Can Business Model of Priceline.Com Be Saved

Only available on StudyMode
  • Download(s) : 337
  • Published : October 26, 2008
Open Document
Text Preview
With the introduction of its innovative "Name Your Own Price" services program in April 1998, Priceline provides this unique transaction service allowing consumers and businesses to leverage the Internet for the buying and selling of leisure airline tickets, hotel rooms, rental cars, cruises, vacation packages and even home mortgages. Since launching its business, priceline.com has sold millions of airline tickets, hotel room nights, and rental car days. Priceline.com is the patented Internet pricing system that enables consumers to achieve significant savings by naming their own price for goods and services. Priceline.com takes consumer offers and then presents them to sellers who can fill as much of that guaranteed demand as they wish at price points determined by buyers. Priceline.com licenses its business model to independent licensees, including priceline mortgage and certain international licensees. Priceline become a famous e-business company and make great success very quickly. However Priceline encounters big problem such as poor management, too much expanding cause the economic burden, facing more and more competitors.

This assignment firstly is to analyse the current competitive environment of Priceline.com by using Porter’s five force model, using SWOT analysis tool to discuss the strengths and weakness, next is to analyse the business model and what Priceline.com create value for its customer, then analyse why Priceline.com will ultimately succeed, last is to introduce the Priceline model to be applied in other industry area.

Table of Contents

Q1: Analyse the current competitive environment of Priceline.com and discuss strengths and Weakness of Priceline.com………………………………………………………………..P5

Q2: What are the core components of Priceline.com’s business model? What values can Priceline.com create for customers? ..................................................................................P11

Q3: Do you think Priceline.com will ultimately succeed or fail? Why? ................................P13

Q4: How widely applicable is the Priceline model? ...................................................................P14

Reference………………………………..…………………………………..………………….P15

Q1: Analyse the current competitive environment of Priceline.com and discuss strengths and Weakness of Priceline.com
Answer:

1.1 The current environment---Porter’s Five Forces Model
In the Five Forces Model, Porter explains that in any industry there are five forces that influence what happens within the industry: 1. Existing companies,
2. Potential new companies,
3. Substitutes for products offered,
4. The suppliers
5. The customers.

These five forces combine to make up the business environment. Porter designed his basic model to be applied to an entire industry. In this case we can identify the “force” as the competitive environment of Priceline.com as below:

Competitors: Those sites that offer the same product, service, or information as your site. Priceline will face extraordinary competition, not just from other online middlemen such as Expedia, Hotels.com, Cheaptickets.com, and Travelocity, but also from the direct discounts sales by the airlines on Orbitz.com and hotels on Travelweb.com.

Potential new entrants: It is not only incumbent rivals that pose a threat to an industry, the possibility of new firms may enter the industry also affects the competition. Your site-less off-line competitors as well as new companies entering the industry via a Website are the potential new entrants. For example, competitors like Biddingfortravel.com and Flyertalk.com are cutting into Priceline.com’s markets by providing users with the exact price people are paying for hotels and airfares.

Customers: Visitors and potential visitors to your Website and your competitors’ sites. The power of buyers is the impact that customer have on the producing industry. If the...
tracking img