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Welcome to MT- 219Marketing Seminar
Dear Students, The Seminar will start promptly at the Schedule Time. Remember that the system saves a transcript of everything in the
Chat, if you wish to talk among yourselves you may do so, or you may use the Private Chat Option.
Dr. Nardi
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Welcome to MT- 219Marketing
Welcome to MT- 219Marketing
Unit 4- SeminarProfessor: Dr. Nardi
Unit 4- SeminarProfessor: Dr. Nardi
………
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Agenda
• Announcements• Review – Unit 3• Questions• Multi-Channel Retail
– Interactions? – Reasons?– Benefits?
• Shopping online– Impediments– Virtual Communities– Purchases
• Evolution towards Multi-Channel Retail• Lessons, Failures, and How to make it work?
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Announcements
■ Great work on your discussion■ Quiz - Review
Will close on Tuesday at 11:59PM.■ Research Paper
Are you working on it?
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Review of Unit 3
■ How did Unit 3 go? Questions or concerns?
■ Instructor suggestions for Unit 4- - Assignments
■ Final Research paper?
■ Questions?
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Review from Last Week
■ Type of retailers Convenience stores Traditional supermarkets Hypermarkets Supercenters/ Superstores Specialty & category Stores Among others
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Questions
■ What are the unique customer benefits offered by the three retail channels – stores, catalogs, and the Internet?
■ Why are retailers moving toward using all three channels?
■ How do multichannel retailers provide more value to their customers?
■ What are the key success factors in multichannel retailing?
■ How might technology affect the future shopping experience?
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3-8
The Multi-Channel Retailer
Retailer
Digital Vision / Getty Images
Steve Cole/Getty Images
The McGraw-Hill Companies, Inc./Andrew Resek, photographer
A retailer that sells merchandise or service through more than one channel. By using a combination of channels, retailers can exploit the unique benefits provided by each channel.
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3-9
Why are Retailers Using Multiple Channels to Interact with Customers?
■ Customer wants to interact in different ways
■ Each channel offers a unique set of benefits for Customers
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3-10
Why are Retailers Using Multiple Channels
to Interact with Customers?
customer
Consumers buy what they want,When they want,Wherever they want
store kiosk catalog Call center Web/E-mail mobile
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3-11
More Reasons for Becoming a Multi-Channel Retailer
- Increase Share of Wallet
Example: Eddie Bauer, single-channel customers spend $100-$200
per year, dual-channel customers spend $300-$500 per year, tri-channel customers spend $800-$1000 per year
- Overcome Limitations of Existing Format - Expand Market - Provide services more cost-efficiently - Leverage Existing Assets
- Brand Name, Inventory, Customer Database
- Develop Insights in Customer Shopping Behavior
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Dollars spent at different channels:Average annual dollars spent by JCPenny’s customers
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Benefits Provided by Different Channels
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What are some of the Benefits of the Store
Channel?
Question
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Unique Benefits Provided by Store Channel
■ Browsing■ Touching and feeling■ Personal service■ Cash and credit payment ■ Entertainment and social interaction■ Immediate gratification■ Risk Reduction
Royalty-Free/CORBIS
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What are some of the Benefits of the Catalog
Channel?
Question
3-16
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Benefits Provided by Catalog Channel
Convenience
Information
Safety
Hoby Finn/Getty Images
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What’s the Big Deal About Shopping on the Internet?
■ $2.5 Trillion US Retail Sales
■ $200 Billion Catalog and Direct Sales
■ $ 4 Billion TV Home Shopping
■ $ 100 to 150 Billion Internet Retail Sales
■ Just a drop in the bucket, but growing fast!
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3-19
What’s the Big Deal About Shopping on the Internet?
Just 6% of total retail sales,
but is growing very fast (about 25% annually)
Furthermore, it has an important impact on other
channels
75% of US consumers say they sometimes get information or shop online prior to visiting a regular store 49% purchase from a different retailer offline than researched online 61% of US auto consumers use the Web to research their car purchases.
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Source: Forrester, State of Consumers and Technology, 2006
What’s the Big Deal About Shopping on the Internet?
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Any Questions??
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Impediments to Shopping On-Line
Technological concerns are becoming less important
Access to Internet Broadband Connections Privacy, Security concerns
Are the benefits of shopping on-line greater than the benefits of going to a store?
