Assignments
Homework Assignments.
Please see the Fall 2011 class Moodle page for assignments. The following assignments may or may not be assigned in this class - Moodle specifies what you need to do for this class.
Analyze an Online Business
- Use the Down Under Bakery spreadsheet Pieshop.xls to answer the following questions. Explain your reasoning:
- Gareth is considering advertising to people who live beyond the range of one-day ground shipping from his store (that means pies must be shipped using the more expensive DHL overnight shipping). He investigates Google adwords and finds that he can advertise "australian meat pies" for $1.00 per click. (That means that Gareth has to pay $1.00 for every person who clicks on his ad). If he estimates that 15% of people who click on his ad will become a customer, under what circumstances does it make sense for him to start this advertising campaign? Explain.
- Gareth is considering a 20% discount on all pies bought online in the week before Australia day. Under what circumstances does that make sense?
Note that pies are sold in boxes of twelve.
Retail Businesses Homework
- See the Petsdotcom spreadsheet. Why did Pets.com fail the numbers test? (for an explanation of "numbers test", see Business Models). Why are bulk transport and courier delivery costs so different?
- Use Amazon.com's latest quarterly income statement to compare Amazon.com fulfillment costs as a percentage of net sales with those of DUB Pies's online sales (for DUB, assume that fulfillment costs include all shipping, handling and transaction costs). How do you explain the difference? N.B. If you are having trouble interpreting this income statement, refer to Financial Reports, revenue, costs and profit.
- Use this article in Wired magazine to identify three key challenges Barnes and Noble faced in trying to compete with Amazon.com. According to the article, how did they plan to compete in the future? (This article is eight pages long, but you can skim it).
- Look at the Amazon.com historical financial spreadsheet. What percentage of net sales was spent on marketing in 1999? In 2008? How do you explain the difference?
- How do you think apparel became the largest online retail segment? Isn't there a risk that the clothes will not fit or not look good once the customer tries them on? How do retailers help customers overcome that risk? Provide a link to an example of a site that you think does a good job selling apparel online.
- Start to analyze eBay.com by looking at its financial statements. Include a link to your information source in your answer:
- What was eBay's revenue for the full year ended December 31, 2008? (use the Generally Accepted Accounting Principle [GAAP] numbers)
- What was the net income for that period?
- What was eBay's margin in % (net income divided by revenue)? How does that compare with Amazon.com's?
Network Effect Homework
- It's important that you understand the network effect. The network effect is where the value of a good or service to a potential buyer increases with the number of people who have already bought the good or already use the service. To see how it works, examine the growth of a market as follows: draw one table with five columns: step, membership, # transactions possible, benefit to joiner, benefit to the market of the joiner joining) and fill in the table using the answers from steps 1-8 as follows (N.B. this is easier than it looks - just take it step by step):
- Step 1. Imagine a new "market" with one buyer (B) and zero sellers (S). Write "B" in the membership column next to step 1. How many transactions are possible? Fill in the rest of the row with zeros.
- Step 2. One seller (S) joins the market. The membership column next to Step 2 should now read "B,S". Fill in the rest of the row. How many transactions are now possible? What is the benefit for the new seller to joining the market (in terms of additional transactions possible)? What is the benefit to the buyer already in the market of the seller joining (in terms of additional transactions possible to the market as a whole?)
- Step 3. (Continue with the exact same procedure, adding buyers and sellers alternately. Here are some more steps to help you out). Now imagine a second buyer joins the market (which currently has one buyer and one seller). What would the market's membership be? How many transactions would be possible if the second buyer joined? What is the benefit to the new joiner? What is the additional benefit to the people already in the market (in terms of additional transactions possible to the market as a whole?)?
- Step 4. After step 3 the market has one seller and two buyers (membership is now B,S,B). If a second seller joins how many transactions will be possible? What are the benefits of a second seller joining to the new joiner and to the people already in the market?
- Step 5. After step 4 the market has two sellers and two buyers (BSBS). If a third buyer joins how many transactions will be possible? Fill in the rest of the row.
- Repeat this analysis - with new buyers and new sellers joining alternately - until there are four buyers and four sellers. At each step, work out the number of transactions possible, the benefit to the new joiner and the benefit to people already in the market.
- What do you notice about the benefits to the joiner and to the market as the market size increases?
- As the market grows some sellers may be concerned that the amount of competition is increasing. If you were that seller, what factors would you consider when deciding whether or not to leave the market?
- Is there a network effect associated with buying a hamburger? Explain.
Online Marketing: IP Address Homework
- What is your IP address? Go to http://whatismyipaddress.com/ and make a note of it. Then click on the gray button to the right of the map that says "Lookup IP Address." Write down your Hostname and the town and state where the host is located. Also write down where you are right now. How close is the host location to your location - same town, nearby town or a long way away? Enter the answer on your blog (see below).
