So… Priceline? Ian – Jolene – Dorlisa – Grace – Wei Ling
Agenda The Beginning
The Past
The Present
The Future
The End
The Beginning
What is Priceline? Priceline
“Priceline is the ultimate bargain bin of travel agencies. It takes the extra rental cars, airline seats, and rooms that travel suppliers don't think they could possibly sell, marks them w-a-a-a-y down, and gives them to you for cheap”
The Past
Evolution of the Business Model 2003: Introduction of retail pricing
2003: Introduction of retail pricing 2005: Acquisition of booking.com
Evolution of the Business Model
2003: Introduction of retail pricing 2005: Acquisition of booking.com
2006: Acquisition of Active Hotels
Evolution of the Business Model
2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels
2007: Acquisition of Agoda Hotels
Evolution of the Business Model
2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels 2007: Acquisition of Agoda Hotels
2008: Eliminated booking fee
Evolution of the Business Model
2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels 2007: Acquisition of Agoda Hotels 2008: Eliminated booking fee
2010: Acquisition of Traveljigsaw
Evolution of the Business Model
2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels 2007: Acquisition of Agoda Hotels 2008: Eliminated booking fee 2010: Acquisition of Traveljigsaw 2012: Acquisition of Kayak
Evolution of the Business Model
Further Evolution of the Business Model
Shift Towards Social Media
Emphasis on M-Commerce
Further Evolution of the Business Model
Focus on Retail Pricing
Further Evolution of the Business Model
The Present
Value Proposition?
Buyers • Save money by trading off flexibility about brands, product features and/or sellers in return for lower prices
Sellers i. Minimize disruption of existing distribution channels and pricing structure ii. Maximize revenue iii. Minimize lost sales
Value Proposition?
Transaction Broker Connecting buyers and sellers for a transaction fee
Revenue Model?
Name Your Own Price
Online Retail E-tailer Commission fees from the merchants for the sales of discounted flights and hotels
Market Opportunity?
Poor Economic Conditions
Price-Sensitive Leisure Travellers
Excess Inventory/Capacity
Competition?
Direct Competitors Similar Internet Travel Companies i. Expedia ii. Travelocity iii. Orbitz
Competition?
Indirect Competitors Online Airlines and Hotel Portals • Budget Airlines Discount websites • Groupon
Competitive Advantage?
1. Cost Leadership
2. Information Asymmetry
Competitive Advantage?
3. First-Mover Advantage
Competitive Advantage?
Marketing Strategy
Celebrity Endorsement
Search Engine Marketing
Online Affiliate Marketing
What is Priceline’s Impact on the Travel Industry?
Impact On Consumers
Empowers consumers by making it easier to compare prices and features
Open up a new demographic: price-sensitive, brand-ignorant
consumers who could not afford to travel previously
Impact On Industry
Increase Number of Efficient Transactions
Reduce Excess Capacity
Enlarge Market Size
Eliminating Booking Fees
Streamlined the industry and increased overall efficiency
Encourage people to book directly
through online sites, instead of
through airlines
The Future
Priceline:
Success? Or Failure?
Priceline Failure Factors
Porter’s 5 Forces • Low barriers to entry • Strong competitive rivalry • Strong supplier bargaining power • Price conscious buyers have little loyalty • Substitute products are increasingly common (budget airlines and hostels)
Priceline Success Factors
1. Priceline Group unique position à Greater synergy 2. Poor economic outlook à Price conscious market segment é 3. E-Commerce and M-commerce markets are set to grow 4. Promising company direction (diversification and marketing efforts) 5. Well-established brand name
Recap!
Priceline ü Unique business model ü Impacted the travel services industry in a positive way
Overall, • Sustainable competitive advantage • Strong potential to succeed
Top Related