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Sahil Malhotra-2010195
Vivek Parekh-2010281
Rituparna Adak-2010182 Siddharth Mohpatra-2010274 Rohit Deshmukh-2010185
strategies To sell the right capacity to the right Customer at the right prices Implicit: notion of time-perishable capacity and segmentation of capacity
a fifth C, customer demand, in such a way as to maximize profitability. C - calender C - clock C - capacity C cost
Pricing
quadrant 1. After deregulation many airlines emerged Low cost strategy : Peoples express New computerised reservations system & variable pricing on flight by-flight basis:- Most of major carriers e.g. american airlines, united airlines etc Faliure of people express and most carriers shifting to quadrant 2
shifted to hub and spoke model It prevented airlines from managing predictability of their duration causing them to move towards 4th quadrant Problems:
Passenger obtain lower fare on one leg Empty seats on flight- lost revenue
management- variable pricing to hotels Relied on top down pricing Forte charged one rate and concentrated on length of stay Marriott forecasted by arrival day length of stay and room rate to able to determine best set reservation request.
of arrival Reduce the uncertainty of duration Reduce the time between customers
How long customer uses our service Measured either by TIME or by EVENT Better forecasting possible if measured by TIME rather
than by EVENT.
INTERNAL APPROACHES
Overbooking
Markovian decision process or simulation approaches Service level approaches or Critical fractile method(News-Vendor Model)
Displacement Strategies
Time of Arrival Frequency of use Perceived importance
service delivery
-Forecasting time of start and end of service usage -Rather than predict by flight leg they should predict for all
-Consistency of duration like TGI Friday External Approaches: -Penalties Hence Best approach is Internal Approach.
management
Quadrant based pricing for each airline Resentment from the customers for being charged
price mix. Optimal Pricing policies were designed by Taco Bell. It determines relatively a simple way of determining the price sensitivity and acceptable price range. Although not very popular.
same service. Quadrant 2 industries often use this type of pricing. Can be physical or non physical in nature. Physical rate fence include tangible features. Non-physical rate fences include rewarding customers. It also include cancellation or change facilities and benefits based on the prior reservations.
Case of Movie Theatres American Movie theatres did not have differential pricing. In Indian context, movie theatres had differential pricing on the basis of seat location Other variables can be used to efficiently distribute pricing, such as:
Show timings (as in the case of multiplexes)
Luxury services to certain class of customers
Case of golf courses Service consumption time is highly variable Need to control and shorten the service consumption time in order to maximize profitability Arrival uncertainty can be tackled by
Deposits or overbooking
Case of Health Care Industry Duration is different for each case Patients can be classified on the basis of their health Trying to control patient stay is a controversial case
Case of Internet Service Providers Fluctuating load on ISPs ISPs overbook the connection Heavy load during peak hours mean deteriorated service. Differential Pricing can be used by: Analyzing the peak hours Giving discounts or charging penalties
accordingly
Maximization of Revenue
Effective use of Strategic lever of pricing and
performance.