Priceline.com and the Search for a Business Model that Works

Priceline.com and the Search for a Business Model that Works

NAME YOUR OWN PRICE“ NO ONE DEAL LIKE WE DO”

Submitted By : GROUP- 6, MBA (PT) – 2nd year

NAME ROLL NO.

Abhishek Sahi S-2

Amlan Mukherjee S-7

Anesh Dimoli S-8

Amit Kumar Lakra S-5

Ankit Barua S -14

2

Contents

11 Case Background

22 Priceline.com Business Model

33 The future of Priceline.com

44 Travel Industry Impacts

55 Current Situations

3

Background

Start Business

One Stop Shopping!!

Hotel ReservationStart Operation by

“Jay Walker”

1998

“Reverse Auction”

Products

Airline Ticket

Financial Service

Car Rental

“Name Your Own Price ®”

4

Background

Expansion Phase

“Priceline Webhouse Club”

Beginning of 2000

Extend Model

- Groceries- Gasoline- Used Goods

Shut Down!!

Oct 2000

Jay Walker Resigned

Dec 2000

- Unable to deal with major Brands

- Incovenient to pick up

Factors

5

Background

Reorganization Phase

Core Business

“Richard Braddock”

New Chairman

“Discount Retail”

2003 – 2004 Extension

** First Annual Profit **

6

Background

Boom!!

“InternationalBusiness”

2004 - Active Hotels

Integration

2005 – Booking.com

2007 – Agoda

Question1

7

WWhat are the corecore

components of Priceline’s

business model?

8

Components of Business Model

Value Proposition

Revenue Model Market Opportunity

Competitive Environment Competitive Advantage

Market Strategy

Organizational Development Management Team

9

Components of Business Model

Consumer Side

Low Cost with some

additional conditions

Vendor Side

New channel for excessed products

1) Value Proposition

10

Components of Business Model

Transaction Fee

Booking & Handling FeeAdaptive Marketing Program

- Adaptive Promotion

- Adaptive Cross Selling

Sales

Gain between the offer price and

the vendor price

2) Revenue Model

11

Components of Business Model

Marketspace

Travel Service Industry started from domestic (U.S.)

1978–2007 => $253.29 billion

Realistic Market

Consumer side:Budget Concern

Vendor side:Excessed Demand Product

Rapid Aging

3) Market Opportunity

12

Components of Business Model

Direct Competitors

Travel Agenciese.g. expedia.com,

orbitz.com

Vendor itself !!!

Travel Industry

High-Revenue Attractive Price-War Information-War

Indirect Competitors

Online Market Makere.g. eBay.com, Amezon.com

High CompetitiveSegment !!

4)CompetitiveEnvironment

13

Components of Business Model

Lower Price from “Reverse Auction”

Fast Response, Reliability & Standard

First Mover Advantage & Brand

Product Mix

5) Competitive Advantages

International Expansion

14

Components of Business Model

New Trading Model

“Name Your Own Price®”

Brand Ambassador

“William Shatner”

Published Price Model

“No One Deals Like We Do®”

6)strategies

Components of Business Model

15

OOrganization

Development&

MManagement

Team

Core Components of Priceline.com

16

VValue Propositionalue Proposition

RRevenue Modelevenue Model

CCompetitive ompetitive AAdvantagedvantage

MMarket arket CCreatorreator

Question 2

17

DDo you think Priceline will o you think Priceline will

ultimately succeed or fall?ultimately succeed or fall?

Why?Why?

18

Question 2 Success Factors

Success Factors

Focus on Core BusinessTravel Reservations

Financial ControlsExtent Inter-MarketPricing Strategy

Discount fee

Flexible ServicesSpecific Information

Group Services

Technology ChannelI-Phone

Uncertainty2 Sides Effects

Direct & Indirect Competitors

Price War

Inflexible ServicesDigital/Internet

EffectBrand Image

Risk FactorsRisk Factors

Question 3

19

HHow has Priceline (and similar online services) ow has Priceline (and similar online services) impacted the travel services industry?impacted the travel services industry?

20

Question 3

Customer EffectsCustomer Effects

Positive EffectsIncrease Customer

Easy/Direct to Target

Negative EffectsPrice War

Value vs. Volume

Entrepreneur EffectsEntrepreneur Effects

Positive EffectsMatching Demand

• Price/Budget

Cost Savings

Almost Perfect Information

Negative EffectsLimitation

• Acceptable Prices

• Comparable Prices

Question 4

FFollow up on developments at Priceline since ollow up on developments at Priceline since Sep 2008 when this case study was prepared. Sep 2008 when this case study was prepared.

• Has its business model and/or strategy changed at all,

and if so, how?

• Who are its strongest competitors?

• Is it profitable or operating at a loss?

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Question 4

22

HHas its business model and/or strategy changed at all,as its business model and/or strategy changed at all,

and if so, how? and if so, how?

Iphone Application

23

Priceline Competitor

24

Who are its strongest competitors?

Question 4

25

Who are its strongest competitors?

Question 4

26

Is it profitable or operating at a loss?

Question 4

27

Is it profitable or operating at a loss?Is it profitable or operating at a loss?

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Class Discussion

Q & A