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Internet Channel
■ Broader Selection■ More and Better Information to Evaluate Merchandise
Drill Down as Much as You Want Full motion Video
■ Personalization Information is tailored to Individual consumers to help them
make quicker and better purchase decisions Fred is a Super Retail Salesperson Customized Information -- Side By Side Comparisons, Full
Motion Video Try It On Virtually
■ Information for Solving Problems, Not Just Merchandise Characteristics
Virtual Communities
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More and better information to evaluate merchandise
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3-25
Side-by-Side Comparison
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Personalized Customer Service
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Using an Agent to Locate Merchandise
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Problem Solution BenefitsOffered By Internet Channel
■ Bundling Information, Services, and Products
■ Examples iVillage The Wedding
Channel Garden.com
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Any Questions??
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Virtual Communities
People who seek information, products and services communicate with each other regarding specific issuesSocial shoppers: seek not just information but also an
enhanced emotional connection to others participants in the shopping experience
Royalty-Free/CORBIS
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Virtual Communities
■ Virtual community is a network of members sharing common interests that interact with each other electronically.
■ Examples: IVillage – Women Pricegrabbers.com; Epinion.com–product comparisons
and reviews Flypaper.com – talks about fashion ThisNext.com, Kaboodle.com, Wists.com, StyleHive.com
– social shopping that combines shopping and social networking
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Virtual communities
Source. Future Trends in Microelectronics and IT, IBM Research from http://www-05.ibm.com/cz/events/power6/pdf/Ton%20Engbersen_Trends%20in%20microelectronics.pdf
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Any Questions??
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What People Buy Over the Internet
Travel
PC/Electronics/Toys
Books/Software
Apparel
Home & Garden
Jewelry & Watches
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What Merchandise Will Be Sold Successfully Through Electronic Channel?
■ “Look and See” attributes vs. “Touch and Feel” attributes (?)■ Degree to which information can be used to predict
satisfaction prior to purchase Gifts Services
■ Might not need to “Touch and Feel” “Touch and Feel” not useful - Gifts Superior presentation of “Touch and Feel” Branding
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How to Sell Over the Internet…and eliminate returns Branding:
National brands provide a consistent experience for customers to overcome not being able to touch and feel.
The McGraw-Hill Companies, Inc./Jill Braaten, photographer
How Can the Electronic Channel Overcome Limitations?
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How Can the Electronic Channel Overcome Limitations?
Use technology to convert “touch and feel” information into “look and see” information
■ 3-D Imaging■ Zoom Technology■ Live Chat■ 360 Degree Viewing■ Virtual Models
conversion rates: % of consumers who buy the product after viewing it
Technology increases conversion rates
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My Virtual Model: Try It On
Link to My Virtual Model H & M
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Any Questions??
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GIFTS■ Saves time■ Saves effort in packing■ Saves effort in delivery
SERVICES■ No Shipping Problems■ Examples
Travel websites Banking Newspapers
The Electronic Channel Provides Superior Benefits for
How Can the Electronic Channel Overcome Limitations?
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■ Use the Internet to Improve Multichannel shopping experience
Instantaneous and easy data collection on how and why customers shop, and how they’re dissatisfied or satisfied with their electronic shopping
Store and website layout design tailored to customers’ buying habits
How Can the Electronic Channel Overcome Limitations?
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What are some of the perceived risk of online
shopping?
Question
3-43
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Perceived Risks of Electronic Shopping
Security of credit card transaction – security problems have not arisen in actual usage
Potential privacy violations – consumers are concerned about retailers collecting their personal information
Don Farrall/Getty Images
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Any Questions??
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Evolution Toward Multichannel Retailing
■ Traditional store-based and catalog retailers are placing more emphasis on their electronic channels and evolving into multichannel retailers.
E-channel gives a way to overcome limitations of existing format
With electronic channel, retailers can reach out to new markets
Builds share of wallet E-channel enables retailers to give insights into
customers’ shopping behaviors
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Recreation Equipment Inc. (REI) – A Leader in Multichannel Retailing
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Overcoming Existing Format
Size of the store is the greatest constraint for stores■ By blending store with internet-enabled kiosks,
retailers expand assortments offered to shoppers.
Store based retailers face inconsistent execution■ Kiosks can be used by both sales associates and
customers for up-to-date product information, stock information and price reduction on clearances.
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Any Questions??
