An affiliate model provides purchase opportunities for people wherever they might be on the web. This is done by offering financial incentives to affiliate partner sites. The incentives are based on a pay on performance basis and that means if an affiliate is not generating any sales it doesn’t affect Priceline as far as costs are concerned.
You can join Pricelines.com’s network of affiliates and become one yourself by simply sending your customers to priceline if they are requested to travel or need to stay in a hotel, you can recommend them to this service and you can then earn money from priceline in return. To join is free and companies can earn up to 2% on ticket sales.
This model is Patented by Priceline.com
Priceline solicits the best offer from a group of vendors with excess inventory. If a match is found, consumers are committed to buy the item at the price they bid.
Competition:
Online/Direct Competition
The online airline ticket market is rife with cut-throat competition from a number of sources, including travel agencies, wholesalers and Internet travel agents such as Microsoft's and CNN’s BizTravel.com.
US-Airlines set competition for Priceline.com3
Six of the key US-Aircarriers have agreed to step up to the competition set by Priceline.com in the segment of consumer-self-pricing.
United Airlines, American Airlines, Northwest, Continental, America West and US Airways will be selling their free allotments under www.hotwire.com.
Similar to Priceline.com, travellers will be quoting the rate at which they wish to travel and according to availability can be granted their requested price.
Increasing Competition
Priceline.com, which has patented several of its business models, faces increasing competition on multiple fronts.
While companies like Budget Rent A Car have licensed one of priceline.com's business models, Microsoft has launched a name-your-price service for hotel rooms on its Expedia site. Priceline.com has filed a lawsuit against Microsoft.
In addition to worrying about protecting its business model, the consolidation of the online travel market could lead to increased competition for priceline.com.
The upcoming merger of Preview Travel and Travelocity.com will create an online travel powerhouse, whose allies include America Online and Yahoo!. Both industry giants will have a stake in the new venture.
Intended as a comeback directed at its competitors, Priceline.com is focusing upon licensing its business models to other companies in other industries. For example, Alliance Mortgage will license the name-your-price business model and team up with priceline.com to launch an online mortgage service known as PricelineMortgage.
The chart below shows the sites that customers visit both before and after visiting Priceline.com
All sorts of competing sites figure in the before and after surfing list above. These range from specific airline websites like www.delta.com to competing "full-service" travel sites like www.orbitz.com and www.expedia.com. A competitive site to note is www.hotwire.com as it figures prominently in both lists and is a site that drives customers to Priceline.com.
Although it is compelling to see how competitors figure in the pre and post site visit categories, it is even more interesting to look at a typical "Path" that visitors take through Priceline.com's site. This path includes visits to off-site destinations. The figure below shows a typical path a visitor takes through the site and the sites they visit that are "off-site"4
4According to this path analysis, a visitor visits priceline.com, leaves the site and returns to the site to either continue surfing or make a purchase. Note the abundance of competing sites that visitors travel to: www.skyauction.com, www.expedia.com, www.orbitz.com, www.hotwire.com and also to banks - perhaps to verify their account balances before booking their vacation.
Legal issues:
With the "Name Your Own Price" services, priceline.com and pricelinemortgage are the leaders in the field of electronic commerce and true innovators in the way people buy the things they need.
They are very adamant about keeping customers privacy online. This is represented in their clearly displayed privacy policy and privacy promise.5
The information collected and stored by Priceline.com includes names, addresses, credit card numbers and other personally-identifying information of customers of the Site who make purchase requests. This information is saved in a secure environment and is kept in records to make it easier for customers’ to use the services on return visits.
Priceline.com use "cookies" technology. Cookies are small bits of code, usually stored on a user's computer hard drive, which enable a Web site to "personalize" itself for each user. They use cookies to reduce the time it takes for customers to submit purchase requests. No third party has access to the information they collect this way. Priceline.com also have a “disable cookies” button which will turn them off.
Information collected by priceline.com or pricelinemortgage is stored in a single, secure database, accessible only by priceline.com and pricelinemortgage. Name’s, address’s, credit card number’s or any other personally-identifying information are not revealed to any participating seller, manufacturer, retailer, or sponsor of priceline.com. These are collectively referred to as "Providers", unless a customer affirmatively respond to the Provider's offer and/or the Provider agrees to provide the product or service the customer requested at a specified price.
From time to time, priceline.com or pricelinemortgage also contact customers to request feedback on their experience using the Site, to assist Priceline in improving the Site, or to offer special savings or promotions to customers. Priceline.com also offer an “opt-out” option on receiving these notices.
Customers are also able to access and change any personal information kept by Priceline. To protect customers privacy and security, they verify your identity before granting access or making changes to your personally-identifying information. If you have registered your profile on any of the services available on their Site from priceline.com or pricelinemortgage, your e-mail address and password are required in order to access your profile information.
Trade marks
A trademark includes any word, name, symbol, or device, or any combination, used, or intended to be used, in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others, and to indicate the source of the goods. In short, a trademark is a brand name.
Priceline's patent covers its marketing system as embodied in a computer. The claims, which define what the patent covers, recite a method for using a computer to facilitate a transaction between a buyer and seller. The buyer inputs a conditional purchase offer into the computer and a payment identifier, such as a credit card number. The computer outputs the purchase offer to sellers. A seller can then input an acceptance, at which time the payment is made using the payment identifier. There are also claims for an apparatus that can perform the same functions. At a first pass, it appears that much of electronic commerce could fit within Priceline's patent. If so, Priceline could extract a royalty for use of its patent on all commerce over the Internet or over any other computer system including proprietary systems.
