AN INTRODUCTION TO REVENUE MANAGEMENT

Revenue management is sometimes called yield management or revenue enhancement. At Strategic Management Science, Incorporated, we use the term revenue management.

Information technology (IT) is changing the way firms are managed. IT provides a new infrastructure of networks, host computers, wireless and fiber optic voice and fax communication technologies, much like a new road network. Leading edge managers are exploiting this new IT infrastructure by devising and implementing new approaches to the fundamental problems of management.

One of these fundamental problems is setting prices for products. Product prices are a critical marketing variable and many books and articles have been written on how the firm should price its products. Deciding on product prices has been an intensively human problem, where managers and groups of managers argued and discussed whether a product should carry a $10.49 or $10.99 price sticker, or whether discounting should be used to clear out excess inventory. This view that setting prices was such a critical and complex activity that it had to be done by intelligent humans began to be challenged in the 1980s when computer systems which performed revenue management began to appear.

Today, revenue management has developed to a point where it is revolutionizing markets and making a nonsense of what were once considered to be good management practices. Many previously successful firms have been victimized by revenue management systems: these systems have proven time and again to be extremely effective competitive weapons.

A necessary first step to competing using revenue management, or to competing against others who are using revenue management, is to develop a clear understanding of what it is and why it has been so successful. Strategic Management Science, Incorporated can provide you with this basic understanding.

Click here for more details of our on-line Revenue Management Course

or contact SMSI@StrategicManagementScience.COM.