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In the 1980s, progressive was a relatively small auto insurance company that specialized in writing policies for people who could not qualify for regular policies with others insurers. Progressive was able to charge higher premiums for these policies, which the insurance industry calls substandard policies. Often, other insures who could not write standard policies for customerswould refer those customers to progressive. The combination of high premiums and the lower cost of a smaller sales for allowed to earn good profits on the substandard business. Eventually, other insures noticed progressive’s and began to offer their own substandard policies.
To respond to the increased competition, Progressive improved its claim service and was one of the first insurance companiesto offer 24/7 service every day of the year. Through the 1990s. Progressive developed a full line of auto insurance products for all types of drivers and worked hard to make sure that offered the lowest prices in every market.
Like most other companies selling auto insurance. Progressive offers policy quotes and services on its Web site. Progressive’s market mentions the quality of its service,but it always emphasizes its low prices. In 2002, Progressive began comparing its prices to those of other insurers on its Web site. Progressive’s Web site offers quotes at include its prices along with prices of similar policies offered by its competitors, even when one or more of the competitors offers a lower price.
People shopping for auto insurance often visit the Web sites of variousinsurers. By offering to provide quotes from other companies in addition to its own price, Progressive hopes to convinces shoppers to includes its site in their list of Web sites to visit. By offering several quotes, Progressive can save shoppers time. The practice of displaying competitors’ quotes also creates an impression of openness and honesty. Progressive believes that people prefer to buy insurancefrom honest companies who offer the best prices. The comparison shopping feature on its Web site is an important element in its Progressives’ marketing efforts to convince potential customers that the company is both honest and able to offer the lowest prices on auto insurance.

As you learned in chapter 1, a useful way to think about electronic commerce implementations is toconsider how they can generate revenue. Not all electronic commerce initiatives have the goal of providing revenue; some are undertaken to reduce costs or improve customers service. You will learn about cost reduction initiatives in Chapter 5. In this chapter, you will learn about various models for generating revenue used by Web business today, including Web catalog, digital content,advertising-supported, advertising-subscription mixed, and fee-based models. The approaches can work for both business-to-consumer (B2C) and business-to-business (B2B) electronic commerce. Many companies create one Web site to handle both B2G and B2B sales. Even when companies create separate sites (or separate pages within one site), they often use same revenue model for both types of sales.

Many companies sell goods and services on the Web using an adaptation of a mail order catalog revenue model that 100 years old. In 1872, a traveling salesman named Aaron Montgomery Ward started selling dry goods to farmers through a one-page list. Richard Sears and Alvah Roebuck began mailing catalogs to farmers and small-town residents in 1895. Both Montgomery Ward (which closed in2001) and Sears, Roebuck & Company grew to become dominant retailers in the United States by the 1950s, with retail stores serving urban markets in addition to the catalog business that served that rural and small-town markets.
In this traditional catalog-based retail revenue model, the seller establishes a brand image, and then uses the strength of that image to self through printed...
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