E-business case study
Priceline.com is an Internet-based transactional service that offers products in two categories: a travel service that offers leisure airline tickets, hotel rooms, rental cars, packaged vacations and cruises; and a personal finance service that markets home mortgages, refinancing and home equity loans through an independent licensee. In addition to its U.S. operations, priceline.com owns Priceline.co.uk, a London-based online travel service and is an investor in an Asian travel service, also called Priceline that operates in Hong Kong and Singapore.
In addition to its Name Your Own Price travel services, priceline.com also markets fixed-price, retail travel products through Internet travel site LowestFare.com. Priceline.com acquired the domain names and trademarks for LowestFare.com in 2002. Priceline.com licenses its business model to independent licensees, including Priceline Mortgage and certain international licensees.
E-Business Market Factors and Business Models: Creativity Priceline.com have aggressively entered new growth areas such as new geographical areas and new product lines compared to what they offered as a product when they first started. Improved productivity and Customer Service Innovation For Priceline.com customer service is everything, and the Web site and contact centres offer the company’s only chance to do it well. The reason why it is successful is because of the IT operation that is set in place. Priceline.com have profited from the fact that are able to buy good technology. The operation has to be successful because the store is always open.
Priceline.com has invested in a solid set of customer-service infrastructure tools so the current situation with the economy has not affected them as far as laying people off is concerned. (reduction of costs) Change management Priceline.com has recently undergone a change in its structure. The Company believes that cutting 87 of its 535 employees in its head office and a change in its compensation program will result in restructuring and other charges that are not currently determinable and that will be recognised later in the year.
Most of the companies biggest operational challenges faced are related to the rate of change or velocity that Priceline.com maintains in order to respond to market dynamics. E-commerce in general has had a bumpy ride over the past few years, and the travel industry has had perhaps the bumpiest of all. Providing customers with up-to-the-minute information on pricing and schedules requires tight co-ordination between Web site content and contact-centre agent information.
Priceline.com make customer-facing business changes for marketing purposes, business reasons and product initiatives. One of the key issues is making sure that changes are communicated to all customer-service personnel so they can provide accurate, timely, high-quality responses to site visitors. According to Michael Rappa’s Business Models2 , Priceline.com falls into a number of categories of business models.
Brokerage Model This type of model brings organisations and their customers together and then facilitates the transactions. Priceline.com is an example of a B2C or business to customer market. The Borokerage Model that Priceline.com use is one, which was pioneered by Priceline. This derives from the “name your own price” slogan which is an example of and is known as a Demand Collection System Model.
Merchant Model Piceline.com is an example of a Virtual Merchant. This is one which opperates over the world wide web. Also know as an e-tailor. Affiliate Model An affiliate model provides purchase opportunities for people wherever they might be on the web. This is done by offering financial incentives to affiliate partner sites. The incentives are based on a pay on performance basis and that means if an affiliate is not generating any sales it doesn’t affect Priceline as far as costs are concerned.
You can join Pricelines.com’s network of affiliates and become one yourself by simply sending your customers to priceline if they are requested to travel or need to stay in a hotel, you can recommend them to this service and you can then earn money from priceline in return. To join is free and companies can earn up to 2% on ticket sales. Reverse Auction model This model is Patented by Priceline.com Priceline solicits the best offer from a group of vendors with excess inventory. If a match is found, consumers are committed to buy the item at the price they bid.