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MICRO Project

BUY.COM was founded in 1996 to sell computer hardware online. It diversified into books and videos through an acquisition. In its first year, it posted $120 million in revenue and quadrupled third quarter revenue in 1999. However, it was operating at a net loss as it pursued an aggressive customer acquisition strategy. BUY.COM relies on low prices to attract customers but this results in net losses. Making the website more user-friendly could help increase brand loyalty beyond just price-sensitive customers. PRICELINE.COM uses a "name your price" model for airline tickets, finance, and automotive services. It saw large revenue increases but also increased net losses in 1999 as it focused on less

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Divroop Dhillon
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61 views2 pages

MICRO Project

BUY.COM was founded in 1996 to sell computer hardware online. It diversified into books and videos through an acquisition. In its first year, it posted $120 million in revenue and quadrupled third quarter revenue in 1999. However, it was operating at a net loss as it pursued an aggressive customer acquisition strategy. BUY.COM relies on low prices to attract customers but this results in net losses. Making the website more user-friendly could help increase brand loyalty beyond just price-sensitive customers. PRICELINE.COM uses a "name your price" model for airline tickets, finance, and automotive services. It saw large revenue increases but also increased net losses in 1999 as it focused on less

Uploaded by

Divroop Dhillon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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BACKGROUND

BUY.COM

Founded by Scott Blum in 1996, deals in online computer hardware sales. It purchased Speedserve
from Ingram Entertainment to diversify into selling books and videos. The company posted record
setting $120 million revenue in first year and quadrupled its revenue for 3 rd quarter of 1999. But it
was posting net loss in view to acquire customers and to adhere to their tagline.

EVALUATION

BUY.COM is acquiring customers through their strategy of low pricing but it is posting net losses and
there is skepticism towards their policy of offsetting losses through advertisement revenues as
advertisers are experiencing low response rates and also their target audience is not suited to
advertisers. There is a growth hinderence as not all consumers are price sensitive and also not on all
items, other factors influence buying process like experience etc on which BUY.COM is failing.

SOLUTION

The brand should develop more customer friendly interface to also cater to people who are not so
price sensitive, that will help in increasing brand loyalty as well as helps in brand evolution. Any
rational consumer will not look to the website providing 2-3% extra discount with bad consumer
experience again for a product unless he/she is extremely price sensitive. So only brand loyalty
BUY.COM has is because of its price.

RECOMMENDATIONS

Making the website more user friendly and setting up its own customer care office. This will help in
gaining brand loyalty and increasing advertising revenues.

PRICELINE.COM

BACKGROUND

It has its “name your price” model, revenue auctioning model. The brand deals in airline ticketing,
personal finance, automotive service. The company posted a 1654% increase in revenue for 3 rd
quarter of 1999 and over 5x of net loss for the same when compared to previous years.

EVALUATION

The brand is focusing on not so consumer friendly products such as airline ticketing but it also misses
to generate brand loyalty for its brand and merely relying on price point to attract customers, while
there is also limited growth due to conflict of interest between vendor and priceline, as vendors can
set up this model themselves too. Commitment from buyer’s end is a problem.

SOLUTION

Priceline should become more user friendly and increase contact between buyer and verified seller
to increase brand loyalty and to open up opportunity for vertical growth in business. The increased
information flow will benefit vendors and buyers both while also increasing the trust over the
facilitator brand, which will ultimately increase guaranteed offers. Demand of a product is
dependent on various factors other than price of the product.

RECOMMENDATIONS

Priceline could adopt some features from like to specify an agreed on price and to make user
friendly website to increase information flow between buyers and seller, while also exploiting the
rising person to person auctions after these.

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