_econ. _
By: bobo
Priceline.com is an Internet company that has pioneered a unique type of
e-commerce known as demand collection system that enables consumers to use
the Internet to save money on a wide range of products and services while
enabling sellers to generate incremental revenue. Using a simple and
compelling consumer proposition of name your price, the consumer is in
control of the product they wish to purchase. In the form of individual
customer offers guaranteed by a credit card for a particular product or
service at a price set by the customer and communicate that demand directly to
the participating sellers or to their private databases. The company works by
allowing the consumers to agree to hold their offers open for a specified
period of time to enable priceline.com to fulfill their offers from inventory
provided by participating sellers. Once fulfilled, offers generally cannot be
canceled. By requiring consumers to be flexible with respect to brands,
sellers and/or product features, the company enables sellers to generate
incremental revenue without disrupting their existing distribution channels or
retail pricing structuresThe company is grounded on the assumption of
rational self-interest. In other words, since individuals make rational
decisions to achieve the greatest satisfaction or the maximum fulfillment of
their goals, Priceline.com has now revolutionized the market industry. By
their name and lock your price strategy, more and more consumers have been
able to maximize their satisfaction on differentiated products. The consumers
want to spend their incomes to get the greatest benefit from the goods and
services they can afford. Priceline.com helps them to achieve their goals.
Since the inception of this internet-based company, millions of consumers were
able to afford more with less expenditure on their goods. In addition,
rational behavior varies among every individual because individual
preferences, circumstances, and available information differ. Priceline.com
offers various or differentiated goods and services in a broad range of
products to purchase from E-Commerce Pioneer Priceline.com Sells 20,000
Leisure Airline Tickets In Six Weeks. As ticket sales accelerated,
priceline.com has become one of the nations top 10 most-visited commerce Web
sites. In its first six weeks of operation, priceline.com sold more than
10,000 tickets. Sales have been monumental with a recorded 1,000-plus-ticket
sale in a single day. Sales with an average of one ticket sold every 70
seconds. With its leisure airline ticket service, priceline.com collects
consumer demand and helps airlines fill thousands of empty seats every week on
their domestic and international flights. Consumers simply tell priceline.com
the location, the date they want to travel, the price theyre ready to pay and
the major credit card theyll use to guarantee their request. Consumers then
receive an answer from priceline.com in one hour for domestic travel, or 24
hours for international travel. The name-your-price buying service that
launched in April, sold a record 20,000 tickets online in the last six weeks.
In another article titled, After First 45 Days, Priceline.coms New Car
Sales Pass $2 Million Mark In New York Market Test, Priceline.com launched a
new car buying service in the New York metro area in July of 1998. The service
enables buyers to name the exact car or truck they want, the price they want
to pay and the counties they are willing to travel to in order to take
delivery of their new car. However, all customers must either have their own
financing or pay cash for their new cars. The financing plan is only a limit
in the market test; priceline.com now has a financing option that enables
consumers to name their own monthly payment plan. The patented e-commerce
system has attracted thousands of car buyers and has sold more than $2 million
worth of new cars just 45 days after launching in its first test market.
Lastly, there is an article titled, Name Your Own Price For Gasoline On The
Internet, then Get Your Price At A Local Gas Station. Since May 20th,
Priceline Webhouse Club, a licensed affiliate of priceline.com, launched a new
service that makes it possible for drivers to simply ignore the price at the
pump. Instead, they can go to priceline.com on the Internet and name their own
price for up to 50 gallons of gas a month. After locking in their price in 60
seconds or less, drivers can get their gas at local major-brand gas stations
selected by Priceline Webhouse Club. Drivers can expect to save 10 to 20 cents
a gallon, possibly even more Both buyers and sellers have benefited from
this new concept of naming your own price for business transactions. The
members of Priceline.com are submitting testimonials of how much theyre
saving on airfares for leisure, business, and vacation travels. Sellers can
move excess inventory at will without competing with their own retail prices
or disrupting their established distribution channels. Buyers on the other
hand, get the thrill of naming their own price for quality products and
services. In addition, priceline.com has joined alliance with other
internet-based companies as well to demonstrate new ways in which the Internet
can deliver even greater value to consumers I believe Priceline.com is a
unique new form of commerce thats a win/win for sellers and buyers.