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Percentage of Cross Channel Shoppers
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Capabilities for Multi-Channel Retailing
To effectively operate and realize the benefits of multi-channel retailing, firms need to have skills in:
■ Developing assortments and managing inventory■ Managing employees in distant locations■ Distribute merchandise efficiently from DCs to stores■ Present merchandise in catalogs■ Present merchandise on websites■ Process orders electronically■ Efficient distribution of individual orders to homes■ Operate information systems for all channels
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Who Has These Critical Resources?Capabilities for Multi-Channel Retailing
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Resources Possessed by Different Firm Types
E Only Catalog Store-Based ManufacturersWebsite Systems Excellent Poor Poor PoorRetailing Skills Poor Good/Excel Excellent PoorFulfillment Poor Excellent Poor PoorBrand Reputation Poor Good/Excel Excellent Good/ExcelAssortments Good Good/Excel Excellent PoorCustomer Data Poor Excellent Good/Excel Poor
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Resources Possessed by Different Firm Types
E Only Catalog Store-Based ManufacturersWebsite Systems Excellent Poor Poor PoorRetailing Skills Poor Good/Excel Excellent PoorFulfillment Poor Excellent Poor PoorBrand Reputation Poor Good/Excel Excellent Good/ExcelAssortments Good Good/Excel Excellent PoorCustomer Data Poor Excellent Good/Excel Poor
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Resources Possessed by Different Firm Types
E Only Catalog Store-Based ManufacturersWebsite Systems Excellent Poor Poor PoorRetailing Skills Poor Good/Excel Excellent PoorFulfillment Poor Excellent Poor PoorBrand Reputation Poor Good/Excel Excellent Good/ExcelAssortments Good Good/Excel Excellent PoorCustomer Data Poor Excellent Good/Excel Poor
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Resources Possessed by Different Firm Types
E Only Catalog Store-Based ManufacturersWebsite Systems Excellent Poor Poor PoorRetailing Skills Poor Good/Excel Excellent PoorFulfillment Poor Excellent Poor PoorBrand Reputation Poor Good/Excel Excellent Good/ExcelAssortments Good Good/Excel Excellent PoorCustomer Data Poor Excellent Good/Excel Poor
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Any Questions??
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What does a retailer need to be successful in
online retail?
Question
3-58
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Resources Needed to Compete Effectively in Internet Retailing
■ Exciting and easy to use the website■ Management Information Systems
Order processing and status Customer database Personalization software
But these resources were not enough!
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Resources Needed to Compete Effectively in Internet Retailing
■ Retailing Skills Managing inventory Editing assortment
■ Efficient Fulfillment Systems Significant costs - last mile Picking and packing individual orders Handling returns - reverse distribution
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Resources Needed to Compete Effectively in Internet Retailing
■ Strong Brand Name and Image Build traffic Reduce customer perceived risk
■ Complementary Merchandise One stop shopping Lower shipping costs
■ Availability of Customer Information Tailored presentations - personalization
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Why do Online Retails fail?
Question
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Why Did Internet Retail Entrepreneurs Fail?
■ Lack of Skills to Succeed in Internet Retailing■ Consumers Prefer Multi-Channel Retailers
(Bricks and Clicks)
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Why did Electronic-only Retailers Fail?
■ They did not have skills in brand recognition
■ They did not have skills necessary to build consumer trust
■ They did not have skills to build assortments, manage inventory and fulfill small orders to homes
■ They did not posses sufficient resources to evolve into multichannel retailers
They had skills in web designThey had skills in systems to manage transactions
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How can Catalog Retailers adapt to the online environment?
Question
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Catalog Retailers can Add Electronic Channel Easily
■ Ready to take orders■ Able to pack merchandise■ Able to deliver■ Able to handle returned
merchandise■ Already have a database■ Visual merchandise for catalog
is the same for electronic
Steve Cole/Getty Images
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Any Questions??
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Why are store-based retailers evolving into multi-channel retailers?
■ Sales through an electronic channel are growing at over 20% per year
■ Adding an electronic channel creates immediate possession utility
■ Multi-channel retailers can attract more customers and satisfy existing customers better
■ The growth of sales in stores is declining
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Impact of Internet Shopping on Store Sales
$0
$200
$400
$600
$800
$1,000
% of US Spending 5% 8% 10% 13% 17% 20% 24%
Online Spending $18 $29 $45 $68 $106 $152 $199
Web-Influenced $135 $207 $269 $348 $441 $540 $632
1999 2000 2001 2002 2003 2004 2005
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Ecommerce Myths
■ Low Cost of Entry
■ Overestimate Importance of Technology, Under Estimated Need for Traditional Resources
■ First Mover Wins
■ Gets Rid of the Middleman
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Any Questions??
