The airline industry was the first one to notice and accept the Revenue Management System. Before moving towards the Revenue Management System, most travel and hospitality companies focused on the concept of "adapt or perish". Today, almost every industry and sector implements the Revenue Management Systems and techniques in their functioning. These sectors include manufacturing, advertising, energy, hi-tech, telecommunications, car rental, cruise line, railroad, retail and many more. In the near future, companies ignoring the concept of yield management will be the ones, facing serious drawbacks.
Primarily, Revenue Management System aims at selling the appropriate product, to the right customer, at the proper time and for the right price. While, the Yield Management System concentrates on understanding customers’ perceptions towards product range and value, thus assisting in aligning product prices, placement and availability within different segments according to customer requirements.
The Yield management system utilizes statistical and mathematical ideas, based on trade research and management science methods and tools to provide information for the marketing environment to:
Analyze consumer behavior under the dynamically changing market scenario.
Price and assign stock to reach every potential customer, each day & speculate real-time modification as the market scenario changes
Convey this data instantly to distribution and sale outlets who actually deal with the costumers.
Function as decision-support propriety to assist in: pricing, product development, advertising, sales, scheduling, distribution, human resource utilization and capacity planning.
The Process of Revenue management includes:
Data Collection: A system must collect and store historical data for stock, prices, demand, and other causal factors. This assists a Yield Management System to provide accurate and actionable information.
Segmentation: Market segmentation helps in pricing the product on the market-basis and thus maximizing the revenue. Different Customers are categorized into different groups based on the calculation of customers’ response to the rates of certain products with respect to time and place.
Forecasting: Forecasting various elements such as demand, stock availability, market share, and total market are the basic requirements of Yield Management System. It mainly suggests what customers are likely to do. Forecasting is a very critical aspect of the Revenue Management System and may take some time to develop, maintain, and implement.
Optimization: Optimization suggests that how a firm should respond. It is also considered to be the most important aspect of the Yield management Process. Optimization helps in evaluating multiple market options on how to sell your product and to whom.
Dynamic Re-evaluation: Revenue Management System suggests that in order to maximize revenue, a firm must continually reevaluate their prices, products, and processes. Eventually, in a dynamic market, all the variables involved are constantly re-evaluated in order to move dynamically as per the market.
The Revenue Management System has been adopted by companies worldwide to enhance their profits by segmenting customers into micro-markets and creating categorized and targeted price structures.