What is Yield Management? - Definition, Concept & Examples

Yield management is when a company prices their products or services to make the most money by offering the right price at the best time. forTeachers forSchools forWorkingScholars® forCollegeCredit Login SignUp Menu forWorkingScholars® forCollegeCredit Plans Plans Courses Courses FindCoursesbySubject Science Math Business Psychology History English SocialScience Humanities Spanish ProfessionalDevelopment ByEducationLevel College HighSchool MiddleSchool TestPrep PopularTests… PopularTests SAT ACT TOEFL GMAT GRE CLEP GED ASVAB RealEstate TeacherCertification… TeacherCertification AEPA CEOE CSET/CBEST FTCE GACE ILTS MTEL MTLE MTTC MoGEA/MEGA NES NYSTCE OAE Praxis RICA TExES VCLA WEST Nursing… NursingTests HESI TEAS NCLEX PAXRN CNE OtherTests… OtherTests AP ASCP ASWB Accuplacer CHSPE CTEL DSST Finance FSA HSPT ISEE MBLEx NCE PERT PHR SHSAT TASC TECEP UExcel Exploreover 4,600 videocourses BrowseAllCourses SAT ACT TOEFL GMAT GRE CLEP GED ASVAB RealEstate AEPA CEOE CSET/CBEST FTCE GACE ILTS MTEL MTLE MTTC MoGEA/MEGA NES NYSTCE OAE Praxis RICA TExES VCLA WEST HESI TEAS NCLEX PAXRN CNE AP ASCP ASWB Accuplacer CHSPE CTEL DSST Finance FSA HSPT ISEE MBLEx NCE PERT PHR SHSAT TASC TECEP UExcel Credit Credit CreditOptions CreditOptions OnlineCollegeCredit HighSchool&GED CertificatesofCompletion HowitWorks TransferCredit TransferCredit AllTransferCredit FindYourSchool CollegeCoursesforCredit TransferringCredit HowItWorks EarnTransferableCredit&GetyourDegreefast Learnmore ContactSupport LessonTranscript Instructor: BethHendricks Showbio Bethholdsamaster'sdegreeinintegratedmarketingcommunications,andhasworkedinjournalismandmarketingthroughouthercareer. Yieldmanagementisavariablepricingstrategybasedonanticipatingandinfluencingconsumerbehavior.Thegoalistomaximizerevenuefromafixed,time-limitedresourcesuchasairlineseats,hotelroomreservations,oradvertisinginventory. Createanaccount WhatIsYieldManagement?Hasthiseverhappenedtoyou?You'recruisingaroundarentalwebsitelookingforacartorentforanupcomingtrip.Yourtripisaboutamonthawayandpricesareprettylow.Satisfiedwithwhatyou'vefound,younavigateoffthewebsiteanddon'treturnuntiltheweekbeforeyourtrip.Butnowthosecheappricesyoufoundamonthagoarethreetimeswhattheywerewhenyoufirstchecked!Youpulloutyourcreditcardandbookquicklytoavoidanyadditionalpriceincreases.You'veprobablyseenitwhenlookingforairfareorbookingahotelroomintheheightofprimetouristseason:pricesthatappeartojump,virtuallyovernight.Thesamehotelroomthatis$89inAprilsuddenlybecomes$189inJune.Anairlineticketyoulookedatweeksagofor$300round-tripisnow$800.Whatgives?What'shappenedhereexactly?Thisissimplyapricingstrategyknownasyieldmanagement.Yieldmanagementiswhenacompanypricestheirproductsorservicestomakethemostmoneybyofferingtherightpriceatthebesttime.It'sacommontacticusedinthehospitalityindustry.Considertheseexamples: Ahotellocatednexttoastadiumwhereabigconcertisscheduledchargesmoreforitsroomstheweekendoftheconcertthantheweekendbeforeorafter. Arestaurantthatisn'tasbusyonTuesdayeveningsoffersspecialpromotionsjustonthatdaytogetmoredinersintheestablishment. Anairlinethatfliesdirectyear-roundtomanysunnyspotsinFloridachargesapremiumforflightsinthesummermonths,butoffersreducedratesinthewinter. Anerroroccurredtryingtoloadthisvideo. Tryrefreshingthepage,orcontactcustomersupport. YoumustcCreateanaccounttocontinue watching Registertoviewthislesson Areyouastudentorateacher? Iamastudent Iamateacher CreateYourAccountToContinueWatching Asamember,you'llalsogetunlimitedaccesstoover84,000 lessonsinmath,English,science,history,andmore.Plus,getpracticetests,quizzes,andpersonalizedcoachingtohelpyou succeed. Getunlimitedaccesstoover84,000lessons. Tryitnow Itonlytakesafewminutestosetupandyoucancancelanytime. Alreadyregistered?Loginherefor access  Back WhatteachersaresayingaboutStudy.com Tryitnow Alreadyregistered? Loginhereforaccess Comingupnext: WhatistheAIDAModelinMarketing?