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

Reasons:

Easily applies to car and airline reservations:

Not easily apply to Purchasing identical DVDs online or a soda from a vending machine at a theme park:

Cost:

Usually cost is high and customers concentrate on the reason why a discount is being given and if it is fair or not

Usually cost is low and customers do not mind on the reason why a discount is being given and if it is fair or not

Value:

The usage and value of travelling in a car or airline is high

Comparatively the usage or value of a DVD or soda is not so high.

Frequency:

People frequently travel in car or airlines

But hardly buy DVD’s or visit theme parks

Savings:

Saving are high here and hence the curiosity to know why.

There is no much savings here. So it doesn’t matter much

Reasons:

Easily applies to car and airline reservations:

Not easily apply to Purchasing identical DVDs online or a soda from a vending machine at a theme park:

Cost:

Usually cost is high and customers concentrate on the reason why a discount is being given and if it is fair or not

Usually cost is low and customers do not mind on the reason why a discount is being given and if it is fair or not

Value:

The usage and value of travelling in a car or airline is high

Comparatively the usage or value of a DVD or soda is not so high.

Frequency:

People frequently travel in car or airlines

But hardly buy DVD’s or visit theme parks

Savings:

Saving are high here and hence the curiosity to know why.

There is no much savings here. So it doesn’t matter much

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