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... services, multiple dealers may contact the customer in response to the customer's inquiry to the Internet service. By contrast, Priceline. com's new car sales service does not reveal the identity of the customer to the auto dealer until the dealer has accepted the customer's offer. Furthermore, in contrast to other Internet car sales services, dealers are not currently required to pay a participation fee to review offers from the Priceline. com service.
Priceline. com has recently launched a Name Your Own Price service for international and domestic long distance calls. The company allows consumers to name their own price for phone-to-phone international and domestic long distance calls. Priceline. com has developed adaptive marketing programs to help bridge the between consumer offers and seller prices, provide users of the priceline. com service with other desired products, and generate additional revenue for the Company.
These programs also serve as an integral part of Priceline. com's strategy of building customer loyalty. Priceline. com's adaptive marketing programs presently include two distinct initiatives. The first, which it refers to as "adaptive promotions, " allows consumers to increase the amount of their offers, and thus their likelihood of success, at no additional cost by participating in sponsor promotions during the process of making a priceline.
com offer. For example, a customer making an offer to buy a round-trip airline ticket can immediately have the amount of his or her offer increased and thereby increases his or her likelihood of success by applying online for a credit card. The second type of adaptive marketing program is referred to as "adaptive cross selling" and utilizes cross selling of multiple products to increase the number of successful transactions. For example, a customer whose offer for an airline ticket was marginally below acceptable levels could be offered a second related product such as a hotel room reservation or a rental car day at a combined price that provided an acceptable margin for Priceline. com. During 1999, Priceline.
com added adaptive marketing partners and, as a result, reduced its dependence on any one partner. Priceline. com intends to continue to add adaptive marketing programs so that consumers have a variety of programs from which to choose and priceline. com has a diversified source of adaptive marketing revenues.
The Internet and the World Wide Web has fundamental impacts on the pricing strategy of firms. Similarly, the technology has open many doors to buyers hitherto closed by the effects of time, cost and effort. Technology may combine with market forces to reduce the vast majority of a firm's transactions to the level of commodity trades, leaving managers with little opportunity to make prices. The information age - and the advent of computer-controlled machine tools - lets consumers have it both ways: customized and cheap, automated and personal. Particularly in consumer markets, suppliers tend to make prices while customers "take" them. There are a number of instances on the World Wide Web where the opposite situation is now occurring.
One of them is Priceline. com. It is a kind of Internet pricing system that enables consumers to achieve significant savings by naming their own price for goods and services. Their primary products are new cars, travel, and personal finance products. Priceline. com takes an offer of purchase to the seller and they have the option of accepting or rejecting any offers.
Not unlike EBay, Priceline. com has no warehouse or inventories. At a higher level of customer price making, Priceline. com invite customers to name their price on products and services ranging from air tickets to hotel rooms, and new cars to home mortgages.
In the case of air tickets for example, customers name the price they are willing to pay for a ticket to a destination, and provide credit card details to establish good faith. Priceline. com then contacts airlines electronically to see if the fare can be obtained at the named price or lower, and undertakes to return to the customer within an hour. Priceline.
com's margin is the differential between the customer's offer price and the fare charged by the airline. The market space replaces market place, and in the land of 'clicks vs. bricks', you buy online in a virtual store and have the option of taking it back to a physical store "Place" will be online and not of much interest or it will consider virtual places as "real." Every company now competes in two worlds: a physical world marketplace and a digital world "market space." Within a decade, most products and services will be sold in the market space. Priceline. coms market place is this market space and the web. Priceline.
com continues to frequently update and enhance the features of the Priceline. com service. Priceline. com constantly monitors feedback from consumers and regularly adds new features to further simplify the buying process. Priceline. com also receives offers by telephone and provides customer service by telephone and e-mail to assist customers in the offer process.
Priceline. com believes that it will continue to increase customer usage and loyalty by continuing to increase the functionality of the service and enhance consumer experience. Priceline. com understands that the international scope of the Internet and the global demand for the types of products and services available through Priceline. com presents opportunities to expand its service internationally.
Priceline. com has already launched web sites in Australia, which is named Myprice. com. au, which currently uses its Name Your Own Price strategy only for long distance calling cards, while the other web site for United Kingdom; Priceline. co. uk uses its Name Your Own Price just for Air plane tickets.
