Firewalls

A firewall is like a security guard for a network, controlling the data that comes in and goes out.
It protects the internal network of an organization from outside attacks by filtering data based on
certain rules.

Types of Firewalls:

1. Packet Filter Firewall:

o How it works: Uses rules to allow or block data packets based on the IP
addresses.
o Example: If a rule blocks packets from certain IP addresses, those packets are
stopped from entering the network.
o Layer: Operates at the data link and network layers (lower layers) of the OSI
model.
2. Circuit Level Firewall:
o How it works: Filters packets at the transport layer, making internal network
packets appear as if they originated at the firewall.
o Functionality: More sophisticated than packet filters, can cut off hijacked
connections.
o Layer: Operates at the transport layer of the OSI model.
3. Application Gateway Firewall:
o How it works: Filters requests at the application layer, requiring strong user
authentication.
o Functionality: Blocks specific HTTP or FTP requests and restricts access to
certain websites.
o Layer: Operates at the application layer of the OSI model.
4. Hybrid Firewall:
o How it works: Combines features of circuit-level and application gateway
firewalls for enhanced security.

Proxy Server:

 Role: Sits between a trusted internal network and the untrusted internet.
 Functions:
1. Hides the internal IP address by using its own IP.
2. Acts as a firewall by filtering web requests.
3. Speeds up web requests by caching frequently accessed pages.

Virtual Private Network (VPN):

A VPN provides a secure connection over the internet, allowing a user to become part of a
remote network as if they were physically connected to it. This is done using the internet
infrastructure instead of a direct phone line, which saves costs.
How VPN Works:

1. Connection: Both the client (user) and the server are connected to the internet.
2. Configuration: The client and server are configured for VPN.
3. Secure Tunnel: A secure, encrypted tunnel is created using the Point to Point Tunneling
Protocol (PPTP).
4. Access: The client can access the remote network's resources through this secure tunnel.

Security:

 Challenge: Security is a major concern for e-commerce and web servers.

 Organizations: Groups like CERT and SANS Institute help share information and
combat security threats.

Cryptography:

Cryptography is the technique of converting readable messages into unintelligible forms to

protect them from unauthorized access.

Techniques:

1. Substitution: Replaces each letter in the message with another letter (e.g., 'a' becomes
'd').
2. Transposition: Scrambles the characters in the message (e.g., writing the message in
rows and reading it in columns).

Historical Use:

 Military: Julius Caesar and Hitler used cryptography to protect military communications.
 Modern Use: Widely used in business and commerce to secure online transactions.

Firewall Types:

1. Packet Filter Firewall:

o Operates at lower OSI layers (data link and network).
o Simple rules-based filtering based on IP addresses.
2. Circuit Level Firewall:
o Operates at the transport layer.
o More sophisticated, can manage TCP/IP connections and hide internal network
details.
 3. Application Gateway Firewall:
o Operates at the application layer.
o Uses strong authentication, filters application-level requests.

Proxy Server:

 Hides internal IP addresses, filters web requests, and caches web pages for faster access.

VPN:

 Securely connects remote users to a network over the internet, using encrypted tunnels to
ensure security and cost efficiency.

Cryptography:

 Converts messages into unreadable formats to protect them, using techniques like
substitution and transposition. Essential for secure online transactions.

Cryptography Simplified

What is Cryptography? Cryptography is a set of methods used to keep information private and
secure. It involves transforming a message into an unreadable format using a key (encryption)
and then changing it back to its original form using another key (decryption).

Types of Cryptography:

1. Symmetric Cryptography: Uses the same key for both encryption and decryption.
2. Asymmetric Cryptography (Public Key Cryptography): Uses a pair of keys – a public
key for encryption and a private key for decryption.

Key Terms:

 Encryption: The process of converting a message into a coded format.

 Decryption: The process of converting the coded message back to its original format.
 Keys: Randomly generated numbers or characters used in encryption and decryption.

Pretty Good Privacy (PGP): A popular cryptographic system available for public use.

Digital/Electronic Signature: An electronic signature is any digital symbol or character that

verifies the authenticity and integrity of an electronic document. It uses public key cryptography
to ensure that:

 Authenticity: The message is from a verified source.

 Integrity: The message has not been altered.
 Non-repudiation: The sender cannot deny sending the message.
Digital Certificates: Digital certificates are electronic documents that verify the ownership of a
public key. They include:

 The public key.

 Certification information (e.g., name, ID).
 The signature of a certification authority (CA).

Certification Authority (CA): A CA is a trusted entity that issues digital certificates. It

confirms that a public key belongs to a specific person. CAs operate in a hierarchy, with the top
CA (root CA) being the most trusted. The most well-known CA is Verisign.

How It Works:

1. Sending a Secure Message:

o To send a secure message to Mr. A, you need his public key.
o You find his public key on a key server using his details (name, address, etc.).
o Check if the public key is certified by a trusted CA.
o If the key is certified by a reputable CA, you can trust it and use it for encryption.
2. Trust in Certificates:
o If a CA is reputable, its issued certificates are more trustworthy.
o Certificates from higher-level CAs (e.g., root CAs) carry more trust.
o The more reputable the CA, the more trust you can place in the certificate.
3. Certificate Hierarchy:
o Certificates can be issued in a chain from the root CA down to other CAs.
o Each CA verifies the one below it, ensuring a chain of trust.
o If the entire chain of certificates is valid, you can trust the public key.

Why Use CAs?

 To verify the identity of people online.

 To ensure secure communication across the internet.
 Even though there might be some fraudulent keys, the system of CAs and digital
certificates is considered the best available method for verifying identities.

Example: Imagine you want to send a message to someone in Canada from Pakistan. Instead of
traveling to Canada to get their public key, you can easily find it on a key server, check if it’s
certified by a reputable CA, and use it to send your message securely.

Summary:

Cryptography is about securing information through encryption and decryption. It relies on keys,
digital signatures, and certificates issued by trusted authorities (CAs) to ensure the authenticity
and integrity of messages, making secure global communication possible.

Hash Function and Message Digest

Hash Function:

 A hash function is a mathematical function that takes an input (like a message or data)
and produces a fixed-size output (called a hash value or hash).
 It's one-way, meaning you can't easily reverse it to get the original input from the hash
value.

Message Digest:

 The result of applying a hash function to a message is called a message digest.

 It's typically a unique, fixed-length string of bits (e.g., 128 to 256 bits) that represents the
original message.

Why Use Hash Functions?

 Integrity: They verify that data hasn't been tampered with. If the message digest changes,
it means the message has been altered.
 Uniqueness: Different messages should ideally produce different message digests.

Example:

 Suppose you have the message "Hello".

 Applying a hash function might give you a message digest like "abc123".
 Even a small change in the message ("Hello!" instead of "Hello") should produce a
completely different digest ("def456").

Digital Signatures Using Public Key Cryptography

Digital Signature Process:

1. Hashing: First, the sender applies a hash function to the message to get its message
digest.
2. Encryption: The sender then encrypts the message (for confidentiality) using the
receiver's public key.
3. Signing: The sender signs the message digest with their private key. This creates a digital
signature.
4. Sending: The encrypted message, digital signature, and the hash function used are sent to
the receiver.
5. Verification: The receiver uses the sender's public key to decrypt the digital signature
and get the message digest.
6. Integrity Check: The receiver hashes the received message to get a new digest and
compares it with the decrypted digest. If they match, the message is intact.

Symmetric Key vs. Asymmetric Key

  Symmetric Key: Faster but requires securely transmitting the key. Used for encrypting
the message.
 Asymmetric Key (Public Key): Slower but ensures security and authenticity through
digital signatures and encryption.

Public Key Infrastructure (PKI)

 Provides a framework for managing digital certificates and verifying identities in digital
communications.

Key Length

 Longer keys provide greater security against brute-force attacks.

In essence, hash functions ensure message integrity, digital signatures verify authenticity, and
PKI manages the infrastructure for secure communications.

Symmetric Key Algorithms

Symmetric key algorithms are used for encrypting and decrypting data. Here are some popular
ones:

1. DES (Data Encryption Standard): Uses a 56-bit key.

2. IDEA (International Data Encryption Algorithm): Uses a 128-bit key.
3. RC2 and RC4: Can use keys ranging from 1 bit to 2048 bits.
4. Rinjdael (AES): Uses keys of 128, 192, or 256 bits.

Attacks on Symmetric Key Algorithms

1. Key Search (Brute Force) Attacks: Attempt to decrypt a message by trying every
possible key. Longer keys (like AES-256) make this extremely difficult.
2. Cryptanalysis: Uses mathematical analysis and computing power to break encryption
without knowing the key.
3. System-Based Attacks: Target vulnerabilities in the system around the algorithm rather
than directly attacking the algorithm itself.

Public Key Algorithms

Public key algorithms (asymmetric cryptography) are slower but provide secure key exchange
and digital signatures.

Virtual PIN Payment System

This system was introduced for secure online transactions without requiring encryption software:
 1. Registration: Both buyers and merchants register with First Virtual (FV). Buyers provide
credit card details and receive a Virtual PIN.
2. Transaction Process:
o Buyer's Role: Enters Virtual PIN at the merchant's website.
o Merchant's Role: Verifies the Virtual PIN with FV.
o If valid, the merchant sends goods and transaction details to FV.
3. Verification and Payment:
o FV confirms the transaction and buyer satisfaction via email.
o Buyer responds (accept/reject/fraud), affecting payment processing.
o Payment is processed through Automated Clearing House (ACH) from buyer's
credit card issuer to merchant's bank account.

Security Measures

 Email Verification: Ensures buyer satisfaction before finalizing payment.

 Fraud Prevention: Virtual PINs are blacklisted for suspicious activities.
 Transaction Monitoring: Checks for unauthorized or fraudulent transactions.

Summary

Symmetric key algorithms encrypt data efficiently with varying key lengths, while the Virtual
PIN system ensures secure online transactions through registration, verification, and payment
processes. It relies on buyer and merchant interaction with FV for validation and transaction
management, ensuring security and reducing fraud risks in e-commerce transactions.

Virtual PIN Payment System

The Virtual PIN Payment System was designed for online transactions without needing
encryption software:

1. Registration: Buyers and merchants register with First Virtual (FV). Buyers provide
credit card details and get a Virtual PIN. Merchants also register their bank details with
FV.
2. Transaction Process:
o Buyer: Uses their Virtual PIN to purchase goods from a registered merchant.
o Merchant: Verifies the Virtual PIN with FV, delivers goods, and informs FV of
the transaction.
3. Payment and Commission:
o FV handles the payment process: deducts from the buyer's credit card and credits
the merchant's account.
o FV takes a commission per transaction.
o Payments are settled every 90 days.
4. Advantages:
o Simplicity: No need for special software at the front end.
o Suitable for low-cost items like articles, journals, music.
o Losses due to fraud are limited to sales rather than financial loss.
 5. Disadvantages:
o Security Concerns: Pre-registration with FV required for both buyers and
merchants.
o Buyer must have a credit card; merchant must have a bank account.
o Merchants face higher financial risk for physical goods transactions.
o Declined in popularity after 1998 with the rise of encryption-based payment
systems.

Electronic Checks

Electronic Checks are digital versions of traditional paper checks used for online payments:

1. Setup: Payers and payees have digital certificates issued by their banks for
authentication.
2. Transaction Process:
o Payer: Uses a secure electronic checkbook device (like a smart card) to create
and sign an electronic check with their private key.
o Payee: Receives the securely encrypted check via email, decrypts it using their
private key, endorses it with their own secure hardware, and forwards it to their
bank.
3. Bank Processing:
o Payer's Bank: Debits the payer's account upon check creation.
o Payee's Bank: Credits the payee's account upon check clearance via Automated
Clearing House (ACH).
4. Advantages:
o Uses both symmetric and asymmetric cryptography for secure transactions.
o Secure communication via email with encryption.
o Allows for electronic endorsement and clearing.
5. Scenarios for Processing:
o Depending on infrastructure, checks are processed via electronic funds transfer
(EFT) between payer and payee banks.

In summary, both systems provide different approaches to online payments: Virtual PIN for
simplicity and low-cost items, and Electronic Checks for secure digital transactions akin to
traditional banking methods. Each system has its advantages and challenges, catering to different
needs in the digital payment landscape.

E-cash Payment System

The E-cash payment system, pioneered by DigiCash, focuses on buyer anonymity and involves
three main participants: the buyer, merchant, and E-cash bank. It utilizes both symmetric and
asymmetric cryptography for secure transactions.

Participants and Roles:

1. Buyer:
 o Has an account with the E-cash bank.
o Uses a Cyber wallet software on their computer to manage E-cash coins.
o Withdraws coins from their account to use as E-cash.
2. Merchant:
o Accepts E-cash payments from buyers.
o Uses special software to interact with the E-cash system.
o Receives payments in E-cash coins.
3. E-cash Bank:
o Issues and signs E-cash coins requested by buyers.
o Maintains accounts for both buyers and merchants.
o Verifies and clears E-cash coins during transactions.

E-cash Coins:

 Components: Each E-cash coin consists of:

o Serial number: Unique identifier.
o Key version: Corresponding to the value of the coin.
o Signature: Signed by the E-cash bank's secret key specific to the coin's
denomination.
 Minting Process:
o Client (Buyer): Generates a random serial number and blinds it (multiplies with a
blinding factor 'r').
o Request to Bank: Sends the blinded serial number to the E-cash bank for signing.
o Bank Signing: Signs the blinded serial number using its private key
corresponding to the coin's value.
o Final Coin: The bank sends back the signed serial number which the client
unblinds to get the valid E-cash coin.

Workflow:

1. Coin Management:
o Buyer: Stores E-cash coins in their Cyber wallet software after withdrawal from
the E-cash bank.
o Merchant: Receives E-cash coins from buyers as payment for goods or services.
2. Transaction Process:
o Payment: Buyer sends E-cash coins to the merchant.
o Verification: Merchant forwards the coins to the E-cash bank.
o Validation: E-cash bank decrypts the coins using its private key and checks the
serial numbers against its database to ensure coins haven't been spent before.
o Approval: If the coins are valid, the bank confirms this to the merchant.
o Completion: Merchant delivers goods/services to the buyer.
3. Security and Anonymity:
o Encryption: E-cash coins are encrypted with the E-cash bank's public key before
being sent to merchants, ensuring privacy.
o Database: The E-cash bank maintains a database to prevent double-spending and
ensures the validity of each coin.
Advantages:

 Anonymity: Buyers' identities are protected as transactions do not reveal personal

details.
 Security: Uses cryptographic techniques to prevent fraud and ensure the integrity of
transactions.
 Convenience: Allows for easy online payments without the need for physical currency.

Limitations:

 Dependency: Buyers and merchants must have accounts with the E-cash bank.
 Setup: Initial setup and management of E-cash wallets and accounts are required.
 Regulation: Vulnerable to regulatory challenges due to anonymity features.

In summary, the E-cash payment system provides a secure and anonymous method for online
transactions through the use of digital coins, offering benefits of privacy and convenience while
requiring adherence to specific security protocols and account management.

