Summary
Priceline.com is an e-commerce site which when founded in 1998, brought forth a new angle to conduct business. Traditionally marketers scan the market to determine which prices purchasers are willing and able to pay for products or services. The sellers then offer their product for a price which meets their internal criteria. With priceline, instead of the seller setting the price, the buyer makes an offer of what he or she is willing to pay and sellers compete for the buyers business. This innovation represented a first in that general non commercial consumers have never been able to name the price they will pay and have sellers respond.
Problem Analysis
After enjoying much initial success by utilizing the internet and a patented technology which connected buyers to sellers, priceline began to suffer growing pains early on. Initially priceline was successful because it concentrated solely on airline seats. Airlines were more than happy to fill empty seats for any price rather than fly with an undersold plane. Copying its success, priceline quickly followed into offering hotel rooms, another commodity in which hotels would rather book a room at a minimal price than have it empty. As priceline spread out to encompass more areas such as home mortgages and groceries, it faced a diluted image to shoppers. Some ventures were huge resource drains to the company both financially and in talent. As employees tried fixing what was wrong with problem areas, profitable areas such as hotels and airfare began to receive direct competition from the airlines and hotels themselves as well as other websites such as expedia.com.
Solution Analysis
We can consider the following alternative solutions:
• Concentration Option. Focus on just one product or just one arena. Instead of offering everything under the sun from food to long distance to mortgages and auto sales, streamline the offerings. Priceline could focus exclusively on travel related products. Flights, hotels, vacation packages, cruises etc. Alternatively priceline could focus on just ticket sales. Not only airline tickets but also movie tickets, sporting tickets, theatrical tickets and others such as museums and amusement parks.
• International Option. Currently priceline offers flights that must originate in the United States or Puerto Rico. Priceline could expand its offerings to international flights, international hotels, car rental and other vacation products to consumers who are seeking to travel outside of the country. This would exponentially increase the market presence as not only would this service be used by Americans seeking to go abroad but also by those in other countries where the services are offered.
of price versus service in the airline industry as a whole, as well as, the
Spirit Airlines has long been considered an unorthodox airline. They, of course, address all four P’s in their marketing strategy; however, they focus a large amount of their effort on price and promotion. They focus on cutting price through “unbundling”. They focus on promotion through taking advantage of social issues and breaking news. Many advertisements and deals promoted by Spirit have given the public a definite shock-factor. Spirit has made two objectives very clear: they are furious at getting the customer the lowest fare possible by any means necessary, and they will similarly use any means necessary to get those potential customers to notice those fares. Such a blatant marketing strategy works. Even going up against some big competition, Spirit finds ways to be competitive and successful in flagrant fashion.
Southwest Airlines faced many barriers to entry from the fierce competition of other airlines in the industry. Though competition was fierce, Southwest Airlines managed to succeed by doing things differently. Their mission was to provide affordable air travel to those who would not normally fly. Contradictory to the rest of the airline industry, Southwest maintained a profit while keeping its fares low. Southwest was unique to the industry in two ways. They focused on the short haul traveler and used a point-to-point method of flight connections.
Priceline is a business service industry and according to the website Funding Universe, Priceline, is an Internet-based company that created a ticketing service called "Name Your Own Price" that matched customers to airlines. The company was formally created in 1997, and his president was Jay Walker The company headquarters is located in Connecticut (“Priceline.com Incorporated History”).
JetBlue's mission is "to bring humanity back to air travel". Its low-cost strategy is second-to-none, not even to Southwest. Utilizing Southwest as a model and benchmark early in Neeleman's career in the industry, he's managed to copy the Southwest model and expand upon it with his ability to find more innovative ways to cut costs along the organization's value-chain, while utilizing technology to increase productivity and further add to operational efficiencies. JetBlue's value chain demonstrates its ability to successfully compete in several key areas relative to the bases of competition within the industry and creates processes that focus on reducing costs, for the specific purpose of continuously creating value for its customers, i.e. fare pricing, customer service, routes served, flight schedules, types of aircraft, safety record and reputation, in-flight entertainment systems and frequent flyer programs.
However, selling a flight from Denver to Tokyo on a Monday is extremely different than selling a flight from Cleveland to Cincinnati on a Saturday night. The people flying that route, the cost, the airplane flow, the services provided, and the frequency/length of the flights all vary greatly from route to route, and the marketing strategies will fall in line with those difference. Although it would be impossible to determine an exact strategies, we will attempt to determine what United attempts to focus on, where they attempt to focus, and what their goals, both long and short ...
Although JetBlue focuses on service value through highly productive personnel and aircraft, potential consumers are still interested in value when they fly; the price aspect of the marketing mix. Customers are interested in quality service at a reasonable price.
In April 1992, American Airlines launched "Value Pricing" -- a radical simplification of the complex pricing structure that had evolved over more than a decade following deregulation of the U.S. domestic airline industry. American expected that the new pricing structure would benefit consumers and restore profitability to both American and the industry as a whole. The critical issue raised is: Would American's bold initiative work?
The focal article I chose is Dynamic Pricing: The Future of Ticket Pricing in Sports by Patrick Rishe published on January 6th, 2012 through Forbes. Pricing is an important component of the marketing mix because it is the element where managers have expectations of customers paying their money to the organization (Kopalle, 2009). Compared with other elements of the marketing mix, pricing has the advantage because there is a high level of flexibility. The flexibility is because prices change continually (Smith, 2008). The opportunity of quick price changes also has disadvantages. For much of the 20th century, the vast majority of sport managers employed one of two pricing strategies: the one-size-fits-all approach, where every ticket price
2.Price: A price must be set to add value to the consumer but also add revenue to the airline. Cost is considered the most volatile areas in the airline industry today; deregulation has forced pricing to become the major competitive variable. Like any industry supply and demand control the pricing elements of the ai...
and is especially popular among eBay customers. Fig.1 briefly illustrates Company’s business. The system enables its
Product differentiation – by offering different products, services, or product features, the company can charge higher prices, or appeal to different audiences. Use of IS have enabled new products and services, that increase the levels of convenience in using existing products and services. By acquiring PayPal, eBay greatly enhanced the ease with which customers can pay for their products. Google keeps an innovative approach towards search engines, by introducing Google Maps, Google Translate and others, which improves the ease of usage. Using online live chatting systems and social networks contributes to understanding of customers. It also adds value and improves customers’ stickiness to website (Booth, Roberts, and Sikes 2011)
Thanks to these factors, pricing becomes one of the primary uses with which hotels attract customers. However, due to customers’ independent nature, there influence over industry players is limited. In the high-end segment of hotels, price influence becomes even less as hotels find it easier to differentiate themselves from the competition and customers become less price sensitive coming to expect higher prices as a symbolism of superior quality and services. Lastly, corporate business and tour operators can exert more influence due to their large purchases but this affect is of a limited nature and does not extend across the whole
This concept was challenged by Southwest Airlines by marketing itself as a cost leader. Their entire growth curve in the industry has been attributed to its cost effective strategies which has made it more efficient and successful than traditional airlines.
Within the airline industry currently the airlines can be divided into low cost airlines and full service airlines. The low cost airlines targets customers that are seeking no frills connectivity between cities at low ticket prices. The full service airlines provide several add-ons like free meals, on plane entertainment, and communication facilities. The target market for full service airlines are customers who are willing to spend extra for the services that the airlines provides.