CCAMP e-Commerce Group Mini Project

Monday, October 8, 2007

About Priceline

Priceline.com, its management and board believe sound governance practices and policies provide an important framework to assist in fulfilling its duty to priceline.com stockholders. Priceline.com is committed to operating with integrity and honesty, and in accordance with the law. We are making available below, among other things, the charters of the Committees of our Board of Directors as well as the Code of Business Conduct and Ethics that applies to all officers, employees and members of the Board of Directors so that you may understand our corporate governance practices. The code of conduct of this management team let the consumers have a better idea that they will do their best to serve consumers well

The aim of this e-commerce webpage is to allow buyers to bid for airline tickets, hotel rooms, rental cars, vacation packages, cruises tickets and tours and attractions. The sellers will then decide whether it is cost effective to accept the offers. It gives access to the consumers from worldwide which enables them to survive in current global competition. There is also pricebreakers which are very low priced hot deal that are given at a time near the due date. Pricebreakers are handpicked by travel deal experts for their exceptional value and offers are updated daily.

Business model

Priceline management adopted Behaviourial Transactional Contractual Agreement whereby C2B (Consumer-to-Business) is used, as Consumers will search for the deal packages that they want and they will be presented with a list of matched deals that the consumer can compare and choose from. It first gained prominence for its “Name Your Own Price” system, where travellers would name their price for airline tickets, hotel rooms, and car rentals. The price would be compared to undisclosed prices in the Priceline database, with the purchaser knowing the location and name of the rental Car Company, airline, or hotel only after the purchase had gone through, with no rights to cancel. Consumers are then willing to pay based on their budget and leave it to the sellers to decide whether to accept the offer. This leaves the consumer with the bargaining power. With the power to decide, customers feel that they have the ability to control which makes this business transaction more meaningful to carry out.

Priceline not only provides good deal and packages but they do not let any business opportunity slip as they allow pp to advertise on their website to gain more earnings. They are not totally reliance on the budget deals clinched online but they are able to boost their earnings through the advertisement fees when companies advertise on their website.

Priceline.com (Nasdaq:PCLN) has been selected by KLM (part of Air France-KLM, the largest European airline group), as a strategic partner for the distribution of hotels. As a result, visitors to www.klm.com can now choose from over 35,000 hotels in more than 9,000 destinations worldwide. Banks alias with Hotels and Airline, and Priceline will work closely with the banks to make sure that there are sufficient funds in the consumer’s account and will liaise with the hotels/ airlines to get the tickets to the consumer. B2B (business-to-business) is adopted to help manage the E-Commerce.

B2C (business-to-consumer) is adopted as the hotels may contact the consumer directly in the future without any middleman for any offers based on the information of the consumer that the hotel may have. So, while on the front end, eBay runs on a C2C business model, at the back end, it also runs a Business-to-Consumer (B2C) business model.

Using the web, consumers are open up to business opportunities and are able to strike a business deal rather than to wait for the business offers to approach them. Consumer can now learn about the offers from the business and then offer their own prices, initiate purchases and give feedback. Consumers can achieve an increase in disintermediation and increases accessibility to information. Thus, “flow of spaces and time” is attained.

Payments are done via instant deduction from the credit card based on information given no physical transaction is taking place. This saves a lot of time, as consumers do not have to go down to the airport ticket booth to pay when they are collecting the tickets.

eg. of online flight ticket booking

Strategies adopted

Priceline faces competitors who also provide similar products and services online. It faces rivalry from Asiarooms.com, wotif.com. However, all these E-Commerce focus on hotel accommodation and booking of airline services but they do not cover as many areas as Priceline.com offers.

Strategy implementation includes allocation of sufficient resources and establishment of a chain of command or some alternative structure (such as cross functional teams). They assign responsibility of specific tasks or processes to specific individuals or groups. It also involves managing the process. This includes monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances, and making adjustments to the process as necessary. When implementing specific programs, this involves acquiring the requisite resources, developing the process, training, process testing, documentation, and integration with (and/or conversion from) legacy processes.