Anonymity in E-cash Payment System

In the e-cash payment system, anonymity refers to keeping the identity of the buyer (client)
confidential throughout the transaction process. Here’s how anonymity is maintained at different
stages:

Minting Stage:

1. Client Request:
o When a client wants to withdraw e-cash coins, they generate a random serial number.
o This serial number is blinded by multiplying it with a blinding factor 'r', which only the
client knows.
o The blinded serial number is sent to the e-cash bank for signature.
2. Bank Signing:
o The e-cash bank signs the blinded serial number using its private key specific to the
coin's denomination (e.g., $1, $5).
o Since the bank does not know the original serial number (due to blinding), it cannot link
the signed serial number to the client.

Deposit Stage:

1. Payment Process:
o The client uses their e-cash coins to make a payment to the merchant.
o Coins are encrypted with the e-cash bank's public key to ensure security during
transmission to the merchant.
2. Merchant Deposit:
o The merchant sends the encrypted coins along with payment information (e.g.,
currency, amount, timestamp) to the e-cash bank.
 o The e-cash bank decrypts the coins using its private key to verify their validity.
o At this stage, the bank knows the serial numbers of the coins (which were earlier signed
blindly), but it cannot identify which specific client (buyer) sent these coins.

Ensuring Anonymity:

 Blinding Factor 'r': At the minting stage, the blinding factor 'r' ensures that the e-cash
bank signs serial numbers without knowing their original values. This breaks the link
between the client and the specific serial numbers signed.
 Encryption: During the payment process, coins are encrypted with the bank’s public key,
preventing the merchant from seeing the details of the coins (like their serial numbers).
 Proof of Payment: The client generates a secret code (e.g., "Bluesky") and sends its hash
(a unique, fixed-size string derived from the code) to the e-cash bank along with payment
information. Later, if there's a dispute, the client can prove they made the payment by
providing the original code, which the bank hashes again to verify.

Transaction Workflow:

 Client Action: Initiates payment using their Cyber wallet software, which manages e-cash coins.
 Bank Role: Signs blinded serial numbers at the minting stage and verifies coins at the deposit
stage.
 Merchant Interaction: Receives encrypted coins for payment and sends goods/services upon
payment confirmation.

Advantages:

 Privacy: Buyer's identity remains hidden from both the merchant and the bank during the
transaction.
 Security: Uses cryptographic techniques to protect transaction details and prevent fraud.
 Convenience: Facilitates online transactions without exposing personal information.

Limitations:

 Dependency: Clients and merchants must have accounts with the same e-cash bank.
 Regulatory Concerns: Anonymity features may pose challenges with regulations aimed at
preventing money laundering and fraud.

In summary, the e-cash payment system ensures anonymity by using cryptographic methods like
blinding and encryption, thereby securing buyer identity while facilitating secure online
transactions between clients and merchants.

SSL (Secure Socket Layer)

What is SSL? SSL is a protocol that helps secure communication over the internet. It ensures
that data sent between a web browser (client) and a web server is encrypted, making it difficult
for anyone else to intercept and read it.
How does SSL work?

1. Encryption: When you see "https" in a URL, it means SSL is in use. It encrypts data
using a combination of symmetric and asymmetric cryptography.
2. SSL Handshake: This is how a secure connection is established:
o The client (like a browser) sends a "hello" message to the server.
o The server responds with its digital certificate, which includes its public key.
o The client creates a secret symmetric key for the session, encrypts it with the
server's public key, and sends it back.
o The server decrypts this message using its private key, and now both client and
server have a shared secret key to encrypt further communication.
3. Encryption in Action: After the handshake, all data exchanged between client and server
is encrypted using this shared secret key. This protects sensitive information like credit
card details during online transactions.

Advantages of SSL:

 Built into browsers, so no extra software needed.

 Encrypts data, ensuring privacy and security.
 Widely used for online shopping, banking, etc.

Drawbacks:

 Once data reaches the server, it may be stored in decrypted form, posing a risk if the
server is compromised.

SET (Secure Electronic Transaction)

What is SET? SET is a more advanced protocol than SSL, specifically designed for secure
online transactions, especially for payments involving credit cards.

How does SET work?

1. Dual Signature: SET uses dual signatures to protect both buyer and seller:
o Buyer sends encrypted order information to the seller along with a digital
signature.
o Seller sends encrypted acceptance and order details to the payment gateway.
2. Encryption and Authentication: SET ensures that credit card details are encrypted and
that order details are authenticated without revealing sensitive information to
unauthorized parties.

Advantages of SET:

 Provides end-to-end encryption and authentication for online transactions.

 Protects both buyer and seller from fraud and unauthorized access to sensitive data.
Drawbacks:

 Requires specialized software on both client and server sides.

 Complex setup and maintenance.
 Higher transaction costs and slower processing compared to SSL.

Summary

 SSL is a basic protocol for securing internet communication through encryption.

 SET is a more complex protocol specifically for secure online transactions, offering
additional layers of security and privacy.

In essence, SSL is like a basic lock for securing data in transit, while SET is a more sophisticated
system designed for secure online payments.

E-Business

Advantages:

1. Personalized Service:
o E-businesses can use customer data to offer personalized experiences, like
customized recommendations based on past purchases.
2. High-Quality Customer Service:
o Customers can easily provide feedback or complaints online, helping businesses
improve their service quickly.
3. No Inventory Costs:
o E-businesses can operate without physical stores or warehouses, reducing
overhead costs. They can fulfill orders by sourcing products from suppliers
directly when orders come in.
4. Global Reach:
o E-businesses can reach customers worldwide, operating 24/7, which allows for
continuous sales even outside regular business hours.
5. Electronic Catalogs:
o Online catalogs are easy to update and offer a wide range of products. Customers
can quickly search and compare items, making shopping more convenient.
6. Bulk Transactions:
o Customers can purchase large quantities in a single transaction without the
limitations of physical storage or transportation.
7. Improved Supply Chain Management:
o E-businesses can streamline supply chain operations, allowing for efficient order
processing and just-in-time inventory management.

Disadvantages:

1. Less Security:
 o Security concerns exist as internet communication can be vulnerable to hackers,
potentially compromising sensitive information like credit card details.
2. Less Privacy:
o Online activities can be tracked, and personal information may be collected
without consent, raising privacy issues for customers.
3. No Physical Proximity:
o Customers can't physically inspect items before purchase, which might affect
buying decisions for products like clothing or perfumes.
4. Challenges with Catalogs:
o While electronic catalogs are versatile, they can be costly and complex to
develop, requiring technical skills to manage effectively.

E-Business Models

1. Storefront Model:
o Basic e-commerce where businesses sell directly to customers online, using
shopping cart technology.
2. Auction Model:
o Websites where users bid to buy items listed by sellers, with auctions ending at a
specified time.
3. Online Banking:
o Banks offering services like fund transfers and bill payments through secure
internet portals.
4. Online Trading and Lending:
o Platforms for buying and selling stocks or providing loans online.
5. Online Recruiting:
o Websites connecting employers with job seekers for recruitment purposes.
6. Online News Services:
o News outlets offering 24/7 updates and digital subscriptions.
7. Online Travel Services:
o Websites facilitating travel bookings for flights, hotels, and car rentals.
8. Online Entertainment:
o Platforms selling digital content like music, movies, and games for download.
9. Online Automotive and Energy Trading:
o Platforms for buying/selling cars, spare parts, or energy resources like oil and
electricity.
10. Selling Intellectual Property Online:
o Websites facilitating the sale of patents, trademarks, or copyrights.
11. Online Art Dealers:
o Platforms selling artworks such as paintings or posters online.
12. E-Learning:
o Universities and institutes offering online courses and digital learning materials.
13. Online Service Providers:
o Consulting or professional service providers offering services like web
development or legal advice online.
14. Online Shopping Malls:
 o Websites offering a wide range of products from multiple sellers in one place,
using a single shopping cart.
15. Portal Model:
o Websites acting as gateways to information on various topics (horizontal portals)
or specific industries (vertical portals).

Brick-and-Mortar vs. Click-and-Mortar Businesses

 Brick-and-Mortar: Traditional businesses with physical stores.

 Click-and-Mortar: Businesses that operate both online and offline, integrating both
channels for sales and customer service.

In summary, e-businesses offer convenience, global reach, and operational efficiencies but also
face challenges like security risks and the need for robust technology solutions. Each business
model caters to different market needs, providing diverse opportunities for online commerce.

E-Business Revenue Models

1. Web Catalogue Revenue Model:

o Description: Online stores selling products like electronics, books, or clothing
using electronic catalogs and shopping carts.
o Revenue Source: Sales from customers who purchase products online.
2. Digital Content Revenue Model:
o Description: Businesses offering digital content such as legal information, news,
or academic resources online.
o Revenue Source: Subscription fees or pay-per-download charges for accessing
digital content.
3. Advertising-Supported Revenue Model:
o Description: Providing free access to services or content online, supported by
revenue from advertisements displayed on the website.
o Revenue Source: Income generated from advertisers paying to display ads.
4. Advertising-Subscription Mixed Revenue Model:
o Description: Combining subscription fees with advertising revenue on websites
offering both free and paid content.
o Revenue Source: Subscription fees and revenue from advertising placements.
5. Fee-for-Transaction Revenue Model:
o Description: Charging fees based on transactions facilitated through the website,
such as online travel bookings or stock trading.
o Revenue Source: Fees charged per transaction processed on the platform.
6. Fee-for-Service Revenue Model:
o Description: Charging fees for specific services offered online, such as legal
advice, online gaming, or professional consultations.
o Revenue Source: Fees charged based on the value or duration of services
provided.
7. Internet Marketing:
 o Description: Utilizing various online marketing techniques to reach and engage
with potential customers.
o Strategies Include: Market segmentation, email marketing, banner advertising,
promotions, public relations, customer relationship management, and creating
brand awareness online.

Market Segmentation

1. Geographic Segmentation:
o Dividing customers based on where they live or work (e.g., urban vs. rural).
2. Demographic Segmentation:
o Categorizing customers by age, gender, income level, etc., to understand their
specific needs and preferences.
3. Psychographic Segmentation:
o Grouping customers based on lifestyle, personality traits, or interests, which
influence their purchasing decisions.
4. Behavioral Segmentation:
o Tailoring marketing strategies based on customer behavior online, such as
browsing habits, purchase intent, or frequency of visits.

Other Key Considerations

 Choosing a Domain Name:

o Selecting a domain name that is easy to remember, type, and relevant globally to
attract diverse audiences.
 Marketing Research:
o Conducting research online to gather insights about industry trends, customer
preferences, and competitors' strategies swiftly and efficiently.
 Web Design:
o Ensuring the website is user-friendly with easy navigation, FAQs section, contact
information, multimedia integration, privacy policy, and an appealing design to
retain visitors and enhance competitiveness.

By understanding these revenue models and market segmentation strategies, e-businesses can
effectively target their audience, maximize revenue opportunities, and create a compelling online
presence. Each model offers unique advantages depending on the nature of the business and its
target market.

E-Mail Marketing

Definition: E-mail marketing involves using emails to send marketing messages to potential
customers. It's an affordable and effective way to reach people globally.

Key Points:
  Personalization: Emails can be customized with the recipient's name and tailored to their
interests, increasing engagement.
 Translation and Outsourcing: For global marketing, emails can be translated using
software. If managing campaigns internally is challenging, businesses can outsource this
task.
 Customer Service: Emails can improve customer service by allowing direct
communication for inquiries, complaints, and order updates.
 Opt-In and Spamming: Customers should opt-in to receive emails to ensure they're
interested. Spamming (sending unsolicited emails) is illegal in many countries.

Promotions

Definition: Promotions are strategies to attract customers to make purchases, both online and
offline.

Popular Methods:

 Frequent-flyer miles: Offering airline miles for purchases.

 Point-based rewards: Customers earn points for actions like purchases, redeemable for
items like t-shirts or mugs.
 Discounts: Advertised discounts in magazines, newspapers, or websites.
 Free-trials and shipping: Providing free trials for services or waiving shipping fees.
 Coupons: Offering online coupons for discounts on purchases.

Banner Advertising

Definition: Banner ads are graphical ads placed on websites to promote products or services.

Key Points:

 Placement and Effectiveness: Ads can vary in size and position on websites. They can
include links to the advertiser's site.
 Types: Banners can be static or dynamic, using techniques like flashing text or pop-ups
to catch attention.
 Payment Modes: Advertisers can pay based on views (CPM), clicks (pay-per-click),
leads generated, or sales made through the ad.

Public Relations (PR)

Definition: PR involves managing communication to maintain a positive public image and

inform stakeholders about business activities.

Modes of PR:

 Press Releases: Sharing news and updates with media outlets.

  Events and Speeches: Hosting seminars or video conferences to engage with
stakeholders.
 Online Engagement: Using emails, chat sessions, or bulletin boards for direct
interaction.
 Presentations and Exhibitions: Showcasing products or services in public forums.

Summary

These marketing and communication strategies are essential for e-businesses to build brand
awareness, attract customers, and maintain positive relationships with stakeholders. Each
method—whether through targeted emails, enticing promotions, impactful banner ads, or
effective PR—plays a crucial role in the overall success of online businesses by enhancing
visibility and engagement.

Customer Relationship Management (CRM)

Definition: CRM refers to all the strategies and tools a company uses to manage interactions
with customers throughout the customer lifecycle, aiming to improve customer satisfaction and
loyalty.

Key Points:

 Tools and Systems: CRM systems include call centers, sales tracking, and transaction
support to handle customer inquiries and feedback efficiently.
 Data Tools: Tools like log file analysis, cookies, and data mining help businesses
understand customer behavior and preferences.
 Stages of Customer Loyalty: Customers move through stages like Awareness,
Exploration, Familiarity, Commitment, and possibly Separation as their relationship with
a company develops.

Simplified Stages:

 Awareness: Customers recognize the company's name or products through advertising.

 Exploration: Customers learn more about the company by visiting its website or
interacting with it.
 Familiarity: Customers engage in transactions and understand the company's policies.
 Commitment: Customers develop loyalty and prefer the company's products, often
recommending them to others.
 Separation: Customers may end their relationship due to dissatisfaction or changing
circumstances.

B2B Marketing on the Web

Definition: B2B (Business-to-Business) marketing involves businesses selling products or

services to other businesses rather than individual consumers.
Key Differences from B2C (Business-to-Consumer):

 Direct Contact: In B2B, there's limited direct contact with end-users compared to B2C.
 Feedback: B2B companies may have less direct feedback from end-users, influencing
their marketing strategies differently.

Search Engines

Definition: Search engines are programs that help users find information on the internet by
scanning websites and creating lists of relevant sites based on keywords.

Key Points:

 Function: Users enter keywords to find specific information or websites relevant to their
interests.
 Examples: Popular search engines include Google, Yahoo, and Bing.
 Importance: Registering your e-commerce website with search engines ensures it
appears in search results, increasing visibility and potential customer visits.

Summary

CRM helps businesses manage customer relationships effectively through various stages of
interaction and loyalty development. B2B marketing focuses on selling to businesses rather than
individual consumers, impacting how companies engage with their customers. Search engines
play a crucial role in helping users find relevant information on the internet, making it essential
for businesses to ensure their websites are visible through search engine registration.

These concepts are fundamental for e-commerce success, enabling businesses to attract, retain,
and satisfy customers effectively in the digital marketplace

Meta Information

What is Meta Information? Meta information is key data about a webpage that search engines
use to understand and rank websites. It includes details like keywords and descriptions.

