Applied Prelim Handouts.pdf

TH2106 The Tourism Industry and Information Technology Tourism and Information Technology The tourism industry comprises organizations involved in the production and distribution of travel and to...

TH2106 The Tourism Industry and Information Technology Tourism and Information Technology The tourism industry comprises organizations involved in the production and distribution of travel and tourism products. It can be viewed as an umbrella industry with a complex distribution chain containing a set of interrelated businesses, such as transportation companies, accommodation facilities, attractions, food and beverage enterprises, intermediaries, and providers of recreation and leisure facilities, as well as a multitude of government agencies, according to Werthner and Klein (as cited in Gretzel & Fesenmaier, 2009). Information technology (IT) is defined as the collective term given to the most recent development in the mode (electronics) and machines (computers and communication technology) used for acquisition, processing, analysis, storage, retrieval, dissemination, and application of information (Haque & Rahman, 2012). In tourism, unlike other industries, it is not a physical product but information that moves from suppliers to customers. This information must be able to flow smoothly among consumers, intermediaries, and suppliers involved in serving customer needs. As a result, according to Buhalis, IT has become an almost universal distribution platform for the tourism industry and has emerged as the “info-structure” that supports internal and external processes in tourism organizations (as cited in Gretzel & Fesenmaier, 2009). It reduces the cost of each transaction by minimizing print, coordination, communication, and distribution costs. It also allows short-notice changes, supports one- to-one interaction with a customer, and enables organizations to reach a broad audience. Most communications and transactions are now also supported by Web-based systems. Given how IT is reshaping the structure of both commerce and society in general, Buhalis & O’Connor pointed out that tourism companies have changed dramatically in the way they conduct their business; they are also under pressure to invest further in new technologies to maintain their competitive advantage (as cited in Gretzel & Fesenmaier, 2009). Some of the major influences of technology in the tourism industry can be observed in the following aspects: Travel Distribution Internet technology has a great impact on travel distribution, as it enables direct transactions between consumers and primary suppliers. This is known as disintermediation or the elimination of intermediaries in the conduct of tourism transactions. Such disintermediation empowers suppliers who were previously unable to obtain and maintain contacts with consumers and handle transactions without the help of intermediaries. At the same time, travel distribution experienced re-intermediation as new intermediaries (such as online travel agencies [OTAs]) emerged that handle tourism transactions, although several large hotel providers have chosen not to participate in this form of distribution. They only allow booking from their own websites and offer price guarantees and incentives to consumers who book directly with them. Another addition in technology-based players in the distribution chain are metamediaries that form strategic alliances with suppliers and provide consumers with opportunities to simultaneously search the databases of their partners (Gretzel & Fesenmaier, 2009). They aim to charge for passing along the consumer directly to the supplier site. These fight the traditional concept of using online travel agencies as the major medium in referring shoppers to a booking site. For hotels, this means potential additional costs for a booking on top of the fees for each transaction completed through a third party. They present more content within the initial search, which potentially bypasses multiple visits to OTAs or hotel websites. As a result, the metamediaries can gain control over the entire booking process by being the initial point of contact to consumers and, thus, can direct the consumer to additional websites or channels (Nieberding, 2015). Dynamic packaging is another technology-based development disrupting established relationships among tourism service providers. According to Cardoso and Lange (as cited in Gretzel & Fesenmaier, 2009), dynamic packaging involves the assembly of various travel products and service components into one (1) package at the moment of request. This requires instant access to information, interaction with the consumer, and 01 Handout 1 *Property of STI  [email protected] Page 1 of 3  TH2106 adaptability. This also changes the notion of collaboration in tourism into being driven by consumers rather than providers. Tourism Marketing Information technology has also led to a change in the marketing environment of the tourism industry. Website marketing has become an essential component of tourism marketing. Destination marketing organizations (DMOs) are particularly affected by technological developments. Their product is destination- related information, and such information is increasingly provided by websites (such as those of travel agencies, portals, consumer communities, and even suppliers). Thus, DMOs have to adapt their offerings and services to the new realities of tourism marketing constantly. Emerging technologies also provide opportunities for collaboration within a destination and among destinations in a