Reconciling operational efficiency with human perceptions - A study of Revenue Management Practices

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Abstract

Revenue management is widely practiced in services where fixed costs are high relative to variable costs, allowing discriminatory prices to appeal to buyers with differing levels of price elasticity. Numerous studies have demonstrated short-term economic benefits in terms of financial returns from each unit of capacity. However, price discrimination which is implicit in Revenue Management systems may undermine trust in an organisation, when buyers perceive that they have been treated less fairly than other buyers. Trust is at the heart of Relationship Marketing strategies, therefore there would appear to be a potential conflict between the aims of Relationship Marketing and Revenue Management. This paper reports on a study into the effects of variable pricing on consumers’ trust in a brand. A pilot scenario-based longitudinal study of restaurant customers indicated differences in trust levels between respondents who had received messages containing constant prices compared with those who received variable prices. The initial scenario based study was followed by an ongoing longitudinal study involving 2273 customers on a hotel chain’s database, who were divided into a test group (variable prices for a specified product offer) and a control group (constant prices).
Original languageEnglish
Title of host publicationUnknown Host Publication
PublisherAix Marseille Université
Number of pages0
Publication statusPublished - 2006
EventInternational research seminar in Service Management Conference, La Londe - France
Duration: 1 Jan 2006 → …

Conference

ConferenceInternational research seminar in Service Management Conference, La Londe
Period1/01/06 → …

Bibliographical note

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