Some concerns with doing revenue management include the effect on customer brand

Question

Some concerns with doing revenue management include the effect on customer brand perception. This usually comes down to:

1. Presentation and framing of the reason for the discounts

2. Fairness to the customer/firm as well as between customers

We find that customers find some situations more acceptable than others:

Explain how this more easily applies to car and airline reservations but would not easily apply to purchasing identical DVDs online or a soda from a vending machine at a theme park.

More acceptable Less Acceptable Product based Customer based Open information Hidden/secret Framed as a discount or promotion Framed as a fee or charge Reward Penalty Easy to understand Hard to understand Available to me if I change behavior Unavailable to me Familiar Unfamiliar/ not the way this usually works

Explanation / Answer

Purchasing DVDs or Soda is an activity which is impulsive, of small monetary value and somewhat a routine affair. A customer buying a DVD of a movie or show may eventually like it or not after watching it. They will take it in their stride either way and will not think much about the money spent. Similarly, consuming Soda is a routine affair and customers do not really go in depth other than looking at the brand name.

While purchasing a car or an airline ticket involves high monetary transaction and is something the customer will have to bear whether it turns out to be as expected or not. Customers do not buy car for a one ride affair. The amount paid for the car is also significant and any hidden costs associated with it not only creates unpleasantness but also dents customer's estimated budget. Similarly after buying an airline ticket, the customer has to bear the consequences which may be good or nightmarish. Therefore a customer pays much more attention and is attentive to details before buying a high value item or something like an airline ticket that he/she has to bear with.  

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