region. Most notable is the Web 2.0 technologies, which are based on user-generated content and social networking applications that provide tourism marketers with increasing challenges. Consumer reviews and blogs can easily damage costly branding strategies employed by tourism marketers. These contents are perceived as more credible than marketer-based information and are extremely search- engine friendly, making it reach greater rates of exposure and have more impact on consumers. Some tourism marketers have successfully implemented Web 2.0 marketing. For example, JetBlue Airways, a New York’s hometown airline and a leading carrier in Boston, asks consumers to submit their stories online or visit their touring JetBlue Story Booth to make a recording. Another example is Sheraton Hotels and Resorts (part of Marriott International, Inc. with over 435 hotels and 88 resorts in more than 70 countries worldwide) presenting consumer stories on its website (sheraton.marriott.com). Very often, travelers will be looking for other customers’ experiences from websites and other media and will be generating their personal evaluations of a product or service. Tourism marketers must realize that word of mouth has evolved and that new technologies should be utilized to capture and promote services better. The Role of Technology in Shaping Tourism Experiences Internet-based technologies have become important drivers of change in consumer behavior. In contrast to consumer goods, the consumption of tourism experiences, in addition to the actual trip, involves extensive pre-consumption and post-consumption stages. These stages of the tourism consumption process are normally information-intensive, and Internet technologies have a significant role in supporting consumers throughout this multistage process. This role can be summarized in each stage of the tourism consumption process (Gretzel & Fesenmaier, 2009): A. Pre-consumption – Internet technologies are used to obtain information necessary for planning travels, formulating correct expectations, and evaluating and selecting alternatives, as well as to communicate with providers of tourism products and services to prepare or execute transactions. The challenge in tourism lies in providing consumers with an opportunity for a product trial before the actual purchase. This is a challenge because tourism products are experience-oriented, intangible goods that are normally consumed at a place away from the point of purchase. Given this limited opportunity for pre-purchase trial, virtual tours, with their ability to represent tourism products and services in more realistic and dynamic ways than other promotional materials, play a crucial role in offering rich travel information. The new generation of 3D applications offers virtual worlds that have a greater potential of immersing the user and creating telepresence (the feeling of being transported to and present in the virtual environment). Online customer support technology, which allows consumers to contact suppliers or distributors of tourism products if they need additional information or other forms of assistance, is also a development because of IT. Geographical and cultural distances between travel and tourism suppliers and consumers make communication through traditional means difficult. The Internet, on the other 01 Handout 1 *Property of STI  [email protected] Page 2 of 3  TH2106 hand, provides consumers with fast, easy, and cost-effective ways of contacting the providers of travel and tourism-related goods and services. Technologies of support include frequently asked questions (FAQs) on websites, online request forms, e-mail, real-time chat options, and instant messaging applications. B. Consumption – Internet technologies are used during the actual trip mainly for travelers to stay connected and obtain relevant en-route information at a specific place and moment in time for decision-making and on-site transactions. The spread of Internet cafes at tourist destinations, the growing number of accommodation establishments offering high-speed Internet connections, and the efforts of airlines to provide in-flight Internet access to travelers indicate that a substantial need for this kind of information and communication link exists. En route Internet access means anywhere- and-anytime availability of tourism-related information for consumers. Mobile technologies play an important role in this sense due to their ability to provide travelers with wireless and instantaneous Internet access. Cellular phones supported through a wireless application protocol (WAP), global system for mobile communication (GSM), and short message service (SMS) allow travelers to take full advantage of the Internet while on the road. Another development is the provision of real-time location-based services. Empowered by geographical information systems (GIS) and global positioning system technology (GPS), in combination with information available on the Internet, these advanced mobile applications identify the traveler′s location to generate personalized assistance in the form of location-specific and time- sensitive information. Many advancements in mobile technologies are encouraged by needs arising from information and communication problems encountered during travel. C. Post-consumption – Internet technologies are used in ways that allow sharing, documenting, storing, and reliving tourism experiences, as well as establishing close relationships with places, attractions, or product and service providers. Virtual travel communities and social media are