Priceline.Com Harvard Business Case
Summary
Priceline.com is an e-commerce site which when founded in 1998, brought forth a new angle to conduct business. Traditionally marketers scan the market to determine which prices purchasers are willing and able to pay for products or services. The sellers then offer their product for a price which meets their internal criteria. With priceline, instead of the seller setting the price, the buyer makes an offer of what he or she is willing to pay and sellers compete for the buyers business. This innovation represented a first in that general non commercial consumers have never been able to name the price they will pay and have sellers respond.
Problem Analysis
After enjoying much initial success by utilizing the internet and a patented technology which connected buyers to sellers, priceline began to suffer growing pains early on. Initially priceline was successful because it concentrated solely on airline seats. Airlines were more than happy to fill empty seats for any price rather than fly with an undersold plane. Copying its success, priceline quickly followed into offering hotel rooms, another commodity in which hotels would rather book a room at a minimal price than have it empty. As priceline spread out to encompass more areas such as home mortgages and groceries, it faced a diluted image to shoppers. Some ventures were huge resource drains to the company both financially and in talent. As employees tried fixing what was wrong with problem areas, profitable areas such as hotels and airfare began to receive direct competition from the airlines and hotels themselves as well as other websites such as expedia.com.
Solution Analysis
We can consider the following alternative solutions:
• Concentration Option. Focus on just one product or just one arena. Instead of offering everything under the sun from food to long distance to mortgages and auto sales, streamline the offerings. Priceline could focus exclusively on travel related products.
Priceline.com is an e-commerce site which when founded in 1998, brought forth a new angle to conduct business. Traditionally marketers scan the market to determine which prices purchasers are willing and able to pay for products or services. The sellers then offer their product for a price which meets their internal criteria. With priceline, instead of the seller setting the price, the buyer makes an offer of what he or she is willing to pay and sellers compete for the buyers business. This innovation represented a first in that general non commercial consumers have never been able to name the price they will pay and have sellers respond.
Problem Analysis
After enjoying much initial success by utilizing the internet and a patented technology which connected buyers to sellers, priceline began to suffer growing pains early on. Initially priceline was successful because it concentrated solely on airline seats. Airlines were more than happy to fill empty seats for any price rather than fly with an undersold plane. Copying its success, priceline quickly followed into offering hotel rooms, another commodity in which hotels would rather book a room at a minimal price than have it empty. As priceline spread out to encompass more areas such as home mortgages and groceries, it faced a diluted image to shoppers. Some ventures were huge resource drains to the company both financially and in talent. As employees tried fixing what was wrong with problem areas, profitable areas such as hotels and airfare began to receive direct competition from the airlines and hotels themselves as well as other websites such as expedia.com.
Solution Analysis
We can consider the following alternative solutions:
• Concentration Option. Focus on just one product or just one arena. Instead of offering everything under the sun from food to long distance to mortgages and auto sales, streamline the offerings. Priceline could focus exclusively on travel related products.