Priceline Presentation


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Priceline Presentation

  1. 1. 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
  2. 2. Contents 1 Case Background 2 Business Model 3 The future of 4 Travel Industry Impacts 5 Current Situations
  3. 3. 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
  4. 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 <ul><li>Unable to deal with major Brands </li></ul><ul><li>Incovenient to pick up </li></ul>Factors
  5. 5. Background Reorganization Phase Core Business “ Richard Braddock” New Chairman “ Discount Retail” 2003 – 2004 Extension ** First Annual Profit **
  6. 6. Background Boom!! “ International Business” 2004 - Active Hotels Integration 2005 – 2007 – Agoda
  7. 7. Question1 <ul><li>W hat are the core </li></ul><ul><li>components of Priceline’s </li></ul><ul><li>business model? </li></ul>
  8. 8. Components of Business Model <ul><li>Value Proposition </li></ul><ul><li>Revenue Model </li></ul><ul><li>Market Opportunity </li></ul><ul><li>Competitive Environment </li></ul><ul><li>Competitive Advantage </li></ul><ul><li>Market Strategy </li></ul><ul><li>Organizational Development </li></ul><ul><li>Management Team </li></ul>
  9. 9. Components of Business Model <ul><li>Consumer Side </li></ul><ul><li>Low Cost with some </li></ul><ul><li>additional conditions </li></ul><ul><li>Vendor Side </li></ul><ul><li>New channel for </li></ul><ul><li>excessed products </li></ul>1) Value Proposition
  10. 10. Components of Business Model <ul><li>Transaction Fee </li></ul><ul><li>Booking & Handling Fee </li></ul><ul><li>Adaptive Marketing Program - Adaptive Promotion </li></ul><ul><li>- Adaptive Cross Selling </li></ul><ul><li>Sales </li></ul><ul><li>Gain between </li></ul><ul><li>the offer price and </li></ul><ul><li>the vendor price </li></ul>2) Revenue Model
  11. 11. Components of Business Model <ul><li>Marketspace </li></ul><ul><li>Travel Service Industry </li></ul><ul><li>started from domestic (U.S.) </li></ul><ul><li>1978–2007 => $253.29 billion </li></ul><ul><li>Realistic Market </li></ul><ul><li>Consumer side: </li></ul><ul><li>Budget Concern </li></ul><ul><li>Vendor side: </li></ul><ul><li>Excessed Demand Product </li></ul><ul><li>Rapid Aging </li></ul>3) Market Opportunity
  12. 12. Components of Business Model <ul><li>Direct Competitors </li></ul><ul><li>Travel Agencies </li></ul><ul><li>e.g., </li></ul><ul><li> </li></ul><ul><li>Vendor itself !!! </li></ul><ul><li>Travel Industry </li></ul><ul><li>High-Revenue </li></ul><ul><li>Attractive </li></ul><ul><li>Price-War </li></ul><ul><li>Information-War </li></ul><ul><li>Indirect </li></ul><ul><li>Competitors </li></ul><ul><li>Online Market Maker </li></ul><ul><li>e.g., </li></ul>High Competitive Segment !! 4) Competitive Environment
  13. 13. Components of Business Model Lower Price from “Reverse Auction” Fast Response, Reliability & Standard First Mover Advantage & Brand Product Mix 5) Competitive Advantages
  14. 14. Components of Business Model <ul><li>New Trading Model “Name Your Own Price ® ” </li></ul><ul><li>Brand Ambassador “William Shatner” </li></ul><ul><li>Published Price Model “No One Deals Like We Do ® ” </li></ul>6) strategies <ul><ul><ul><ul><ul><li>International Expansion </li></ul></ul></ul></ul></ul>
  15. 15. Components of Business Model <ul><li>O rganization </li></ul><ul><li>Development </li></ul><ul><li>& </li></ul><ul><li>M anagement </li></ul><ul><li>Team </li></ul>
  16. 16. Core Components of <ul><li>V alue Proposition </li></ul><ul><li>R evenue Model </li></ul><ul><li>C ompetitive A dvantage </li></ul>M arket C reator
  17. 17. Question 2 <ul><li>D o you think Priceline will </li></ul><ul><li>ultimately succeed or fall? </li></ul><ul><li>Why? </li></ul>
  18. 18. Question 2 Success Factors <ul><li>Focus on Core Business </li></ul><ul><ul><li>Travel Reservations </li></ul></ul><ul><li>Financial Controls </li></ul><ul><li>Extent Inter-Market </li></ul><ul><li>Pricing Strategy </li></ul><ul><ul><li>Discount fee </li></ul></ul><ul><li>Flexible Services </li></ul><ul><ul><li>Specific Information </li></ul></ul><ul><ul><li>Group Services </li></ul></ul><ul><li>Technology Channel </li></ul><ul><ul><li>I-Phone </li></ul></ul><ul><li>Uncertaint y </li></ul><ul><ul><li>2 Sides Effects </li></ul></ul><ul><li>Direct & Indirect </li></ul><ul><li>Competitors </li></ul><ul><ul><li>Price War </li></ul></ul><ul><li>Inflexible Services </li></ul><ul><li>Digital/Internet </li></ul><ul><li>Effect </li></ul><ul><ul><li>Brand Image </li></ul></ul>Risk Factors
  19. 19. Question 3 H ow has Priceline (and similar online services) impacted the travel services industry?
  20. 20. Question 3 Customer Effects <ul><li>Positive Effects </li></ul><ul><ul><li>Increase Customer </li></ul></ul><ul><ul><li>Easy/Direct to Target </li></ul></ul><ul><li>Negative Effects </li></ul><ul><ul><li>Price War </li></ul></ul><ul><ul><li>Value vs. Volume </li></ul></ul>Entrepreneur Effects <ul><li>Positive Effects </li></ul><ul><ul><li>Matching Demand </li></ul></ul><ul><ul><ul><li>Price/Budget </li></ul></ul></ul><ul><ul><li>Cost Savings </li></ul></ul><ul><ul><li>Almost Perfect Information </li></ul></ul><ul><li>Negative Effects </li></ul><ul><ul><li>Limitation </li></ul></ul><ul><ul><ul><li>Acceptable Prices </li></ul></ul></ul><ul><ul><ul><li>Comparable Prices </li></ul></ul></ul>
  21. 21. Question 4 <ul><li>F ollow up on developments at Priceline since Sep 2008 when this case study was prepared. </li></ul><ul><ul><li>Has its business model and/or strategy changed at all, </li></ul></ul><ul><ul><li>and if so, how? </li></ul></ul><ul><ul><li>Who are its strongest competitors? </li></ul></ul><ul><ul><li>Is it profitable or operating at a loss? </li></ul></ul>
  22. 22. Question 4 <ul><ul><li>H as its business model and/or strategy changed at all, </li></ul></ul><ul><ul><li>and if so, how? </li></ul></ul>
  23. 23. Iphone Application
  24. 24. Priceline Competitor <ul><ul><li>Who are its strongest competitors? </li></ul></ul>
  25. 25. Question 4 <ul><ul><li>Who are its strongest competitors? </li></ul></ul>
  26. 26. Question 4 <ul><ul><li>Is it profitable or operating at a loss? </li></ul></ul>
  27. 27. Question 4 <ul><ul><li>Is it profitable or operating at a loss? </li></ul></ul>
  28. 28. Class Discussion <ul><li>Q & A </li></ul>