Case Study: Priceline.com

Jun 18th, 2015
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Alabama State University
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1. What are the core components of Priceline’s business model? Priceline.com’s business model is based on what is called the reverse auction pricing system. This allows its users through the use of placing bids to located discounted travel in various categories. In today’s economic turbulent times a term called aging inventory is even more present and it applies to Priceline’s business of airplane tickets, hotel room reservations, and car rentals. Offering the services of the middleman, they just providing price quotes from various major hotel chains, airlines, and rental car companies and are almost considered an independent representative or broker. Originally its services were catered to the bottom feeders of the pricing game and that is why their name your own price system was so successful. The main difference between similar business models is that with Priceline you cannot select your hotel, airline, or departure time.

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Case Study: Priceline.comDon LeeMarylhurst University MGT 536E E-Business Strategies Dr. Gordon E. Whitehead AbstractAlthough many e-commerce businesses were hurt by the events of 9/11, discount airfare site Priceline took a double blow. In the first few months after the terrorist attacks, air travel was viewed as favorably as a trip to the dentist. But even as air travel has rebounded, the company's business continues to be affected by the prolonged practice of airlines to discount their own retail tickets. Consequently, the difference between an online retail ticket and a Priceline ticket is not as great as it once was. This makes it tough for Priceline's "name your own price" model, a groundbreaking development in e-commerce. Shoppers enter their desired travel dates, destination, and the price they're willing to pay. Their bid is accepted only after they've committed to it with a credit card. Purchases cannot be cancelled. The business model benefits not just consumers. It's also a very potent way for airlines to fill seats without harming their retail fare structure. But now that airlines are discounting, it has an effect on the trade-offs that certain people are willing to make for a Priceline ticket. As soon as there's a trend of airline prices to go up, an airline jumps in and undercuts. Case Study Questions1. What are the core components of Pricelines business model?Priceline.coms business model is based on what is called the reverse auct

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