EXERCISE 1: Analysis of the online communities’ paradigm

1. Visit http://yahoo.com and http://facebook.com as examples of online communities.

a) What is meant by an online community and how is it important for E-commerce?

Wikipedia’s definition of an online community, credited to American author and researcher Amy Jo Kim, is a virtual community that exists online whose members enable its existence through taking part in membership rituals. The original online community is the Advanced Research Projects Agency (ARPA) creation ARPANET which was used by scientists to share research. Ultimately, ARPANET developed into the Internet. Online communities come in a myriad of formats. Some examples of online communities include LISTSERV servers, newsgroups, bulletin boards, and online forums.

With the advent of Web 2.0 technologies, online communities have evolved and the ubiquitous social and professional social networks are constantly growing and developing. More and more, modern online communities mirror ‘real-world’ communities and we now see online communities from corporate sectors including Education, Media, Science, Law and, of course, Information Technology. Social network is also extremely popular and there are several avenues available for social interaction. Facebook, MySpace, and LinkedIn are all examples of social networking sites that have all gained in popularity. Mobile technologies have also provided a new an exciting avenue for social interaction online.

The importance of online communities to business cannot be underestimated. Some of the possible benefits of corporate interaction with online communities include:

• A marketing device for organisations.
• A source of invaluable information about people likes/dislikes and attitudes.
• Word-of-Mouth marketing opportunities abound and the importance of consumer to customer communications has never been more important.
• Improved feedback from consumers
• Reaching consumers in a community-based setting can strengthen the bond between consumer and company
• Communities can be used to reinforce, or manipulate brand image
• Communities can be used to gauge consumer responses to new products and new marketing campaigns

Australian Media have seen the value of online communities with two of the major television studios aligning themselves with major online community provides - Channel Nine with NineMSN and Channel Seven with Yahoo7.


b) Is there a common thread and a local community sense in action?

The sites are considerable different both in nature and delivery. Facebook is primarily a social networking site and as such is used to socialise with friends and family. Facebook has a number of optional programs, provided by third party developers. These for the most part are geared towards entertainment and earn revenue by collecting marketing data about the individuals who use the applications. Yahoo is more of a full-service offering. The various functions appear more closely integrated. Both sites earn revenue through advertising. Both sites have a community feel to them, with Facebook displaying a slightly stronger sense of community. Neither site can really be considered as local communities, in terms of location, but there is a local sense of community in terms of individual interest groups.




2. Visit the famous online store front at http://www.amazon.com

a) Why has it been a successful site? How does the purchase of a book work?

Amazon.com is perhaps the most successful website of the modern era. Amazon has a patent on the “One Click” checkout process, and has in the past vigorously defended the rights that patent in the courts. Amazon uses several marketing tools to enhance the user’s shopping experience. For example, users can offer reviews on articles that they have purchased from Amazon. Amazon provides a summary and highlights of the books available for purchase. In addition, for a book, Amazon provides reference for related materials (e.g. for a particular book, what other books have users purchased).

Purchasing a book on Amazon is a matter of searching for a book, placing it in the shopping cart. When you are ready to finalise the purchase of the items in your shopping cart, you can use the checkout process to make appropriate payment for the items. Users have the option of registering their credit card details with Amazon to allow them to use the “One Click” checkout process..


b) Is there any secure transactions not involving money?

Amazon provide the ability to purchase items using gift cards, so individuals can purchase gift cards for the family and friends, who in turn can use these to purchase items from Amazon. JP Morgan Chase issue Amazon Rewards credit cards that allow users to earn points for purchases and use these points to make purchases on Amazon.

3. What happens with new models emerging such as price comparison sites?

As with any business environment, new models can have unpredictable impacts in relation to online communities. Internet users may be hesitant to utilise a new service in today’s security conscious environment. Competitions have the ability to respond relatively quickly to a new entrant, or even a new business model. Ultimately, the success of a new model and the impact of that success on the business environment is dependant on a number of factors including:

• How valuable user perceive the new service
• How quickly competitors can respond to the new service
• The level of trust that users have in the new service
• The performance of the marketing campaign

REFERNECES

http://www.pronetadvertising.com/articles/marketing-through-online-communities.html

http://www.marketingpower.com/AboutAMA/Pages/AMA%20Publications/AMA%20Journals/Journal%20of%20Marketing/TOCs/SUM_2010.2/Networked_Narratives.aspx