Question

Give examples of businesses taking advantage of revenue management opportunities. Explain how they take the opportunities and what they do. Also discuss the pros and cons with regarding to the business as well as to the society.

Answer 1

Examples of businesses taking advantage of revenue management opportunities are airline and hospitality industry. The airline industry makes the best use of resources by offering the optimum price for their services at the right time and to the customers as per the perceived value for the product, market conditions and competition. The purpose is revenue growth and offering the best price to the customer for better profits and resource utilization.

The airline industry uses computer programs and algorithms to calculate the price for a particular product depending on the location, timing and the customer profile. They may provide corporate discounts for to their regular business customers on fixed bulk buy and regular buy. The prices fluctuate as per the demand and the availability for the customers so as to manage the services at the best prices and manage the inventory of the products and services profitably and optimally as per business goals and targets. The hospitality industry also uses revenue management techniques to determine the prices based on advanced bookings, market demand, competition, available inventory and customer profile.

The pros of using the revenue management opportunities regarding to the business as well as to the society are the business offers differentiated product and services as per customer expectations and competition. The businesses operate within the reasonable limits while determining the pricing strategy and work for the interests of the company and its employees to maintain viability of the business. It gives the customers the choice to avail the opportunities for better prices and meet their demands.

The cons of the revenue management opportunities is that it may seem unfair to customers and may not feel encouraged to use the services in future. It may appear discriminatory and offer unequal advantage or benefits to customers depending on the pricing strategy and the time of purchase. It requires considerable efforts for managing continuously the price and demand and may not always result in accurate outcomes or benefits from the dynamic pricing and demand management.