"RICEFLEXIBILITY 239
tocontinue with thesamedealeroverti me. It shouldbenotedthatsuchcumulativequan-
titydiscounts areextremelydifficulttodefendif attackedinthecourts.
Seasonal discountsarepricereductionsgivenorout-of-seasonmerchandise. Anexam-
plewouldbea discountonsnowmobilesduring thesummer.Theintentionofsuchdiscounts
istospread demandovertheyear. This canallow fulleruseof productionfacilitiesand
improvedcashflowduringtheyear.Electricpower companiesusethelogicofseasonal
discountstoencouragecustomersto shiftconsumption to off-peakperiods.Since thesecom-
paniesmust haveproductio n capacityto meetpeakdemands,theloweringofthepeakcan
lessenthegeneratingcapacityrequired.
Cash discountsarere ductionsonbasepricegivento customersforpayingcashor
withinsomeshorttimeperiod.Forexample, a two-percent discountonbillspaidwithin
tendays is a cashdiscount.Thepurpose isgenerallytoacceleratethecashflowofthe
organization.
Tradediscountsarepricereductionsgiv entomiddlemen(e .g.,wholesalers,indus-
trial distributors,retailers) toencouragethemto stockandgivepreferredtreatmenttoan
organization's products. Forexample,a consumer goods companymaygivea retailera 20%
discounttoplacea largerorderfor soap.Such a discountmightals o beusedtogainshelf
spaceora preferredpositionin the store.
Personalallowancesaresimilardevices aimed at middlemen. Theirpurposeisto
encourage middlemento aggressivelypromotetheorganization'sproducts.Forexample,
a furniture manufacturer mayofferto pay somespecifiedamounttowarda retailer's adver-
tis ingexpensesiftheretaileragreesto includethemanufacturer'sbrandnameintheads.INTEGRATED MARKETING •
BEAMMEUP,SCOITYI
You rememberWilliamShatner, a.k.a. CaptainJamesT.Kirk.
AsKirk,herepresentedtheepitome of integrity andprofes-
sionalism.Deathwas betterthancompromise.Yet, herehe
is doingratherstrangeTVadsforPliceline.com.Inc.Why?
Probablybecausehe's being paida tonofmoney, andhe's
havingfun. Workingforanapparentwinnerisalsoexciting.
Wesay "apparent" because transferring Priceline's
patented"nameyourownprice" systemofsellingairlinetick-
ets,groceries,cars,gasoline,telephoneminutes, and araftof
otherproductsis provingquitedifficult.Complicatingmat-
ters, severalairlinesandhotelsarestudyingwhethertolaunch
Webservicesthatcouldcutthelegs outfromunderPrice-
line's establishedtravel businesses.
Pricelinecouldsoon facestiff competitionfromitsown
suppliers.Hyatt, Marriott,Starwood,andCendant-mostof
which sellexcesshotelroomsthrough Priceline-arehaving
seriousdiscussionsaboutstartingtheirowncompanytodis-
tributeoverthe Internet.Essentially,thesechains worrythat
byhandingsalestoPriceIine,theycould losecontroloftheir
customers. Severalairlineshavethesameconcerns.
Tostayonestepahead, Pricelinehasdecidedtointroduce
18 newproducts.Initially,Pricelinegenerated90%ofitsrev-
enuesfromairlinetickets,rentalcars,andhotelrooms.By
2003,Pricelineestimatesthatonly 50 %ofrevenueswiIIcome
fromthesesources.
By June2000,userswere ableto nametheirpriceforlong-
distancephoneservice,gasoline, andcruises.Attheendof
2000,Priceline.comstartedsellingblocksoflong-distance
phonetimetosmallcompanies. Later,it willofferthemad
space,freightservices, and officeequipment.Newjointven-
tures areintheworks with companiesinHongKong, Aus-
tralia, Japan, Europe, andLatinAmerica.
ExecsatPricelinesaythey'reon'therighttrackandthat
they'rebuildi nga broad-baseddiscountingpowerhouse.Sources: PamelaL.Moore,"NameYourPrice-ForEverything?"
BusinessWeek,ApriJ 17 ,2000,pp.72-75;"PJiceline.comtoLet
CallersNamePrice,"LosAnge les Times,Nov.9, 1999,p.3;
"Pricelineto offerautoinsurance,"WallStreetJournal,Aug.3,
2000 ,p.J2;"Pricelineteamsup with3 phonecompaniestosell
longdistance,"WallStreetJournal,May2000,p.16.