How does it work?

 Submission: Website owners provide Meta information to search engines, paying a fee
for registration.
 Indexing: Search engines store this data in their databases.
 Searching: When users type keywords in search engines, they match these keywords
with the Meta information to show relevant websites.
 Ranking: Websites with the most relevant keywords and higher frequency in Meta
information often rank higher.
Caution: Using competitors' Meta information without permission can be illegal and is known
as passing-off.

Partnerships

What is a Partnership? Partnerships are strategic alliances between businesses for mutual
benefit.

How do they work?

 Businesses with complementary products or services collaborate.

 Example: A computer book seller partners with a computer seller.
 Benefits: Shared customers can easily buy both related products, enhancing sales for
both partners.
 Partners can also share research, customer data, or outsource tasks to each other.

Affiliate Programs

What is an Affiliate Program? Affiliate programs involve one party paying another for specific
actions, like clicks or purchases.

Example: Banner ads on websites where the host site earns money for each click or sale made
through the ad.

Purpose: Boosts visibility and sales through mutual advertising efforts for a limited time.

Branding

What is Branding? Branding creates a strong connection between a company and its customers
through its name, logo, and reputation.

Elements of Branding:

1. Differentiation: Standing out from competitors.

o Example: Unique features like soap that doesn't dissolve quickly.
2. Relevance: Meeting customer needs.
o Example: Selling jewelry that people actually want and can afford.
3. Perceived Value: Showing customers the worth of a product beyond its features.
o Example: A restaurant's unique dish might not sell if perceived as unhealthy.

Emotional vs. Rational Branding

 Emotional Branding: Appeals to feelings and emotions, often used in passive media like
TV ads.
 Rational Branding: Uses facts and benefits to appeal to logic, suitable for active online
users who can easily skip ads.
Global Marketing

What is Global Marketing? Marketing to customers worldwide, considering different

languages, currencies, and cultural differences.

Considerations:

 Multilingual Content: Websites in various languages to reach diverse audiences.

 Currency Options: Prices in different currencies for easier purchasing.
 Local Infrastructure: Distribution channels and payment systems compatible with each
country.
 Cultural Sensitivity: Respect local laws and customs to avoid misunderstandings.

Tools: Technology helps translate websites and emails into different languages, facilitating
global communication.

Conclusion: Understanding these concepts helps businesses navigate digital marketing, establish
strong partnerships, build recognizable brands, and effectively reach global audiences while
respecting local norms and laws. Each strategy plays a crucial role in expanding market presence
and driving business growth in the digital age.

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explain in simple and easy way. SECURE SOCKET LAYER (SSL) SSL is a protocol developed
by Netscape Communications. SSL is built into many browsers. It operates at the TCP/IP layer
of the OSI model, and uses a combination of symmetric and asymmetric cryptography. If there
appears the word “https” in a URL, (e.g, https://www.microsoft.com) it indicates that the web
server hosting this web site is SSL enabled. So, if a client machine is configured for SSL then
any exchange of information between such a client and the web server would be in the encrypted
form. To configure a client machine for SSL following steps are required: Internet
Explorer:Tools menu->Internet options->Advanced tab-> Security (use SSL option can be
checked) SSL Handshake SSL supports a variety of encryption algorithm and authentication
methods. The combination of algorithms and methods is called a cipher suite. When a client
connects to an SSL server, the SSL handshake begins, which means that the two negotiate a
cipher suite selecting the strongest suite the two have in common. Thus, the handshake
establishes the protocols that will be used during the communication, selects cryptographic
algorithms and authenticates the parties using digital certificates. To start the SSL handshake
process, a client sends a message to the server, the server responds and sends its digital
certificate that authenticates its public key. The client (customer’s browser) generates a secret
symmetric key for the session. The client encrypts the secret key using the public key that it has
just received and transmits it to the server. The server decrypts the message using its private key
and now has the secret or symmetric key. Further communication between the customer’s
browser and the merchant’s server can now be encrypted and decrypted using the secret session
key. SSL is commonly applied in online shopping as the customer puts in his/her credit/debit
card information on the web form for payment purposes. If the web client and the server are SSL
enabled, the SSL handshake would begin when the client enters the URL starting with “https”.
This handshake can be accomplished in seconds. The web form opens before the client. The
client enters information in the text boxes of the form and on pressing ‘submit’ all such
information is automatically encrypted with the agreed secret or session key. This
secured/encrypted information travels across the internet and is retrieved by the server side
where it is automatically decrypted with the help of same secret or session key. Even if someone
intercepts the information, he cannot make any sense out of it because of encryption. The
greatest advantage of SSL is its simplicity. Since SSL is built into many browsers, no special
encryption software is required either on the client or the server side. However, a drawback of
SSL is that the merchant can store credit/debit card information after decryption that can be
accessed by unauthorized parties from the merchant’s database. E-COMMERCE – IT430 VU ©
Copyright Virtual University of Pakistan 122 The process of SSL handshake is also explained in
Fig. 1 below: Fig. 1 Secure Electronic Transaction (SET) The drawback in SSL that the credit
card/debit card information remains with the merchant led to the development of a more
sophisticated protocol called SET. It was developed in 1997 jointly by Visa, MasterCard,
Netscape and Microsoft. There are four entities involved in a SET transaction – cardholder,
merchant, and certification authority and payment gateway. The role of payment gateway is to
connect entities on the internet with those which are not on the internet such as the electronic
network of banks (see fig. 2 below). Payment gateway provides the security of data transmission
to/from the acquirer bank. Merchants must have special SET software to process transactions.
Customers must have digital wallet software that stores certificates and card information. Client
sends “hello” message Client sends response Session SSL Client (browser) Server responds With
“hello” message Session Send encryption algorithms and key length SSL Server Send server
certificate containing server’s public key Send client certificate and encrypted private session
key Send data between client and server using private shared key Server receives client response
and initiates session E-COMMERCE – IT430 VU © Copyright Virtual University of Pakistan
123 Debit Card Debit Card Automated Clearing House Payer’s Bank Acquirer Bank Payer Payee
Internet Debit Card Debit Card Certification Authority Payment Gateway Fig. 2 Dual Signature
in SET SET hides customer’s credit card information from merchants and hides order
information from banks to protect privacy. This scheme is called Dual Signature. A dual
signature is created by combining two message digests and creating a new digest called Dual
Signature Message Digest (DSMD). Fig. 3 below explains how the scheme of dual signatures is
implemented in SET. Buyer/Bidder Merchant or Auction house Acquirer Bank •Encrypted
message authorizing payment to the auction house if offer is accepted, but no details about what
item is bought •MD2 and DSMD encrypted with Bidder’s private key 1a Offer for Items 4
•Encrypted message includes amount offered on the item, but no account information •MD1
encrypted with Bidder’s private key 1b •Decrypt message with auction house private key
•Decrypt MD1 with bidder’s public key •Determine whether to accept bid 2 •Decrypt account
information with acquirer private key •Decrypt offer acceptance message with acquirer private
key •Decrypt MD2 and DSMD with bidder’s public key •Decrypt MD1 from step no. 3 with
auction house’s public key •Concatenate MD1 and MD2 •Recompute dual signature and verify
against DSMD sent by bidder •Encrypted message that offer is accepted from bidder •MD1
encrypted with auction house’s private key 3 4 Fig. 3 E-COMMERCE – IT430 VU © Copyright
Virtual University of Pakistan 124 SET software on the customer side splits the order
information from the account information. MDI is the message digest obtained by applying hash
function on the order information. MD2 is the message digest obtained by applying hash
function on the account information. Both, MD1 and MD2 are concatenated and a third message
digest, DSMD, is obtained by again applying the hash function on the concatenated message
digests. The order information or the offer for items is forwarded to the merchant/auction house
in an encrypted form along with its message digest (MD1) signed with the private key of the
buyer/bidder (step 1b). The merchant/auction house decrypts the order information/offer and
verifies the signatures of the buyer/bidder through his/her digital certificate (step 2). If the
order/offer is acceptable to the merchant then the merchant signs the received MD1 with
merchant’s private key and sends it to the acquirer bank along with an encrypted letter of
acceptance to the offer (step3). On the other hand, the buyer sends the text based account
information (credit card details) to the acquirer in an encrypted form. The buyer also sends MD2
(message digest related to account information) and DSMD to the acquirer bank signed with
his/her private key (step 1a). The acquirer bank decrypts this information. Mainly, the acquirer
bank receives four pieces of information as follows (step 4): MD1 from merchant/auction house
related to order information Account information in encrypted form from the buyer MD2 related
to account information from the buyer DSMD from the buyer Acquirer bank concatenates MD1
and MD2 and applies the hash function to compute a message digest. Note that if this message
digest is the same as the DSMD received by the acquirer, it ensures that a particular order
information or offer is related to particular account information. At the same time, we have
achieved our purpose that the order information should not reach the bank and the account
information (credit card no. etc.) should not reach the merchant/auction house. SETCo. SETCo.
is a company formed to lead the implementation and promotion of SET specifications It ensures
that the vendors of SET software comply with the requirements laid down by its originators. A
merchant holds certificate from card brand indicating that the merchant is authorized to accept
credit card payment. The customer holds certificate from the card issuing bank. SETCo acts as a
root certification authority in the certification hierarchy (see Fig. 4 below) SETCo Card Issuer
Bank Customer Card Brand Merchant Fig. 4 E-COMMERCE – IT430 VU © Copyright Virtual
University of Pakistan 125 SSL vs. SET SSL only handles secured transmission of credit card
no. but SET is designed to handle the whole transaction in a secured manner using dual
signatures. SSL is a general purpose protocol built into the browser, whereas SET requires
software on, both, the client and the merchant side. SET uses a hierarchy of certificates for
authentication. SET is complex and distribution of certificates is sometimes not stable. SET
increases transaction cost. SET transactions are slower than SSL. SET uses a payment gateway
for secured transmission of information. E-Business An e-business is defined as a
company/entity that has an online presence. E-businesses that have the ability to sell, trade,
barter or transact over the web can be considered as e-commerce businesses. An e-business
model is defined by a company’s policy, operations, technology and ideology. Advantages of E-
business Some of the major advantages of an e-business as compared to a traditional business are
as under: Personalized service High-quality customer service No inventory cost Worldwide
reach of the business Electronic catalogues (convenient and quick transaction) Bulk transactions
Improved supply chain management
ChatGPT

Sure, let's break down SSL (Secure Socket Layer) and SET (Secure Electronic Transaction) in a
simple way:

SSL (Secure Socket Layer)

What is SSL? SSL is a protocol that helps secure communication over the internet. It ensures
that data sent between a web browser (client) and a web server is encrypted, making it difficult
for anyone else to intercept and read it.

How does SSL work?

1. Encryption: When you see "https" in a URL, it means SSL is in use. It encrypts data
using a combination of symmetric and asymmetric cryptography.
2. SSL Handshake: This is how a secure connection is established:
o The client (like a browser) sends a "hello" message to the server.
o The server responds with its digital certificate, which includes its public key.
o The client creates a secret symmetric key for the session, encrypts it with the
server's public key, and sends it back.
o The server decrypts this message using its private key, and now both client and
server have a shared secret key to encrypt further communication.
3. Encryption in Action: After the handshake, all data exchanged between client and server
is encrypted using this shared secret key. This protects sensitive information like credit
card details during online transactions.

Advantages of SSL:

 Built into browsers, so no extra software needed.

 Encrypts data, ensuring privacy and security.
 Widely used for online shopping, banking, etc.

Drawbacks:

 Once data reaches the server, it may be stored in decrypted form, posing a risk if the
server is compromised.

SET (Secure Electronic Transaction)

What is SET? SET is a more advanced protocol than SSL, specifically designed for secure
online transactions, especially for payments involving credit cards.

How does SET work?

1. Dual Signature: SET uses dual signatures to protect both buyer and seller:
o Buyer sends encrypted order information to the seller along with a digital
signature.
o Seller sends encrypted acceptance and order details to the payment gateway.
2. Encryption and Authentication: SET ensures that credit card details are encrypted and
that order details are authenticated without revealing sensitive information to
unauthorized parties.

Advantages of SET:
  Provides end-to-end encryption and authentication for online transactions.
 Protects both buyer and seller from fraud and unauthorized access to sensitive data.

Drawbacks:

 Requires specialized software on both client and server sides.

 Complex setup and maintenance.
 Higher transaction costs and slower processing compared to SSL.

Summary

 SSL is a basic protocol for securing internet communication through encryption.

 SET is a more complex protocol specifically for secure online transactions, offering
additional layers of security and privacy.

In essence, SSL is like a basic lock for securing data in transit, while SET is a more sophisticated
system designed for secure online payments.

E-BUSINESS Advantages of E-business Some advantages of an e-business are given as under:

