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Case Study : priceline.com
- 1. Priceline.com NAME YOUR OWNPRICE “ NO ONE DEAL LIKE WE DO” APSM10 Assignment 02 Dated: 20-04-2017 Presented by: Deepa Shukla Sanjay Gurtu APSM10 Assignment 02 Dated: 20-04-2017 Presented by: Deepa Shukla Sanjay Gurtu
- 2. ContentsContents 2 1 Understanding Intermediation 2Case Study:Priceline.com 3 Priceline Business Model 4 Changes & their Effects in Ecosystem 5 Sustainability of Business Model
- 3. 3 1. Understanding Intermediation Itis a process of creating online middleman Suppliers Consumers Intermediaries
- 4.
- 6. 6 DisintermediationDisintermediation via Traditionalvia Traditional ChannelsChannels Reintermediation ofDelta into the Value Chain
- 7. Business Models Basedon the Value Chain in the Market PlaceBusiness Models Based on the Value Chain in the Market Place Raw material producer Manufacturer Distributor Retailer Consumer Examples: • B2B: Vericalnet.com • B2C: Amazon.com • C2B: Priceline.com • C2C: eBay.com C2B B2C B2C C2CIntermediaries Service Providers: • Logistics • Financial
- 8. BackgroundBackground 8 2. Case Study:Priceline.com Operational by “Jay Walker” Losses Early Stage not Profitable 1998 - 2000 •1999: lost over $1 billion •2001: pared losses to $15 million After 11 Sep 2001 attack •2002: lost $23 million
- 9. BackgroundBackground 9 2. Case Study:Priceline.com (Expansion Phase) “Priceline Webhouse Club (WHC)” Beginning of 2000 - Unable to deal with major Brands - Incovenient to pick up Factors Proprietary Service “Name Your Own Price ® ” Extend Model - Groceries - Gasoline - Used Goods
- 10. BackgroundBackground 10 2. Case Study:Priceline.com (Reorganization Phase) Pioneer in - “Demand Collection System” “Richard Braddock” New Chairman 2003 – 2004 Extension ** First Annual Profit ** $10.4 million Net Income
- 11. BackgroundBackground 11 2. Case Study:Priceline.com (Boom!!!) “International Business” 2004 - Active Hotels Integration 2005 – Booking.com 2007 – Agoda
- 12. 12 3. Priceline :C2B Business Model Core Components of Priceline.com VValue Propositionalue Proposition RRevenue Modelevenue Model MMarketarket OOpportunitiespportunities SStrategiestrategies BBrandrand BBuildinguilding
- 13. Components of BusinessModelComponents of Business Model 13 Supplier’s Side •Anonymous through selling process- Brand Shield •Integrity of its price- Price Shield. •Incremental Sales 1) Value Proposition Consumer Side •Anonymous through buying process – Identity Shield •Name your own price- choice •Multi-Budgetary options •Structured Conditions
- 14. Components of BusinessModelComponents of Business Model 14 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 “In an age of disruptive start- ups and diminishing competitive barriers, it’s more important than ever before to understand your customers and to act on that insight faster than the competition. As Adaptive Marketing illustrates, rapidly applying even just a single source of real-time data can lead to happier customers and better ROI.”
- 15. Components of BusinessModelComponents of Business Model 15 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
- 16. International Expansion Components ofBusiness ModelComponents of Business Model 16 New Trading Model “Name Your Own Price® ” Brand Ambassador “William Shatner” Published Price Model “No One Deals Like We Do® ” 4) strategies
- 17. BackgroundBackground 17 4. Changes &their Effects in Ecosystem Power Role •Changes : Consumerdemands Supply •Effects: IncrementalSales of Suppliers •Changes: Priceline has power of rejection •Effects: Both Buyers & Suppliers are hidden. Priceline Ecosystem Different Entities •Changes: Relations are anonymous to one another •Effects: Optimum E- Commerce Model
- 18. Question 3Question 3 18 CustomerEffectsCustomer Effects Positive Effects Increase Customer Easy/Direct to Target Negative Effects Price War Value vs. Volume Entrepreneur EffectsEntrepreneur Effects Positive Effects Matching Demand • Price/Budget Cost Savings Almost Perfect Information Negative Effects Limitation • Acceptable Prices • Comparable Prices
- 19. 19 Weakness 1. First MoverAdvantage2. Budget Price3. Large Range of Services4. Quick response 1.Less popular outside US and Europe 2. Tickets are non-refundable 5. Sustainability of Business Model Analysis through SWOT Strengths
- 20. 20 Challenges 1. Work-Life Balance2.Family mindedsociety 3. Budget travelers4. Internet TravelTrend 1. Direct Competitors 2. Info War 3. Brand Loyalty 4. Terrorism 5. Sustainability of Business Model Analysis through SWOT Opportunities
- 21. Question 2Question 2 21 SuccessFactors 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 Uncertainty 2 Sides Effects Direct & Indirect Competitors Price War Inflexible Services Digital/Internet Effect Brand Image Risk Factors Risk Factors
- 22.
- 23. Priceline CompetitorPriceline Competitor 23 Whoare its strongest competitors? 5. Sustainability of Business Model (Contd..)
- 24. Question 4Question 4 24 Whoare its strongest competitors? 5. Sustainability of Business Model (Contd..)
- 25. Question 4Question 4 25 Isit profitable or operating at a loss? 5. Sustainability of Business Model (Contd..)
- 26. Priceline Revenue Model& Present Status 26 Priceline Revenue Model Segments Future
Editor's Notes
- #8 The services of intermediaries reduce the number of contacts, or exchanges, between producers and buyers, thereby increasing efficiency; especially across longer distances. These intermediaries however ‘lengthen’ the supply chain.
- #15 • Netflix uses viewing data to assess what directors, actors, and programs its subscribers like, and then commissions new programs like House of Cards to add new subscribers. • Travel service company Orbitz identifies a user’s smartphone operating system to adapt hotel recommendations in real-time. Orbitz knows from its historical data that Apple users tend to spend $20-$30 more than Android users on hotel room bookings. (See video links below) Johnston said: “In an age of disruptive start-ups and diminishing competitive barriers, it’s more important than ever before to understand your customers and to act on that insight faster than the competition. As Adaptive Marketing illustrates, rapidly applying even just a single source of real-time data can lead to happier customers and better ROI.”