Priceline Presentation

Priceline.com and the Search for a Business Model that Works N AME Y OUR O WN P RICE “ NO ONE DEAL LIKE WE DO” Present by Group 2

Contents 1 Case Background 2 Priceline.com Business Model 3 The future of Priceline.com 4 Travel Industry Impacts 5 Current Situations

Background Start Business One Stop Shopping!! Hotel Reservation “ Reverse Auction ” Products Airline Ticket Financial Service Car Rental “ Name Your Own Price ® ” Start Operation by “ Jay Walker” 1998

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

Background Reorganization Phase Core Business “ Richard Braddock” New Chairman “ Discount Retail” 2003 – 2004 Extension ** First Annual Profit **

Background Boom!! “ International Business” 2004 - Active Hotels Integration 2005 – Booking.com 2007 – Agoda

Question1
W hat are the core
components of Priceline’s
business model?

Components of Business Model
Value Proposition
Revenue Model
Market Opportunity
Competitive Environment
Competitive Advantage
Market Strategy
Organizational Development
Management Team

Consumer Side
Low Cost with some
additional conditions
Vendor Side
New channel for
excessed products
1) Value Proposition

Transaction Fee
Booking & Handling Fee
Adaptive Marketing Program - Adaptive Promotion
- Adaptive Cross Selling
Sales
Gain between
the offer price and
the vendor price
2) Revenue 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

Direct Competitors
Travel Agencies
e.g. expedia.com,
orbitz.com
Vendor itself !!!
Travel Industry
High-Revenue
Attractive
Price-War
Information-War
Indirect
Competitors
Online Market Maker
e.g. eBay.com, Amezon.com
High Competitive Segment !! 4) Competitive Environment

Components of Business Model Lower Price from “Reverse Auction” Fast Response, Reliability & Standard First Mover Advantage & Brand Product Mix 5) Competitive Advantages

New Trading Model “Name Your Own Price ® ”
Brand Ambassador “William Shatner”
Published Price Model “No One Deals Like We Do ® ”
6) strategies
International Expansion

O rganization
Development
&
M anagement
Team

Core Components of Priceline.com
V alue Proposition
R evenue Model
C ompetitive A dvantage
M arket C reator

Question 2
D o you think Priceline will
ultimately succeed or fall?
Why?

Question 2 Success Factors
Focus on Core Business
Travel Reservations
Financial Controls
Extent Inter-Market
Pricing Strategy
Discount fee
Flexible Services
Specific Information
Group Services
Technology Channel
I-Phone
Uncertaint y
2 Sides Effects
Direct & Indirect
Competitors
Price War
Inflexible Services
Digital/Internet
Effect
Brand Image
Risk Factors

Question 3 H ow has Priceline (and similar online services) impacted the travel services industry?

Question 3 Customer Effects
Positive Effects
Increase Customer
Easy/Direct to Target
Negative Effects
Price War
Value vs. Volume
Entrepreneur Effects
Positive Effects
Matching Demand
Price/Budget
Cost Savings
Almost Perfect Information
Negative Effects
Limitation
Acceptable Prices
Comparable Prices

Question 4
F ollow up on developments at Priceline since 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?

Question 4
H as its business model and/or strategy changed at all,
and if so, how?

Iphone Application

Priceline Competitor

Question 4

Question 4
Is it profitable or operating at a loss?

Class Discussion
Q & A

Priceline Presentation

by Kurara

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