Personalized service Product, place, price and promotion are generally recognized as the 4 P’s of
marketing in relation to traditional offline businesses. However, personalization is the 5th ‘P’
added to the other 4 P’s when we talk about an e-business. In fact, the nature of internet
technology is such that the information about the online customers including their buying
behavior can be recorded in the databases. This information can be utilized by the e-commerce
site to study the needs of a particular customer. Based upon that the site can do customization
and provide a personalized service to the customer. High-quality customer service Customers
can provide their feedback or register their complaints quite conveniently in case of online
business as compared to offline business, and in light of that an e-business can improve its
customer services. No inventory cost An e-business can have minimum overhead cost. You do
not need to have any special physical place to start your business or hire any staff to operate the
business as required in offline business. One can start an e business as an intermediary or a
middle man. In that case one does not require any warehouses for holding the inventory. An e-
business can receive orders and get them fulfilled by procuring the ordered goods form open
market without bearing the inventory cost. Worldwide reach of your business An online business
has global reach. In a way people living anywhere in the world are potential customers of an e-
business. Moreover, the e-commerce site is open 24 hours a day, so shopping can be done from
there at any time. Electronic catalogues Electronic catalogues are used in case of an online shop.
They have many advantages over paper catalogues. Therefore, online shopping can be done
more quickly and in a more convenient environment. Bulk transactions One can do bulk
transactions during one visit to an e-shop, since there is no limitation of collecting, packaging or
carrying goods in contrast to shopping from a traditional offline shop. Improved supply chain
management Typical members of a supply chain management are suppliers, manufacturers and
end customers. If suppliers of raw material have online presence, the manufacturers can place
emergency orders to them, which can be electronically/quickly processed on the supplier side.
Thus, just in time delivery of raw material is possible without requiring the manufacturer to
arrange for the accommodation to hold the inventory. Ultimately, the goods can be quickly
delivered to the end customers due to the improved supply chain management. E-COMMERCE
– IT430 VU © Copyright Virtual University of Pakistan 127 Disadvantages of E-business Some
disadvantages of an e-business are given as under: Less security The biggest obstacle in the
growth of e-commerce is the issue of security. Internet is not a secured medium of
communication. There are tools or options available to hackers whereby they can not only
monitor but also control any data communicated over the internet. Particularly, people are not
comfortable while providing their financial information (credit card no. etc.) online due to the
fact that this information can be hacked and misused. Less privacy The nature of internet
technology is such that private information of the online customers can be easily collected and
recorded on the server side. The buying pattern of a customer can be known to an e-shop with
the help of certain sophisticated tools. You know that cookies can be used to track customers
online. On one hand these technologies are useful for doing customization but on the other, they
can be said to have caused the breach of informational privacy rights of a person. No physical
proximity with items purchased In certain cases the customers cannot decide about buying a
thing before they can physically examine it. For example, a customer would ideally want to
touch and feel the texture of a piece of cloth before buying. Similarly, a customer would actually
want to smell a perfume before purchasing it. In the above or any similar case, people cannot
expect to physically examine/test the thing while buying it online. Rather, they would prefer to
buy such things from physical shops. An e-business has a limitation in this regard. Online
catalogues vs. Paper catalogues Paper catalogs Advantages Easy to create a catalog without high
technology Reader is able to look at the catalog without computer system More portable than
electronic catalog Disadvantages Difficult to update changes in the product information Only
limited number of products can be displayed Online or electronic catalogs Advantages Easy to
update product information Able to integrate with the purchasing process Good search and
comparison capabilities Able to provide timely, up-to-date product information Can provide
broad range of product information Possibility of adding voice and motion pictures Cost savings
Easy to customize E-COMMERCE – IT430 VU © Copyright Virtual University of Pakistan 128
Disadvantages Difficult to develop catalogues Large fixed cost if used for small no. of products
Need for customer skill to deal with computers and browsers E-Business Models Following are
some popular online businesses that one currently finds on the web: Storefront Model It
represents basic form of e-commerce where buyers and sellers interact directly. Merchants need
to organize online catalog of products, take orders through their websites, accept payments in a
secure environment and send items to the customers. They can also store and manage customer
data in databases. A storefront model uses the shopping cart technology which allows customers
to accumulate items they want to buy during shopping. This is quite popular in B2C transactions.
Auction Model In this model there are auction sites to which the users can log-on and assume the
role of a bidder or seller. As a seller, one has to specify the minimum price to sell one’s item
(called reserve price), the description of the item and the deadline to close the auction. At the end
of the auction, the seller and the bidder are notified by the auction site and the payment
mechanism and delivery mode is worked out. Auction sites charge commission on sales. Online
Banking There is an online bank providing banking services to the customers through internet
including services of electronic funds transfer. Online Trading and Lending Online trading is
buying and selling of stocks/shares of listed companies using internet. Many brokerage houses
have established an online presence. Online lending is providing loan through an internet
transaction. Online Recruiting Employers can recruit and job searchers can search for jobs
effectively through online recruiting web sites. Online News Services Many
newspapers/magazines have online presence, providing 24-hour updates. Online publishing is
attractive because printing and distribution costs are not involved in it. Online Travel Services
One can make travel arrangements online without going to travel agent. It is convenient and less
costly. There are online businesses which help customers find discount fares for airline tickets,
hotel rooms and rental cars or assist in case of lost luggage. Online Entertainment Internet
technology can quickly provide information with high quality multimedia. Therefore, such
e businesses have emerged which sell music albums, movie tickets, video films etc. The content
can be easily downloaded by the customer in this case. E-COMMERCE – IT430 VU ©
Copyright Virtual University of Pakistan 129 Online Automotive Sites and Energy Online
Certain web sites allow users to search and purchase new and used cars and their spare parts.
Also, there are sites where buyers and sellers can buy, sell and distribute energy (oil, electricity
etc.) on the web. Selling Intellectual Property Online Some e-businesses deal in the sale of
intellectual property rights of companies such as patents, trade marks, trade names etc. Online
Art Dealers Artwork can be bought from the web at a discount, e.g pictures, paintings, posters
etc. E- Learning Universities and various training institutes are offering high-quality distance
education over the web. E books and other reading material can be easily downloaded to one’s
computer. Virtual University is an example of this type of business model. Online Service
Providers These e-businesses help improve policies, procedures, customer service and general
operations of other businesses. They can provide consultancy/professional services, for example,
web site development services, online legal consultancy services etc. Online Shopping Malls
Online shopping malls are those web sites which present customers with a wide selection of
products and services at a single place. Thus, Instead of making several separate purchases,
customers can use the mall’s shopping cart technology to purchase items from many stores in a
single transaction. Portal Model Portals are the web sites which provide chance to the visitors to
find almost everything in one place. Horizontal portals provide information about a very broad
range of topics. Search engine is the example of a horizontal portal. Vertical portals provide
information pertaining to a single area of interest. Community Portals such as those related to
medical or legal profession are the examples of a vertical portal. Online shopping is a popular
addition to the some portals such as ‘yahoo.com’. Portals allow users to browse independently
owned storefronts unlike online shopping malls. Brick-and-Mortar vs. Click-and-Mortar
businesses These two terms refer to the offline and the online businesses, respectively. Where a
company is doing its business both online and offline, there is often the problem of lack of
proper integration between the two different channels of business. explain simply
ChatGPT

Sure, let's simplify the concepts of e-business, its advantages, disadvantages, and different
business models:

E-Business

Advantages:

1. Personalized Service:
o E-businesses can use customer data to offer personalized experiences, like
customized recommendations based on past purchases.
2. High-Quality Customer Service:
 o Customers can easily provide feedback or complaints online, helping businesses
improve their service quickly.
3. No Inventory Costs:
o E-businesses can operate without physical stores or warehouses, reducing
overhead costs. They can fulfill orders by sourcing products from suppliers
directly when orders come in.
4. Global Reach:
o E-businesses can reach customers worldwide, operating 24/7, which allows for
continuous sales even outside regular business hours.
5. Electronic Catalogs:
o Online catalogs are easy to update and offer a wide range of products. Customers
can quickly search and compare items, making shopping more convenient.
6. Bulk Transactions:
o Customers can purchase large quantities in a single transaction without the
limitations of physical storage or transportation.
7. Improved Supply Chain Management:
o E-businesses can streamline supply chain operations, allowing for efficient order
processing and just-in-time inventory management.

Disadvantages:

1. Less Security:
o Security concerns exist as internet communication can be vulnerable to hackers,
potentially compromising sensitive information like credit card details.
2. Less Privacy:
o Online activities can be tracked, and personal information may be collected
without consent, raising privacy issues for customers.
3. No Physical Proximity:
o Customers can't physically inspect items before purchase, which might affect
buying decisions for products like clothing or perfumes.
4. Challenges with Catalogs:
o While electronic catalogs are versatile, they can be costly and complex to
develop, requiring technical skills to manage effectively.

E-Business Models

1. Storefront Model:
o Basic e-commerce where businesses sell directly to customers online, using
shopping cart technology.
2. Auction Model:
o Websites where users bid to buy items listed by sellers, with auctions ending at a
specified time.
3. Online Banking:
o Banks offering services like fund transfers and bill payments through secure
internet portals.
4. Online Trading and Lending:
 o Platforms for buying and selling stocks or providing loans online.
5. Online Recruiting:
o Websites connecting employers with job seekers for recruitment purposes.
6. Online News Services:
o News outlets offering 24/7 updates and digital subscriptions.
7. Online Travel Services:
o Websites facilitating travel bookings for flights, hotels, and car rentals.
8. Online Entertainment:
o Platforms selling digital content like music, movies, and games for download.
9. Online Automotive and Energy Trading:
o Platforms for buying/selling cars, spare parts, or energy resources like oil and
electricity.
10. Selling Intellectual Property Online:
o Websites facilitating the sale of patents, trademarks, or copyrights.
11. Online Art Dealers:
o Platforms selling artworks such as paintings or posters online.
12. E-Learning:
o Universities and institutes offering online courses and digital learning materials.
13. Online Service Providers:
o Consulting or professional service providers offering services like web
development or legal advice online.
14. Online Shopping Malls:
o Websites offering a wide range of products from multiple sellers in one place,
using a single shopping cart.
15. Portal Model:
o Websites acting as gateways to information on various topics (horizontal portals)
or specific industries (vertical portals).

Brick-and-Mortar vs. Click-and-Mortar Businesses

 Brick-and-Mortar: Traditional businesses with physical stores.

 Click-and-Mortar: Businesses that operate both online and offline, integrating both
channels for sales and customer service.

In summary, e-businesses offer convenience, global reach, and operational efficiencies but also
face challenges like security risks and the need for robust technology solutions. Each business
model caters to different market needs, providing diverse opportunities for online commerce.

E-BUSINESS REVENUE MODELS Experts have identified following revenue models on the
web: Web Catalogue Revenue Model Though the goal of an e-business can be to reduce cost or
improve customer service, however, the primary aim of most e-commerce sites is to generate
revenue and earn profit. This is the most simple and common type of e-business model for
generating revenue. This model would use electronic catalogue and shopping cart providing
access to customers throughout the world. Businesses using this type of a model include online
sellers of computers, electronic items, books, music, videos, toys, flowers, gifts, clothes etc.
Payment received from customers is the source of earning revenue. Digital Content Revenue
Model Web serves as a very efficient distribution mechanism of content. Therefore, one finds
many e-businesses that offer different types of information services such as legal information,
corporate information, government information, news and resources for academic libraries etc.
These services can be customized by an e-business for different firm sizes depending upon their
needs and usage pattern. Normally, a customer has to subscribe to such services by paying
certain amount as subscription fee. This fee becomes the main source of generating revenue for
the e-business. Instead of subscription fee, a credit card charge option can be made available for
infrequent users. Online journals, newspapers, libraries fall under this category. Note that E-
publishing eliminates high costs of paper printing and delivery of digital content is much
quicker. Advertising-Supported Revenue Model In this model service/information is provided
free of any charge to certain audience and the advertising revenue is sufficient to support the
operation of the business and its cost. For example, Yahoo portal provides useful information
and a search engine free of cost, but earns revenue through advertisements on its portal web site
to bear the operational cost. Advertising-Subscription Mixed Revenue Model In this type,
subscribers pay a fee and accept some level of advertising. Thus an e-business can earn its
revenue from both the sources, that is, through subscription and advertisements. On web sites
that use this model, normally, the subscribers are subjected to much less advertising than they are
on advertising supported sites. For instance, in case of certain online newspapers, a customer
has to pay subscription fee for certain services/information whereas some services are free of
charge as they are supported by advertising. Fee-for-Transaction Revenue Model There are
businesses offering services for which they charge a fee based on the number or size of
transactions they process. The business provides information to the customers which is required
to complete a transaction and revenue is purely earned on that basis. For example, online travel
agents receive a fee for facilitating a transaction that includes the making of travel arrangement
for their clients, as well as, advising them about lodging, transportation etc. Stock brokerage
firms also use this model as they charge their customers a commission for each transaction of
stocks/shares executed through them. Fee-for-Service Revenue Model This model does not relate
to services provided by agents or brokers to complete a transaction (the above case). Rather, the
fee is charged on the basis of value of some service rendered. Professional services provided
online by lawyers, doctors, accountants etc. relate to this type of revenue model. E-businesses
that provide online entertainment and online games are also the examples of this type. In case of
online games, E-COMMERCE – IT430 VU © Copyright Virtual University of Pakistan 131
visitors pay to the business either by buying and installing game software on their computers or
by paying a subscription fee for playing online for a limited time. This earns revenue for the
business. Internet Marketing Internet has opened a new door of marketing opportunity to the
marketers. Consequently, a new branch in the field of marketing has developed very rapidly in
the past few years known as internet marketing or e marketing. This topic can be covered under
following main headings: Market Segmentation E-mail Marketing Banner Advertising
Promotions Public Relations Partnering Customer Relationship Management Creating Brands on
the Web Affiliate Programs Search Engines Global marketing Market Segmentation Businesses
need to identify specific portions of their markets in order to target them with specific
advertising messages. The practice called market segmentation divides the potential customers
into segments or groups. Segments are defined in terms of demographic characteristics such as
age, gender, marital status, income level and geographic location. For example, unmarried men
between 19-25 years of age may be called one segment. Traditionally, marketers have used three
types of variables to define three different market segmentations, namely, geographic
segmentation, demographic segmentation and psychographic segmentation. Geographic
segmentation In this type, customers are divided into groups on the basis of where they live or
work. For example, urban and rural customers can be the two segments on the basis of
geography. Different marketing plan would be required for each segment. Demographic
segmentation Here segmentation is done on the basis of demographic variables such as age,
gender etc. Customers belonging to different age groups may have different product
requirements. This type of market segmentation helps in identifying those requirements of
different groups of customers. Psychographic segmentation Here customers are grouped by
variables such as social class, personality or approach to life or lifestyle. For example, a car
manufacturing company may direct advertising for a sports car to customers who have a
particular life style and like thrill in their lives. Variables used in different segmentations can be
combined. So, income level can be combined with location to create a particular segment.
Market Segmentation on the web Note that the concept of market segmentation is equally
applicable to e-businesses as it applies to physical businesses. Moreover, one can easily provide
a particular sales environment in case of an e-business as compared to offline business. In a
physical store, one cannot easily change the environment for different E-COMMERCE – IT430
VU © Copyright Virtual University of Pakistan 132 customer segments. Therefore, display
options, lighting, music, sales persons remain the same for all customers groups in a physical
shop. However, web gives opportunity to present different store environment online to different
customer segments. So, a web site may have a web page for children with the right kind of web
design for children, and have a different web page designed exclusively for the old people. In
other words, web can easily and usefully provide separate virtual spaces for different market
segments. Some web retailers allow their customers to create their own product. For example
there are computer companies online that allow their customers to choose component of a
computer to configure their own computer according to their need. This is called one-to-one
marketing. Behavioral segmentation Creation of separate experiences for customers based on
their behavior is called behavioral segmentation. Three identified behavioral modes of the
customers on the web are: Browsers – customers who just browse through the site with no
intention of buying Buyers – customers who are ready to buy right away Shoppers – customers
who are motivated to buy but want more information An e-business site should devise right
combination of marketing strategy to lure visitors in different behavioral modes to become its
customers. Choosing a Domain Name Choosing a suitable domain name is the first thing to be
considered at the start of an online business. Due to the worldwide nature of the web, choose a
domain name that people coming form different countries/cultures will be able to recognize,
remember and type easily. Marketing Research It consists of interviews, paper and phone
surveys, questionnaires, findings based on previous investigations etc. to find strengths and
weaknesses of your business and the business of your competitors. It also includes the analysis of
opportunities and threats to your business. In case of e-businesses, marketers have a faster option
to find/analyze information about the industry, customers or competitors, because the
information is just a few clicks away. This kind of marketing research can be extremely
beneficial for the success of an e business. Web design Basically, the only interaction of an e-
business with its customers is through the web site. So, a good web design is another very
important factor for the success of an e-business. Note that in online environment the
competitors of an e-business are just a few clicks away, so if your web site design is not catchy
or useful enough the visitors might not wait and immediately switch to a competitor’s site. The
cost of switching to competitors site is also very low in online environment. All this makes e-
commerce very competitive. An internet marketer should particularly pay attention to the
following considerations as regards web site design: Easy site navigation – give a site map
Frequently asked questions (FAQs) section Conveniently located contact information
Multimedia – use streaming video and audio – be aware the time each element takes to get
loaded Privacy policy – outline the policy about intended use of customers personal details
General outlook of the web site should be attractive making it sticky explain in simple terms
ChatGPT

Certainly! Let's simplify the concepts related to e-business revenue models, market
segmentation, and other relevant aspects:

E-Business Revenue Models

1. Web Catalogue Revenue Model:

o Description: Online stores selling products like electronics, books, or clothing
using electronic catalogs and shopping carts.
o Revenue Source: Sales from customers who purchase products online.
2. Digital Content Revenue Model:
o Description: Businesses offering digital content such as legal information, news,
or academic resources online.
o Revenue Source: Subscription fees or pay-per-download charges for accessing
digital content.
3. Advertising-Supported Revenue Model:
o Description: Providing free access to services or content online, supported by
revenue from advertisements displayed on the website.
o Revenue Source: Income generated from advertisers paying to display ads.
4. Advertising-Subscription Mixed Revenue Model:
o Description: Combining subscription fees with advertising revenue on websites
offering both free and paid content.
o Revenue Source: Subscription fees and revenue from advertising placements.
5. Fee-for-Transaction Revenue Model:
o Description: Charging fees based on transactions facilitated through the website,
such as online travel bookings or stock trading.
o Revenue Source: Fees charged per transaction processed on the platform.
6. Fee-for-Service Revenue Model:
o Description: Charging fees for specific services offered online, such as legal
advice, online gaming, or professional consultations.
o Revenue Source: Fees charged based on the value or duration of services
provided.
7. Internet Marketing:
o Description: Utilizing various online marketing techniques to reach and engage
with potential customers.
o Strategies Include: Market segmentation, email marketing, banner advertising,
promotions, public relations, customer relationship management, and creating
brand awareness online.
Market Segmentation

1. Geographic Segmentation:
o Dividing customers based on where they live or work (e.g., urban vs. rural).
2. Demographic Segmentation:
o Categorizing customers by age, gender, income level, etc., to understand their
specific needs and preferences.
3. Psychographic Segmentation:
o Grouping customers based on lifestyle, personality traits, or interests, which
influence their purchasing decisions.
4. Behavioral Segmentation:
o Tailoring marketing strategies based on customer behavior online, such as
browsing habits, purchase intent, or frequency of visits.