Online Marketing: Web Site Analytics and Blog Homework
- This question is designed to give you practice in two skills: 1) creating a blog and 2) using web site analytics software. You will look up information on the analytics site and enter the answers into your blog.
- If you already have a blog that you set up yourself you can skip to the next question. Otherwise, go to http://blogger.com and set up a blog. Note that you need a gmail address to do this.
- Log in to http://www.google.com/analytics/indexu.html and answer the following questions about the web site statistics for the class site for the most recent full calendar month (November 2009):
- Look at Visitors:
- How many visits did the site receive in this period?
- Of the cities from which people visited the site, which one is furthest from SUNY Purchase?
- Which browser was least used by site visitors in this period?
- Look at Traffic Sources. Which keywords accounted for the most visits in this period?
- Look at Content. Which page on the site was most visited in this period? How many visits did it receive?
- Look at Goals. Note that I set up the goal to be a visit to the Assignments page. I also assigned a value of $10 to the goal.
- What was the average conversion rate over this period?
- Click on Goal Value. If I received $10 for every person who visited the Assignments page in November 2009, how much would I have made?
- Click on Funnel Visualization. What percent of visitors visited the home page and then visited the Assignments page?
- Create a new blog entry entitled Internet and Business Online Marketing Homework (or something similar) and enter the answers to the question on the blog.
- Create a link to your blog next to your name on the Student page of the class wiki.
- David's Bathroom Renovation Store is a store in Greenwich, CT 06830 that sells tiles, mirrors, faucets, tubs, bidets and everything else people need to renovate their bathrooms. You have been hired by David to advise him on internet marketing. Investigate the following as a prelude to making an initial presentation to your client:
- Find a business web site from a different industry to David's that you believe is effective. Write down three or four bullet points explaining why you think that site is effective and the principles that David could apply to his own web site. Put a link to that site next to your name on the student page of the class wiki.
- Find a display ad for the kinds of products David sells. What site is that display ad on? (provide a clickable link as your answer)
- Find a blog or forum or online user community related to David's business. How might David participate in that blog or forum or community in a way that helps his business?
- Write down some search terms that customers might use when looking for the kinds of products David sells. Type them into a search engine and see which sites are listed highest (do not include sponsored search results). Put links to the top three sites in your answer. Why do you think they were listed highest?
- Search advertising:
- Use the Google keyword tool to find the relevant keywords that are searched most frequently. What are they? How many times do Google users search for these terms in an average month?
- Use the Google Traffic Estimator to estimate the cost per day of advertising using your proposed keywords. What is that cost? (copy and paste your results into the body of your blog)
- If 1% of people who click on his ad made a purchase, what is David's customer acquisition cost from search advertising?
- David's average sale value is $4000. His gross margin is 50%. Does it make sense for David to do search advertising using the keywords you proposed?
- Investigate social media sites such as Facebook and Twitter. How might David use those sites in his marketing campaign?
Online Marketing Tools
You should email the answers to questions 1-3 but post the answer to question 4 on a blog.
- What is your IP address? Go to http://whatismyipaddress.com/ and make a note of it. Then click on the gray button to the right of the map that says "Lookup IP Address." Write down your Hostname and the town and state where the host is located. Also write down where you are right now. How close is the host location to your location - same town, nearby town or a long way away?
- Go to http://www.doubleclick.com/. You can use other sources too to answer this question but make sure you provide links to the sources you use in your answer.
- Describe in your own words what Doubleclick does.
- Explain in your own words how the services they offer marketers and publishers differs.
- Watch this video about tracking cookies. Does it make you more or less worried about cookies?
- This question is designed to give you practice in two skills: 1) creating a blog and 2) using web site analytics software. You will look up information on the analytics site and enter the answers into your blog.
- If you already have a blog that you set up yourself you can skip to the next question. Otherwise, go to http://blogger.com and set up a blog. Note that you need a gmail address to do this.
- Log in to http://www.google.com/analytics/indexu.html and answer the following questions about the web site statistics for the class site for the last four weeks:
- Look at Visitors:
- How many visits did the site receive in this period?
- Of the cities from which people visited the site, which one is furthest from SUNY Purchase?
- Which browser was least used by site visitors in this period?
- Look at Traffic Sources. Which keywords accounted for the most visits in this period?
- Look at Content. Which page on the site was most visited in this period? How many visits did it receive?
- Look at Goals. Note that I set up the goal to be a visit to the Assignments page. I also assigned a value of $10 to the goal.
- What was the average conversion rate over this period?
- Click on Goal Value. If I received $10 for every person who visited the Assignments page on 2/23/09, how much would I have made?
- Click on Funnel Visualization. What percent of visitors visited the home page and then visited the Assignments page?
- Create a new blog entry entitled Internet and Business HW 5 (or something similar) and enter the answers to the question on the blog.
- Create a link to your blog next to your name on the Student page of the class wiki.