Nobody downloaded yet

The Relationship between Revenue Management and Pricing Strategies in Airline Industries - Research Paper Example

Comments (1) Cite this document
Summary
This research is being carried out to evaluate and present the relationship between revenue management and pricing strategies in airline industries. Revenue Management refers to pricing methods that aim to increase revenue from perishable capacity…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER93.8% of users find it useful
The Relationship between Revenue Management and Pricing Strategies in Airline Industries
Read TextPreview

Extract of sample "The Relationship between Revenue Management and Pricing Strategies in Airline Industries"

Download file to see previous pages This essay discusses that Revenue Management (RM) falls under the dynamic pricing models. There are several terms used to describe revenue management. The most common on is yield management, or a combination of several terms such as Price and Revenue Management (PRM), or Perishable asset revenue management (PARM). It normally describes a pricing method where the cost of buying the product or service changes over time to take advantage of the variation in consumer willingness to pay a certain price for the product. Depending on the industry, the prices either increase or decrease with time. In the electronics market for instance, the price of a product is normally higher during the launch compared to the prices charged after some time. In the airline industry, prices typically increase towards the scheduled time of the flight. Pricing strategy refers to the framework that a producer uses to set the prices for a particular product. Pricing strategy is very crucial because it affects the potential for success of a product. The most basic pricing model is unit cost pricing model, which assigns the price of an item based on the cost of production and the expected margin. Pricing is not normally a straightforward affair because forces of supply and demand affect it. The price of an item tends to be closer to what the market is willing to pay for than the simple arithmetic of cost of production and margin. Dynamic pricing models tend to seek to maximize revenue based on the prevailing demand. In some cases, dynamic pricing actually disregards the cost of production. ...
In some cases, dynamic pricing actually disregards the cost of production. In the case of the airline industry, unit cost is an unstable way of organizing pricing because of the large upfront cost Revenue management is the most dominant pricing model in the airline industry because of its potential to boost profitability in that particular industry. It came about after the liberalization of the industry in the late seventies. Airline executives found themselves in a tight spot because of increasing competition in the fledgling industry. They sought to find ways of increasing the profitability of the airlines in the industry based on their existing carrying capacity. However, the airline industry is not the only industry that uses yield management. The hotel industry also uses it and other industries such as printing firms, bus companies, car hire firms and private lodges also use it to maximize revenue against a backdrop of fixed capacity and highly perishable products (Koenig & Meissner 2011). The goal of this paper is to investigate the relationship between revenue management and pricing within the airline industry. In the first part, the discussion will seek to examine the important issues surrounding revenue management, followed by an analysis of how those factors affect pricing strategy in the second part. Literature Review The Concept of Revenue Management There is a wide variety of terms, concepts, and approaches to the study of revenue management. Some scholars use all the related terms interchangeable stressing the greater meaning of time sensitive pricing. Older researchers used yield management and revenue management to mean the same thing (Boella 2000; Bieger & Agosti 2005). Recent ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Relationship between Revenue Management and Pricing Strategies in Research Paper”, n.d.)
Retrieved from https://studentshare.org/management/1396616-the-relationship-between-revenue-management-and
(The Relationship Between Revenue Management and Pricing Strategies in Research Paper)
https://studentshare.org/management/1396616-the-relationship-between-revenue-management-and.
“The Relationship Between Revenue Management and Pricing Strategies in Research Paper”, n.d. https://studentshare.org/management/1396616-the-relationship-between-revenue-management-and.
  • Cited: 0 times
Comments (1)
Click to create a comment or rate a document
kn
knienow added comment 1 year ago
Student rated this paper as
The topic of "The Relationship between Revenue Management and Pricing Strategies in Airline Industries" is quite often seen among the assignments in university. Still, this document opens a brand new perspective of seeing the problem. I’ll use the manner for my own paper.

CHECK THESE SAMPLES OF The Relationship between Revenue Management and Pricing Strategies in Airline Industries

Pricing Strategies and their impact on Revenue

...? Pricing Strategies and their Impact on Revenue Pricing Strategies and their impact on Revenue Introduction Revenue management has been a practice in the hotel industry for approximately 20 years (Anderson et al., 1994). Good revenue management results from a correlation of pricing and hotel occupancy. In essence hotels ought to set their rates according to demand factors. Pricing remains an elemental factor that influences revenue streams in the hotel industry. Studies carried out in...
10 Pages(2500 words)Research Paper

Revenue Management in the Airline Industry

...?Revenue Management in the Airline Industry I. Introduction It has always been business instinct to increase profitability with the utmost efficiencylike in the way seasonal products are sold at higher prices when demand is at peak and at lower prices when there appears to be no demand for it at all. The basic idea underpinning revenue management therefore is not entirely new in the practice when it was coined three decades ago, strictly speaking. In the field of operations research, RM only evolved from a theory. It is itself a practice, a systems- and methods-based approach that optimizes...
18 Pages(4500 words)Thesis