examples of Internet applications that provide consumers with support during the post-consumption phase. These are facilitated by computer-mediated communication allowing members to conduct various types of travel-related tasks, such as obtaining travel information, maintaining connections, finding travel companions, or simply having fun by telling each other interesting travel experiences and stories. Consumers can use these technologies to post photographs and testimonials of their trips, mimicking real-world storytelling activities that normally happen at this stage. References: Farkhondehzadeh, A., Robat Karim, M., Roshanfekr, M., Azizi, J., & Legha Hatami, F. (2013). E-tourism: The role of ICT in tourism industry. European Online Journal Of Natural And Social Sciences, 2(3(s)), pp. 566-573. Retrieved April 3, 2020, from http://european-science.com/eojnss/article/view/451 Gretzel, U. & Fesenmaier, D. R. (2009). Information technology: Shaping the past, present and future of tourism. http://dx.doi.org/10.4135/9780857021076.n31 Haque, I. & Rahman, A. (2012). Information technology in tourism industry - What more needed?. International Journal of Engineering Sciences Paradigms and Researches, 01(01), 111–117. Retrieved April 3, 2020, from https://www.academia.edu/6576030/Information_Technology_in_Tourism_Industry_What_More_Needed?auto=downloa d Nieberding, C. (2015). Metamediaries forcing hotel to adapt. Hospitality Net. Retrieved April 3, 2020, from https://www.hospitalitynet.org/file/152005594.pdf 01 Handout 1 *Property of STI  [email protected] Page 3 of 3  TH2106 Information and Communication Technologies in Tourism Information and Communication Technologies: Challenges and Trends The advent of information and communication technology (ICT) has a vital impact on tourism. The effects of this revolution continue to change the nature of tourism, imposing both trends and challenges, on a regular basis. Some of these influences are discussed below. Tourism Marketing Communications Tourism is an information-intensive industry. Organizations rely on communication with tourists through various channels to market their products and build customer relationships. Social media marketing – using a variety of social media channels to promote a company and its products and services – has become indispensable to an organization’s marketing plan. Social media have grown to be one of the most effective means for tourists to seek information and share travel experiences. Given the prevalence of social media use among tourists, social media became indispensable platforms for tourism marketers. The Challenge: Engagement with consumers on social media is driven by word of mouth among consumers, in an electronically facilitated extension of the traditional word of mouth. Additionally, consumers not only have greater access to information and greater command over information consumption but can themselves actively create marketing content. With this, marketers cannot dictate communication on social media; instead, they have to engage consumers’ interest and participation. Successful marketing in this new conversation space calls for innovative strategies. An engaging conversation on social media requires marketers to understand who is talking to whom—not only marketers to consumers, but consumers to each other—and what they are talking about. Though various studies have discussed the importance and differences of social media marketing, very few marketers have a clear idea of how to engage consumers and influence conversations on social media (Baggio et al., 2014). Co-Creation Tourist Experiences Tourist experience has been playing a vital role in the tourism product, thereby requiring practitioners to focus on designing and staging memorable experiences. Neuhofer, Buhalis, and Ladkin (2013) explained that co- creation tourist experiences are “experiences that are not only passively staged but rather actively shaped and created by the tourist consumer in conjunction with the company.” The co-creation experience is the next practice in value creation. It is a process that changes the game of innovation from designing for people to designing with people. The co-creation process begins with the inspiration or the heart’s desire of individuals—what they would like to experience the most. The co-creation process connects closely with active participation, the inner alignment of an individual with a positive motive to co-create what they want. However, the experience environment or destination should be of arousing interest so that consumers can take on active participation. As a result, they become directly involved in the co-creation of their individual experiences. The Challenge: Tourist experience has gained much attention as the main focus for creating the value of tourism products. The reason is based on the concept that the tourism product is intangible, perishable, and seasonal. Therefore, it is the experience that tourists gain during consumption. As such, designing and staging memorable experiences are of high importance. Companies must deliver experiences that would unveil unique emotions and memories to consumers. Tourist experiences are socially constructed in the tourists’ interactions and experiences, which are associated with different social and environmental components of the visited destination. This is directing competitive tension on the tourism industry and thereby advocating the customization of experiences. Consumers no longer purchase services but rather seek experiences gained through the consumption of products and services. Tourists are co-creating their own experiences, and the inability to recognize this shift can showcase a great impact on tourism service providers (Baggio et al., 2014). 