities for  Market & Sell Products & Services
marketers  Deliver Value Through Distribution
 Provide Customer Care
Digital Environments Are Procedural  Manage Customer Information
• Computers are logic engines - they follow rules
• However, well-programmed computers can create PART2
wonderful illusions of intelligence, spontaneity,
and attention to detail THE GLOBAL MATRIX
• For example: digital actors can create the illusion
 The web is truly worldwide
of social interaction
 Firms and governments around the globe are
– Imagine digital actors as hosts on a Wal-
devoting huge sums of money to make the
Mart Web site
promise of the Web come true
– Digital actors can make the online site
 Malaysia, for example
feel “more like Wal-Mart
 - Celebrity endorsements, media stories,
MARKETING WITH NETWORKS and general “buzz” create an aura of
success.
 Networks are a social technology
 A network of users and resources creates a new Sharing
activities and powerful capabilities for marketers
 Low connections costs lead to sharing
 For Internet marketers, networks imply
 Shared resources enable companies to launch a
- Ubiquity
Net presence more easily and cost-effectively
- Expectations
- Sharing Specialization
- Specialization
- Virtual value activities  The Internet makes it easier to bring resources
together from a wide range of alliance partners
Ubiquity  Each alliance partner specializes in providing
Metcalfe’s Law particular content
The value of a networks starts to grow at a rate that is the  Visit any portal or search engine
square of the size of the network - Yahoo!
- Excite
 To understand How Metcalfe’s Law Plays out, lets - Alta Vista
take a look at some recent headlines. - Lycos
- AOL
HEADLINE
Name of Publication – Date Virtual Value Activities
Insert excerpts from a current article out of the business  A VVA takes Information as an input and outputs
press (e.g Wall Street Journal, Wired News, Business 2.0, or new kinds of info that helps customers
Fast Company) that talks about the increasing number of - Solve problems
people online. I usually take excerpts out of the lead - Makes better decisions
paragraph, and highlight keywords. I’ve found articles on - Entertain themselves
the surging Net population in China, for example, that
nicely illustrate Metcalfe’s law. The Five Virtual Value Activities

 Selecting
Ubiquity  Synthesizing
Metcalfe’s Law  Enabled by AI technologies that build up profiles of
users (implicit) and allow a user to input
The more people on line, the bigger the e-commerce preferences (explicit)
opportunity.  Selects the most relevant info (to a given user) and
makes it the most obvious
- My Yahoo!
Ubiquity
- Preferred customer pages
Opt-In, Opt-Out, Spam

 Spam is a drawback to ubiquity

 Net Marketers must choose what terms the offers Why The Net Works
user
No restrictions: the company has unrestricted  It’s reliable and efficient
use of the information it gathers on visitors to  Multiple connections
its site - There are a number of ways to connect to
- Opt – out: users can choose not to receive any each node on the network
solicitation - Even if multiple links aren’t working, a
- Opt – in: users can give permission to receive message can still get through
relevant solicitations  Packet switching
- No sharing: the company cannot use or sell - Messages are broken up into pieces called
use information packets
- This allow many users to simultaneously
Expectations share network resources
 Open technology standards enable the Internet to
 Publicity and Celebrity
grow (scale)
- Hype plays a large part of any Net
marketing campaign  Open standards
 Kim Polese, Marimba - software protocols and operations are
 Jeff Bezos, Amazon readily available
- they are documented widely
- they aren’t controlled by any one firm
 The economic logic of hype
  Scalability refers to the ability to add locations, - New Products Teams
paths, capabilities, and resources to the Net - Training
without having to reengineer the whole thing - Research and Data Sources
- Employee Activities
When The Net Stumbles
Wide Range of Internet Content
 Outages on the Net are quite rare
 Congestion and delay is more common Contrasting Internal and External Network Roles
 Access lags are caused by limited transmission
capacity from the user to the Internet Difference An Intranet An Internet
- Faster connections will enable marketers
to utilize and send richer content
Managerial Propriety info Public info
 Transmission lags are caused by limited Control Decentralized Centralized
transmissions capacity from the user’s ISP to the
server’s ISP
 Server lags refer to the time that a server takes to Communication Employee Customer
recognize and fulfill a user’s request Goal

