Business Model

Who buys the product and why? How do the businesses make money? Impact of the internet on business models?

Business Model for Expedia.com (Chris Farago)

(1) Why will people buy?

  • Expedia.com is the world’s second largest online travel site.
  • new pricing engine designed to scan hundreds of inbound and outbound options to offer consumers the best possible selection.
  • It is a free travel and reservation website
  • Can compare prices and has many options
  • No longer need to pay the Middle Man. Result is Cheaper Prices
  • Has exlusive partnership with Sam's Club which will attract the 47 million Sam's Club members to use Expedia.com over other travel websites because of the advantages they get.
  • Has strategic partnership with MSN. Anyone who uses MSN will be more likely to use Expedia.com
  • Change from “Commission Model” to “Merchant Model”
  • Booking online gets you your ticket and your price right then and there. No excuses.
  • Cruise Price Guarantee (Expedia) assures customers booking a cruise that they will pay the lowest price for their cruise, or Expedia will match the competing price and provide a $50 certificate redeemable online for gift certificates from hundreds of stores, theatres and restaurants.
  • Lets you preview hotel rooms with pictures and what the hotel offers.

(2) Why will they be profitable?

  • Expedia.com will get a cut of the profit of anything bought such as airplane tickets.
  • Lower costs because they provide a service not a product.
  • Expanded Customer base. They will gain many customers because of the partnerships with Sam's Club, MSN, and the NFL.
  • Expedia.com will be spending less on advertising due to recent efficiency initiatives that have increase advertising and decreased their costs.
  • Word of Mouth. The larger Expedia gets the more customers they will get from word of mouth.
  • Quick and easy
  • Efficient distribution of information, and inexpensive e-commerce transactions.
  • Package Pricing
  • Internet Travel Agencies act as wholesalers, negotiating net prices on inventory directly with suppliers. Customers get great deals, suppliers achieve sales goals, and increased profit for travel sites.

Overview

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