02 Handout 1 *Property of STI  [email protected] Page 1 of 2  TH2106 Virtual Platform The Internet and the World Wide Web have provided a whole new virtual platform to conduct business called e-commerce (involves the use of the Internet, the Web, and mobile apps and browsers running on mobile devices to transact business). This created both opportunities and threats for businesses in the tourism industry. Easy access to the Internet has changed the way travel is planned and bought. The Internet-savvy traveler can research and shop in just about any place with wireless connection (Internet or Wi-Fi) and at any time of the day or night. The Challenge: Understanding the behavior of travelers online and the important elements of functional websites is necessary to ensure success when adopting e-commerce. An electronic trading system is a type of information system. Many studies have approached the development of applications for e-commerce and identified several features to be taken into account. These key factors consist of the quality of information, quality of service, the playful character, the quality of the system design, and system usability. A well-designed website would lead to better memory by the user and a positive attitude to the website and its products. Additional factors that tourism companies have to focus on include customer relationship management, after- sales service, and customer information updating. To entice and keep the interest of online customers, tourism companies have to level up their strategies and meet the demands of online customers (Baggio et al., 2014). Augmented Reality Gaming Location-based mobile augmented reality (AR) games are an innovative way to attract tourists into challenges and interactive gameplay while they explore an urban destination or cultural heritage site. Location-based AR games can be defined as making use of the player’s physical location via Global Positioning System (GPS) sensors, a compass, and the inbuilt mobile device camera to project virtual 2D and 3D objects in real time on the player’s mobile screen in order to facilitate interactive gameplay (Azuma et al., 2001; Jacob, da Silva, Coelho, & Rodrigues, 2012). AR games aim to create a deeper level of engagement with the destination by adding a game experience that educates in a fun way using location-based storytelling, personalized features, and social interactions. The player location and the context of playing are important dimensions in location- based AR gameplay. The Challenge: The generation of digital natives demand new forms of media applications for their journeys to create engaging experiences. Smartphones and tablets provide a link between real and virtual environments. In order to address young traveler’s needs, the tourism industry needs to implement new mobile technologies, which combine both elements of entertainment of video games and learning about cultural facts to engage visitors with a holiday destination (Baggio et al., 2014). References: Baggio, R., Sigala, M., Inversini, A., & Pesonen, J. (Eds.). (2014, January). Information and communication technologies in tourism 2014. Retrieved March 23, 2020, from https://www.ifitt.org/wp- content/uploads/2014/05/eProceedings_ENTER2014_PhDWS-Jan17201411.pdf Morais, E., Santos, A., & Cunha, C. (2016, January). Information and communication technologies in tourism: Challenges and trends. https://www.researchgate.net/publication/316830871_Information_and_communication_ technologies_in_tourism_Challenges_and_trends 02 Handout 1 *Property of STI  [email protected] Page 2 of 2  TH2106 E-Commerce Concepts and Issues E-Commerce Essentials E-commerce involves the use of the Internet, the World Wide Web (or simply Web), and mobile apps and browsers running on mobile devices to transact business. More formally, e-commerce can be defined as “digitally enabled commercial transactions between and among organizations and individuals.” Digitally enabled transactions include all transactions mediated by digital technology, i.e., transactions that occur over the Internet, the Web, and/or via mobile devices. Commercial transactions involve the exchange of value (such as money) across organizations or individuals in return for products and services. Exchange of value is important because without this, no commerce occurs (Laudon & Traver, 2017). Technological Building Blocks of E-Commerce The technological building blocks behind e-commerce are the following (Laudon & Traver, 2017): Internet – It is a worldwide network of computer networks built on common standards. It links businesses, educational institutions, government agencies, and individuals together, and provides users with services such as e-mail, document transfer, shopping, research, instant messaging, music, videos, and news. World Wide Web – It is an information system that runs on the Internet infrastructure. It was the original “killer app” that made the Internet commercially interesting and extraordinarily popular. It provides access to billions of Web pages indexed by Google and other search engines. Before the Web, the Internet was used mainly for text communications, file transfers, and remote computing. The Web introduced more powerful and commercially interesting capabilities with direct relevance to commerce. It added color, voice, and video to the Internet, creating a communications infrastructure and