-Examples&Concept You'reonaroll.Keepupthegoodwork! TakeQuiz Watch NextLesson  Replay Justcheckingin.Areyoustillwatching? Yes!Keepplaying. Yournextlessonwillplayin 10seconds 0:03WhatIsYieldManagement? 1:36WhyBusinessesUse… 2:47YieldManagementinPractice 3:38LessonSummary Save Save Save Wanttowatchthisagainlater? LoginorsignuptoaddthislessontoaCustomCourse. LoginorSignup Timeline Autoplay Autoplay Speed Speed 32Kviews Video Quiz Course 32K views WhyBusinessesUseYieldManagementYoucanseefromsomeofourexamplesthereasonsthatbusinessesmodifytheirpricingstrategyusingyieldmanagement.It'sbasedontheideaofsupplyanddemand:thegreaterthedemandforahotelroomorairlineticket,thehighertheprice.Ifyou'relookingforahotelroominNewOrleansduringMardiGras,rateswillbehigher.Ontheflipside,ifyou'reupforabeachvacationinFebruary,rateswillgenerallybelower(sinceit'snotpeakweatherseason).Businessesthatdon'tengageinyieldmanagementstrategiesmaybemissingoutontheopportunitytocreatemorerevenue.Amongthemostcommontypesofyieldmanagementstrategiesarethosebasedon: Amenities:Factorssuchasroomamenitiesandsizecanhaveanimpactonwhatthey'rewillingtopay.Aguestislikelytobewillingtopaymoreforanoceanfrontviewthanastreetview.Similarly,someonepreparingtoflymayagreetopaymorefortheperksofafirst-classticketthananeconomyone. Seasonal:Seasonalratesareverycommoninresortareas,whereratesforhotelswillsoarinthesummermonthsbutdipwhencolderweatherhits.Otherfactorsmaybeinfluentialaswell,suchasahotellocatednearasportscomplexwhenthehometeamisplayingintown. YieldManagementinPracticeFluctuatingpricingstrategiesinyieldmanagementcanbeseenacrossmanyindustries.Hereareafewthatyoumayrecognize: Ridesharing:companieslikeUberandLyfthavebeenknowntoincreasetheirpricesfortravelersonnightsofbusyactivityinaparticulartown.Ifapopularcountrymusicianisperforminginyourhometown,expecttopayapremiumpriceforscoringarideto(andfrom)theshow. Restaurants:thedealsyou'llcatchinthatrestaurantonaMondayafternoonbetween4and6p.m.willprobablyneverbeavailableduringtheweekenddinnerrushonFridayandSaturdaynights. Airlines,hotelsandrentalcars:Needalast-minuteflight?Bepreparedtopayaprettypenny.Willingtotakeyourbeachvacationinoff-peakmonths?You'llprobablysaveafewbucks.Wantaking-sizedbedasopposedtotwofull-sizedones?Expecttopayslightlymoreforbetteraccommodations. LessonSummaryLet'stakeacouplemomentstoreviewwhatwe'velearnedaboutyieldmanagement'sconceptanddefinition.Yieldmanagementisapricingstrategyfocusedonmaximizingrevenuesbasedonsupplyanddemand.Whendemandisup,sotooaretheprices.Whendemandisdown,pricesgodowntoattractmorecustomers.Thisappliestohotelsnearpopularevents,restaurantswithslowtimesordays,orairlinesraisingpricesduringpeakmonths.Thispricingstrategyisusedquiteofteninthehospitalityindustryandistypicallybasedonamenities,suchasanoceanfrontviewversusastreetview,orseasonalchanges,suchaspeaksummermonthsversusslowwintermonths. TounlockthislessonyoumustbeaStudy.comMember. Createyouraccount Practice: WhatisYieldManagement?-Definition,Concept&ExamplesQuiz Instructions:Chooseananswerandclick'Next'.Youwillreceiveyourscoreandanswersattheend. 1/5completed Yieldmanagementstrategiestypicallyrevolvearoundwhichtwocategories: Fluctuationsandincreases Expensiveandinexpensiveitems Amenitiesandseasonalattractions Hotelsandresorts Next CreateYourAccountToTakeThisQuiz Asamember,you'llalsogetunlimitedaccesstoover84,000lessonsinmath, English,science,history,andmore.Plus,getpracticetests,quizzes,andpersonalizedcoachingtohelpyousucceed. Tryitnow Itonlytakesafewminutestosetupandyoucancancelanytime. Alreadyregistered? Loginhereforaccess Registertoviewthislesson Areyouastudentorateacher? Iamastudent Iamateacher UnlockYourEducation Seeforyourselfwhy30millionpeopleuseStudy.com BecomeaStudy.commemberandstartlearningnow. BecomeaMember Alreadyamember?LogIn  Back WhatteachersaresayingaboutStudy.com Tryitnow Alreadyregistered? Loginhereforaccess Createanaccount WhatisYieldManagement?