19 Facts About Revenue management

Revenue management is the application of disciplined analytics that predict consumer behaviour at the micro-market levels and optimize product availability, leveraging price elasticity to maximize revenue growth and thereby, profit.

The primary aim of revenue management is selling the right product to the right customer at the right time for the right price and with the right pack.

Revenue management uses data-driven tactics and strategy to answer these questions in order to increase revenue.

The discipline of revenue management combines data mining and operations research with strategy, understanding of customer behavior, and partnering with the sales force.

Natural extension of hotel revenue management was to rental car firms, which experienced similar issues of discount availability and duration control.

Up to this point, revenue management had focused on driving revenue from Business to Consumer relationships.

Marriott's original application of revenue management was limited to individual bookings, not groups or other negotiated deals.

Revenue management found that certain products were overpriced and some were underpriced.

The revenue management system developed by Prorize enabled a consistent and proactive pricing process across Holiday, while simultaneously providing optimal pricing recommendations for each unit in every one of their communities.

Whereas yield management involves specific actions to generate yield through perishable inventory management, revenue management encompasses a wide range of opportunities to increase revenue.

When focused on controlling inventory, revenue management is mainly concerned with how best to price or allocate capacity.

Revenue management optimization proves useful in balancing promotion roll-off variables in order to maximize revenue while minimizing churn.

Revenue management strives to determine the value of a product to a very narrow micro-market at a specific moment in time and then chart customer behavior at the margin to determine the maximum obtainable revenue from those micro-markets.

Revenue management requires forecasting various elements such as demand, inventory availability, market share, and total market.

Forecasting is a critical task of revenue management and takes much time to develop, maintain, and implement; see Financial forecast.

Revenue management requires that a firm must continually re-evaluate their prices, products, and processes in order to maximize revenue.

Supply chain management is a vital process in many companies today and several are integrating this process with a revenue management system.

On one hand, supply chain Revenue management often focuses on filling current and anticipated orders at the lowest cost, while assuming that demand is primarily exogenous.

Conversely, revenue management generally assumes costs and sometimes capacity are fixed and instead looks to set prices and customer allocations that maximize revenue given these constraints.