Priceline Case Study
Priceline.com is an online travel company with a unique business model. The company allows the users to set their own prices for their travelling needs. The business structure is referred to as a brokerage model because it brings customers and sellers together in one platform. The company conducts a unique type of commerce known as demand collection system. Buyers post the price they are willing to pay for a travel service and then the sellers willing to provide such services at the buyer’s price get in touch with the customers.
The company’s major strength is the fact that it pioneered this unique mode of commerce. It patented its business model meaning that any company that wishes to use the same model needs to pay the company. Furthermore, competition is limited as it is the only company allowed to use the business strategy.
The second strength is the diversification of the product offerings from the company. Priceline.com offers more than six different travel products to the customers including hotel rooms, airline tickets, and car rentals. The company has also delved into the sale of automobiles, long distance call services, as well as financial management. The company has created a strong network with top automobile dealers, hotels, and airlines in the country making it dominate the online travel market.
One of the major internal weaknesses that Priceline.com has to deal with is the poor customer service. It seems that every online company has issues with maintaining proper customer service and Priceline.com is no exception. Bidding online is not exactly convenient and it does not guarantee fast service. Good customer service will guarantee that the customers keep coming back to use the company’s services. Thus, the company should be looking towards improving its customer services.
The main companies offering direct competition to Priceline.com include Microsoft Expedia, Orbitz.com,SkyAuction.com, and Travelocity.com. Expedia offers the exact same products to its online consumers but with better customer service than Priceline.com. This is probably the reason behind Expedia’s growing consumer base.
The company’s business strategy has been effective so far but there are certain issues arising. Many investors doubt that the company’s patent on its method of doing business will actually have merit in court. This is because introducing a selling technique to the Internet does not qualify as a new invention. Furthermore, its poor standards of customer service have contributed to its dwindling market share.