Demand Management: Beyond Revenue Management
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[Excerpt] Think of yield or revenue management (RM) as the base of a funnel where the demand for services pours into the top is managed using price, terms and conditions, layovers, and length of stay controls to optimise revenue. That process can be carried out with a sophisticated RM system or in a more limited way with an intelligently developed and applied set of pricing and organisational practices. Demand management can be envisioned as both RM and keeping the funnel continuously and cost-effectively full of potential business. Formally, demand management has been defined by Larry Hall, President and CEO of Hotel Booking Solutions as, ‘the art and science of dynamically managing demand to optimise distribution and maximise customer relationships’. More generally, think of demand management as extending the tactical tools of RM to a more strategic level of not just managing demand but creating and directing demand. Used effectively, demand management has the opportunity to create value and avoid the increasing commoditisation of services.
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revenue management; yield; demand management; pricing
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Required Publisher Statement: © Palgrave Macmillan. Final version published as: Anderson, C. K., & Carroll, B. (2007). Demand management: Beyond revenue management. Journal of Revenue and Pricing Management, 6(4), 260-263. Reprinted with permission. All rights reserved.