information storage system. Mobile platform – It provides the ability to access the Internet from a variety of mobile devices such as smartphones, tablets, and other ultra-lightweight laptop computers via wireless networks or cell phone service. An app (short for application) is a software application, which is typically used when referring to mobile applications, although it is sometimes used to refer to desktop computer applications as well. A mobile browser is a version of Web browser software accessed via a mobile device. Types of E-Commerce There are different types of e-commerce and many ways to characterize them. According to Laudon and Traver (2017), the following are the types of e-commerce based on the nature of market relationship—who is selling to whom. Business-to-Consumer (B2C) E-Commerce – It is the most common type of e-commerce that most consumers are likely to encounter. It is where online businesses attempt to reach individual consumers. B2C e-commerce includes purchases of retail goods, travel and other types of service, and online content. Business-to-Business (B2B) E-Commerce – It is the largest form of e-commerce in which businesses focus on selling to other businesses. Consumer-to-Consumer (C2C) E-Commerce – It provides a way for consumers to sell to each other with the help of an online market maker (also called a platform provider) such as eBay and Etsy or an on- demand service company such as Airbnb. In this type of e-commerce, the consumer prepares the product for market, places the product for auction or sale, and relies on the market maker to provide catalog, search engine, and transaction-clearing capabilities so that products can be easily displayed, discovered, and paid for. Mobile E-Commerce (M-Commerce) – It refers to the use of mobile devices to enable online transactions, which involves using cellular and wireless networks to connect smartphones and tablet computers to the Internet. Once connected, mobile consumers can purchase products and services, make travel reservations, access online content, and much more. 03 Handout 1 *Property of STI  [email protected] Page 1 of 6  TH2106 Social E-Commerce – It is enabled by social networks and online social relationships. The growth of social e-commerce is driven by several factors, including the increasing popularity of social sign-on (signing onto websites using Facebook or other social network IDs) and social search (recommendations from online trusted friends) and the increasing prevalence of integrated social commerce tools such as buy buttons, shopping tabs, and virtual shops on Facebook, Instagram, Pinterest, and other social networking sites. Social e-commerce is often intertwined with m-commerce, particularly as more and more social network users access those networks via mobile devices. A variation of social e-commerce known as conversational commerce controls the mobile connection even further. It involves the use of mobile messaging apps such as Facebook Messenger, WhatsApp, Snapchat, Slack, and others as a vehicle for companies to engage with consumers. E-Commerce Business Models A business model is a set of planned activities or business processes designed to result in a profit in a marketplace. An e-commerce business model aims to use and control the unique qualities of the Internet, the Web, and the mobile platform. Major Business-to-Consumer (B2C) Business Models The major business models of business-to-consumer e-commerce, in which online businesses seek to reach individual consumers, are the following (Laudon & Traver, 2017): E-tailers – Online retail stores, often called e-tailers, are similar to the traditional storefront, except the customers only have to connect to the Internet or use their smartphone to place an order. Some e-tailers are subsidiaries or divisions of existing physical stores and carry the same products. Others, however, operate only in the virtual world without any ties to physical locations. Examples of e-tailers are wine.com (online liquor store), airasia.com (AirAsia airline), and hyatt.com (Hyatt Hotels Corporation). Community Providers – They create an online environment where people with similar interests can transact (buy and sell goods); share interests, photos, and videos; communicate with like-minded people; receive interest-related information; and even play out fantasies by adapting personalities called avatars. Facebook, LinkedIn, Twitter, and Pinterest, and hundreds of other social networks all offer community- building tools and services. Content Providers – They distribute information content, such as digital video, music, photos, text, and artwork. These can make money via different revenue models, including advertising, subscription fees, and sales of digital goods. For example, in the case of music streaming services, such as Spotify and Apple Music, users can stream millions of music by paying a monthly subscription fee. Portals – Portals such as Google, Yahoo, MSN, and AOL offer users powerful search tools, as well as an integrated package of content and services, such as news, e-mail, instant messaging, calendars, shopping, music downloads, video streaming, and more, all in one place. These generate revenue by charging advertisers for ad placement and collecting referral fees for steering customers to other sites. Transaction Brokers – These are companies that process transactions normally handled in person, by phone, or by mail on behalf of consumers. The largest industries using this model are financial services, travel services, and job placement services. They make money