Other Key Considerations

 Choosing a Domain Name:

o Selecting a domain name that is easy to remember, type, and relevant globally to
attract diverse audiences.
 Marketing Research:
o Conducting research online to gather insights about industry trends, customer
preferences, and competitors' strategies swiftly and efficiently.
 Web Design:
o Ensuring the website is user-friendly with easy navigation, FAQs section, contact
information, multimedia integration, privacy policy, and an appealing design to
retain visitors and enhance competitiveness.

By understanding these revenue models and market segmentation strategies, e-businesses can
effectively target their audience, maximize revenue opportunities, and create a compelling online
presence. Each model offers unique advantages depending on the nature of the business and its
target market.

2/2
E-MAIL MARKETING E-mail marketing campaigns are cheap and effective way to target
potential customers. E-mails can instantaneously convey a marketing message to customers at
distant areas. Personalized direct e-mails target customers with specific information – name,
right product at the right time, special promotions etc. When your e-business is doing global
marketing, e-mails can be first translated into proper languages as a personalization measure
using specific translation software. Personalization technology (data mining) can also improve
response rate tremendously. Where an e-business lacks resources for doing e-mail marketing on
its own, it can outsource such campaign to outside firms. For instance, outsourcing services
should be used when direct e-mailing becomes too difficult to manage and there is inadequate
staff or technical support at the e-business level itself. E-mails can be used to improve customer
service by adding an e-mail link to your web site. Thus, you can receive your customers’
complaints through e-mails. It should be ensured that your e-business is capable of handling
expected volume of e-mails; otherwise it can bring poor reputation to your business when you
receive complaints through emails but are unable to respond. Another advantage with emails is
that they can be automatically sorted and sent to the relevant persons. E-mails can be used to
inform customers about their order/shipment status etc. Internet mailing lists can also be
conveniently used to send targeted personalized emails. You can also provide the “opt-in e-mail”
option to your customers on your web site. If they opt for it, this means that they want to receive
through email any product information, offers or promotions etc. in the future. Spamming is a
term used to refer to mass e-mailing to customers who have not expressed any interest in a
specific product or service. In different countries, spamming has been declared as an offence. E-
mails can be combined with traditional direct marketing. Telemarketing (live interaction through
telephone) and e-mails can be combined to reach prospective customers. Similarly, direct
mailing and e-mails can also be combined. Promotions E-business promotions can attract visitors
to your site and induce them to purchase. Promotional messages can be sent both online and
offline. Some popular promotional methods are as under: Frequent-flyer miles The online
business has a contract with an airline such that the customer of the business earns specific miles
from the airline free of charge if he purchases from the online business items up to a certain
value. Point-based rewards On the performance of a pre-specified action, customers can be
entitled to point-based rewards – t-shirts, mugs etc. with the company’s logo etc. Discounts
Discount advertisements through magazines, newspapers, web sites etc. can attract new and
repeat customers. Free-trials Customers can sign up for a free service. For example, they can be
allowed to download software for certain days free of cost on trial basis before buying it. Free
shipping Shipping cost may not be charged on the delivery of certain items as an incentive for
the customers. Coupons Online coupons are placed on certain popular sites to attract customers
for online shopping. They can use these coupons for shopping through specific web sites. E-
COMMERCE – IT430 VU © Copyright Virtual University of Pakistan 134 E-Business
Advertising Advertising is an attempt to disseminate information in order to effect a buyer-seller
transaction. It is an impersonal and one-way mass communication paid for by the sponsors.
Televisions, movies, newspapers and magazines are traditional ways for e-business advertising.
On the other hand, Telemarketing and Direct marketing are attempts to personalize advertising in
order to make it more effective. For e-business advertising it is important that your brand is
unique and easy to remember. Publicizing URL on direct mails or business cards can increase
brand awareness. Banner Advertising Web page banner ads are like small billboards containing
graphics and an advertising message. These advertising messages are placed on popular web
sites (host sites) which are frequently accessed and thus those who access a host site can look at
the banner/advertising message and come to know about the brand/business which is advertising
itself through the host site. The host site charges certain fee for providing space to the banner on
its web site and thus generates income/revenue. This concept therefore is mutually beneficial for
both the parties. Banners have different sizes and are placed on different positions on the web
site. Banners can be simply for viewing as well as having link to the home page of the product or
service. Business logo on a banner may increase brand recognition. Flashing, scrolling text, pop-
up boxes and color changes grab viewer’s attention. So, these techniques can effectively be used
for creating a banner. As a marketer you should note how many ads the host site already carries.
Also, note which position has a better chance of click through. There can be specific times for
banner advertisement. Banner advertising space can be expensive for peak traffic times.
Exchanging banners with another site is also an option. Some sites carry banner ads for free. For
example, a business selling computers can host the banner of business selling computer books
free of charge. These are related businesses which support each other so there can be an indirect
benefit to the computer business for carrying the banner of computer books business in the sense
that the latter is likely to spread more awareness about computers. Advertising payment modes
Following payment modes can be accepted between the parties: Monthly charges for online
advertising Cost per thousand (CPM) – fee for every thousand people viewing the banner Pay-
Per-Performance that includes: Pay-per-click – fee according to no. of click to your site Pay-per-
lead – pay for every lead generated from the advertisement Pay-per-sale – pay the host for every
sale resulting form a click through Exchanging advertising space on your site for advertising
space on another’s site Note that the log file of the web server where the advertising web site is
hosted contains a column in which the IP address of top-referring web site is recorded. Thus by
studying the log file it can be found that how many visitors were diverted to the advertising site
from the host web site (top-referring web site). Web casting Web casting is a term used to refer
to internet-based broadcasting of audio and video content. It can provide two-way
communication between the broadcaster and the listener or viewer. Marketers should consider
some people may have slow internet access. Video conferencing is an example of web casting.
For example, using this technique, doctors sitting in China, England and Pakistan etc. can, in real
time, exchange and benefit from each other’s ideas as if they are physically holding a meeting.
Interactive Advertising It uses a combination of rich media (such as audio, video, animations)
and traditional forms (such as print, TV or radio ads) in order to involve customers in advertising
process to increase brand recognition. For E-COMMERCE – IT430 VU © Copyright Virtual
University of Pakistan 135 example, there is a famous business that uses this marketing
technique. Its TV commercial induces/encourages viewers to access its website from where
customers can select/download various action pictures and background music. Thus, by
involving a customer in the advertising process itself, it attempts to increase its brand recognition
for the customers. E-business Public Relations Public Relations (PR) keeps the customers and
employees of a business current or updated as regards information about products, services and
internal and external issues such as any promotional activities, new products, customer reactions
etc. Following different modes can be used to disseminate information: Press releases Speeches
Special events – seminars, video conferencing etc E-mails Chat sessions Bulletin board – people
can post comments Presentations/exhibitions Press releases can provide information about
current events and other important news to the press or media via internet. There can be a press
release section of your online business which can be accessed through a hyperlink. Moreover,
video clips of news appearances, speeches, commercials can also prove to be an effective way of
publicity. explain in simple terms
ChatGPT

Sure, let's break down the concepts related to e-mail marketing, promotions, banner advertising,
and public relations in simple terms:

E-Mail Marketing

Definition: E-mail marketing involves using emails to send marketing messages to potential
customers. It's an affordable and effective way to reach people globally.

Key Points:
  Personalization: Emails can be customized with the recipient's name and tailored to their
interests, increasing engagement.
 Translation and Outsourcing: For global marketing, emails can be translated using
software. If managing campaigns internally is challenging, businesses can outsource this
task.
 Customer Service: Emails can improve customer service by allowing direct
communication for inquiries, complaints, and order updates.
 Opt-In and Spamming: Customers should opt-in to receive emails to ensure they're
interested. Spamming (sending unsolicited emails) is illegal in many countries.

Promotions

Definition: Promotions are strategies to attract customers to make purchases, both online and
offline.

Popular Methods:

 Frequent-flyer miles: Offering airline miles for purchases.

 Point-based rewards: Customers earn points for actions like purchases, redeemable for
items like t-shirts or mugs.
 Discounts: Advertised discounts in magazines, newspapers, or websites.
 Free-trials and shipping: Providing free trials for services or waiving shipping fees.
 Coupons: Offering online coupons for discounts on purchases.

Banner Advertising

Definition: Banner ads are graphical ads placed on websites to promote products or services.

Key Points:

 Placement and Effectiveness: Ads can vary in size and position on websites. They can
include links to the advertiser's site.
 Types: Banners can be static or dynamic, using techniques like flashing text or pop-ups
to catch attention.
 Payment Modes: Advertisers can pay based on views (CPM), clicks (pay-per-click),
leads generated, or sales made through the ad.

Public Relations (PR)

Definition: PR involves managing communication to maintain a positive public image and

inform stakeholders about business activities.

Modes of PR:

 Press Releases: Sharing news and updates with media outlets.

  Events and Speeches: Hosting seminars or video conferences to engage with
stakeholders.
 Online Engagement: Using emails, chat sessions, or bulletin boards for direct
interaction.
 Presentations and Exhibitions: Showcasing products or services in public forums.

Summary

These marketing and communication strategies are essential for e-businesses to build brand
awareness, attract customers, and maintain positive relationships with stakeholders. Each
method—whether through targeted emails, enticing promotions, impactful banner ads, or
effective PR—plays a crucial role in the overall success of online businesses by enhancing
visibility and engagement.

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) The sum of a company’s customer

service solutions constitutes its customer relationship management (CRM) system. Level of
traffic at the online business site and the available resources would normally determine whether
or not a business should have CRM. It provides fast and effective service to customers and
ensures that corrective measures are readily in place. CRM includes call handling, sales tracking
and Transaction support (technology/personnel etc.). Three tools can be used to improve
customer service, that is, log file analysis, cookies and data mining. Under CRM system, call
centers can be set up having customer service representatives who can be reached trough phone,
e-mails or online chatting. There are software tools or tracking devices that can provide feedback
on how many number of internet users actually viewed a banner or a marketing message and
how many actually clicked on the advertisement. Log files consist of data generated by site visits
and include information about each visitor’s location, IP address, time of visit, frequency of
visits etc. There are businesses that provide the services of analyzing web log files. The results
would show how effective your web site is and indicate the top-referring web sites. You know
that cookies allow e-commerce sites to record visitor behavior. They can be used to track
customers online and do personalization. Many customers do not know that their information is
being collected and used by the e business site. Thus, informational privacy rights of customers
can be breached in cases where cookies are used. One major goal of CRM is to establish a long-
lasting relationship between a company and its customers. Good customer services can help in
building a sense of loyalty towards company and its products or services. Experts have pointed
out five stages of loyalty as customer relationships develop over a period of time. One can find
that the intensity of relationship increases as the customer moves through the first four stages. In
the fifth stage a decline occurs and the relationship terminates. See Fig. 1 below: Awareness
Exploration Familiarity Commitment Separation Time Level Of Intensity Fig. 1 Let us briefly
examine these stages: Awareness This is the first stage where customers recognize the name of
the company or any of its products. However, they have never interacted with the company
before. A company/business can achieve this level by properly advertising its brand. Exploration
At the exploration stage the potential customers know more about the company or its products.
For instance, they may have visited the web site of the company and have exchanged any
information with it. E-COMMERCE – IT430 VU © Copyright Virtual University of Pakistan
137 Familiarity At this stage, customers have completed several business transactions with the
company and know its policies regarding refund, privacy of information, discounts etc.
Commitment Having completed a number of satisfactory transactions, some customers may have
developed a strong sense of loyalty or preference for the products or brand of a company. They
are said to be at the commitment stage in their relationship with a business. Such loyal customers
often tell others about their satisfaction as regards products/services offered by the company.
Sometimes, companies make concessions on price or other terms of business to bring customers
into this stage. Separation After a period of time those conditions over which a valuable
customer relationship is established might change. Customers might not be any longer satisfied
with the product quality or customer service. On the other hand, a company may also find that a
loyal customer is proving to be very expensive to maintain. Thus, the parties enter into the
separation stage. Note that the objective of any marketing strategy is to bring the customers
quickly to the committed stage and try to hold them there as long as possible. Life Cycle
Segmentation These five stages are also called customer life cycle. Using them to create groups
of customers is called customer life-cycle segmentation. Segment information is useful for
companies to develop better relationship with the customers. Companies, thus, know about their
customers and their level of relationship with the company, and can customize their
product/service. B2B Marketing on the Web For effective CRM, it is necessary that there is
complete integration between different steps in a customer transaction. So, the processes of
selling, buying, marketing, front-end and back-end operations should be fully linked and
integrated with each other. Key difference between B2C and B2B is that in case of B2B there is
no direct contact with the end users, whereas this contact exists in B2C. Thus, an e-business can
have direct response or feedback from its customers in B2C as compared to B2B. For example,
an online business that deals in the supply of raw material to an online manufacturing business
has a very limited chance of receiving direct feedback from end customers about its
product/services due to lack of contact with them. That is one reason why a marketing plan is
different in B2B from B2C. Search Engines A search engine is a program that scans web sites
and forms a list of relevant sites based on keywords or other search-engines ranking criteria. It
allows people to find information about their area of interest out of large amount of information
available on the internet. Examples of famous e-businesses that provide search engine facilities
are google, altavista, yahoo etc. As a marketer, after you have launched your e-commerce web
site, you should look for the registration of the same with popular search engines so that your site
appears on search engine results. explain in simple terms
ChatGPT

Certainly! Let's simplify the concepts related to Customer Relationship Management (CRM),
B2B marketing, and Search Engines:

Customer Relationship Management (CRM)

Definition: CRM refers to all the strategies and tools a company uses to manage interactions
with customers throughout the customer lifecycle, aiming to improve customer satisfaction and
loyalty.