Networks Inside Companies Orientation Process Sales/ marketing

 Internet marketing uses Net technologies to reach Development Implementation
out to customers Collaboration Transactions
 Many companies divide their Net activities into
three categories Desired Creates a Customer/ sales
- The public Internet, managed by the Transformation learning cycle
marketing department organization Create customer
- The extranet, connects the company with loyalty
it’s major suppliers
- The Intranet, available only to the
company’s employees
Lesson 5: Web Business Models 
How Companies Organize Net Activities
 LEARNING CONTENT
 PUBLIC INTERNET (Marketing Department)
 Visible to the public Managed by marketing Introduction:
- Financial Data Many companies are embracing “e-commerce.” Or
- Government Records business conducted on-line over computer networks, as a
- Universities means of expanding markets, improving customer service,
- Current and Potential Customers reducing costs, and enhancing productivity.  Companies
- Competitors have traditionally used computers to manage their product
- Research Community and customer data.  Now, however, advances in networking
- Media technology have enabled firms to streamline their
transactions with suppliers, distributors, and retailers
 EXTRANET (Marketing and Logistics) through the electronic exchange of information.
 Visible to suppliers and B-to-B customers
 Supply chain management
 Managed by marketing and logistics Lesson Proper:
- User Advocates/ Groups
- Beta Users
E-commerce Business Models—Definitions
- Alliance Partners
 Business model: set of planned activities designed
- Supplies Partners
to result in a profit in a marketplace
- Distribution Partners
 Business plan: document that describes a
- Research and Data Sources
firm’s business model
- Procurement
 E-commerce business model: aims to use and
leverage the unique qualities of Internet and Web
 INTRANET (Human Resources and
Communications)
KEY INGERDIENTS OF BUSINESS MODEL
 Internal to a company
COcCOMPONENTS KEY QUESTIONS
 Available only to employees
Value Proposition Why should the customer buy
 Often managed by HR
from you?
- Executive Vision
Revenue Model How will you earn money?
- Benefits
Market What market place do you
- Travel
Opportunity intend to serve, and what is its
 size?
Competitive Who else occupies your
Environment intended marketplace?
Competitive What special advantages does
Advantage your firm bring to the
marketplace?
Marketing How do you plan to promote
Strategy your products or services to
attract your target audience?
Organizational What type of organizational
Development structures within the firm are
necessary to carry out the
business plan?
Management What kind of experiences and 2. Subscription Revenue Model
Team background are important for - Web site that offers users content or services
the company’s leaders to charges a subscription fee for access to some or all
have? of its offerings
Examples:
o Consumer Reports Online
o Yahoo! Platinum
Value Proposition 
Defines how a company’s product or service fulfils the
needs of customers

Questions to ask:
 Why will customers choose to do business with
your firm instead of another?
 What will your firm provide that others do not or
cannot?

Examples of successful value propositions:

 Personalization/customization
 Reduction of product search costs
 Reduction of price discover costs
 Facilitation of transactions by managing product
delivery
3. Transaction Fee Revenue Model
Revenue Model - Company that receives a fee (commission) for
Describes how the firm will earn revenue, generate profits, enabling or executing a transaction.
and produce a superior return on invested capital 1. In auction sites when a seller is successful in
auctioning off a product site receives transaction
Major types: fee
1. Advertising revenue model 2. Online stock broker receives fees each time it
2. Subscription revenue model executes a transaction on behalf of customers
3. Transaction fee revenue model Examples:
4. Sales revenue model o eBay.com
5. Affiliate revenue model o E-Trade.com
o Visa
1. Advertising Revenue Model o Schwab 
- Web site that offers content, services and/or
products also provides a forum for 4. Sales Revenue Model
advertisements and receives fees from - Company derives revenue by selling goods,
advertisers. information, or services to customers
- Common model used for high traffic Web sites. Examples:
- It includes selling banner ads, classified ads, o Amazon.com
sponsor ads, pop-up ads, etc. Revenue at Yahoo, o LLBeancom
Web crawler, and Geocities is generated this way. o Gap.com 

