Information Technology Reference
In-Depth Information
The Detroit Trading Exchange lets auto dealers and others bid to buy more than 300,000
sales leads generated from consumers who visit a host of auto-related Web sites. The sales
leads can be sorted by zip code, financial factors, and other parameters so buyers tailor the
sales leads they receive.
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Several strategic and competitive issues are associated with the use of exchanges. Many
companies distrust their corporate rivals and fear they might lose trade secrets through par-
ticipation in such exchanges. Suppliers worry that the online marketplaces and their auctions
will drive down the prices of goods and favor buyers. Suppliers also can spend a great deal of
money in the setup to participate in multiple exchanges. For example, more than a dozen
new exchanges have appeared in the oil industry, and the printing industry is up to more
than 20 online marketplaces. Until a clear winner emerges in particular industries, suppliers
are more or less forced to sign on to several or all of them. Yet another issue is potential
government scrutiny of exchange participants—when competitors get together to share
information, it raises questions of collusion or antitrust behavior.
Many companies that already use the Internet for their private exchanges have no desire
to share their expertise with competitors. At Wal-Mart, the world's number-one retail chain,
executives turned down several invitations to join exchanges in the retail and consumer goods
industries. Wal-Mart is pleased with its in-house exchange, Retail Link, which connects the
company to 7,000 worldwide suppliers that sell everything from toothpaste to furniture.
Marketing
The nature of the Web allows firms to gather much more information about customer
behavior and preferences than they could using other marketing approaches. Marketing
organizations can measure many online activities as customers and potential customers
gather information and make their purchase decisions. Analysis of this data is complicated
because of the Web's interactivity and because each visitor voluntarily provides or refuses to
provide personal data such as name, address, e-mail address, telephone number, and demo-
graphic data. Internet advertisers use the data they gather to identify specific portions of
their markets and target them with tailored advertising messages. This practice, called
market segmentation
, divides the pool of potential customers into subgroups, which are
usually defined in terms of demographic characteristics, such as age, gender, marital status,
income level, and geographic location.
market segmentation
The identification of specific
markets to target them with
advertising messages.
comScore Networks is a global
information provider to large
companies seeking information on
consumer behavior to boost their
marketing, sales, and trading
strategies.
