Yield management is a variable pricing business model based on understanding, anticipating, and influencing customer behavior in order to maximize revenue from a fixed, time-limited resource such as an airline seat, a hotel room, or advertising inventory. As a branch of revenue management focused specifically on inventory, it involves controlling that inventory strategically to sell the right product to the right customer at the right time for the right price, which can mean charging different prices to customers consuming an identical good or service. Robert Crandall, former chairman and chief executive of American Airlines, gave the practice its name and called it one of the most important technical developments in the history of transportation management.
Facts
Core MechanismA variable pricing strategy that adjusts prices for a fixed, time-limited resource, such as airline seats or hotel rooms, based on anticipated demand, aiming to sell the right unit to the right customer at the right time for the right price to maximize revenue. 1 Connections
Associated With
American Airlines' SABRE-based yield management system is the widely cited origin case.
Sources
1. Wikipedia, Yield Management
WikipediaHistory section, American Airlines 1985 fares
On January 17, 1985, American Airlines launched Ultimate Super Saver fares in an effort to compete with low cost carrier People Express Airlines.
Opening definition paragraph
Yield management (YM) 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 (such as airline seats, hotel room reservations, or advertising inventory).
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