5. Affiliate Revenue Model

 - Sites that steer business to an “affiliate” receive a - Achieved when a firm can produce a superior product
referral fee or percentage of the revenue from any and/or bring product to market at a lower price than
resulting sales most, or all, of competitors
Examples: - Firms achieve competitive advantage when they are
o MyPoints.com able to obtain differential access to the factors of
production that are denied to competitors
o Google
FIVE PRIMARY REVENUE MODELS Types of competitive advantage include:
o First mover advantage—results from a firm being
REVENUE EXAMPLES REVENUE SOURCE first into a marketplace
MODEL o Unfair competitive advantage—occurs when one
firm develops an advantage based on a factor that
Advertising Yahoo.com Fees from advertisers other firms cannot purchase
in exchange for
advertisements  Market Strategy
- A plan that details how a company intends to enter a
Subscription WSI.com, Fees from new market and attract customers
Consumerreports.org, subscribers in - Best business concepts will fail if not properly
exchange for access marketed to potential customers
Sportsline.com to content or services Organizational Development
- Describes how the company will organize the work
Transaction eBay.com. E- Fess (commissions) that needs to be accomplished
Fee Trade.com for enabling or - Work is typically divided into functional
executing a departments
transaction. - Move from generalists to specialists as the
company grows
Sales Amazon.com, Sales of goods,
LLBean.com, information, or  Management Team
Gap.com, Sears.com, services. - Employees of the company responsible for making
JCpPenny.com the business model work
- Strong management team gives instant credibility
Affiliate MyPoints.com Fees for business to outside investors
referrals. - A strong management team may not be able to
salvage a weak business model, but should be able
to change the model and redefine the business as
it becomes necessary
 Market Opportunity
Categorizing E-commerce Business Models: Some
- Refers to a company’s intended market space and the
Difficulties
overall potential financial opportunities available to
- No one correct way
the firm in that market space
- We categorize business models according to e-
- Market space: the area of actual or potential
commerce sector (B2C, B2B, C2C)
commercial value in which a company intends to
- Type of e-commerce technology used can also
operate
affect classification of a business model
- Realistic market opportunity: is defined by revenue
Some companies use multiple business models
potential in each of market niches in which company
hopes to compete  B2C Business Models
Competitive Environment
- Refers to the other companies selling similar products
and operating in the same marketspace.
Influenced by:
o how many competitors are active
o how large their operations are
o what is the market share for each competitor
o how profitable these firms are
o how they price their products
 Includes both direct competitors and indirect
competitors
 Competitive Advantage  B2C Business Models: Portal
- Offers powerful search tools plus an integrated
package of content and services
 B2B BUSINESS MODELS

BUSINESS EXAMPLES DESCRIPTION REVENUE

MODEL MODEL - Typically utilizes a combines
subscription/advertising revenues/transaction fee
(1) NET MARKET PLACES model
- May be general or specialized (vortal)