-Definition,Concept&Examples Starttoday.Tryitnow Business / MarketingOverview:Help&Review MarketingOverview:Help&Review 26chapters| 200lessons {{courseNav.course.topics.length}}chapters| {{courseNav.course.mDynamicIntFields.lessonCount}}lessons |{{course.flashcardSetCount}} flashcardset{{course.flashcardSetCoun>1?'s':''}} Ch1. AdvertisingBasics Goto AdvertisingBasics Ch2. BasicsofContentStrategy Goto BasicsofContentStrategy Ch3. BasicsofDigitalMarketing Goto BasicsofDigitalMarketing Ch4. BasicsofMobileAdvertising Goto BasicsofMobileAdvertising Ch5. BasicsofRuralMarketing Goto BasicsofRuralMarketing Ch6. BasicsofSellingforMarketing Goto BasicsofSellingforMarketing Ch7. BasicsofShopperMarketing Goto BasicsofShopperMarketing Ch8. BasicsofSocialMediaMarketing Goto BasicsofSocialMediaMarketing Ch9. BasicsofVisualMarketing Goto BasicsofVisualMarketing Ch10. BasicsofYieldManagement WhatisYieldManagement?-Definition,Concept&Examples 4:20 Goto BasicsofYieldManagement Ch11. ConceptsinMarketing Goto ConceptsinMarketing Ch12. IntrotoAffiliateMarketing Goto IntrotoAffiliateMarketing Ch13. IntrotoB2G,B2BandC2B... Goto IntrotoB2G,B2BandC2BMarketing Ch14. IntrotoGreenMarketing Goto IntrotoGreenMarketing Ch15. IntrotoInboundMarketing Goto IntrotoInboundMarketing Ch16. IntrotoMarketingStrategies Goto IntrotoMarketingStrategies Ch17. IntrotoRelationshipMarketing Goto IntrotoRelationshipMarketing Ch18. OverviewofEmailMarketing Goto OverviewofEmailMarketing Ch19. OverviewofOnlineAdvertising Goto OverviewofOnlineAdvertising Ch20. TypesofMarketingOverview Goto TypesofMarketingOverview Ch21. BasicsofMarketingResearch Goto BasicsofMarketingResearch Ch22. Interviewing&SurveyinginMarketing... Goto Interviewing&SurveyinginMarketingResearch Ch23. DataCollectionforMarketing... Goto DataCollectionforMarketingResearch Ch24. MarketingResearchDataAnalysis Goto MarketingResearchDataAnalysis Ch25. CreatingaMarketingResearch... Goto CreatingaMarketingResearchReport Ch26. BehavioralEconomics&... 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Definetheterm"sustainedyield"anduseitinasentencetodemonstratehowitappliestoecology. Defineayieldmanagementsystem.Howisitusedinanindustry? Whichofthefollowingisnotoneofthekeystepsinayieldmanagementprocess?a.Dividetheconsumersintomarketsegments.b.Establishrestrictionstoseparatecustomersegmentsbycategoryofservice.c.Setapriceforeachcategoryofservice.d. Peakloadpricingforasellerwithacapacityconstraintandconstantmarginalcostuptocapacitytypicallyrequires:a.ensuringthatmarginalrevenueisequalforthepeakandnon-peakperiods.b.settingthepriceinthepeakperiodsuchthatconsume Explainhowayieldcurvewouldshiftinresponsetoasuddenexpectationofrisinginterestrates,accordingtothepureexpectationstheory. Forthesakeofillustration,considerasituationwhereRestLifeholdsa$120MMfacevaluepositionwithanIRDV01of73,828.09andSPRDDV01of95,908.09.WhatpositioninanIRSandaCDSshouldbeheldiftheIRDV01andSPRDDV01of$10MMnotional AccordingtoarecentconversationwithsomeoneIknowatSNCF(Frenchtrainoperator),thetraincompanyhastomakeacertainnumberoflowerpricedticketsavailableonallitsservices,regardlessofdemandlevel.Discusstheimplicationsofthisrequ Createanaccounttostartthiscoursetoday Usedbyover30millionstudentsworldwide Createanaccount Likethislesson Share Exploreourlibraryofover84,000 lessons Search Browse Browsebysubject CollegeCourses Business English ForeignLanguage History Humanities Math Science SocialScience SeeAllCollegeCourses HighSchoolCourses AP CommonCore GED HighSchool SeeAllHighSchoolCourses OtherCourses College&CareerGuidanceCourses CollegePlacementExams EntranceExams GeneralTestPrep K-8Courses SkillsCourses TeacherCertificationExams SeeAllOtherCourses Upgradetoenroll × Enrollinginacourseletsyouearnprogressbypassingquizzesandexams. 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