Pricing and Revenue Management
Camilleri, M. A. (2018). Pricing and Revenue Management. In Travel Marketing, Tourism Economics and the Airline Product (Chapter 9, pp. 155-163). Cham, Switzerland: Springer Nature.
11 Pages Posted: 17 Dec 2018
Date Written: December 1, 2017
Modern revenue managers understand, anticipate, and react to market demand to maximize their businesses’ revenues. They often do so by analyzing, forecasting, and optimizing their fixed, perishable inventory, and time-variable supply, through dynamic prices. Hence, the objective of pricing and revenue management is to stimulate demand from different customers to earn the maximum revenue from them. The essence of this discipline is to understand the customers' perceptions of value and to accurately align the right products to each customer segment. Therefore, this chapter suggests that revenue management systems combine data mining and operational research with strategy. Essentially, this involves maximizing revenue from a combination of high-yield and price-sensitive customers; as these systems are intended to reduce seat spoilage and to increase load factors; thereby filling excess capacity. Moreover, these systems also manage overbooking, and are intended to minimize denied boarding.
Keywords: marketing, pricing, revenue management, yield management, capacity management, overbooking, denied boarding, perishability, laod factors, airline marketing
JEL Classification: M00, Z3, Z30, Z33, M1, M10, M3, M30, M31
Suggested Citation: Suggested Citation