E- Grainger.com Single-firm Sales of goods  B2C Business Models: E-tailer

distributor online versions - Online version of traditional retailer
FindMRO.com of retail and Types include:
Staples.com wholesale o Virtual merchants
stores; supply o Bricks-and-cricks
maintenance, o Catalog merchants
repair, o Manufacturer-direct
operation
goods; indirect
inputs.  B2C Business Models: Content Provider
Information and entertainment companies that provide
E- Ariba.com Single firms Fees for market digital content over the Web
procureme creating digital making Typically utilizes a subscription, pay for download, or
nt CommerceOn markets where services, supply advertising revenue model
e.com thousands of chain Syndication a variation of standard content provider model
Siernens sellers and management,
buyers transact and fulfillment B2C Business Models: Transaction Broker
for indirect services. - Processes online transactions for consumers
inputs. - Primary value proposition—saving of time and
money
- Typical revenue model—transaction fee
Exchanges Exchange.eSte Independently Fees and Industries using this model include:
el.com owned digital commissions on o Financial services
marketplaces for transaction. o Travel services
IMX.com direct inputs. o Job placement services
GEPolymerlan Vertical industry
d.com orientation.  B2C Business Models: Market Creator
- Uses Internet technology to create markets that
bring buyers and sellers together
Industry Covisint.com Industry-owned Fees and
Examples:
Consortia vertical digital commissions on
Sciquest.com o Priceline.com
markets open to transaction
o Ebay.com
Pasticsnet.co select suppliers.
- Typically uses a transaction fee revenue model
m
 B2C Business Models: Service Provider
- Offers services online
- Value proposition: valuable, convenient, time-
(2) PRIVATE INDUSTRIAL NETWORKS saving, low-cost alternatives to traditional service
providers
- Revenue models: subscription fees or one-time
Single- Wal-Mart Company- Cost absorbed
payment
firm owned networks by network
networks Proctor & to coordinate owner and  B2C Business Models: Community Provider
Gamble supply chains recovered - Sites that create a digital online environment
DaimlerChrysl with a limited through where people with similar interests can transact,
er set of partners. production and communicate, and receive interest-related
distribution information.
Ford Motor efficiencies. - Typically rely on a hybrid revenue model
Co. Examples:
o IVillage.com
Industry- Nistevo Inc. Industry- owned Contributions o Friendster.com
wide networks to set from industry o About.com
networks Globalnetexch standards, member firms
ange.com coordinate and recovered
DCCnet.org supply and through
logistics for the production and  B2B Business Models: E-distributor
Worldwiderret industry. distribution - Company that supplies products and services
ailexchange.or efficiencies; directly to individual businesses
g fees for
transactions
and services.
 - Owned by one company seeking to serve many
customers
Example:
o Grainger.com

B2B Business Models: E-procurement Companies

- Create and sell access to digital electronic markets
- B2B service provider is one type: offer purchasing
firms sophisticated set of sourcing and supply
chain management tools
- Application service providers: a subset of B2B
service providers
Example:
o Ariba

 B2B Business Models: Exchanges

- An electronic digital marketplace where suppliers
and commercial purchasers can conduct
transactions
- Usually owned by independent firms whose
business is making a market
- Generate revenue by charging transaction fees
- Usually serve a single vertical industry
- Number of exchanges has fallen to around 200 in
2005 
END of LESSON 5 
ASSIGNMENT
 Read about Pricing in an Online World

NOTE: PRELIM EXAM LESSON 1-5

 
 B2C BUSINESS MODELS

BUSINESS VARIATIONS EXAMPLES DESCRIPTION REVENUE MODEL

MODEL
Portal Horizontal Yahoo.com Offers an integrated package of Advertising, subscription
General AOL.com content services and content- fees, transaction fees
MNS.com search, news, e-mail, chat, music
downloads, video streaming,
calendars, etc. Seeks- to be a
user’s home base.
Vertical/ Salinet.com Offers services and products to Same
Specialized specialized market space
(Vortal)
E-tailer Virtual Amazon.com Online version of retail store, Sales of goods
Merchant where customrs can shop at any
hour of the day or night without
leaving their home or office.
Clicks and Bricks Wal-Mart.com Online distribution channel for a Same
Sears .com company that also has physical
stores
Catalog LandsEnd.com Online version for a direct mail Same
Merchant LLBean.com catalog