Priceline.com is among the first of a new generation of e-commerce solutions
that deliver on the promise that the Internet can develop compelling consumer
benefits unique to the medium. Their revolutionary new way of doing business
alleviates consumer satisfaction and self-interest. In other words, consumers
marginal benefit exceeds their marginal cost. So, individuals have little to
sacrifice in their choices as well as their decisions Until recently, the
Internet was a solution primarily about convenience when shopping online for
books, software, and music. Priceline.com is about saving money on the
everyday items for tens of millions of consumers, beginning with groceries and
now, gasoline. With the inflation of gas prices consumers are actively looking
for alternative ways to reduce the prices theyre paying. More than half of
all the drivers now say that price always or frequently dictates their
selection of gas stations. Priceline.com offers consumers to do something
about the high cost of gas. OPEC was a force to increase the cost of gas. Now,
the Internet is the new counter-force to lower it. What better time to save
then now! However, the drawbacks to this innovative service are the
fraudulent activity prevalent in cyberspace. The first time you come to the
Priceline.com Web site to name your price for gas, you have to submit your
identification number on the back of ones priceline gas card along with a
major credit card or debit card account number. The problem is individual
identification or credit cards are being stolen for others personal access or
use. It is especially rampant on the Internet and many people have become
victims of stolen identities Another problem is that consumers have been
complaining about the cost-efficient prices. One noted that you dont know
what youre buying until its too late. That is because your credit card is
charged automatically the amount of your offer once Priceline finds someone to
accept it. Some people like to expand their horizons for an alternative
airport including off-peak hours, smaller planes, and possibly the kind of
flight class. Unfortunately opportunities like that are not feasible and the
consumer is stuck paying for an airline they are not satisfied with.
Priceline.com represents an oligopoly, a market dominated by a few large
producers of a homogeneous or differentiated product. Specifically,
Priceline.com is a differentiated oligopoly because it is a consumer goods
industry. The company is currently selling multiple services to its sellers
across three distinct product categories: a travel service that offers leisure
airline tickets, hotel rooms and rental cars; an automobile service that
offers new cars, and a personal finance service powered by pricelinemortgage
(a licensee of priceline.com and a subsidiary of a federally charted thrift)
that offers home refinancing and home equity loans Priceline.com has also
merged and joined alliance with other growth of dominant firms via Internet.
It has merged with Travelcity.com to increase their market share, enabling the
new and larger producer to achieve greater economies of scale. In addition, a
larger firm may have greater flexibility to control market supply. If there is
a more abundant supply, the buyers may be able to demand and obtain lower
prices. More importantly, mergers are able to produce greater production, thus
increasing revenue for the company In terms of the R expenditures Priceline
invest their money on advertising and commercials to attract its customers. To
get incremental business a portion of the money is used in advertising to
reduce the cost of the consumers demanding prices. In doing so, Pricelines
marginal benefit exceeds the marginal cost. The expected rate of return is far
greater than the interest invested in producing advertisement. Moreover, they
expect companies to support their business strategy so the other companies in
return can generate greater revenue as well Conclusively, Priceline.com has
brought an exciting and provides other businesses with inspiration to follow
their strategies. Many consumers have benefited from this Internet Company and
as a result have saved money to spend on other wants. Now we have the option
of choosing a price and giving countless vendors the chance to bid. For better
or worse, this could transform the way we think of shopping, as well as the
way in which we do it. Conceivably, it could alter the nature of balance and
power between vendors and consumers. In addition, it restructures
long-standing capitalistic business and sales traditions. This new business
model appears to have the potential to give enormous new powers to people who
want to buy things, since their price is being offered to many thousands, even
millions, of possible sellers. The new business method venture is successful
and it opens the doors for consumers who are tired of the fixed prices they
have to pay.
Word Count: 1643
| 