Key Points:

 Tools and Systems: CRM systems include call centers, sales tracking, and transaction
support to handle customer inquiries and feedback efficiently.
  Data Tools: Tools like log file analysis, cookies, and data mining help businesses
understand customer behavior and preferences.
 Stages of Customer Loyalty: Customers move through stages like Awareness,
Exploration, Familiarity, Commitment, and possibly Separation as their relationship with
a company develops.

Simplified Stages:

 Awareness: Customers recognize the company's name or products through advertising.

 Exploration: Customers learn more about the company by visiting its website or
interacting with it.
 Familiarity: Customers engage in transactions and understand the company's policies.
 Commitment: Customers develop loyalty and prefer the company's products, often
recommending them to others.
 Separation: Customers may end their relationship due to dissatisfaction or changing
circumstances.

B2B Marketing on the Web

Definition: B2B (Business-to-Business) marketing involves businesses selling products or

services to other businesses rather than individual consumers.

Key Differences from B2C (Business-to-Consumer):

 Direct Contact: In B2B, there's limited direct contact with end-users compared to B2C.
 Feedback: B2B companies may have less direct feedback from end-users, influencing
their marketing strategies differently.

Search Engines

Definition: Search engines are programs that help users find information on the internet by
scanning websites and creating lists of relevant sites based on keywords.

Key Points:

 Function: Users enter keywords to find specific information or websites relevant to their
interests.
 Examples: Popular search engines include Google, Yahoo, and Bing.
 Importance: Registering your e-commerce website with search engines ensures it
appears in search results, increasing visibility and potential customer visits.

Summary

CRM helps businesses manage customer relationships effectively through various stages of
interaction and loyalty development. B2B marketing focuses on selling to businesses rather than
individual consumers, impacting how companies engage with their customers. Search engines
play a crucial role in helping users find relevant information on the internet, making it essential
for businesses to ensure their websites are visible through search engine registration.

These concepts are fundamental for e-commerce success, enabling businesses to attract, retain,
and satisfy customers effectively in the digital marketplace.

META INFORMATION You know that a Meta tag contains the key information of a web page.
This Meta information is used by a search engine to locate and rank the web site. You provide
your Meta information to a search engine, pay its prescribed registration fee and get your site
registered with the search engine. Search engine puts this Meta information in its database. When
a searcher types key words in the search engine text box, these key words are matched with the
Meta information recorded in the database of the search engine. Different search engines have
different ranking criteria. Normally, those sites are ranked at the top by the search engine
software where maximum keywords typed by the user match with the recorded Meta information
of the site, as well as, such words appear in greater frequency in the Meta information. Some
search engines search the entire internet each time. Many search engines rank the site by using a
program called ‘spider’ which inspects the site before ranking. You know that one can view
Meta information of one’s competitor’s web site. This information can be incorporated and
misused by an e-business in its web site representing that to be its Meta information. Thus, such
a business can improve its ranking on search engines by capitalizing upon the reputation of the
business whose Meta information it actually is. In many countries, stealing and misusing Meta
information in this manner to gain business/competitive advantage is considered as an offence
known as the tort of passing-off. Partnerships Partnering means to form a strategic union with
another company/business for mutual benefit or profit sharing. Partner businesses can provide
complementary services and products to their customers and thus benefit each other. For
example an e-business selling computer science books having a link to an e-business selling
computers and vice versa can enter into a partnership for mutual advantage. Competitive
advantage to both the businesses in this arrangement is that the customers are a link away from
buying a complementary product/service. Thus, a person buying a computer from one site can be
induced to buy computer science books from the partner’s web site. Moreover, partners can
exchange technical research or customer information. They can help each other in improving
respective management or operations. Outsourcing a job to a partner can also be useful. Affiliate
Programs An affiliate program is an agreement between two parties that one will pay the other a
commission based on a specified customer action. It is not a strategic union as is partnership.
Rather, it is for limited purpose and time. Banner advertising is the example of an affiliate
program. Branding A brand refers to an emotional shortcut between a company and its
customers. You can say that it is the trade name/symbol that reminds customers about the
reputation of a company regarding its products or services. Elements of Branding Researchers
have identified three elements of branding, that is, Differentiation Relevance Perceived Value
Product differentiation Product differentiation is the first condition to be met in order to
create/establish a product/service brand. It means that a company must clearly distinguish its
product from all others in the market in some significant way so that the product/service is
different from that of its competitors. For example, you can E-COMMERCE – IT430 VU ©
Copyright Virtual University of Pakistan 139 create/establish your brand on the basis that the
soap manufactured by your business is unique in the market in the sense that it does not dissolve
quickly in water. Relevance Relevance means to what degree is the product/service useful for
potential customers. For example, you may have designed very distinguished jewelry but very
few people use or purchase the same. In fact, it may prove to be too costly for most people to
buy. Note that your product/service should be capable of easily relating itself to the people.
Perceived value A product/service may be different and relevant (customers can see them using
it), still they would not buy unless they find some perceived value in it. For example, a restaurant
may be selling a unique dish that relates/associates itself to the taste of majority of people; still
they may not be inclined to buy it because of certain negative associations, such as its high fat
content. Thus, to create or maintain a brand the above three elements have to be fulfilled.
Emotional branding vs. rational branding In case of television, radio or print media people are
normally in a passive mode. To a greater extent they do not control the communication channel
and thus have to listen or view the advertisement about a brand. This is a type of emotional
branding. On the other hand, emotional appeals are difficult to covey on the internet because web
is an active medium largely controlled by the customers, which means that they can easily click
away from any such emotional appeals. Therefore, rational branding is normally used to create or
maintain brands on the web. Here, businesses offer something interesting or valuable to visitors
in exchange for viewing the advertisement. For example, a free email account with storage space
can be offered through some web pages, and on each such page (that offers this email service)
the visitors have to see an advertisement about the brand. Note that transferring existing brands
to the web or using the web to maintain an existing brand is much easier and less expensive as
compared to creating an entirely new brand on web. One common way of popularizing the brand
of a business on the web is to provide its URL on product packaging, advertisements on TV or
print media etc. One can also combine the URL with logo of a company on brochures, visiting
cards etc. in order to popularize the brand. Global Marketing As a marketer, when you are
aiming at marketing your business in the entire world, you have to keep certain considerations in
mind. Your web design must provide content in various languages and provide prices in various
currencies, so that people belonging to different countries/cultures can understand the
information contained in your web site. A regular display of currency exchange rate information
can be useful in this behalf. Today, tools exist that can translate emails and your web sites into
different languages. Another important consideration should be as to whether the country where
you are doing the business has the required infrastructure to support your e-business. For
example, whether you have a proper distribution channel of your products in a country you are
doing business in. Similarly, you should carefully choose a payment system for your e-business
which is compatible with the environment of a country where you are doing business. For
example, a payment mechanism using SET cannot be considered as compatible with business
environment in most of the third world countries. explain in simple terms
ChatGPT

Sure, let's simplify the concepts related to Meta Information, Partnerships, Affiliate Programs,
Branding, Emotional vs. Rational Branding, and Global Marketing:

Meta Information

Definition: Meta information refers to the data about a webpage that search engines use to index
and rank websites. It includes keywords, descriptions, and other details that help search engines
understand the content and relevance of a webpage.
Key Points:

 Purpose: Helps search engines locate and rank websites based on user-entered keywords.
 Content: Includes keywords relevant to the webpage's content, often repeated to improve
visibility.
 Importance: Proper Meta information can improve a website's ranking on search engine
results pages (SERPs).
 Misuse: Using competitors' Meta information without permission can lead to legal issues
like passing-off.

Partnerships

Definition: Partnerships involve forming strategic alliances between businesses for mutual
benefit, typically by offering complementary products or services.

Key Points:

 Mutual Benefit: Partners share resources, customer bases, and expertise.

 Examples: An e-business selling computer books might partner with one selling
computers, benefiting both through shared customers and increased sales.
 Collaboration: Partners can exchange technical knowledge, customer data, and support
each other's operations.

Affiliate Programs

Definition: An affiliate program is an agreement where one party pays another for promoting its
products or services, usually based on specific customer actions like clicks or purchases.

Key Points:

 Limited Scope: Unlike partnerships, affiliate programs are temporary and focus on
specific marketing goals.
 Example: Banner advertising on websites where the host site earns a commission for
each click or sale generated through the ad.
 Purpose: Increases visibility and drives traffic through mutual promotion.

Branding

Definition: Branding establishes a connection between a company and its customers, creating
recognition and trust through its name, logo, and reputation.

Key Elements:

 Differentiation: Making a product stand out from competitors by highlighting unique

features or benefits.
 Relevance: Ensuring the product or service meets customer needs and expectations.
  Perceived Value: Customers see the product's worth beyond its features, considering
factors like quality and reputation.

Emotional vs. Rational Branding

Emotional Branding:

 Definition: Appeals to customers' emotions through advertising to create a strong

connection with the brand.
 Example: TV ads that evoke feelings to build brand loyalty.

Rational Branding:

 Definition: Uses factual information and benefits to appeal to customers' logic and
reason.
 Example: Web ads offering value or incentives in exchange for viewing.

Global Marketing

Definition: Marketing strategies aimed at reaching and appealing to customers worldwide,

considering cultural, linguistic, and economic differences.

Key Considerations:

 Multilingual Content: Websites should offer content in various languages to cater to

diverse audiences.
 Currency Options: Providing prices in different currencies makes purchases easier for
international customers.
 Local Infrastructure: Ensure there's adequate distribution and payment systems
compatible with each market.
 Legal and Cultural Factors: Respect local laws and cultural sensitivities to avoid
misunderstandings or legal issues.

Summary

Understanding these concepts helps businesses navigate the complexities of digital marketing,
ensuring effective communication with global audiences, leveraging partnerships for growth, and
maintaining ethical standards in branding and online presence. These strategies are crucial for
building a strong online presence and maximizing reach and profitability in the digital
marketplace.

META INFORMATION You know that a Meta tag contains the key information of a web page.
This Meta information is used by a search engine to locate and rank the web site. You provide
your Meta information to a search engine, pay its prescribed registration fee and get your site
registered with the search engine. Search engine puts this Meta information in its database. When
a searcher types key words in the search engine text box, these key words are matched with the
Meta information recorded in the database of the search engine. Different search engines have
different ranking criteria. Normally, those sites are ranked at the top by the search engine
software where maximum keywords typed by the user match with the recorded Meta information
of the site, as well as, such words appear in greater frequency in the Meta information. Some
search engines search the entire internet each time. Many search engines rank the site by using a
program called ‘spider’ which inspects the site before ranking. You know that one can view
Meta information of one’s competitor’s web site. This information can be incorporated and
misused by an e-business in its web site representing that to be its Meta information. Thus, such
a business can improve its ranking on search engines by capitalizing upon the reputation of the
business whose Meta information it actually is. In many countries, stealing and misusing Meta
information in this manner to gain business/competitive advantage is considered as an offence
known as the tort of passing-off. Partnerships Partnering means to form a strategic union with
another company/business for mutual benefit or profit sharing. Partner businesses can provide
complementary services and products to their customers and thus benefit each other. For
example an e-business selling computer science books having a link to an e-business selling
computers and vice versa can enter into a partnership for mutual advantage. Competitive
advantage to both the businesses in this arrangement is that the customers are a link away from
buying a complementary product/service. Thus, a person buying a computer from one site can be
induced to buy computer science books from the partner’s web site. Moreover, partners can
exchange technical research or customer information. They can help each other in improving
respective management or operations. Outsourcing a job to a partner can also be useful. Affiliate
Programs An affiliate program is an agreement between two parties that one will pay the other a
commission based on a specified customer action. It is not a strategic union as is partnership.
Rather, it is for limited purpose and time. Banner advertising is the example of an affiliate
program. Branding A brand refers to an emotional shortcut between a company and its
customers. You can say that it is the trade name/symbol that reminds customers about the
reputation of a company regarding its products or services. Elements of Branding Researchers
have identified three elements of branding, that is, Differentiation Relevance Perceived Value
Product differentiation Product differentiation is the first condition to be met in order to
create/establish a product/service brand. It means that a company must clearly distinguish its
product from all others in the market in some significant way so that the product/service is
different from that of its competitors. For example, you can E-COMMERCE – IT430 VU ©
Copyright Virtual University of Pakistan 139 create/establish your brand on the basis that the
soap manufactured by your business is unique in the market in the sense that it does not dissolve
quickly in water. Relevance Relevance means to what degree is the product/service useful for
potential customers. For example, you may have designed very distinguished jewelry but very
few people use or purchase the same. In fact, it may prove to be too costly for most people to
buy. Note that your product/service should be capable of easily relating itself to the people.
Perceived value A product/service may be different and relevant (customers can see them using
it), still they would not buy unless they find some perceived value in it. For example, a restaurant
may be selling a unique dish that relates/associates itself to the taste of majority of people; still
they may not be inclined to buy it because of certain negative associations, such as its high fat
content. Thus, to create or maintain a brand the above three elements have to be fulfilled.
Emotional branding vs. rational branding In case of television, radio or print media people are
normally in a passive mode. To a greater extent they do not control the communication channel
and thus have to listen or view the advertisement about a brand. This is a type of emotional
branding. On the other hand, emotional appeals are difficult to covey on the internet because web
is an active medium largely controlled by the customers, which means that they can easily click
away from any such emotional appeals. Therefore, rational branding is normally used to create or
maintain brands on the web. Here, businesses offer something interesting or valuable to visitors
in exchange for viewing the advertisement. For example, a free email account with storage space
can be offered through some web pages, and on each such page (that offers this email service)
the visitors have to see an advertisement about the brand. Note that transferring existing brands
to the web or using the web to maintain an existing brand is much easier and less expensive as
compared to creating an entirely new brand on web. One common way of popularizing the brand
of a business on the web is to provide its URL on product packaging, advertisements on TV or
print media etc. One can also combine the URL with logo of a company on brochures, visiting
cards etc. in order to popularize the brand. Global Marketing As a marketer, when you are
aiming at marketing your business in the entire world, you have to keep certain considerations in
mind. Your web design must provide content in various languages and provide prices in various
currencies, so that people belonging to different countries/cultures can understand the
information contained in your web site. A regular display of currency exchange rate information
can be useful in this behalf. Today, tools exist that can translate emails and your web sites into
different languages. Another important consideration should be as to whether the country where
you are doing the business has the required infrastructure to support your e-business. For
example, whether you have a proper distribution channel of your products in a country you are
doing business in. Similarly, you should carefully choose a payment system for your e-business
which is compatible with the environment of a country where you are doing business. For
example, a payment mechanism using SET cannot be considered as compatible with business
environment in most of the third world countries. xplain in simple terms
ChatGPT

Sure, let's break down each of these concepts in simpler terms:

Meta Information

What is Meta Information? Meta information is key data about a webpage that search engines
use to understand and rank websites. It includes details like keywords and descriptions.

How does it work?