Hence, this forms a senior management team which performs duties for Priceline.com. They welcome feedback from customers so as to serve them better.

Design

Similarly, the Design of the website will have effect on the customers. If it appeals to the customers, they will be attracted to use the website. Priceline is easy to access and the instructions are clear to first timers using its website. The layout of the website is very straightforward and clean cut. Most importantly, it communicates effectively to users and the results of their search are listed clearly.

However, there is a lack of richness as there are no images and video clips of the hotel, plane interiors, what type of cars available for rental and the cruise interiors. Thus, consumers will not be able to check out what are the exact things they can expect when they renting the car or living in that certain hotel etc.

Strengths

Consumers are able to decide on how much they are willing to pay attainting best price, best quality best savings and quality guaranteed. Within 60secs, consumers are able to get a confirmation on the deal they offered to the sellers. Consumers can choose to repost the offer immediately or get priceline.com to repost the offer 24 hours later. Customer satisfaction is achieved by lowering the price. At the same time Priceline.com is able to meet the different shopping styles of consumers as the website shows a list of different price components which enables customers to compare price. As this is an e-commerce website, consumer with busy lifestyles can also use it as they do not have to physically go to the shops to get what they need. There is an express delivery service, which enables the consumers to get their purchases in 24 hours.

There are also localized websites for specified countries/ regions so that language and currency is no longer a problem. Thus this implies that distance, time and language are no longer obstacles to achieving a boundaries/ borderless world.

The website is interactive with the sharing of information and testimonials from consumer who have browse through the website. Thus this is a socio-technical system with a cycle of input, process, output and feedback. Priceline.com also increases market competitiveness and removes market inefficiencies by lower prices and allowing to consumers to compare between a few companies that improves their welfare and satisfaction.

By adopting the marketing concept whereby customer is the focus, Priceline can get to know the needs and wants of the targeted market by allowing the consumer to choose the prices they are able afford thus making the product to be highly affordable to the mass market. They are able to deliver the desired satisfaction better than their competitors.

Weakness

Priceline.com being an e-commerce website loses the personal touch as the consumer and the products do not have “interaction”. There is also no sale person to direct and inform the consumer what are the pros and cons of the product. Since there is no virtual reality displays, the consumer is unable to test the product or in the case of hotel rooms are unable to see the condition of the rooms before reserving. Products and Services are not custom made to the consumer thus individual consumer might not be convinced by the products they saw online.

Transaction may not be safe as there are security concerns and problem of information system breakdown causing market failure and different aspects of life is affected. As there is no formal contract agreement between both parties one side maybe a fraud or back out without informing the other party increasing information asymmetry.

Customers might fall to the victim of organized crime. Many syndicates have caught on to the potential of the Internet as a new revenue stream. Criminals have used identity theft techniques like phishing to order expensive goods and bill them to some innocent person, then liquidating the goods for quick cash. They extort by using a network of compromised "zombie" computers to engage in distributed denial of service attacks against the target Web site until it starts paying protection money.

As the website only accepts credit cards it will only allow working adult earning above a certain level of income to be able to use this website. This restriction will thus reduce the number of people that will follow through the transaction and gain a successful transaction. If a successful transaction has taken place, the unsatisfied consumer will not be able to get a refund or even transfer to another person/ other offers/ other days thus will have to forfeit the transaction. For example, hotel rooms booked are non-transferable and non-refundable.

Although the website is said to be interactive and promotes testimonials to be submitted, they will filter the negative comments which will affect the image of Priceline and will only put up the good points about the website. Most of the testimonials are only the good experiences that consumers have after using the services provided by priceline.com. In the consumer viewpoint, information is one-sided as the company maybe bias toward themselves as they only post the positive comments.

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8:44 PM