20 Facts About Yield management

Yield management is a variable pricing strategy, based on understanding, anticipating and influencing consumer behavior in order to maximize revenue or profits from a fixed, time-limited resource.

Yield management has become part of mainstream business theory and practice over the last fifteen to twenty years.

Whether an emerging discipline or a new management science, yield management is a set of yield maximization strategies and tactics to improve the profitability of certain businesses.

Yield management is multidisciplinary because it blends elements of marketing, operations, and financial management into a highly successful new approach.

The yield management systems developed at American Airlines were recognized by the Edelman Prize committee of INFORMS for contributing $1.

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Yield management spread to other travel and transportation companies in the early 1990s.

Yield management gave way to the more general practice of revenue management.

Whereas revenue management involves predicting consumer behavior by segmenting markets, forecasting demand, and optimizing prices for several different types of products, yield management refers specifically to maximizing revenue through inventory control.

Some notable revenue Yield management implementations include the NBC which credits its system with $200 million in improved ad sales from 1996 to 2000, the target pricing initiative at UPS, and revenue Yield management at Texas Children's Hospital.

Revenue Yield management is blamed for much of the financial difficulty currently experienced by legacy carriers.

Yield management is of especially high relevance in cases where the constant costs are relatively high compared to the variable costs.

Yield management has significantly altered the travel and hospitality industry since its inception in the mid-1980s.

Yield management has moved into the bus industry with companies such as Megabus, Megabus, BoltBus, and easyBus, which run low-cost networks in the United Kingdom and parts of the United States, and more recently, nakedbus.

Now operating and developed in Chile by SARCAN, a Chilean company that provides revenue and yield management systems focused on this industry, with the company Turbus as principal customer.

Yield management tends to focus on environments that are less rational than the financial markets.

Yield management is particularly suitable when selling perishable products, i e goods that become unsellable at a point in time.

Industries that use yield management include airlines, hotels, stadiums and other venues with a fixed number of seats, and advertising.

The goal of this level of yield management is essentially trying to force demand to equal or exceed supply.

When yield management was introduced in the early 1990s, primarily in the airline industry, many suggested that despite the obvious immediate increase in revenues, it might harm customer satisfaction and loyalty, interfere with relationship marketing, and drive customers from firms that used yield management to firms that do not.

Today, yield management is nearly universal in many industries, including airlines.