Yield management is a pricing strategy used by businesses in hospitality, air travel, and other tourism-related fields to generate maximum revenue from a perishable inventory. It is a variable pricing strategy based on understanding, anticipating, and influencing consumer behavior to maximize revenue or profits from a fixed, time-limited resource. Yield management is a set of yield maximization strategies and tactics to improve the profitability of certain businesses.
Here are some key features of yield management:
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Fixed inventory: Yield management is based on the idea that certain fixed, time-limited resources, such as hotel rooms or airline seats, can be sold for different prices based on the time of year, level of demand, number of rooms already sold, and other external factors.
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Data-driven: Yield management strategies take a data-driven approach to pricing and inventory controls.
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Multidisciplinary: Yield management blends elements of marketing, operations, and financial management into a highly successful new approach.
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Narrow focus: Yield management has a narrower focus than revenue management and is concerned only with the selling price and the sales volume to achieve the best possible revenue yield.
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Computer-based: Firms that engage in yield management usually use computer yield management systems to do so.
Yield management is often described as "selling the right room to the right customer (guest) at the right time for the right price". It is a dynamic pricing strategy designed to produce the maximum revenue or yield from a set inventory of rooms. Yield management shares many similarities with the concept of revenue management, but has actually existed for longer.
In summary, yield management is a pricing strategy that involves selling a fixed inventory of perishable resources for different prices based on various factors. It is a data-driven approach that blends elements of marketing, operations, and financial management to maximize revenue or profits. Yield management is commonly used in the hospitality, air travel, and tourism-related fields.