 Submission: Website owners provide Meta information to search engines, paying a fee
for registration.
 Indexing: Search engines store this data in their databases.
 Searching: When users type keywords in search engines, they match these keywords
with the Meta information to show relevant websites.
 Ranking: Websites with the most relevant keywords and higher frequency in Meta
information often rank higher.

Caution: Using competitors' Meta information without permission can be illegal and is known
as passing-off.
Partnerships

What is a Partnership? Partnerships are strategic alliances between businesses for mutual
benefit.

How do they work?

 Businesses with complementary products or services collaborate.

 Example: A computer book seller partners with a computer seller.
 Benefits: Shared customers can easily buy both related products, enhancing sales for
both partners.
 Partners can also share research, customer data, or outsource tasks to each other.

Affiliate Programs

What is an Affiliate Program? Affiliate programs involve one party paying another for specific
actions, like clicks or purchases.

Example: Banner ads on websites where the host site earns money for each click or sale made
through the ad.

Purpose: Boosts visibility and sales through mutual advertising efforts for a limited time.

Branding

What is Branding? Branding creates a strong connection between a company and its customers
through its name, logo, and reputation.

Elements of Branding:

1. Differentiation: Standing out from competitors.

o Example: Unique features like soap that doesn't dissolve quickly.
2. Relevance: Meeting customer needs.
o Example: Selling jewelry that people actually want and can afford.
3. Perceived Value: Showing customers the worth of a product beyond its features.
o Example: A restaurant's unique dish might not sell if perceived as unhealthy.

Emotional vs. Rational Branding

 Emotional Branding: Appeals to feelings and emotions, often used in passive media like
TV ads.
 Rational Branding: Uses facts and benefits to appeal to logic, suitable for active online
users who can easily skip ads.

Global Marketing
What is Global Marketing? Marketing to customers worldwide, considering different
languages, currencies, and cultural differences.

Considerations:

 Multilingual Content: Websites in various languages to reach diverse audiences.

 Currency Options: Prices in different currencies for easier purchasing.
 Local Infrastructure: Distribution channels and payment systems compatible with each
country.
 Cultural Sensitivity: Respect local laws and customs to avoid misunderstandings.

Tools: Technology helps translate websites and emails into different languages, facilitating
global communication.

Conclusion: Understanding these concepts helps businesses navigate digital marketing, establish
strong partnerships, build recognizable brands, and effectively reach global audiences while
respecting local norms and laws. Each strategy plays a crucial role in expanding market presence
and driving business growth in the digital age.

DATA MINING Data Mining can be defined as the task of discovering interesting patterns from
large amounts of data, where the data can be stored in databases, data warehouses, or other
information repositories. Data mining has a lot of business application in today’s world. We can
identify the behavior of our customers and can effectively target them with personalized
messages using data mining techniques. Assume that there is a shopping store where the
data/information about customers has been recorded/stored over a period of time. Using a data
mining technique on the customers’ data, certain pattern can be generated that can provide useful
information. For example, this pattern may tell us that people having a certain demographic
profile (age over 20 years and sex male) coming from a particular location have shown
inclination to buy computer related items. It is an interesting clue for the marketers. In case there
is a computer related item that is to be marketed in future, then marketing effort in this behalf
should be focused on such persons instead of sending marketing messages at random. In other
words, persons indicated by the pattern are the ones who are likely to respond to this kind of
marketing initiative. Thus, if a company follows the pattern it can save time, energy and mailing
cost. Data warehouse A data warehouse is a repository for long-term storage of data from
multiple sources, organized so as to facilitate the management for decision making. Fig. 1 below
shows how data collected at different sources is cleaned, transformed, integrated and loaded in a
data warehouse from where it can be accessed by clients for data mining and pattern evaluation.
Data warehouse Clean Transform Integrate Load Query and Analysis tools Client Client Data
source in Karachi Data source in Lahore Data source in Islamabad Data source in Faisalabad Fig.
1 Knowledge discovery A knowledge discovery process includes data cleaning, data integration,
data selection, data transformation, data mining, pattern evaluation and knowledge presentation.
Fig. 2 shows the knowledge discovery process: E-COMMERCE – IT430 VU © Copyright
Virtual University of Pakistan 141 Data Warehouse Databases Patterns Data Mining Knowledge
Cleaning and Integration Selection and Transformation Evaluation and Presentation Fig. 2 Note
that data mining is a step in the overall knowledge discovery process. Data must be cleaned,
transformed, selected and integrated before data mining is performed. Data cleaning means that
missing values should be provided in different fields/columns wherever needed and any
impossible or erroneous values should be substituted by correct/reasonable ones. For example if
the age of a person is typed as 1000 years in the column ‘age’ then an average age value can be
put in its place. Where there are quite a few erroneous or missing values in a row, then that row
can be discarded/deleted altogether. This process is called data selection. In data transformation,
the data from all different sources is converted into the same format. For example, date typed
under a column should be in the same format in the entire data collected through different
sources. In data integration, data from all the sources is assembled or integrated into one and
housed in the data warehouse. Now, this cleaned, transformed, selected and integrated data is fed
to the data mining tool from a data warehouse for data mining purpose. The results/ patterns are
evaluated by managers and useful knowledge is thus gained. Note that almost 80% of the total
time used in a knowledge discovery process is spent on just making the data fit for mining, that
is, data cleaning, data transformation, data selection etc. Types of Data Mining There are four
main types of data mining as follows: Classification Association Characterization Clustering
Classification and association are predictive types of data mining while characterization and
clustering represent the descriptive type. Classification It allows you to have a predictive model
labeling different samples to different classes. The results of this type of mining/model are
represented as (if-then) rules, decision trees, neural networks etc. Two important algorithms used
for this type are ID3 Algorithm, and Bayesian classification. Decision tree is a graphical
representation of the if-then rules. Fig. 3 below shows the result of classification in the form of a
decision tree. Initially, the whole data is divided into two sets – training data and test data. E-
COMMERCE – IT430 VU © Copyright Virtual University of Pakistan 142 In the example
below, ‘sex’ is the target attribute/variable with males and females as the two classes. When no
mining is done and values are picked at random, we find that males are 55% and females 45% in
the training data. With a variation of 1 or 2 % the test data indicates a similar result.
Classification algorithm may find the variable ‘age’ as the best predictor of males such that when
the age is between 20 and 25 years the percentage of males rises to 60% in the training data and
59% in test data. Similarly, education and annual income can be discovered as other predictors
for males, and so on. Thus, you can find a pattern that when age is between 20 and 25 years, and
education is matric or below and annual income is less than one lac (assuming that the model
ends at annual income), then there is a 65% probability (in the training data) and 64% probability
(in the test data) that the sex of a person would be male. Similarly, a pattern for predicting
females can also be obtained. Note that by using classification mining your probability of
reaching males has increased from 55% (when no model is used) to 65% when the model is
applied. Hence, if you want to launch/market a product for males and target them, you can use
the model or pattern dug out through classification mining. Following this model there would be
65% chance that your message would reach the desired class of persons (males). You can send
marketing messages to persons having the above profile to increase response rate. It would save
time, energy and mailing cost. In another example, three classes in a sales campaign may be
‘good response’, mild response’ and ‘no response’ and different features of items such as ‘price’,
‘brand’, ‘category’ etc. can be found as predictors by the algorithm. M 55% 56% F 45% 44% M
65% 66% F 35% 34% M 62% 64% F 38% 36% M 60% 59% F 40% 41% M 40% 39% F 60%
61% M 35% 36% F 65% 64% Training Data Test Data Age >=20<=25 years Education : Matric
or Below Location : rural area Marital Status : unmarried Annual Income < one lac Fig. 3 Note
that we split data into training and test data to judge the effectiveness of a rule, which means that
a rule (for example, age>=20<=25 years) is picked up as such by the tool only if the test data
also confirms the same rule with a variation upto 1or 2 % etc. The model is practically applied
and the results are analyzed to calculate the efficiency of the tool/model. Efficiency =
actual/theoretical*100 In case after applying the model we actually reach 50% males whereas the
predicted value was 66% (we take the figure in test data for calculation) then Efficiency =
50/66*100= 75.75 % E-COMMERCE – IT430 VU © Copyright Virtual University of Pakistan
143 The decision as to whether or not the same model should be used in the future would depend
upon its efficiency. Normally, efficiency of a model close to 80% is considered as a good value.
Association Association analysis is the discovery of association rules showing attribute-value
conditions that occur frequently together in a given set of data. It is widely used for market
basket analysis. For example, where we are recording sales of a big shopping store in databases,
then by applying association mining we may discover that certain items have a strong bondage or
affinity with each other such that when one item is purchased the other is purchased, too. Apriori
algorithm is used for association mining. explain in simple and easy terms
ChatGPT

Certainly! Let's simplify the concepts of data mining, data warehouse, classification, and
association:

Data Mining

Definition: Data mining is about finding interesting patterns from large amounts of data stored
in databases or data warehouses.

Business Application: Businesses use data mining to understand customer behavior and target
them with personalized messages. For example, if data shows that men over 20 from a specific
area buy computer items, marketers can focus their efforts there instead of random marketing.

Data Warehouse

Definition: A data warehouse is a place where data from various sources is stored for long-term
use, organized to help decision-making.

Process: Data is cleaned (fixing errors), transformed (made consistent), integrated (put together),
and loaded into the warehouse. From there, it's used by clients for analysis and mining patterns.

Classification

Definition: Classification is a predictive data mining method where data is sorted into categories
based on attributes. It's like creating rules to predict outcomes.

Example: If we analyze customer data, a classification model might predict that males aged 20-
25 with certain education and income levels are more likely to respond to marketing aimed at
men. This helps marketers target their messages more effectively.

Association
Definition: Association mining finds relationships between items in large datasets. It identifies
which items often appear together.

Example: In a shopping store's database, association mining might reveal that customers who
buy milk also tend to buy bread. This information helps stores plan product placements and
promotions.

Simplified Explanation:

 Data Mining: Finding patterns in big data to make better business decisions.
 Data Warehouse: Central storage for organized data used in analysis.
 Classification: Predictive sorting of data into categories based on attributes.
 Association: Discovering which items are frequently bought together.

These techniques help businesses understand their data better, predict customer behavior, and
optimize their operations for more effective marketing and sales strategies.

1. Support and Confidence

Support and Confidence are measures used to understand relationships between items in a
dataset, often in the context of market basket analysis (like finding out which items are
frequently bought together).

 Support tells us how often two items are bought together compared to the total number
of transactions.
o Example: If out of 50 transactions, eggs and milk are bought together 10 times,
then the support for the eggs-milk pair is 20% (10/50 * 100).
 Confidence measures how likely it is that one item is bought when another item is
bought. It focuses on the probability of one item appearing when another item appears.
o Example: If people buy milk and eggs together 25 times, and they buy milk or
eggs or both 75 times, the confidence of buying milk given eggs is 33.3% (25/75
* 100).

Summary: High confidence means that when one item is bought, the other is also likely
to be bought. High support means that the pair is frequently bought in general.

2. Characterization

Characterization is about summarizing data in a simplified way to find general patterns. It helps
us to understand overall trends in a dataset.

 Example: If you have a list of students with their departments and cities, characterization
might tell you, "Out of all the students from Pakistan, 2 are studying arts."

This approach helps in identifying generalized trends or patterns.

3. Clustering

Clustering groups similar data items together based on certain features so that similar items are
in the same group (or cluster).

 Example: Imagine customers are grouped based on their income levels. One group might
include customers with incomes between $50,000 and $100,000, while another group
includes those with incomes over $100,000.

K-means is a common method used to create these clusters. It helps in understanding

different segments of data.

4. Online Analytical Processing (OLAP)

OLAP is used for analyzing data from different perspectives and summarizing it in a way that is
easy to understand. It doesn’t find patterns like data mining but helps in viewing data in a more
structured way.

 Data Cube: Imagine a 3D cube where you can look at data from different angles – such
as by time (quarters of the year), item types (furniture, groceries), and location (cities).

Example: You can see sales data for furniture in different quarters and cities. For
instance, you might see that 605 units of furniture were sold in Lahore during Q1 (first
quarter).

o Drill-down: Look at more specific details, like furniture sales in February of Q1.
o Roll-up: Summarize broader data, like total furniture sales for the entire year.
o Slice: View data for a specific category, such as furniture sales in Q1.
o Dice: Look at a subset of data, such as sales in Lahore and Karachi only.

Summary: OLAP tools help in organizing and viewing data from various angles and levels of
detail, which aids in better decision-making.

Tools

 SAS (Enterprise Miner) and DB Miner are software tools used for performing data
mining and OLAP.

Summary of Differences:

 Support & Confidence: Measure item relationships.

 Characterization: Summarizes data into general concepts.
 Clustering: Groups similar data together.
 OLAP: Allows viewing data from different perspectives and levels of detail.

I hope this helps clarify these concepts!

Electronic Data Interchange (EDI)

EDI is a technology used by businesses to exchange important documents (like orders and
invoices) electronically, without using paper.

Key Features of EDI:

 No Paperwork: Everything is digital, so no paper is needed.

 No Human Intervention: Orders and documents are processed automatically by the system.
 Fast Transactions: Information is exchanged in seconds.
 Standard Formats: Documents follow standardized formats for consistency.

Example of EDI in Action:

 Before EDI: E-Pens manually creates an order on paper and sends it to a supplier.
 With EDI: E-Pens’ system automatically generates and sends the order to the supplier in a
standardized digital format.

EDI Formats:

 ANSI X12 and EDIFACT are two common standards used to format these electronic documents.

Value Added Network (VAN)

VAN is a service that helps manage and route EDI messages between businesses.

 Postbox: Where outgoing messages are stored.

 Mailbox: Where incoming messages are retrieved.

Advantages of VAN:

 Time Independence: Messages can be sent and received at any time.

 Protocol Independence: VAN handles different communication standards and formats.

Internet-Based EDI

Internet-Based EDI uses the internet to exchange EDI messages, which can be simpler and
cheaper than traditional VAN services. It includes:

 Email for EDI: Sending EDI messages via email.

 Extranet: A private network for sharing EDI data with partners.
 Web-Based EDI: Using online software for EDI transactions.

Benefits of EDI:

 Faster Orders: Orders are processed quickly because they are automated.
  Cost Savings: Reduces the cost of paper and manual processing.
 Fewer Errors: Automated systems reduce human errors.
 Quick Responses: Suppliers can quickly fulfill orders.
 Accurate Invoices: Electronic invoices are precise and reliable.
 EDI Payments: Allows for electronic financial transactions.

Enterprise Resource Planning (ERP)

ERP is a system that integrates all the different functions of a company (like finance,
manufacturing, and warehousing) into one unified software system. This way, everyone in the
company can access the same information.

Example: If a customer service representative needs information about a customer’s order, they
can access data from finance, warehouse, and shipping modules all from one system.

Electronic Banking

Electronic Banking (or e-banking) is the use of online tools and services to manage your bank
accounts and perform banking transactions without visiting a physical bank branch.

Advantages of E-Banking:

 Access Anytime: Check account balances and manage finances from anywhere.
 Bill Payments: Pay bills online.
 Account Management: Transfer money, apply for loans, and more.
 Convenience for Banks: Reduces the need for physical branches and supports remote
customers.

I hope this makes these concepts clearer

Personal Finance Online

Personal finance online means using digital tools to manage your money. You can use software
like Quicken or MS Money to handle tasks like budgeting and tax calculations.

