[it1004: tutorial 2] priceline case presentation by group a
DESCRIPTION
Priceline case presentation, prepared by Grace Ong, Ian Gobardja, Chooi Wei Ling, Jolene Lim & Dorlisa Song. Uploaded with kind permission from the abovementioned authors.TRANSCRIPT
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So… Priceline? Ian – Jolene – Dorlisa – Grace – Wei Ling
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Agenda The Beginning
The Past
The Present
The Future
The End
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The Beginning
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What is Priceline? Priceline
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“Priceline is the ultimate bargain bin of travel agencies. It takes the extra rental cars, airline seats, and rooms that travel suppliers don't think they could possibly sell, marks them w-a-a-a-y down, and gives them to you for cheap”
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The Past
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Evolution of the Business Model 2003: Introduction of retail pricing
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2003: Introduction of retail pricing 2005: Acquisition of booking.com
Evolution of the Business Model
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2003: Introduction of retail pricing 2005: Acquisition of booking.com
2006: Acquisition of Active Hotels
Evolution of the Business Model
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2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels
2007: Acquisition of Agoda Hotels
Evolution of the Business Model
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2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels 2007: Acquisition of Agoda Hotels
2008: Eliminated booking fee
Evolution of the Business Model
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2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels 2007: Acquisition of Agoda Hotels 2008: Eliminated booking fee
2010: Acquisition of Traveljigsaw
Evolution of the Business Model
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2003: Introduction of retail pricing 2005: Acquisition of booking.com 2006: Acquisition of Active Hotels 2007: Acquisition of Agoda Hotels 2008: Eliminated booking fee 2010: Acquisition of Traveljigsaw 2012: Acquisition of Kayak
Evolution of the Business Model
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Further Evolution of the Business Model
Shift Towards Social Media
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Emphasis on M-Commerce
Further Evolution of the Business Model
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Focus on Retail Pricing
Further Evolution of the Business Model
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The Present
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Value Proposition?
Buyers • Save money by trading off flexibility about brands, product features and/or sellers in return for lower prices
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Sellers i. Minimize disruption of existing distribution channels and pricing structure ii. Maximize revenue iii. Minimize lost sales
Value Proposition?
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Transaction Broker Connecting buyers and sellers for a transaction fee
Revenue Model?
Name Your Own Price
Online Retail E-tailer Commission fees from the merchants for the sales of discounted flights and hotels
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Market Opportunity?
Poor Economic Conditions
Price-Sensitive Leisure Travellers
Excess Inventory/Capacity
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Competition?
Direct Competitors Similar Internet Travel Companies i. Expedia ii. Travelocity iii. Orbitz
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Competition?
Indirect Competitors Online Airlines and Hotel Portals • Budget Airlines Discount websites • Groupon
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Competitive Advantage?
1. Cost Leadership
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2. Information Asymmetry
Competitive Advantage?
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3. First-Mover Advantage
Competitive Advantage?
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Marketing Strategy
Celebrity Endorsement
Search Engine Marketing
Online Affiliate Marketing
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What is Priceline’s Impact on the Travel Industry?
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Impact On Consumers
Empowers consumers by making it easier to compare prices and features
Open up a new demographic: price-sensitive, brand-ignorant
consumers who could not afford to travel previously
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Impact On Industry
Increase Number of Efficient Transactions
Reduce Excess Capacity
Enlarge Market Size
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Eliminating Booking Fees
Streamlined the industry and increased overall efficiency
Encourage people to book directly
through online sites, instead of
through airlines
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The Future
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Priceline:
Success? Or Failure?
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Priceline Failure Factors
Porter’s 5 Forces • Low barriers to entry • Strong competitive rivalry • Strong supplier bargaining power • Price conscious buyers have little loyalty • Substitute products are increasingly common (budget airlines and hostels)
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Priceline Success Factors
1. Priceline Group unique position à Greater synergy 2. Poor economic outlook à Price conscious market segment é 3. E-Commerce and M-commerce markets are set to grow 4. Promising company direction (diversification and marketing efforts) 5. Well-established brand name
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Recap!
Priceline ü Unique business model ü Impacted the travel services industry in a positive way
Overall, • Sustainable competitive advantage • Strong potential to succeed
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