Pricing Strategies for NIVEA

...organisation. There are three reasons for which every organisation provide so much attention to pricing. These are: The higher price and higher quantity of product sale provides company revenue. Thus, every company must control cost and operation expenses in production of product. Changing a product or its distribution process takes so much time and is quite expensive, but in case of price in can be increased or reduced instantly similar to real time. Every company takes considerable steps to formulate a good price for a product. The pricing strategies of other competitors are also anticipated for making...
14 Pages(3500 words)Essay

Pricing Strategies of Organisations

... use dynamic pricing strategy, which is another form of price discrimination. Under the umbrella of dynamic pricing, airlines charge different fares to the different customers during peak and off peak seasons, for advanced bookings, for last minute bookings and thus fares vary for different times of the day, different days of the month and different seasons (Kurtz, MacKenzic & Snow, pp. 325-326, 2009). In fact, there are all chances that two people who are travelling through the same flight may have paid different fares for the same flight with the same benefits. Important here to note is that this kind of pricing not only allows the company to earn some extra revenues during the peak hours, days and seasons but it also ends... , it is...
10 Pages(2500 words)Essay

Singapore Airline Industries

... Singapore Airline Industries Abstract Singapore airline is one of the leading carriers. It has an outstanding performance that outweighs its competitors. It carries approximately 16 million passengers per year, spans 5 continents, and 59 cities. Singapore airlines aim at providing best flights, best products, and best services. It has developed two strategies i.e. innovation and service excellence. It, therefore, is strict in leadership and in choosing its staff. They have adapted the two goals of driving strategies need adaption: the growing local concern’ and the ever increasing consumer expectations’ (Binggeli & Pompeo, 2002,...
8 Pages(2000 words)Research Paper

Pricing Strategies

...PRICING THE ZC GEMSTONE: STRATEGY ANALYSIS February 4, 2007 Pricing the ZC Gemstone: Strategy Analysis Pricing is a major component of the 4Ps and is an essential element of any marketing strategy. Setting the price too high can lose sales and market appeal. Setting the price too low can erode profits and drive a product out of the market. The ZC gemstone is presented with a unique situation in which the product has not been offered to the buyers before. Using a comparison to similar items and trying to insure that the product can stay on the market results in 2 strategies that are the...
3 Pages(750 words)Essay

The Considerations of Pricing Strategies in Multiple Industries

...The considerations of pricing strategies in multiple industries BY YOU YOUR ACADEMIC ORGANISATION HERE HERE HERE The considerations of pricing strategies in multiple industries Introduction Pricing is most definitely not just an accounting issue, there are many different factors which drive how a company determines their pricing philosophy which stem from the external marketplace. Consumer behaviour and their willingness to pay for a particular product or brand name at a certain price impacts the pricing activities of a business, as well as the regulatory and legal...
10 Pages(2500 words)Essay

Airline Revenue Management

...barrel whereas; the market rate was $69.21 Barrel (BBC, 2009). Like low cost airline, the company should reduce the ticket costs by offering no-frill services. The customers can be charged more prices for using such services. The company will be able to generate more revenue with more number of travellers as compared to attracting only fewer high yield customers. The air travellers are looking for cheap airlines to travel rather than paying higher ticket costs. The current cost cutting strategy of company focuses on business response scheme, increasing quality of products and services through more investments, reducing capacity and employees salaries and...
4 Pages(1000 words)Essay

PRICING STRATEGIES

...Pricing Strategies of Case Study, Health sciences and medicine Pricing Strategies There can be a number of pricing strategies that a pharmaceutical benefit manager can use to cut down the rising costs of health care products and services provided by the employers and also improving the quality of care for patients. Utilization Management Strategy It is observed that an employer has the potential ability to save thousands of dollars just by eliminating the inappropriate and unnecessary prescriptions filed by their employees. Consider that an organization has 5,000 employees. The average...
2 Pages(500 words)Case Study

Airline Pricing Strategies

...systems are a secure enough strategy to ensure that airlines are able to price successfully or whether other strategies are warranted. 2. Literature review An examination of the relevant literature associated with the current airline industry at the operational level, organizational level, and executive/general business function. Membership and loyalty A leading airline carrier, Qantas, has managed to create high customer loyalty through its membership programmes that provide award seat benefits. The loyalty programme is sophisticated and receives the added revenues associated...
16 Pages(4000 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Research Paper on topic The Relationship between Revenue Management and Pricing Strategies in Airline Industries for FREE!

Contact Us