Priceline.

com
and the Search for a Business Model that Works

NAME YOUR OWN PRICE

NO ONE DEAL
LIKE WE DO

Present by
Group 2

Contents

Case Background

Priceline.com Business Model

The future of Priceline.com

Travel Industry Impacts

Current Situations

Background
Start Business

Name Your Own Price

Products

1998
Start Operation by
Jay Walker

Reverse Auction

Airline Ticket
Hotel Reservation

One Stop Shopping!!

Financial Service
Car Rental

Background
Expansion Phase

Beginning of 2000

Factors

Priceline Webhouse Club

Extend Model
- Groceries
- Gasoline
- Used Goods

- Unable to deal with

major Brands

Oct 2000
Shut Down!!
Dec 2000

- Incovenient to pick up
Jay Walker Resigned

Background
Reorganization Phase

New Chairman

2003 2004 Extension

Core
Business
Richard Braddock

Discount Retail
** First Annual Profit **

Background
Boom!!

Integration
2004 - Active Hotels
2005 Booking.com
2007 Agoda

International
Business

Question1

What are the

core

components of Pricelines
business model?

Components of Business Model

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

Components of Business Model

1) Value Proposition
Consumer Side
Low Cost with some
additional conditions

Vendor Side
New channel for
excessed products

Components of Business Model

2) Revenue Model
Transaction Fee
Booking & Handling Fee
Adaptive Marketing Program
- Adaptive Promotion
- Adaptive Cross Selling

10

Sales
Gain between
the offer price and
the vendor price

Components of Business Model

3) Market Opportunity
Marketspace
Travel Service Industry
started from domestic (U.S.)

19782007 => $253.29 billion

11

Realistic Market
Consumer side:
Budget Concern

Vendor side:
Excessed Demand Product
Rapid Aging

Components of Business Model

Travel Industry

Direct Competitors

High-Revenue
Attractive
Price-War
Information-War

Travel Agencies
e.g. expedia.com,
orbitz.com

4)
Competitive
Environment

Vendor itself !!!

Indirect
Competitors
High Competitive
Segment !!
Online Market Maker
e.g. eBay.com, Amezon.com

12

Components of Business Model

Lower Price from Reverse Auction

Fast Response, Reliability & Standard

First Mover Advantage & Brand
Product Mix

13

Components of Business Model

New Trading Model

Brand Ambassador

Name Your Own Price

William Shatner

6)
strategies
Published Price Model
No One Deals Like We Do

14

International Expansion

Components of Business Model

Organization
Development
&

Management
Team

15

Core Components of Priceline.com

Value Proposition
Revenue Model
Competitive Advantage

16

Question 2

Do you think Priceline will

ultimately succeed or fall?
Why?

17

Question 2

Focus on Core Business

Travel Reservations

2 Sides Effects

Financial Controls
Extent Inter-Market
Pricing Strategy

Direct & Indirect

Competitors

Discount fee

Flexible Services
Specific Information
Group Services

Technology Channel
I-Phone
18

Uncertainty

Price War

Inflexible Services
Digital/Internet
Effect
Brand Image

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

19

Question 3
Customer Effects
Positive Effects
Matching Demand
Price/Budget

Cost Savings
Almost Perfect Information

Negative Effects
Limitation
Acceptable Prices
Comparable Prices

20

Entrepreneur Effects

Positive Effects
Increase Customer
Easy/Direct to Target

Negative Effects
Price War
Value vs. Volume

Question 4

Follow up on developments at Priceline since S

ep 2008 when this case study was prepared.

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

and if so, how?

21

Who are its strongest competitors?

Is it profitable or operating at a loss?

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

22

Iphone Application

23

Priceline Competitor
Who are its strongest competitors?

24

Question 4
Who are its strongest competitors?

25

Question 4
Is it profitable or operating at a loss?

26

Question 4
Is it profitable or operating at a loss?

27

Class Discussion

Q&A
28