each time a transaction occurs. Travel sites generate commissions from travel bookings, and job sites generate listing fees from employers upfront rather than charging a fee when a position is filled. Examples of transaction brokers include Expedia, Travelocity, Orbitz, and Monster. Market Creators – They build a digital environment in which buyers and sellers can meet, display and search for products and services, and establish prices. They make money by either charging a percentage of every transaction made or charging merchants for access to the market. The main examples are Priceline, an online travel agency that allows consumers to set the price they are willing to pay for various 03 Handout 1 *Property of STI  [email protected] Page 2 of 6  TH2106 travel accommodations and other products, and eBay, an online auction site utilized by both businesses and consumers. Service Providers – These entities offer services online and use a variety of revenue models. Some charge a fee or monthly subscriptions, while others generate revenue from other sources such as through advertising. Some examples of service providers include VisaNow (visausanow.com, provider of online immigration services – United States visas), GCash (an app that allows a user to pay bills, purchase goods and services, and send or receive money), and RocketLawyer (an online legal technology company). Major Business-to-Business (B2B) Business Models The following are the major business models of business-to-business e-commerce in which businesses sell to other businesses (Laudon & Traver, 2017): E-distributors – These are companies that supply products and services directly to individual businesses. These are owned by one (1) company seeking to serve many customers. With this model, the more products and services a company makes available, the more attractive it is to potential customers. An example is Grainger (grainger.com), which is a large distributor of maintenance, repair, and operations (MRO) supplies. The platforms of e-distributor include websites and mobile apps that make ordering fast and easy. E-procurement – E-procurement firms create and sell access to digital markets. For example, Ariba (ariba.com) has created a software that helps large firms to organize their procurement process by creating mini-digital markets for a single firm. The company creates custom-integrated online catalogs (where supplier firms can list their offerings) for purchasing firms. On the sell side, Ariba helps vendors sell to large purchasers by providing software to handle catalog creation, shipping, insurance, and finance. Both the buy and sell side software is referred to as value chain management software. Exchanges – These are independent digital marketplaces where hundreds of suppliers meet a smaller number of large commercial purchasers. They generate revenue by charging a commission or fee based on the size of the transactions conducted among trading parties. For B2B buyers, exchanges make it possible to gather information, check out suppliers, collect prices, and be up to date on the latest happenings all in one place. Sellers, on the other hand, benefit from expanded access to buyers. TravelB2BHub (travelb2bhub.com) is an example of an exchange hub that helps travel companies, hoteliers, and event planners to buy or sell tourism services to each other and to end consumers in India. Industry Consortia – These are industry-owned vertical marketplaces that serve specific industries such as automobile, aerospace, chemical, floral, or logging. Vertical marketplaces supply a smaller number of companies with products and services of specific interest to their industry. In contrast, horizontal marketplaces sell specific products and services to a wide range of companies. They supply companies in different industries with a particular type of product and service, such as marketing-related, financial, or computing services. An example of this is Avendra (avendra.com), which is the leading hospitality procurement services provider in North America and the Caribbean formed by Marriott International, Hyatt Hotels, ClubCorp. USA, Inc., InterContinental Hotel Group, and Fairmont Hotels and Resorts. Private Industrial Networks – These are sometimes referred to as private trading exchanges. These are digital networks designed to coordinate the flow of communications among firms engaged in business together. The network is owned by a single large purchasing firm. Participation is by invitation to trusted long-term suppliers of direct inputs only. These networks typically evolve out of a firm’s own enterprise resource planning (ERP) system and are an effort to include key suppliers in the firm’s own business decision making. For example, Walmart (walmart.com) operates one of the largest private industrial networks in the world for its suppliers that use Walmart’s network daily to monitor the sales of their goods, the status of shipments, and the actual inventory level of their goods. 