Priceline.com pioneered a "name your own price" business model in the travel industry. Its core components include allowing customers to name their own price for hotel rooms and other travel services, earning revenue from transaction and booking fees, and targeting the market opportunity of budget-conscious travelers and vendors with excess inventory. While it faced challenges expanding beyond its core travel business, Priceline has succeeded by refocusing on online travel reservations, developing new technology like mobile apps, and gaining a competitive advantage through flexible pricing strategies.

1. 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

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

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

7. Question1 W hat are the core 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 Fee Adaptive 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 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

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

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 International Expansion

15. Components of Business Model O rganization Development & M anagement Team

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

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

18. 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

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

20. 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

21. 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?

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

23. Iphone Application

24. Priceline Competitor Who are its strongest competitors?

25. Question 4 Who are its strongest competitors?

26. Question 4 Is it profitable or operating at a loss?

27. Question 4 Is it profitable or operating at a loss?

28. Class Discussion Q & A