BÀI TH O LU N S 2 – BÀI D CH TI NG ANHẢ Ậ Ố Ị Ế
A. Bài d ch Ti ng Anhị ế
_ Đ tàiề: How Priceline’s Grocery Service Delivers Headaches
_ Ngu nồ: http://www.free-essays-free-essays.com/dbase/4e/mul76.shtml
by Diane Brady in Business Week, November 19, 1999
_ N i dungộ:
Which is the one place where you can satisfy your every need (almost every need) at
your price? Be it airline tickets, hotel rooms, rental cars, mortgages, new automobiles, or even
long distance calling time. The answer would be Priceline.com. All you have to do is know
your need, state your terms, and make your offer. It doesn’t get easier than this! Priceline.com
was one of the pioneer online companies to traverse the traditional limitations of the Internet
and revolutionize online purchasing. It’s strategy – letting the consumer name his/her price,
and matching it with a seller who is willing to fill the demand at that price and those
conditions, there by providing the required service the consumer desires. Thus Priceline.com
is basically an integrated, Web-based e-marketing automated system, which was one of its
kinds when it started its business in the consumer marketplace. In simple word it is the ideal
middleman, who gets you what you want, when you want it through a unique dotcom
experience.
Priceline.com was formed on April 6, 1998 as a limited liability company, but looking
at its potential and rapid success it was soon converted into a corporation. It activities at this
time dealt mainly with providing leisure airline tickets with the unique difference of letting
the customer name his/her own price. By December 31, 1999 its services included hotel
rooms, mortgages and new automobiles. The Company's licensee, Priceline WebHouse Club,
Inc., soon launched a ‘Name Your Own Price’ service for groceries in the fourth quarter of
1999. Another licensee, Priceline Perfect Yard Sale, Inc., launched on a test basis in the first
quarter of 2000, a consumer-to-consumer based ‘Name Your Own Price’, which involved the
sale of quality, used goods over the Internet. Today after nearly three years of existence
Priceline.com boasts a huge market share, loyal fan following and 373 employees.
Priceline.com can be best described as the ‘ultimate Internet middleman’.
How Priceline.com Works? Ron Rose, Chief Information Officer at Priceline.com,
says, Our goal is to lead the industry as a world-class customer-centric company, with an
infrastructure that delivers the best, personalized customer service experience is absolutely
fundamental to our company's long-term success on the Internet. Priceline.com has pioneered
a unique e-commerce pricing system known as a demand collection system that enables
consumers to save money on a wide range of products and services while enabling sellers to
generate incremental revenue.
Priceline.com uses its ‘virtual’ business model, which works as a three-step process
while allowing them rapid scaling using the Internet: The first step consist of Priceline.com
collecting consumer demand, of the individual customer backed with the guarantee of the
respective customer’s credit card, for a particular product or service at a price which is set by
the customer. In the second step then, Priceline.com either communicates that demand
directly to participating sellers or accesses participating sellers' private databases to determine
whether priceline.com can fulfill the customer's offer. In the final step, Priceline.com gets
back to the consumers regarding their offers, which they can hold to for a specific period of
time and, once fulfilled, offers cannot be canceled. If Priceline.com doesn’t meet the customer
price for a particular demand, the credit card is not charged and the customer is once again
asked to change the price if he/she wants and the procedure is repeated.
Priceline.com benefits consumers by enabling them to save money, while at the same
time benefiting sellers by providing them with a competent revenue management tool capable
of identifying and capturing incremental revenues. By requiring consumers to be flexible with
respect to brands, sellers and product features, priceline.com enables sellers to generate
incremental revenue without disrupting their existing distribution channels or retail pricing
structures.
An important goal for effective marketing strategy is the reduce costs of marketing
through targeting of marketing efforts. But the today’s digital world has shaken marketing to
its core. Today’s consumers are more of the cyber consumer. Digital technology and Internet
are changing consumers and are changing the way they relate to products and markets.
Priceline.com has targeted its customers in a different way. Underlying Priceline.com's
marketing strategy is the Company's belief that its target market is all consumers, not just
Internet savvy consumers. It hasn’t limited its customers to net users only, but has also
reached the segment of the market, which doesn’t generally use the Internet for shopping,
through viral marketing and giving them choices and prices they cannot resist. It has shown
them that they have the power of pricing, shifting it from companies to the consumers.
Priceline.com works on the trends of not only attracting their target markets through prompt
website, but also with the advertisements, which have been hit, and toll-free numbers.
Priceline.com not only uses Internet to target the consumers but also with lots of other
advertisement and promotions.
The advertisement with William Shatner, with the oldies of 60’s and 70’s has become
such a hit with the people that they even ask for the record of the tape. Priceline.com has
targeted the whole consumers along with the Internet savvy people in a total different way.
One way, which has benefited Priceline.com, is the viral marketing or the word of mouth
strategy also known as the referral. Priceline.com with the word-of-mouth referrals has been
able to draw large amount of customers to the site. Today Priceline.com’s site is one of the
Internet’s most heavily used sites, with more than 1.5 million hits in a week. Consumers are
required to accept certain trade-offs with respect to brands or product features in return for
saving money. For example, consumers are required to accept a reservation in any hotel
within a specified geographic-area within a designated class of service (1, 2, 3, 4 or 5-star)
and must accept limitations on changes and cancellations. As with the airline ticket service,
the target market for Priceline.com's hotel room reservation service is the leisure travel
market, as the customers have no idea of the carrier and the time they are flying until the
ticket is booked. If the ticket is booked, it cannot be cancelled or be changed. This is one of
the reasons why business personnel cannot use Priceline.com as they have a fixed schedule.