Manufacturer Dell.com Sales of goods

direct Compaq,com
Content WSJ.com Information and entertainment Advertising, subscription
Provider Sportsline.com providers like newspapers, sport fees, affiliate referral
CNN.com sites, and other inline sources fees.
Rhapsody.com that offer customers up-to- date
ESPN.com news and special interest how-to
guidance and tips and/or
information sales.
Transaction E-trade.com Processors of online sales Transaction fees
Broker Expedia.com transactions, such as stock
Monsters.com brokers and travel agents, that
Travelocity.com increase customer’s productivity
Hotels.com by helping them get things done
Orbitz.com faster and more cheaply.
Market Auctions Ebay.com Well-based businesses that use Transaction fees
Creator Priceline.com internet technology to create
Amazon.com markets that bring buyers and
sellers together.
Service Mybconsulting.co Companies that make money by Sales of services
Provider m selling users a service, rather than
Lainfo.com a product
xDrive
myCFO.com
Community About.com Sites where individuals with Advertising, subscription,
Provider IVillage.com particular interests, hobbies, and affiliate referral fees
NetNoir.com common experiences can come
Oxygen.com together and compare notes.
Epinions.com
Lesson 6  Common perception is that the Net will
always raise consumer price sensitivity
LEARNING CONTENT
o This will be true for many companies
Introduction:  But, some companies will be able to get
higher prices
As a businessman, the most exciting and complex
 So, we need to understand why the Internet
exercises that you will take is pricing your products
and services online. You have to utilize an effective brings about changes in price sensitivity
online pricing strategy so that consumers will
The Unique Value Effect
purchase your brand and products.  This requires both
a test-and-learn mentality paired with an intuitive feel  The most important determinant of price
for how you would like your brand and products to be sensitivity
perceived.  In an online marketplace, the price of a  Unique features and benefits lower price
product can captivate the interest of a customer or sensitivity and raise willingness to pay
make them exit to another website.  Whether you are  To prove uniqueness
a B2B e-commerce site or a B2C online store, a pricing o Provide hard facts, solid testimonials,
strategy is an effective driver of growing profits and and hands-on trial use
influencing inventory turnover (Parekh, 2020).  The Internet is effective at doing this
Lesson Proper:
The Substitute Awareness Effect
THE POWER OF PRICING
Drucker’s Pricing Sins  Connects price sensitivity with the presence
1. The Worship of Premium Pricing – companies and awareness of alternatives
try too hard to hold onto high profit margins o Price elasticity depends on whether
with small sales there are alternatives available in the
2. Skim Pricing of New Products – companies marketplace
serve the most desirable segment first and  The Net enables instantaneous side-by-side
forget to adapt to the main stream price comparisons of available alternatives
3. Cost-Driven Pricing – Cost is internal to the o Increasing information may lead to
firm, but value is the only thing the customer less willingness to pay
cares about  This may be the Net’s biggest impact

Total Expenditure Effect

The High Leverage of Proper Pricing
 Consumers are more price sensitive when
 Proper pricing must reflect changes
shopping for items that comprise a larger
brought about by the Internet
percentage of their budget
 They naturally pay more attention to shopping
for the best price
o Examples include cars & healthcare

Shared Cost Effect

 Price sensitivity decreases if the person

choosing the product isn’t the person
paying for the product
o Example: Business travelers are less
price sensitive because their
Figure 1 Pricing is Tightly Linked to Profitability
employers are footing the bill
PRICE SENSITIVITY & THE NET  Companies have to decide whether they’re
targeting their sites at the decider or the
Price Sensitivity and Online Information payer
 If the target is the payer, emphasize cost
effectiveness
Price-Quality Effect Real-Time Pricing Alternatives

 Well-known brands with high quality  Auctions

reputation can charge higher prices because  Rental Markets
price sensitivity is lessened  Yield Management
o Example – Charles Schwab vs.
Auctions as Real-Time Pricing
Ameritrade
 Unknown online low-price outlets need to  Auctions work well on the Internet
build confidence and trust if they want o In-depth information is available to
customers to respond to low price bidders
o One solution is to partner with trusted o Confused bidders can call or e-mail for
and well-known firms more info
 While well-known firms may eventually have o Participants can join in from
to lower their prices to match the anywhere on the planet
competition, the price-quality effect delays  Online auction sites improve the power and
the need for this response efficiency of auctions
Inventory Effect o The Internet makes it easier to gather
buyers and sellers together in the
 Price elasticity is much higher on items that same place at the same time
are nonperishable and can be stored easily o The Internet enables sellers to
o Example: A discount on books may provide in-depth information, so
prompt purchase even though the buyers can evaluate the item being
consumer may not read the book for sold
several months o The Internet expands the number of
 It’s harder to stimulate demand by lowering bidders, which raises the price paid
the prices of perishable items and the profitability of the auction
o There has to be a closer match
Online Auction Types
between time of purchase and
consumption  English Auction
o An auctioneer calls out bids until no
REAL-TIME PRICING
one is willing to top the last bid
 Why Simple Pricing Approaches Fail o The high bidder gets the item
o Examples: FirstAuction.com,
 Setting prices is difficult if
Onsale.com and E-bay.com
o Companies don’t know their demand
 Dutch Auction
curves
o The price starts high and falls at
o Different customers pay different
regular time intervals
prices for the product or service
o The first customer willing to bid gets
o Customers buy multiple products that
as many of the items as he/she wants
are linked to each other
at that price
 Under rapidly changing conditions
o Remaining items continue to have
o It’s impossible for companies to
their prices cut
calculate demand curves accurately,
so they can’t figure out price elasticity
 Instead of setting prices themselves, many
companies are using real-time pricing
o The power of the Internet to provide
real-time information to the
marketplace makes real-time pricing
possible
Online Rental Markets  Bundling Works Well When the Bundle is Viewed
More Similarly than Individual Items
 The rental market serves customers’
immediate needs
 More efficient because the buyer pays a fee
for each use rather than paying a large lump
sum for unlimited use
o Example – software rentals
 Barriers to further online adoption include
credibility and the lack of willingness of sellers
to use micro-transactions 

