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Online Direct Competition Essay

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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 Expedia.com and CNN’s BizTravel.com. US-Airlines set competition for Priceline.com 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.

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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” According 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. An example of this is major dot-com, Pannell-Christ Inc., an Indiana-based provider of consulting and training services to facing accusations of hijacking intellectual property.

Sued by Priceline.com the firm that provides “name your own price” services for hotels, car-hire and airline tickets. According to the, Pannell-Christ is disputing Priceline’s use of the phrases “Name Your Price” and “Name Your Own Price.” Pannell-Christ maintains it used the “Name Your Price!” trademark as far back as 1997. However, the company had not filed for a trademark on the phrase until several months after priceline.com had begun using the slogan in 1998. The U.S. Trademark Office granted Pannell-Christ federal registration of the mark on February 1, 2000.

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