Revenue management involves applying exercised strategy for the purpose of estimating the behaviour of consumers at the micro market level and utilizing the availability and price of the majority of products to maximize the growth of revenue.
Revenue management is instrumental for the generation of additional revenue to the tune of 3% to 8% which ensures profit increment ranging from 50% to 100%. The process of revenue management has made its impact felt in the industry in recent times.
Uses of Revenue Management
Revenue management monitors the shifting environment of the market to review prospective behaviours of consumers and establish the best approach to price and assign inventory to customers on a daily basis. This information is conveyed immediately to sales and distribution outlets which deal with the clients in real-time.
Revenue management encompasses various aspects of business operation including product development, advertising, human resource utilization and capacity planning.
Adopting the Right Revenue Management Method
Revenue management needs to be implemented carefully since it permits companies to successfully direct the challenges of demand, supply as well as other issues. Successful revenue management gives companies an edge over their competitors by selling the “right product to the right customer, at the right place, at the right time”. In the end, companies reap competitive, strategic and economic rewards.
The concepts of revenue management are fairly simple but the execution of the systems can be tricky. The availability of modern revenue management systems is either vendor-related or in-house. Both can be highly time consuming and expensive to put into practice.
Prior to implementing a specific revenue management system, any company or organization has to study whether the methods are useful in their business or not and the necessity in which it can aid further development.
Advantages of Revenue Management
Revenue management can trace its origins to management science as well as information technology and therefore, seeks to bring discipline within the framework of an organization. In modern times, market conditions and customer necessities are changing rapidly and in order to keep up, global leaders are promoting revenue management solutions.
Revenue management enables them to enhance their understanding of the services that benefit customers and the way they offer the maximum amount of profit.
Revenue management solutions help service providers react to new opportunities in the market and pressurize the competition by drawing the attention of customers, introducing new services and driving value to the bottom line.