 Yield Management

 Yield management is the matching of price

and available capacity

Requirements for successful yield management:

 Fixed and perishable capacity – the good must

lose 100% of its value at a specific point in
time. In addition, the industry should face
high fixed costs so the cost of an additional
customer is relatively low
 Customer base with identifiable segments –
give price sensitive customers a break without
causing a loss of customers willing to pay full
price
 Demand uncertainty + information technology
– tracking is necessary to ensure proper yield
management (made easier by using company
web sites)

Bundling

 Bundling works particularly well online

 Bundling is the combination of products into
larger packages
o A single fee gives users access to
entire product offering
 Example: AOL

Bundling Guidelines

 Margin Spread Bundling

o Bundle items that have a high
contribution margin ratio
o Creates incentive for increasing
volume
 Aggregation Bundling
o Target the bundle toward the average
customer
o Increases customer demand for the
bundled good
QUIZZES
QUIZ 1 QUIZ 2
1. What type of virus that can replicate and spread itself – 1. _____ is a special type of browser used in smart phones.
Worms Mobile browser
2. The national science foundation (nsf) connected its 2. _____ is the universe of network accessible information.
huge network of the five super computer centers, World Wide Web
called NSFnet, to ARPANET. This configuration of 3. _____ interprets and runs all scripts. Web browsers.
complex networks and hosts became known as the 4. Websites depend on computer programs to deliver the
internet.-True required information to visitors. False
3. Which of the following is correct about wireless 5. Most web application are custom- made and involve
moderns?-All of the above custom applications which are not developed with security
4. Ana is mobile user. She connects easily to the internet practices and which do not undergo regular security audits.
with her notebook computer, smart phones and other True
mobile devices while away from a telephone, cable, or 6. The terminology of the W3 was closely related to Text
other wired connection. What type of connection is she 7. Firewalls and SSL provide no protection against web
using- Wi-Fi application web application backing. True
5. The original ARPANET consisted of four main 8. Web pages may also run client-side scrips that change the
computers. Which is not a location of one each of the internet browser into an interface for such application as
four main computers? New York University web mail and interactive mapping software like Yahoo,
6. Which is true about a domain name?-It is the text Mail, and Google Maps. True
version of an IP address 9. The World Wide Web (W3) is the universe of network
7. What is the correct evaluation of the following accessible information, an embodiment of human
statements? intelligence. World Wide Web
a. A regional ISP usually provides internet access to a 10. ______ are computer programs allowing website visitors to
specific geographic area. submit receive data to/from a database over the internet
b. A natioal ISP usually is a business that provides using their preferred web browser. Web applications
internet access in cities and towns nationwide. 11. Safari is an example of a Web browser. True
Both statements are true 12. _____ is application software that allows users to access
8. Which of the following provides high-speed internet and view Web pages or access Web 2.0 programs. Web
connection using a dish- shaped antenna on house or browsers
business to communicate with a tower location via 13. _____ user a Unicode
radio signals? Fixed wireless 14. The basic element that a user created or read was called a
9. NSFnet became functional in September 1969, linking page. True
scientific and academic researchers across United 15. _____ is process of a computer or device receiving
States. False information such as Web page, from a server on the
10. ARPANET oversees research and sets standards and internet. Downloading
guidelines for many areas of the internet. False 16. Special index documents have been created in the WWW
11. Which is the following is correct about wireless information space and these can be searched for given
modern? usually are in the form of a USB flash drive or keyword(s). The result is a new document which contains
a card that inserts in a slot in a computer or mobile links to documents selected from the index. True
device 17. ____ is a build in connection to another related Web page