How It Works:

1. Automatic Data Import: Your financial software can automatically download and update
transaction details from your bank accounts.
2. Budgeting and Tax Calculations: With this data, the software helps you create budgets and
calculate taxes more easily.

Value Chain
Value Chain is a way to look at all the activities a company does to create and sell its products
or services. Michael Porter introduced this idea to help businesses understand how they add
value at each step.

Two Types of Activities:

1. Primary Activities: These are the core activities that directly contribute to making and
selling a product.
o Identify Customers: Finding new customers and understanding existing ones.
o Design: Creating and developing the product.
o Purchase Materials: Buying the raw materials needed.
o Manufacture: Making the product.
o Market and Sell: Promoting and selling the product.
o Deliver: Shipping the product to customers.
o After-Sales Service: Supporting the customer after the sale (e.g., repairs).
2. Support Activities: These help make the primary activities more efficient.
o Finance and Administration: Handling money and managing the business.
o Human Resources: Managing employees (hiring, training, etc.).
o Technology Development: Improving products and processes through technology.

Example:

In the wooden furniture industry:

 Logger: Cuts down trees.

 Sawmill: Turns logs into lumber.
 Lumberyard: Distributes lumber.
 Furniture Factory: Makes furniture from lumber.
 Furniture Retailer: Sells furniture to customers.
 Consumer: Buys and uses the furniture.

Understanding these chains helps businesses find ways to cut costs or improve quality.

How E-Commerce Fits into Value Chains

E-commerce (EC) can enhance value chains by:

1. Reducing Costs: For instance, a software company might deliver updates directly online, cutting
out the need for retailers.
2. Improving Quality: Better technology can lead to better products.
3. Reaching New Customers: Online platforms can help find new buyers.
4. New Selling Methods: Selling products online can open up new sales channels.

SWOT Analysis

SWOT Analysis helps businesses evaluate their Strengths, Weaknesses, Opportunities, and
Threats to create effective strategies.
Steps:

1. Strengths: What is the business good at? (e.g., efficient production)

2. Weaknesses: What areas need improvement? (e.g., lack of skilled workers)
3. Opportunities: What new possibilities could be explored? (e.g., new technology)
4. Threats: What challenges might the business face? (e.g., strong competitors)

Example: Dell

 Strengths: Selling directly to customers and reducing manufacturing costs.

 Weaknesses: No local dealers and weak brand compared to competitors.
 Opportunities: Customers are more knowledgeable and can order online.
 Threats: Competitors have stronger brands.

Dell’s Strategy:

 By focusing on its strengths (direct sales and cost control) and taking advantage of opportunities
(online sales), Dell was able to offer customized computers and compete effectively

Supply Chain

A supply chain involves all the steps needed to turn raw materials into a finished product that
reaches the customer. It can be divided into three main parts:

1. Upstream Activities: These are the activities that happen at the beginning of the supply
chain. They involve suppliers providing raw materials or services. For example, in the
milk supply chain:
o Milkmen deliver milk to the processing facility.
o Lumber Company supplies raw materials for making packaging boxes.
o Corrugate Paper Company creates paperboard for boxes.
o Label Manufacturing creates labels for the milk packages.
2. Internal Activities: These occur within the company that processes the raw materials.
They involve:
o Processing Facility: Where milk is processed.
o Packaging: Milk is packaged into boxes and labeled.
3. Downstream Activities: These involve getting the finished product to the end consumer.
For example:
o Distributors send the packaged milk to different stores.
o Stores sell the milk to customers.

Supply Chain Management

Supply Chain Management (SCM) is about managing and improving the flow of goods and
information through the supply chain. This includes working closely with suppliers to improve
products and processes, and using technology to streamline operations. Key points:
  Building Relationships: Establishing long-term relationships with suppliers can help
improve product quality and efficiency.
 Using Technology: Technologies like the internet and SCM software can help:
o Share information quickly (e.g., changes in demand or product designs).
o Speed up transactions and reduce costs.
o Improve accuracy and reduce errors.

Examples of Technology in Supply Chains

1. Aircraft Manufacturer:
o Challenge: Needed to manage over a million parts for custom airplanes, leading
to delays and losses.
o Solution: Implemented a system using EDI (Electronic Data Interchange) and the
internet to share specifications and updates with suppliers.
o Outcome: Reduced assembly time and improved delivery speed.
2. Computer Company:
o Challenge: Needed to manage inventory and production efficiently.
o Solution: Shared sales forecasts and customer data with suppliers via a secure
website.
o Outcome: Reduced inventory levels and improved production planning.

Supply Chain and Consumer Orientation

Ultimate Consumer Orientation focuses on meeting the needs of the final customer. For
example:

 Tire Company: Created an extranet for dealers to access product information directly,
reducing phone calls and improving dealer service. This led to better relationships and
fewer recommendations for competitors.

Competitive Strategy

Competitive Strategy involves how a company positions itself in the market to gain an
advantage. There are three main types:

1. Cost Leadership:
o Goal: Sell products or services at a lower price than competitors.
o How: Reduce costs through efficient operations or technology.
2. Differentiation:
o Goal: Make your product or service stand out due to unique features or quality.
o How: Offer something that competitors don’t, like a noiseless air conditioner.
3. Focus:
o Goal: Concentrate on a specific market segment or niche.
o How: Specialize in a particular area, such as a specific region or product type.

Role of E-Commerce in Competitive Strategy

E-Commerce (EC) helps businesses achieve competitive strategies in several ways:

1. Cost Leadership:
o Reduced Costs: EC reduces overhead costs (like buildings and staff) and
eliminates middlemen, lowering prices for customers.
2. Improved Logistics:
o Efficiency: EC enables faster order fulfillment and just-in-time delivery, cutting
down on inventory and production costs.
3. Customization:
o Personalization: EC allows for better understanding of customer preferences and
tailored offerings, supporting differentiation and focus strategies.
4. Product Differentiation:
o Convenience: For products like music or books, EC allows for instant
downloads, saving on delivery time and cost

Porter’s Model of Competitive Rivalry

Porter’s Model helps businesses understand the forces shaping competition in their industry and
how to respond. The model identifies five key forces that influence competitive rivalry:

1. Threat of New Entrants:

o What It Is: How easy or hard it is for new companies to enter the market.
o Impact: If it's easy for new companies to enter, existing companies face more
competition. For example, starting an online banking service is easier and cheaper
than opening a traditional bank branch.
o Role of IT/EC: Technology can create barriers to entry, like established
companies using advanced IT systems that new entrants can't easily match.
2. Threat of Substitutes:
o What It Is: The risk that customers will switch to a different product or service
that meets the same need.
o Impact: If there are good alternatives, existing companies might lose customers.
For example, downloadable music on the internet is a substitute for physical
music stores.
o Role of IT/EC: Online options or new tech solutions can create new substitutes,
but can also offer ways to differentiate products.
3. Bargaining Power of Buyers:
o What It Is: How much influence customers have on pricing and terms.
o Impact: When buyers have many options, they can demand lower prices or better
quality. For example, if many competitors offer similar products, buyers can
negotiate better deals.
o Role of IT/EC: E-commerce can help companies reduce costs and pass on
savings to customers, or directly reach customers without intermediaries.
4. Bargaining Power of Suppliers:
o What It Is: How much influence suppliers have over the price and quality of their
goods or services.
 Impact: If there are few suppliers or they offer unique products, they can demand
o
higher prices. Conversely, many suppliers mean companies can get better deals.
o Role of IT/EC: Suppliers who don’t use modern technology might have less
bargaining power if companies use digital tools to manage supply chains
efficiently.
5. Competition Among Existing Players:
o What It Is: The level of rivalry between current companies in the industry.
o Impact: Intense competition can lead to price wars, increased marketing costs,
and reduced profits. For example, if many companies sell similar products, they
compete on price and features.
o Role of IT/EC: E-commerce can lower costs, improve efficiency, and enhance
customer service, giving companies an edge over competitors.

Strategic Planning Cycle

The Strategic Planning Cycle is a process used to develop and execute a business strategy. It
has four key stages:

1. Industry and Competitive Analysis:

o What It Is: Understanding factors that affect the success of your business. This
involves:
 SWOT Analysis: Identifying strengths, weaknesses, opportunities, and
threats.
 Competitive Analysis: Examining what competitors are doing, especially
online.
o Purpose: Helps you understand your market and competition to make informed
decisions.
2. Strategy Formulation:
o What It Is: Creating a plan based on your analysis. Decide on a strategy like:
 Cost Leadership: Offering lower prices.
 Differentiation: Providing unique products or services.
 Focus: Targeting a specific market segment.
o Purpose: Develop a strategy that aligns with your business strengths and market
needs.
3. Implementation:
o What It Is: Putting your strategy into action. This involves:
 Building a Plan: Define steps and resources needed.
 Team Involvement: Assign roles and responsibilities.
 Execution: Carry out the plan, like setting up a new online service.
o Purpose: Turn your strategy into practical steps and ensure they are carried out
effectively.
4. Strategy Assessment:
o What It Is: Evaluating the success of your strategy. This involves:
 Monitoring Results: Check if the strategy is working as planned.
 Making Adjustments: Change the plan based on performance and
feedback.
 o Purpose: Learn from outcomes, fix problems, and adapt to changing conditions.

This cycle helps businesses plan, execute, and refine their strategies to remain competitive and
successful.

Barriers to International E-Commerce

When businesses expand their e-commerce operations globally, they encounter several
challenges. Here’s a simplified breakdown of the key barriers:

1. Lack of Trust:
o Problem: Online shoppers may feel uncertain about the legitimacy of a business
they find on the internet. Unlike physical stores where you can see and interact
with the business, online stores lack this face-to-face interaction.
o Solution: Build trust by ensuring your website is professional and easy to
navigate. Include clear information about your company, offer customer service,
and display security certifications. Established brands often have an easier time
gaining trust compared to new businesses.
2. Language:
o Problem: Language differences can hinder effective communication with
customers from different regions. Most internet content is in English, but not
everyone speaks it fluently.
o Solution: Translate your website into local languages to reach a broader audience.
You can use automatic translation tools or provide links to different language
versions of your site. Make sure the translations are accurate and culturally
appropriate.
3. Culture:
o Problem: Cultural differences can affect how your business is perceived. For
example, certain symbols, colors, or images might be interpreted differently
across cultures.
o Solution: Research cultural norms and preferences in each target market. Avoid
using culturally insensitive symbols or colors. For instance, red is lucky in China
but associated with mourning in South Africa.
4. Infrastructure Issues:
o Problem: In many regions, internet infrastructure is underdeveloped, which can
affect the speed and reliability of online transactions. Additionally, high costs or
inefficient shipping and customs processes can complicate international sales.
o Solution: Ensure your website can handle varying internet speeds and provide
clear information about shipping policies. Work with local partners to navigate
customs regulations and improve logistics.

Electronic Transactions Ordinance (ETO) 2002

The Electronic Transactions Ordinance (ETO) 2002 in Pakistan addresses how electronic
documents and signatures are recognized legally. Here’s a simple overview:
  Digital Signatures: These are electronic signatures that verify the authenticity and
integrity of documents.
 Legal Recognition: ETO ensures that electronic documents are legally equivalent to
physical documents. This means that electronic contracts and records are valid and
enforceable.
 Document Requirements: If a law requires a document to be in writing, an electronic
version can fulfill this requirement if it is accessible and usable for future reference.

In summary, international e-commerce involves overcoming barriers like trust, language, cultural
differences, and infrastructure issues. Legal frameworks like ETO help ensure that electronic
transactions are recognized and enforceable.

1. Territorial Jurisdiction

 Concept: Territorial jurisdiction refers to a court's authority to hear a case based on the
geographical location of the parties involved or where the cause of action arose.
 Challenges in E-commerce: The global nature of the internet complicates territorial
jurisdiction. Disputes can involve multiple countries, making it challenging to determine
which jurisdiction should handle a case. Courts typically examine factors like the level of
interactivity and the impact of the online activity to decide jurisdiction. This has led to
practices like forum shopping, where plaintiffs choose jurisdictions that they believe will
be more favorable to their case.

2. Online Contracts

 Formation: Online contracts require the same elements as traditional contracts—offer,

acceptance, and consideration. A contract is formed when one party’s offer is accepted by
another, often indicated by clicking an "I agree" button.
 Validation: Digital signatures and secure authentication methods are used to ensure that
parties involved in online contracts are who they claim to be and have the authority to
enter into agreements.

3. Copyright in Cyberspace

 Challenges: Copyright protection on the internet faces challenges due to the ease of
copying and distributing digital content. Issues arise with unauthorized copying,
distribution, and the enforcement of copyright.
 Fair Use: The concept of fair use allows for limited use of copyrighted material without
permission, under certain conditions. Factors include the purpose of use, the nature of the
copyrighted work, the amount used, and the effect on the market value of the work.
 International Treaties: The World Intellectual Property Organization (WIPO) treaties
aim to provide a framework for international copyright protection in the digital age.

4. Patent Infringement
  Definition: Patents grant exclusive rights to inventions that are novel, non-obvious, and
useful. While software patents are less common, business process patents—covering
methods of doing business—can be valuable.
 Concerns: The granting of business process patents can lead to monopolies and disputes
over patent rights.

5. Trademark and Domain Name Conflicts

 Types of Conflicts:
o Cyber Squatting: Registering domain names that are similar to existing
trademarks to demand ransom.
o Concurrent Use: Disputes over domain names when multiple parties have
legitimate claims.
o Parasites: Domain names that mimic well-known brands to exploit their
reputation.
o Domain Variants: Different top-level domains (e.g., .com vs. .org) leading to
confusion.
 Resolution: The Uniform Dispute Resolution Policy (UDRP) by ICANN provides a
mechanism for resolving domain name disputes through arbitration.

6. Online Defamation

 Definition: Defamation involves false statements that harm someone’s reputation. Online
defamation (cyber libel) can be complex due to the anonymity and global reach of the
internet.
 Liability of ISPs: Internet Service Providers (ISPs) may be held liable for defamatory
content if they have control over it. The liability often depends on whether the ISP can
moderate or remove such content.

7. Online Privacy

 Concerns: The collection and use of personal data online raise privacy issues. Different
countries have varying privacy laws.
 Regulations:
o Canada: Personal Information Protection and Electronic Documents Act
(PIPEDA).
o EU: General Data Protection Regulation (GDPR), which restricts data transfer
outside the EU.
o US: Less stringent federal privacy laws, with companies adopting their own
policies (opt-in or opt-out approaches).

8. Internet Taxation

 Taxes: E-commerce businesses are subject to various taxes including income tax, sales
tax, and customs duties. The concept of “nexus” determines where taxes are applicable.
  Challenges: Businesses operating in multiple jurisdictions must navigate complex tax
obligations and may face issues with double taxation. Countries often have different tax
laws, requiring businesses to comply with multiple sets of regulations.

9. Cyber Crimes

 Emerging Threats: The rise of the internet has led to new forms of crime, including
hacking, identity theft, and online fraud. Cyber crimes are challenging to address due to
their often international nature and the technical expertise required to combat them.

In conclusion, as e-commerce continues to grow, these global legal issues will evolve. Legal
frameworks and international cooperation will be essential in addressing the challenges posed by
the digital marketplace