Unleashing the Power of Yield Management in the Internet Era: OPPORTUNITIES AND CHALLENGES

摘要

The profitability of many companies hinges upon their ability to extract the maximum possible amount of revenue from a fixed quantity of goods and/or services. This dilemma is most evident and acute in those industries where fixed costs dominate other expenses and the products offered are perishable. Airlines, for example, have such substantial fixed costs that their total expenses are virtually unaffected by the number of passengers flying. With 70% of seats sold, most flights barely achieve the breakeven point for profitability. Beyond that level, any additional revenue flows directly to the bottom line as contribution or pure profit. If some combination of more passengers can be attracted or seats can be sold at higher prices, the impact on profit can be powerful. To attain this goal, airlines have been deploying sophisticated yield management techniques generating estimated revenue gains of 7%. This seemingly modest improvement, however, has translated into net profit increases of as much as 100%. Beyond the airline industry, however, there are few yield management success stories. Industries as varied as cruise lines, hotels, sporting events, entertainment, golf courses, car rentals, trucking, hospitals, and others share many of the same characteristics and challenges: high fixed costs, perishable goods, and customer segments that vary in their price sensitivity. Often these businesses operate at usage levels that are close to the breakeven point―where incremental revenues can have a substantial impact on their profitability. Yet, most of these industries have not attempted to implement sophisticated yield management techniques. Most have resorted, instead, to indiscriminate price reductions based on simplistic timing rules (e.g., 50%-off on day of show, early-bird specials).