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Which channel is most profitable: Online or Brick-and-mortar?
Question
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Which Channel Is the Most Profitable?Cost Drivers in Stores and Electronic Retailers
■ Bricks and Mortar, Salespeople■ Attracting Customers to Store■ Distribution Centers■ Restocking Returned
Merchandise
■ Building,Refreshing Web Site■ Attracting Customers to Web
Site: “Customer-Acquisition Costs” are huge but “Customers’ switching costs” are tiny.
■ Picking, Packing, Mailing Small Orders to Home
■ Restocking Returned Merchandise
Stores Electronic Retailers
Few e-tailers are profitable
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Will Electronic Channel’s Low Search Cost Increase Price Competition?
■ Conventional Wisdom Greater Comparison Shopping Offerings Easily Compared on Price Lower Search Costs => More Emphasis on
Price■ Empirical Evidence
Substantial Price Dispersion Lower Search Costs for Quality Information=>
Less Price Sensitivity Lower Search Costs Lead to Better Decisions
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Any Questions??
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Widespread Disintermediation Unlikely
Will Manufacturers Bypass Retailers and Sell Directly to Consumers?
Advantages of Retailers vs. Manufacturers
■ Distribute Merchandise Directly to Customers
■ Provide Assortments■ Collect and Use Information
about Customers
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Issues in Multi-Channel Retailing
■ Integrated Shopping Experience Communicate with customers anytime,
anywhere through multiple channels Website, Store, Kiosks, Handheld Devices Integrating legacy systems for seamless
customer interface■ Brand Image
Consistent brand image across different channels
■ Merchandise assortment offered in each channel■ Pricing across channels
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Customer
Today’s empowered consumers live in a multi-channel world – research products online, buy offline, and demand service everywhere
Web & Email • 24x7 • Visual
Call Center • Convenient • Immediate
Kiosks • Visual • Convenient
Handheld Devices • Immediate • 24x7
Brick & Mortar • Touch/Feel • Experience driven
Consumers buy what they want, when they want, wherever they want
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Channels Offer Complementary Benefits
Stores Internet Catalog
■Known Entity
■Entertaining/ Social Experience
■Easy Checkout and Returns
■Personal Assistance
■Product Trial- Complementary Merchandise
■Immediate Gratification
■Location Convenience
■Speed
■Greater Selection
■Personalized Presentation
■Community
■Portability
■High Quality Visual Presentation
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Multichannel Shopping
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Source: Progressive Grocer, 01 Feb 00; Grocery Headquarters, 01 Feb 00.
Consumer does not find desired item in the store.
Consumer goes to kiosk to search for product
Kiosk links to chain’s web-site allowing consumers to find and purchase item
Consumer places order online for home delivery or store pick-up at a later time
Illustration of Multi-Channel Integration
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Opportunities to Enhance Multi-Channel Experience
■ Order on Internet, Pick-Up in Store■ Promote Web Site on Receipts, Shopping Bags■ Product Availability in Stores Available on Website■ Kiosk in Stores to Order Merchandise Not Available in
Stores■ Plan Purchases (Shopping List) on Website■ In-Store Events Promoted on Website■ Ad Curricular on Website
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Shopping in the Future
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Shopping Experience:Personalization Potential
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Integration – Key to Multi-Channel Retailing
Create a Seamless Experience
Make it Easy Provide Support
Know thy Customer
• Ordering • Returns• Refunds
• Call Center• Shopping
Advice• Customer
Service
• Needs andpreferences
• One to OneMarketing
• Synchronized &consistent serviceregardlessof channel
Shopping Experience
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Assignments
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Any Questions??
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Wrap Up
■ Do your readings. ■ Discussion: Remember you have to Answer ALL questions /
elements of the Question. Do NOT Neglect the Peer-to-Peer comments.
■ Remember you have assignments due this week. Due on Tuesday by 11:59 PM E.T. Discussion, & Quiz
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Contact
you can contact me through my email: [email protected] , through AOL Instant Messaging my AOL IM name is nknardi, (put me on your buddy list) my AOL IM “Office hours” are: ____________________________or through the “Instructor’s Office” link under the
Course Home page
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Thanks
■ Thank you for Attending!!!!
■ See you in the Discussion Thread Questions and in Next Week’s Seminar