03 Handout 1 *Property of STI  [email protected] Page 3 of 6  TH2106 Digital Commerce Marketing Strategies and Tools The objective of online marketing is to build customer relationships so that a firm can achieve above-average returns both by offering superior products and services and by communicating the brand’s features to the consumer. Major Types of Marketing Website – A business’ website is a major tool for establishing an initial relationship with the customer. Its first function is to establish a brand’s identity by identifying for the consumer the differentiating features of a business’ product or service in terms of quality, price, product support, and reliability. It also functions as an anchor for a firm’s other web marketing activities. It acts as a central point where all the branding messages that come from its digital presence, such as Facebook, Twitter, mobile apps, or e-mail, come together at a single location. A website with its online catalogs and associated shopping carts is an important element of the online customer experience. Traditional Online Marketing – These are the basic marketing and advertising tools for attracting e- commerce consumers: o Search engine marketing – It refers to the use of search engines to build and sustain brands. Search engines are often thought of as mostly direct sales channels focused on making sales in response to advertisements. These are also used to strengthen brand awareness and drive traffic to websites. The top three (3) search engine providers (Google, Microsoft/Bing, and Yahoo) supply more than 95% of all online searches. The common types of search engine advertising are organic search (the search results of a search engine that cannot be influenced by paid advertising; results are ranked according to their relevance to the search term), paid inclusion (a program in which, for a fee, a search engine guarantees a website’s inclusion in its list of search results), and pay-per-click (PPC) search ads (the primary type of search engine advertising in which advertisers pay each time a user clicks on one of their online ads). o Display ad marketing – A display ad is made up of texts, images, or videos that encourages users to click-through to a landing page and take action. The common kinds of display ads are banner ads (these display a promotional message in a rectangular box on a computer or mobile device screen and brings a potential customer directly to the advertiser’s site), rich media ads (these employ features such as video, animation, sound, and other elements that encourage viewers to interact and engage with the content), video ads (television-like advertisements that appear as in-page video commercials before, during, or after a variety of content), and sponsorship (a paid effort to tie an advertiser’s name to a particular information, event, or venue in a way that reinforces its brand in a positive yet not obviously commercial manner). o E-mail marketing – Direct e-mail marketing (marketing messages sent directly to interested users) was one of the first and most effective forms of online marketing communications. Marketing messages are sent to an opt-in audience of Internet users who, at one time, have expressed an interest in receiving messages from the advertiser. o Affiliate marketing – It is a form of marketing where a firm pays a commission, typically anywhere between 4% and 20%, to other websites (including blogs) for sending customers to their website. It generally involves pay-for-performance: the affiliate or affiliate network only gets paid if users click on a link or purchase a product. o Viral marketing – It is a form of social marketing that involves getting customers to pass along a company’s marketing message to friends, family, and colleagues. It is the online version of word-of- mouth advertising, which spreads even faster and further than in person. Social Marketing and Advertising – It involves the use of online social networks and communities to build brands and drive sales revenues. There are several kinds of social networks, from Facebook, Twitter, 03 Handout 1 *Property of STI  [email protected] Page 4 of 6  TH2106 Pinterest, and Instagram, to social apps, social games, blogs, and forums. Social networks offer advertisers all the main advertising formats, including banner ads, short pre-roll and post-roll ads (advertisements that stream after a desktop or mobile video finishes) associated with videos, and sponsorship content. Mobile Marketing and Advertising – Mobile marketing includes the use of display banner ads, rich media, video, games, e-mail, text messaging, in-store messaging, quick response (QR) codes, and couponing. Apps on mobile devices constitute a marketing platform that did not exist before. Apps are a non-browser pathway for users to experience the Web and perform several tasks from reading newspapers to shopping, searching, and buying. These provide users much faster access to content than multi-purpose browsers. Local Marketing – The growth of mobile devices has accelerated the growth of local search and purchasing. Local advertisements on social networks and daily sites are also contributing to local marketing growth. The most commonly used venues include Facebook, Google, LinkedIn, Instagram, Yahoo, Bing, and Twitter, as well as more specific location-based offerings like Google My Business, Yahoo! Small Business, Citysearch, ClickTheCity, and Yelp. The “daily deal” coupon sites, like Groupon (American e-commerce marketplace connecting subscribers with local merchants) and Metrodeal Philippines (a market leader when it comes to discount vouchers for different products and services in the country) are also a significant part of this marketing. Without an audience, marketing is not possible. With the rapid growth of the Internet, media consumption patterns have significantly changed as consumers become more likely to engage with online media. Increasingly, marketers are also using multiple online channels to reach customers. E-Commerce Issues Ethics is at the center of social and political discussions about the Internet. Ethics is the study of principles that individuals and