Chapter 5 6 8 9 Flashcards
(16 cards)
The seven uncertainties
- Perishable products and opportunities
- Seasonal and other demand peaks
- The product’s value in different market segments
- Product wastage
- Competition between individual and bulk purchasers
- Discounting to meet competition
- Rapidly changing circumstances
RM tactics
These RM tactics help you maximize revenue when you have perishable products or opportunities:
- Use price balancing
- Maximize revenue through optimal timing
The definition of RM
the application of disciplined tactics that predict consumer behavior at the micromarket level and optimize product price and available ability for the purpose of maximizing revenue growth–selling the right product to the right customer at the right time for the right price.
Business must make numerous decisions about the pricing and availability of their products to the market-place.
These decisions can be made in an ad hoc way or at various levels of sophistication.
The important thing is to recognize the kind of decisions you are making and to employ the right level of analysis and effort to the decision-making process.
RM
The producers of all goods and services must understand their products and markets sot hey can maximize their return from those assets.
RM techniques
RM techiques can apply to virtually any commercial endeavor, but a sophisticated program is not necessarily called for in all cases.
RM is effective at any level because it can be used to reduce uncertainty in decision making by understanding and predicting customer behavior at the micromarket level.
true
Perishable products
Selling perishable products presents a major reveue risk to companies that deal with them.
Perishable opportunity
In many businesses, the physical product does not perish, but the opportunity to sell it for full price does.
Concept of perishability of opportunity
This concept of perishablity of opportunity extends to almost any business—real estate, retail sales, and manufacturing are all affected by the concept of perishable opportunities.
If the timing isn’t right, the opportunity to get the most out of the product will perish.
RM
- A revenue-maximizing firm would use RM techniques to forecast the declining the value of its product with more precision and price it accordingly.
- The degree of sophistication of revenue management required is a function of the value of a product and the speed of its perishability
Seasonal and other demand peaks
Uncertainties caused by seasonal or other demand imbalances can also play havoc with a company’s ability to maximize revenues and profits.
Under the right circumstances, discounts can be offered to attract customers or entice them to move to the less popular time.
True
The success of this simple pricing experiment led Carmel to closely examine the rates for the peak times, when the center routinely turned away excess demand
True
RM techiques could help spread the demand for these valuable resources and make more efficient utilization of them by segmenting the market and charging more during the peaks and discounting during the off-peak
True
DFS
Demand Forecast System
