Lec16_Pricing+Digital+Products

Lec16_Pricing+Digital+Products - ISOM 101: Introduction to...

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ISOM 101: Introduction to Information Systems Lecture 16: Pricing Digital Products Prof. Heather H. Xu
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Exercise Transactions Items Purchased (Market Basket) No. 1 Milk, orange juice, ice cream, beer, soap No. 2 Milk, ice cream, beer No. 3 Milk, orange juice, beer, soap, banana No. 4 Milk, ice cream, pizza, soap No. 5 Milk, orange juice, banana, soap Q1: What is P(orange juice)? A1: 3/5 Q2: What is P(orange juice|beer)? A2: 2/3 Q3: What is the lift of orange juice and beer? A3: 10/9 Q4: What is the lift of orange juice and milk? Q5: What is the lift of ice cream and soap?
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Part I: Database Application Google
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What if search engines play Jeopardy? 200,000 known Jeopardy clues six search engines (Google, Bing, Ask, Blekko, Wikipedia Search, and Yandex)
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Why is Google so important/successful? For decades, companies have been running ok without any search engine • Search engine obviously is not part of most companies’ core business However, Google has changed their way of business • As well as creating new business opportunities.
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Implications of an Ultra-Powerful Search Engine Companies nowadays pay a lot of attention as well as money and effort to manage their search engine results “Beyond the top 15, you are logically non-existent” < 50% of people look beyond the 5 th listing on Google
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Implications of an Ultra-Powerful Search Engine Google’s dilemma • Relevancy: put the most relevant results on the first page and on top, so that users find google useful • Profit: put the most valuable results on top • Ads are sold on a pay-per-click basis • Most valuable means: high pay-per-click; a large number of clicks – Page title and page description becomes important
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Implications of an Ultra-Powerful Search Engine On the other hand, companies want to be placed on the first result page and on top of the page The problem? They don’t know the algorithm Google use to rank them Popularity is out of their control SEO – Search Engine Optimization Objectives Increase traffic, conversion rate, and eventually profit Identify proper key word Figure out how search engine works
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Implications of an Ultra-Powerful Search Engine The cyber space is supposed to be free, open and is supposed to be the ultimate free and efficient market Where small players can compete with big corporations The existence of an ultra-powerful search engine like Google essentially creates an equivalent of a “real estate” market on the Internet Why can MTR generate so much revenue from renting shop spaces from their shopping malls? Companies not getting a primer location on Google may go bankrupt
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Google in Our Daily Life Google changes the way we live • shop, entertain, date, eat, cook, make a living, make life decisions, and even remember things • online recipes, restaurant reviews, product reviews, google maps, etc • Or maybe even more than that…
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Google Conspiracy http://www.youtube.com/watch?v=oNofb-OlZyQ
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Takeaways RFM analysis Market Basket Analysis • How to calculate support, confidence and lift ratio?
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This note was uploaded on 07/30/2011 for the course ISM 101 taught by Professor Lily during the Spring '11 term at HKU.

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Lec16_Pricing+Digital+Products - ISOM 101: Introduction to...

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