Travel Reference
In-Depth Information
Table 27.1
Industry/sector classification
Industry
Product and customer inventory segmentation
Passenger transport
Ticket for transport or seat segmented by time of booking, venue of
booking, subscriptions, conditions
Car rentals
Right to use car segmented by time of booking, point of sale, return
behaviour, conditions
Hotels
Overnight stay segmented by time and duration of booking, venue of
booking, conditions
Cruises
Participation in cruise segmented by time and duration, packages
Casinos
Overnight stay. Hotel-like segmentation versus customer value
Freight
Transport or storage segmented by time and venue of booking, conditions,
volume versus weight
Advertising
Placement of advertisement or commercial segmented by time of booking,
subscription or bulk, placement, frequency
Telecommunication
Bandwidth in time or data segmented by subscription plan, age of
customers, business versus private customers
Energy
Transport and usage of energy segmented by bulk buys, seasonality
Retail
Fashion, consumer electronics, groceries segmented by seasonality, product
life cycle
Source
: Adapted from Cleophas
et al
. (2011)
competitive advantage of the future. One commentator has stated that, 'The mantra “location,
location, location” is fast becoming replaced with “revenue management, revenue management,
revenue management”' (Hales cited in Chase 2007: 59).
Cleophas, Yeoman, McMahon-Beattie and Veral (2011) have produced a useful classifi cation
of industries by the type of product and customer inventory segmentation. For example, they
note that in the car rental industry customer segmentation is based on time of booking, point of
sale and return of the car whereas in the retail industry it is based on product life cycle and
seasonality.
The practice of RM has become widely accepted as a method for maximizing fi nancial
returns in service industries where demand is variable, and fi xed costs are a high proportion
of total costs (Donaghy
et al
. 1995; Kimes 2000b; Chiang
et al
. 2007; McMahon-Beattie
2009). Indeed, a number of empirical studies have claimed signifi cant increases in total
revenue when a service business moves from a relatively passive average pricing system to an
active system of price discrimination between customers, locations and time of use (e.g.
Cross 1997; Boyd 1998; Elliott 2003; Yeoman and McMahon-Beattie 2004; Cross, Higbie
and Cross 2011).
Preconditions and key ingredients
RM suits service industries such as tourism where the market can be segmented and the
consumer demand is unstable. Combining these features with low marginal costs and the ability
to sell a perishable product/service to consumer in advance of consumption are the key
characteristics of sectors that can utilize RM effectively. Kimes (2000b) has outlined a number
of preconditions for successful RM and has suggested a number of 'ingredients' which are
prerequisites for the implementation of RM in services.