12. Which is the following is a correct description of an IP or part of Web page. A link short for hyperlink/ Electronic
address? An IP address, short for internet Protocols mails/ emails
address, is a number that uniquely identifies each 18. The page contained test that the user saw and information
computer or device connected to the Internet. that told the website how to make the page look. False
13. Which of the following is a family of the technologies 19. _____ uses hypertext and multimedia techniques to make
that provide internet access by transmitting digital data the web easy for anyone to roam browse, and contribute
over the wires of a local telephone network? DSL to. W3
14. AOL, differs from many OSP’s in that it provides 20. Hom page is many Websites can be personalized so that it
gateway functionally to the internet, meaning it contains areas of interest to us. True
regulates the internet services to which members have
access. True
15. Andrea keeps on sending unwanted e-mails to Johnny QUIZ 3
which makes it slower to access his e-mails accounts.
What is this scenario refers to? Spamming 1. E-commerce is the trade of products and services by
means of the Internet or other computer networks is a
definition given by what perspective?Online Services and E- 10. E-commerceis an emerging concept that describes the
Commerce process of buying and selling or exchanging of products,
services, and information via computer networks including
2. Telecommunicationis a communication at a distance by the internet.
technological means, particularly through electrical signals
or electromagnetic waves.
3. E-commerce is the delivery of information, QUIZ
products/service, or payments over the telephone lines,
computer networks or any other electronic means is a 1. Just-in-time inventory procedures enable
definition given by what perspective? Communication companies to carry optimal levels of inventory that
save space and energy ___
4. MATCHING TYPE
2. Westinghouse developed an energy-efficient
Geometric graph network topology
refrigerator in 1994 that was more efficient than the
route packets On-armed router
Assembling parts of Computer architecture U.S. Department of Energy Standards ___
computer networks
Energy Star
Regulate organizations Autonomous systems
Smaller than WANs Metropolitan Area 3. _____ Energy Star labels for electronics and
Network appliances that are environmentally friendly are an
Collection of computers Network
example of what kind of labelling? Eco-labelling
First modem Fuzzball routers
Clients Internet Network 4. Green marketing can have an influence on climate
Architecture change in several substantial ways
Common network modems
adaptors Environmental benefits
Data pocket router
5. The ability to trace components throughout the
5. Data Interchangeis a document standard which when distribution process is not limited to food as the
implemented acts as common interface between two or automotive and computing industries have also
more computer applications in terms of understanding the adopted forms of traceability __ Green Marketing
document transmitted.
6. Companies that incorporate consciousness inter
6. Electronic Data Interchange provides a development tool their mission statements and strategy enhance their
for defining format of data interchange in a wide variety of images among consumers and the general public ___
business communities. Strategic Benefits
7. MATCHING TYPE 7. Terrapass enables consumers to purchase carbon
Geometric graph mesh
offset for their auto, air, or home emissions ___
Route packets The same physical link Environmental Benefits
Assembling parts of bridges
8. Issues involved in high dependence on the
computer networks
Regulate organizations Educational institutions agricultural sector __ Developing Economies
Smaller than WANs Spans an entire geographic 9. Pertains to the interaction with customers,
area
suppliers, consumers, and other interest groups __
Collection of computers Internet
First modem Dedicated Social Performance
Clients Note books
10. Fetzer has a companywide waste reduction
Common network Access of the internet
program that involves recycling of bottles, cardboards,
adapters
Data packet Data gram plastics, aluminum paper waste, oil, and glass. Fetzer
took an aggressive approach when it set a goal of zero
8. Video Conferencing facilitiesoffered t hrough the internet Manufacturer
helps organization to hold meetings, conferences with
participants from multiple remote locations.

9. It is a new methodology of doing business in three focal

areas _____, _______ & _______