 Definition Yield Management. Description.
Yield Management is the flexible pricing practice aimed at maximizing the
amount of revenue received from a fixed, perishable product or resource.
It should be seen as the process
of allocating the right type of capacity to the right kind of customer at
the right price as to maximize revenue or yield.
Yield Management Industries
YM has it's origin in the 80s in the airline industry and since then spread to other sectors. It is now usually associated with the pricing practices for:
- Airlines (seats, cargo space)
- Hotels (rooms, meeting rooms)
- Rental (cars, trucks)
- Transportation (containers)
- Telecommunications (bandwidth)
- Publishing (ad space)
- Other perishable products: becoming worthless and/or unsellable at a point in time (such as is the case for airline seats just after a flight
takes off).
In the above mentioned economic sectors, yield management is very important, and many such companies would view it as a Core Competence.
Yield management is typically multidisciplinary, because it combines elements of marketing, operations, and financial management into one business approach. It's overall aim is to provide an optimal mix of goods at a variety of price points at different points in time.
Yield management can be considered as the inventory-focused part of revenue management.
Buyer Behavior
Buyers
will make choices based on their:
- Price sensitivity (pay less in off-peak
hours or going to the theatre mid-week)
- Demand sensitivity (pay more for early morning flights or Saturday night opera)
- Time sensitivity (pay a premium for the luxury of booking
late).
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Overview of Revenue Management
Yield Management, Revenue Management...
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Compare with:
Capacity Management
| Value Engineering
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Special Interest Group Leader
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