Most of revenues to date have been derived from airline ticket sales, hotel room reservations and related adaptive marketing programs. As Priceline's business model evolved, they introduced a number of new products and services. The Company had licensed its patented Name Your Own Price business model and affiliated trademarks and software systems to Priceline Web House Club, Inc. , which operated an Internet-based service for groceries and other retail products. In connection with the Web House Club transaction, Walker Digital, granted to Priceline. com a worldwide license to certain intellectual property, including patent and patent applications, useful in Web House Club's business. Priceline.
com also introduced the sale of gasoline. These new businesses typically incurred start-up costs and operating losses and were not successful. The problem with the gasoline was that, the price of gas changes frequently, the sellers couldnt stand through it. Priceline. com had to heavily subsidize them; this in return affected the other businesses Consumers did not favorably receive these new businesses. The association of their brand name with these new entities might have adversely affected their business and reputation and may have diluted the value of Priceline.
coms brand name. Priceline. com started two new products almost at the same time, the online gasoline and groceries. The idea behind the gasoline was that the customer would pay on the website the amount of the gasoline they wanted and they could name the price. Priceline. com than would contact the gas station nearby the customers given address and if any dealer is ready to accept the price, than they would give the customer the product at the amount they asked for.
This whole product was valid for three months. The reason why the gasoline business had to shut down because the OPEC raised the price of oil, and so dealers were paying more for fuel. They were passing part of the fuel charge on to Priceline. com. Also the main reason was the change of the price of the gasoline so frequently that if the customers price is valid for 3 months than the dealers were having loss. These lead dealers to adjust their price much above the customer wanted as they started seeing in the future prices of the gasoline.
This eventually lead to the regular customers complaining about the prices or high prices asked by the Priceline. com, which resulted in the stopping of the product, i. e. the gasoline. The other product, which went wrong, was the online groceries. The idea behind the whole thing was the same, with customers getting cheaper groceries at the price they wanted and also the dealers agreeing to it.
But as the time went on, the customers started having difficulties in getting groceries. Many times the customer would not get the thing they wanted when they went to collect the groceries. There was also a lack of variety in products. It offers only a few brands, sizes and items to finish online shopping. Also, the touch and feel of the things you get when you actually go and buy it is totally different, the customers also started complaining about it. One of the reasons also was that Americans love buying their own groceries with their own time.
This particular product segment was meant for the people who are really busy and dont have time to buy them. But eventually they landed using Priceline's Web clubhouse, which also takes a long time to come up with a shopping list. People didnt welcome it with much enthusiasm and after the initial sales; the people started avoiding which lead Priceline. com to stop this fragment of their business. The graphs below as shown are the price and volume of the Priceline.
com, in the year of 2000. As shown there, there has been decline in both after the launching of the groceries and gasoline, which was removed in the last quarter of this year from the product line. Also shown is the earnings per share ratio of the priceline. com for the last year, an as shown in the second graph which were down for the year are expected to go up next year. Price-Share Volume Graph for year 2000: Earnings per share for the year 2000: Priceline.
com was formed in July 1997 and began operations on April 6, 1998, so has a limited operating history. Priceline. com is a new company Priceline. com should expand its products and services within the leisure travel industry over the next two years to encompass cruises, all-inclusive resorts, time-share and vacation packages. They also should include the sky miles, as its going to encourage customers travel regularly through them.
Priceline. com intends to expand its products and services within the financial services industry over the next two years to include unsecured personal loans, automobile loans, credit cards and credit card balance consolidations and automobile and life insurance policies. As with its other products and services, Priceline. com may expand its financial services products by entering into licensing transactions or strategic relationships with leading industry participants. They should expand their new car sales service from just 26 states to all 50 states. They should also cut down their massive advertisement expenses, which would enable them to bring the operating cash flow to $ 70 million yearly.
All Priceline. com needs is time to backtrack and focus on how it can rebuild itself again. As the digital revolution has taken place, companies tend to look at the technology itself while paying too little attention to its implications of marketing to customers. World has shifted from physical to virtual, as values moves from greasy gears and hard steel of the industrial age to the high concepts of a knowledge economy, customers comes first. Priceline. com has brought a revolution in the technology itself and also to the decade of the upcoming e-commerce business.
With its demand collection pricing system, Priceline. com changed the look and feel of the old marketing strategy, and brought in the customer before the companies. With its unique strategies, Priceline. com took the world into a new different spectrum, where customer values and requirements meet up to the price they are willing to pay for it.
Thus, though Priceline. com is going down for sometime now, it will bounce back again, with some new ideas and new technology, some new marketing strategies to put it back up. Bibliography: Bibliography: web as on 12 / 1 / 00 Annual Report of Priceline. com for the year ended on December 31 st, 1999. Hoovers Inc web p. 1 How Priceline's Grocery Service Delivers Headaches by Diane Brady in Business Week, November 19, 1999 web 4 Ps of the Internet, Don Top scott Value Line web web web web
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