 Introduction |
Why are customers willing to pay more than the next customer
for different products and services? Why do hairdressers
charge customers a premium price on a Saturday and offer
discount on a Wednesday afternoon? When you were on holiday
last summer, why does your neighbour always get a better
deal than you?
Service industries (Schmenner 1997) differ in characteristic
from manufacturing industries in terms of:
- Service is a moment in time, a holiday, a journey, a
stay in a hotel.
- Consumption and production of that unit
of time is generally simultaneous and inseparable.
- The
service experience is intangible.
These services operate along a range of spectrums from
low to high perishability, low to high simultaneity,
low to high
intangibility and low to high customer intimacy.
Service organisations operate in a range of markets that
compose
a vast array of elements to differing degrees. Therefore
finding the optimum price for a service at a specific
time period is a challenge for the Operational Research
community. The Revenue Management problem within Operational Research
involves matching a probabilistic demand to a set of finite
resources in such a manner which will optimise profits (Cross
1997a). In the service sectors of transport, tourism and
hospitality, the term Yield Management or Revenue Management
has been used to find that answer.
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