Internet-Based Selling in Systems Design

Table of Contents

Coursework Header Sheet 1

1 Introduction 3

2 Digital Personalisation - Product and Service Offerings 4

2.1 Digital Personalisation Methods used within Product/Service Offerings 5

3 Online systems design -Mechanisms for customer influence and persuasion 7

3.1 Price transparency 9

3.2 Product transparency 10

4 Conclusion 10

5 Reference 11

6 Reflective Evaluation 13

7 Appendix 16

Abstract

The advent of the internet has created an opportunity for sellers to compete using internet-based mechanisms by either hiding or revealing market information. Too much information in the hands of the consumer means sellers lose some leverage and less of information means lower customer trust and loyalty. Research however has shown that digital personalisation is able to tailor information to fit the needs of customers. This paper aims to review various literatures on digital personalisation and internet-based selling mechanisms and how the personalisation of these mechanisms could influence and persuade customer interest.

1 Introduction

The lives of people and their style of living have been very well influenced in recent years by the Internet which has created an Electronic Commerce (EC) platform for companies and their partners to conduct business and perform electronic transactions (Zhang, 2005). The editor-in-chief of International Journal of Electronic commerce which is the leading scholarly journal on Electronic Commerce defined E-commerce as "sharing business information, maintaining business relationships and conducting business transactions by means of telecommunications networks" (Zwass , 1996).

Through E-commerce, companies are able to reduce constraints such as time of delivery of products and information, space required for storing products and cost of doing business which together enhances their ability to connect and to interact with their E-commerce customers and partners. To take advantage of this revolutionary opportunity and draw from its benefits many organisations are competing within the ecosystem E-Commerce (Bowen, 2000).

To be able to attract and retain customers, companies who are involved in electronic commerce have had to make use of differentiation methods and personalisation technologies to make their offerings unique and to tailor these offerings to meet specific preferences of their customers. According to (Wind and Rangaswamy, 2000), personalization enables businesses to research on the behaviours of customers so as to develop suitable strategies for marketing and to deliver the appropriate product or service to the intended targeted customer. (Wind and Rangaswamy, 2000) further found that out of the many existing benefits of electronic commerce, perhaps the most vital component is it's the ability to give consumers a flexible and personalised relationship.

The advent of internet based selling, has also increased transparency in markets therefore benefiting customers greatly as they are now more able to discern properly the product or service that best satisfies their needs and at a price they deem fit(Granados and Gupta et al., 2008). In contemporary website building, owners present the users with the option of creating their own page within the website, an example being 'My Banking Page' , whose benefits is not only limited to the feeling of ownership but also gives the user the opportunity to interact in ways which he deems comfortable and suitable (Deitel and Deitel et al., 2001). The search engine site called "Excite" offers "My Excite Start Page" which enables the user to select the content and style shown at their page when they log in. Amazon is also able to recommend CDs or DVDs to a user based on their history of book purchases (Rayport and Jaworski, 2001).

This paper provides an in-depth literature review to show how through Electronic Commerce, businesses are able to digitally personalise their offerings to target a certain consumer base and also how internet based selling mechanisms help to influence customers.

The paper is structured in two sections. The first section of this article is organised to explain the definition and effect of digital personalisation. The second section will provide facts on internet based system designs and how certain selling mechanisms such us pricing are personalised to influence customers. Questions to be discussed will include:

* How do online technologies impact information available to consumers?

* What strategies do firms use through internet-based selling to influence consumers?

2 Digital Personalisation - Product and Service Offerings

Phillips (2003) defines digital personalisation as "using artificial intelligence to find patterns in customers' choices or demographics and to deduce projections from them". A good example of this is Amazon.com's personalised book and music recommendations. Amazon is able to keep record of the buying patterns of its web-site visitors and then the next time the customer revisits, Amazon is able to recommend similar or related products to the customer. This is quite a good selling pitch to customers who are cash-rich and yet time-poor and yet most customers are still unsure about this sales push (Nunes and Kamil, 2001). A study done by (Yang and Yen et al., 2000) showed that information available on the internet doubled every 18 months from 1997 and the number of home pages continues to increase at an even faster rate. Users of the internet are therefore facing the problem of information overload when trying to retrieve information. This fact has therefore given rise to the search by users of the web to find more intelligent ways to conduct information filtering and gathering from the massive web files (Li and Zhong, 2004). Digital personalisation therefore enables a company to create a one-to-one relationship with its customers by studying the customer's choice patterns.

In relation to products and services, the needs, tastes, preferences and interests of people differ and could evolve with time. Consequently, digital personalisation is a marketing strategy within the electronic commerce environment proposed to provide that one-to-one