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Market Management Priceline. com is e-commerce enterprise company that deployed a new revolutionary method of offering its services to the customers, by introducing the concept of so-called demand collection system. This allows customers to save money by using Internet on the wide range of services and products and at the same time it also makes it possible for sellers to increase its profits by generating incremental revenue. Once Priceline receives consumer proposition, a bid, on specific product or service, it notifies seller about customers proposition.
Customer must give Priceline its credit card number in advance, so in case seller agrees to a deal, customer can immediately be charged. In order to be able to save, customer needs to be very flexible in regards of brand names and other products and services values, so potential seller is still able to come up with incremental revenue, without having to alter its established distribution channels. The principle, upon which Priceline has based its business, is simple. In the fields of air travels, car renting and hotels reservations the most of income is generated by using the concept of price discrimination.
Peoples ability to pay for products and services depends on their financial situation and on how bad are they stripped for time. Sellers know that very well and thats why prices for the same product can vary greatly, depending on how much customer can pay. Yet the customers are unaware of what is the real value of any particular product or service. Since most of sellers income comes from the fact that they price the same product differently, in the end sellers have to deal with leftovers.
Even if they were sold for minimal price, they would still generate an additional income. And thats where Priceline comes to help. 1. The price sensitivity is notion that the same product or service can be priced differently and people would still go paying for it, since theyre unaware of its real value. For example, the prices for the plane tickets can vary to as much as 60 % for the same seat on the same flight. On average 30 % of seats on every flight fly empty.
Even if they were sold for 20 dollars a seat, itd still generate income. The trick is to find a price sensitive person, who would go for such deal, regardless of name of the airliner, date and often destination of the flight. 2. Priceline customers are obviously very price sensitive people, otherwise they wouldnt bother using Priceline services in the first place. Yet, in todays economy, their willingness to pay less is as valuable as rich peoples willingness to pay more for certain privileges. 3. In my opinion, Priceline prices will have a substantial impact on the financial perspectives of those people who have used its services. Theyre to increase customers awareness of how the process of pricing products and services is done, and this will automatically cause them to be more selective when it comes to paying for traveling or applying for mortgage loans. 4.
Priceline's lowest-cost loans guaranties will affect customers perception of the real value of products or services that theyre paying for, as they will be required to pay much less. In our days, it is more profitable for the seller to be getting lower incomes but frequently than waiting for well off customer, who would be willing to pay more. Thus, we come to conclusion that more and more people are likely to be using Priceline services to save on money. Still, important is to know that the real price is still defined by sellers, not by customers.
The price can go down only so far. Priceline is given the information from sellers of what are their lowest rates for their products or services and if customers bid is even lower than that, there wont be a deal. It appears that Priceline demand collection system is going to be used by other companies more and more and this will ultimately cause sellers to increase their prices, while trying to generate additional income. Another important reason for Priceline success is the fact of its novelty, but it will be undermined as time passes. Bibliography: Priceline. com web 19. 10. 2004
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