organizations can use to determine right and wrong courses of action. It is assumed in ethics that individuals are free moral agents who are in a position to make choices. Extending ethics from individuals to business firms and even entire societies can be difficult but not impossible. E-commerce and the Internet have raised so many ethical, social, and political issues that can be categorized into four (4) major dimensions: privacy and information rights, intellectual property rights, governance, and public safety and welfare. Privacy Issues − Privacy is possibly the most complex ethical issue raised by e-commerce, as well as the changing technology of human communications brought about by the Internet and mobile devices. The claim to privacy rests on the moral right of individuals to be left alone, free from surveillance or interference from other individuals or organizations, including the government. E-commerce sites routinely collect a variety of information from or about consumers’ visits and purchases. Some of these data constitute personally identifiable information (PII), or any data that can be used to identify, locate, or contact an individual. Advertising networks and search engines also track the behavior of consumers across thousands of popular sites via cookies (small files that are stored on a user’s computer to hold a modest amount of data specific to a particular client and website), web beacon (often- transparent graphic image, usually no larger than 1 pixel x 1 pixel, that is placed on a website or in an e- mail to monitor the behavior of the user visiting the Web site or sending the e-mail), spyware (any software that covertly gathers user information through the user’s Internet connection without their knowledge, usually for advertising), and other techniques. These activities are just a few of the issues linked to privacy over the conduct of e-commerce. Intellectual Property Rights − Next to privacy, the most controversial issue related to e-commerce is the fate of intellectual property rights. Intellectual property encompasses all the tangible and intangible products of the human mind. Intellectual property protection in the Philippines is contained in Republic Act No. 8293, otherwise known as the Intellectual Property (IP) Code of the Philippines. The term “intellectual property rights” in the Code consists of copyright and related rights, trademarks and service 03 Handout 1 *Property of STI  [email protected] Page 5 of 6  TH2106 marks, geographic indications, industrial designs, patents, layout designs of integrated circuits, and protection of undisclosed information. Generally, the creator of the intellectual property owns it and has the exclusive right to use it in any lawful way they see fit. The Internet, however, changes things. Once intellectual works become digital, it becomes difficult to control access, use, distribution, and copying. The Internet technically permits millions of people to make perfect digital copies of various works, from music to plays, poems, and journal articles, and then distribute them nearly cost-free to hundreds of millions of online users. It has demonstrated the potential to disrupt the traditional conceptions and implementations of intellectual property law. The major ethical issue relating to e-commerce in this regard is how individuals and business professionals should treat property that belongs to others. Governance − Governance, as it relates to e-commerce, has something to do with social control: who will control the Internet, what elements will be controlled, and how the controls will be implemented. Control issues revolve around the Internet that could not be controlled, given its decentralized design and its ability to cross borders that made monitoring and controlling message content impossible. This implies that the content and behavior of e-commerce sites cannot be “controlled” in the same way. Another issue is taxation. Governments collect sales taxes based on the type and value of goods sold. The money is used for general government purposes and building infrastructures. However, the development of the “remote sales,” such as mail order/telephone order (MOTO) or online purchasing, broke the relationship between physical presence and commerce, complicating the plans of the government to tax all retail commerce. Public Safety and Welfare − Critical issues in e-commerce center around the protection of children, strong sentiments against pornography in any public media, efforts to control gambling, and the protection of public health through restricting the sales of drugs and cigarettes online. References: Beal, V. (n.d.). Spyware. In Webopedia. https://www.webopedia.com/TERM/S/spyware.html Beal, V. (n.d.). Web beacon. In Webopedia. https://www.webopedia.com/TERM/W/Web_beacon.html Intellectual Property Code of the Philippines (R.A. No. 8293) (1997). Laudon, K. & Traver, C. G. (2017). E-commerce: Business. Technology. Society. Pearson. Lawlor, F. & Jayawardena, C. (2003). Purchasing for 4,000 hotels: the case of Avendra, International Journal of Contemporary Hospitality Management, 15(6), 346–348. https://doi.org/10.1108/09596110310488221 Pizam, A. & Holcomb, J. (2010). International dictionary of hospitality management. Routledge. Weaver, B. (2019, January 2). Your guide to post-roll ads: What are they, ad specs & best practices. Insta Page. https://instapage.com/blog/post-roll-ads What are cookies? Computer cookies explained. (n.d.). WhatAreCookies.com. http://www.whatarecookies.com/ 03 Handout 1 *Property of STI  [email protected] Page 6 of 6