Book Discription

The practices of revenue management and pricing analytics have transformed the transportation and hospitality industries, and are increasingly important in industries as diverse as retail, telecommunications, banking, health care and manufacturing. Segmentation, Revenue Management and Pricing Analytics guides students and professionals on how to identify and exploit revenue management and pricing opportunities in different business contexts.

Bodea and Ferguson introduce concepts and quantitative methods for improving profit through capacity allocation and pricing. Whereas most marketing textbooks cover more traditional, qualitative methods for determining customer segments and prices, this book uses historical sales data with mathematical optimization to make those decisions. With hands-on practice and a fundamental understanding of some of the most common analytical models, readers will be able to make smarter business decisions and higher profits.

Pricing analytics uses historical sales data with mathematical optimization to set and update prices offered through various channels in order to maximize profit. A familiar example is the passenger airline industry, where a carrier may sell seats on the same flight at many different prices. Pricing analytics practices have transformed the transportation and hospitality industries and are increasingly important in industries as diverse as retail, telecommunications, banking, health care, and manufacturing. 

Market Segmentation

Market segmentation is a crucial concept in the field of hotel revenue management. It refers to the process of dividing a market into smaller groups of customers with similar needs or characteristics. This allows hotel revenue managers to tailor their pricing and marketing strategies to each segment, which can ultimately lead to increased revenue and profitability.

Pricing

The aim of this book is to guide students and professionals on how to identify and exploit pricing opportunities in different business contexts. 

The first chapter looks at pricing from an economist’s view point, beginning with the basic concept of pricing analytics and what type of data are needed to use this powerful science. Next, the common assumptions regarding the customer population’s willingness-to-pay are discussed along with the price-response functions that result from this assumption. From the price-response functions, we show how to estimate price elasticity and how it differs at the product, firm, and industry levels as well as in the short term versus long term. Basic price optimization techniques are then explored.

The second chapter looks at these same topics but from a more practical standpoint, with examples provided from several industries and organizations.

The third chapter is on dynamic pricing, with a special emphasis on the most common application: markdown pricing. Similar to the first two chapters, both the theory and the application aspects will be covered.

The fourth chapter covers the new field of customized pricing analytics, where a firm responds to a request-for-bids or request-for-proposals with a customized price response. In this situation, the firm only has historical win/loss data, and traditional methods involving price elasticity do not apply. The pricing analytics methodology is described in a step-by-step process from an actual application. 

The final chapter covers the relevant aspects of behavioral science to pricing. Examples include the asymmetry of joy/pain that customers feelin response to price decreases/increases. A set of best pricing practices are provided based on these behavioral responses. Finally, the appendices

Book Information

Print Length

266 pages

Language

English

Publisher

Routledge

Publication Date

March 10, 2014

Dimensions

6.85 x 0.6 x 9.69 inches

ISBN-10

0415898331

ISBN-13

978-0415898331