The Priceline.com Strategy and the 4 P’s Priceline.com’s goal is to continue to expand the
Priceline.com business and to operate Priceline.com's demand collection system as a leading
source for the purchase of products and services on the Internet.
The key features of Priceline.com's strategy are as follows: Leverage the Priceline.com
brand over diverse products and services: Priceline.com intends to continue to leverage of
Priceline.com brands across its numerous products and services to achieve significant revenue
scale and growth. In contrast to most e-commerce businesses that operate in one or two
vertical markets, Priceline.com is a horizontal commerce system that can benefit both buyers
and sellers across a broad range of products and services. Priceline.com's strategy is to make
available multiple products and service offerings at its web site under a common brand to take
advantage of these market opportunities. Priceline.com intends to expand directly in certain
vertical markets and license its business model and name to independent licensees in other
markets. Priceline.com and its licensees have launched or expanded offerings in several new
categories over the past twelve months and these efforts will continue.
Strengthen the Priceline.com brand: The Company plans to expand consumer
recognition of Priceline.com as the leading consumer brand for buyer-driven commerce over
the Internet. To achieve this goal, Priceline.com intends to continue to pursue an aggressive
brand development strategy through mass market and targeted advertising and promotions,
press coverage and strong word-of- mouth support. While priceline.com is already one of the
most recognized e-commerce brands among adult Americans, priceline.com believes that it
can expand the public's association with the Priceline.com Name Your Own Price proposition
to a broad range of products and services. Priceline.com plans to expand, but it seems quite
impossible according to the current stock market prices. Priceline.com for the time being
should concentrate on their travel section and expand as soon as their company is again well
established.
The product offering is considered to be the heart of a marketing mix. It is impossible
to decide on a promotion campaign or set a price without knowing the products to be
marketed. Priceline.com has numerous products and services to offer. Priceline.com
commenced its service with the sale of leisure airline tickets. The number of airlines
participating in Priceline.com's airline ticket service has increased to a total of 10 domestic
airlines and 20 international airlines. Few of the major domestic airlines Priceline.com uses
are United Airlines, American Airlines and Northwest, whereas major international airlines
include Virgin Airways, British Airways and Lufthansa. Priceline.com uses Delta Airlines as
both its domestic and international carrier. Consumers can make offers to purchase airline
tickets through the Priceline.com Web site or the 1-800-PRICELINE-call center. The
customer than has to follow the process mentioned earlier. In October 1998, Priceline.com
launched its Name Your Own Price travel service for hotel room reservations. Priceline.com's
hotel room reservation service currently is available in substantially all major cities and
metropolitan areas in the United States. Hotels participate by filing private discounted rates
with related inventory control rules in Priceline.com's private database in a central reservation
system for hotel rooms. These rates normally are not available to the general public or to
consolidators and other discount distributors who sell to the public. Priceline.com's hotel
room reservation service operates in a manner similar to its airline ticket service.
Priceline.com offers two different rental car services. In December 1999, priceline.com
launched its Insiders Rates) service and, in February 2000, Priceline.com launched its Name
Your Own Price service. Priceline.com's rental car services are currently available in
substantially all major United States markets. Under Priceline.com's Insiders Rates service,
participating car rental companies offer Priceline.com customers who have already purchased
an airline ticket from Priceline.com rates on car rentals in connection with a customer's
planned travel arrangements. An offer is provided to a customer by e-mail and on
Priceline.com's web site when a customer checks the status of his or her request.
Priceline.com's Name Your Own Price rental car service operates in a manner similar to its
airline ticket and hotel reservation services. Consumers can access the priceline.com Web site
and select where and when they want to rent a car, what kind of car they want to rent (i.e.
economy, compact, mid-size, SUV) and the price they want to pay per-day, excluding taxes,
fees and surcharges.
In January 1999, Priceline.com introduced its home financing service. Under the terms
of separate agreements with Alliance Partners, L.P. and Lending Tree, Priceline.com's
financing service allows consumers to set their interest rate and points for mortgages of a
specified term, including, purchase money mortgages, refinancing and home equity loans.
Priceline.com introduced its new car sales service on a test basis in the New York
metropolitan area in July 1998. Since that time, Price line’s new automobile service has been
expanded to include 26 states. Priceline.com's new car sales service accepts offers for every
major brand of automobile. Due to the numerous features and options on a new automobile,
the range of product substitutability that consumers will accept is lower in the case of new
cars than with airline tickets or hotels. Priceline.com does not negotiate on behalf of
customers or dealers and does not represent to its customers or dealers that it is acting as an
agent or broker on behalf of either party. Once a dealer accepts an offer for a new car, the
consumer completes the transaction directly with the dealer. The Priceline.com new car sales
service is differentiated from other Internet car sales services, which serve as lead generators
for participating car dealers. Under such 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