This patent could severely limit the use of electronic commerce.
Priceline (www.priceline.com) filed its application in 1996, as electronic commerce was just starting to grow. Now, when electronic commerce is more firmly entrenched, the patent is granted, and that award threatens to thwart the growth of electronic commerce.
There are many issues yet to be explored with respect to Priceline's patent. To appreciate them, it helps to understand how the Patent Office could issue a patent on a system that is little more than business relationships communicated using a computer. Until recently such a patent would have been rejected.
Priceline.com has had a hard time defending itself within this type of market against possible threats of infringement on there patents or trademarks.
Security:
To prevent unauthorised access, maintain data accuracy, and ensure correct use of information, Priceline.com employ reasonable and current Internet security methods and technologies. Priceline.com has created a secure environment for credit card transactions. Priceline.com and pricelinemortgage use Secure Socket Layer (SSL) technology to encrypt all personal information including credit card numbers, name’s and address’s to prevent information from being read during transmission over the Internet.
Similarly, SSL technology is used to encrypt personal information when a customer affirmatively responds to a Provider's offer and authorises Priceline to transmit personal information to a Provider for fulfillment.
As yet Priceline.com have not had any security breaches.
Here are some security measures and possible security threats that need to be made aware of to avoid this in the future aswell.
Client-server security:
Uses various authorisation8 methods to make sure that only valid users and programs have access to information resources, such as databases. They include password protection, encryption9 and firewalls10.
Data and transaction security:
Ensures the privacy and confidentiality in electronic messages and data packets, including authentication of remote users in network transactions for activities such as on-line payment. Preventive measures include data encryption.
Client-Server Security Threats
Malicious code
Virus: a code segment that replicates by attaching copies of itself to existing executable files. Software used to infect a computer. A virus is concealed by burying it inside an existing program. Once a person runs the program, the virus is activated. The virus then replicates itself and attaches copies of itself to other programs on the computer.
Trojan Horse: A program that performs a desired task but also includes unexpected and undesirable functions. A program that appears valid, but when activated performs unauthorised activity.
Order fulfillment:
Once a customer has registered on the Priceline.com website with his/her detail, selected which service is required and put in a bid for that service (eg.flights) under the “name your own price” section. Airlines then file unpublished fares and rules for Priceline Tickets with the computer reservation system ("CRS") used by Priceline Travel.
Once there is an agreement between priceline, the airlines and the customer, the tickets are sent.
Wherever possible, priceline send electronic tickets (e-ticket). Ticketless travel is becoming more widespread and is more efficient than sending out paper tickets. All you need to do is bring your booking reference to the check-in desk. All a customer has to do is to print out their email confirmation, or the confirmation booking page, and bring it with them.
When electronic ticketing is not an option the following charges apply:
If the departure date is more than 7 days from booking date then a document issue and delivery fee of £5 per booking will apply.
If the departure date is 7 days or less from booking date then a document issue and special delivery charge of £10 per booking will apply. Tickets are sent out 7 days before the date of departure. If the customer has booked within 10 days of there departure date priceline can arrange special delivery of the tickets at the above costs.
If the above options are not available they will arrange a Ticket on Departure. But this has a £25 surcharge in addition to any charges applied by the airline. Priceline only take bookings for customers who provide an UK delivery address, which must be the same as the credit card billing address.
REFERENCES
1. To begin with Priceline.com only sold airline tickets and sold availability in hotel rooms. They now offer products in two categories: a travel service that offers leisure airline tickets, hotel rooms, rental cars, packaged vacations and cruises; and a personal finance service that markets home mortgages, refinancing and home equity loans through an independent licensee.
2. (webCT)
3. Soucre: FVW International, Germany, 18.07.2000
4. Refer to Appendix A
- priceline.com
Priceline.com's Privacy Promise
Priceline.com promises, and pricelinemortgage agrees, never to sell, rent, barter or share with any third party personally-identifying information collected during your use of the Site without your prior permission.
From time to time we may reveal general statistical information about our Site and visitors, such as number of visitors, number and type of goods and services purchased, etc., but we will never reference you by name or specific address.
Your trust and confidence are our highest priority.
Privacy policy
The following describes the privacy policy (as amended or otherwise changed from time to time, the "Privacy Policy") applicable to the services available through the priceline.com web site (the "Site") from priceline.com and its independent licensees, including the home financing services offered by National Mortgage Center LLC, d/b/a pricelinemortgage, an operating subsidiary of First Alliance Bank, a Federal Savings Bank ("pricelinemortgage"). By visiting the Site, you are accepting the Privacy Policy described herein.
6. redherring.com
7. Protection of an Idea/patent - The brand of a business is an example of intellectual property. It will be important to the business to protect its brand – it will not want anyone else pretending to be associated with the business. The global nature of the internet amplifies the potential of such problems.
- Authorisation /Authentication (passwords/accounts/check IP address, you see only what you suppose to see)
9. Encryption (you may intercept this, but you can’t do anything with It)
10. Firewalls (you go only where you suppose to go)
Monitoring traffic in and out
APPENDIX A
SOURCES
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(webCT)