Revenue management, pricing and the consumer

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

Revenue Management (RM) emerged as a specific discipline in the mid-1980s. However,despite the fact that it has been seen as a set of techniques to influence customer demand and exploit theconsumer surplus, there has been a tendency for much of the research in the area to lack a consumer focus.What research there is tends to focus on three main areas, namely, the algorithm modelling of consumerbehaviour, consumer trust and fairness and consumer-centric marketing. The purpose of this article thereforeis to consolidate and synthesise existing consumer focused research in RM in these three key areas.
LanguageEnglish
JournalJournal of Revenue and Pricing Management
Volume0
Early online date8 Apr 2016
DOIs
Publication statusE-pub ahead of print - 8 Apr 2016

Fingerprint

Revenue management
Pricing
Consumer behaviour
Consumer research
Marketing
Consumer trust
Fairness
Surplus
Modeling

Keywords

  • revenue management
  • consumer behaviour modelling
  • trust
  • fairness
  • consumer-centric
  • marketing

Cite this

@article{ea110fcdc05144ea9975b24de8ce1c63,
title = "Revenue management, pricing and the consumer",
abstract = "Revenue Management (RM) emerged as a specific discipline in the mid-1980s. However,despite the fact that it has been seen as a set of techniques to influence customer demand and exploit theconsumer surplus, there has been a tendency for much of the research in the area to lack a consumer focus.What research there is tends to focus on three main areas, namely, the algorithm modelling of consumerbehaviour, consumer trust and fairness and consumer-centric marketing. The purpose of this article thereforeis to consolidate and synthesise existing consumer focused research in RM in these three key areas.",
keywords = "revenue management, consumer behaviour modelling, trust, fairness, consumer-centric, marketing",
author = "Una McMahon-Beattie and Mairead McEntee and Robert McKenna and Ian Yeoman and Lynsey Hollywood",
note = "Reference text: Anderson, C. and Carroll, B. (2007) Demand management: Beyond revenue management. Journal of Revenue and Pricing Management 6(4): 260–263.CrossRef Belobaba, P.B. (2002) Back to the future? Directions for revenue management. Journal of Revenue and Pricing Management 1(1): 87–89.CrossRef Chapuis, J.M. (2012) A cross-cultural analysis of passenger’s reactions to revenue and pricing management. Journal of Revenue and Pricing Management 12(1): 16–25.CrossRef Chen, C.-C. and Schwartz, Z. (2013) On revenue management and last minute booking dynamics. International Journal of Contemporary Hospitality Management 25(1): 7–22.CrossRef Choi, S. and Mattila, A.S. (2006) The role of disclosure in variable hotel pricing. Cornell Hotel and Restaurant Administration Quarterly 47(1): 27–35.CrossRef Currie, S.M. and Rowley, I.T. (2010) Consumer behaviour and sales forecast accuracy: What’s going on and how should revenue managers respond? Journal of Revue and Pricing Management 9(4): 374–376.CrossRef Dana, J.D. (2008) New directions in revenue management research. Production and Operations Management 17(4): 399–401.CrossRef Dickinson, C.B. (2001) ‘CRM – Enhanced revenue management in the hospitality industry. Hospitality Upgrade Summer: 136–138. Dwyer, F.R., Schurr, P.H. and Oh, S. (1987) Developing buyer-seller relationships. Journal of Marketing 51(April): 11–27.CrossRef Fiala, P. (2012) A framework for solving network revenue management problems with customer choice behaviour. Central European Journal of Operations Research 20: 383–392.CrossRef Freeland, L. (2007) Adoption of customer-centric cargo revenue management: Brief history of cargo revenue management vs passenger revenue management. Journal of Revenue and Pricing Management 6(4): 284–286.CrossRef Gallego, G., Iyengar, G., Phillips, R. and Dubey, A. (2004) Managing flexible products on a network. Technical Report TR-2004-01. New York: Department of Industrial engineering and Operations research, Columbia University. Grayson, K. and Ambler, T. (1999) The dark side of long-term relationships in marketing services. Journal of Marketing Research 36(1): 132–141.CrossRef Haddad, R.L. (2015) Exploration of revenue management practices – case of an upscale budget hotel chain. International Journal of Contemporary Hospitality Management 27(8): 1791–1813.CrossRef Hanif, M., Hafeez, S. and Riaz, A. (2010) Factors affecting customer satisfaction. International Research Journal of Finance and Economics 60: 44–51. Helm, S.V. (2013) How corporate reputation affects customers’ reactions to price increases. Journal of Revenue and Pricing Management 12(5): 402–415.CrossRef Huppertz, J.W., Arenson, S.J. and Evans, R.H. (1978) An application of equity theory to buyer-seller exchange situations. Journal of Marketing Research 15(May): 250–260.CrossRef Jain, D. and Singh, S.S. (2002) Customer lifetime value research in marketing: A review and future directions. Journal of Interactive Marketing 16(2): 34–46.CrossRef Jonas, D. (2001) Carriers melding revenue management and CRM systems. Business Travel News, 26 March, pp.18–19. Johnson, M., Gustafsson, A. and Roos, I. (2005) The effects of customer satisfaction relationship commitment dimensions, and triggers on customer retention. Journal of Marketing 69(4): 210–218.CrossRef Kahneman, D., Knetsch, J. and Thaler, R. (1986a) Fairness as a constraint on profit seeking: Entitlements in the market. American Economic Review 76(September): 728–741. Kahneman, D., Knetsch, J. and Thaler, R. (1986b) Fairness and the assumptions of economics. Journal of Business 59(4): 285–300.CrossRef Kimes, S.E. (1989) Yield management: A tool for capacity constrained service firms. Journal of Operations Management 8(4): 348–363.CrossRef Kimes, S.E. and Wirtz, J. (2002) Perceived fairness of demand-based pricing for restaurant. Cornell Hotel and Restaurant Administration Quarterly 43(1): 31–37.CrossRef Kimes, S.E. and Wirtz, J. (2003) Has revenue management become acceptable? Journal of Service Research 6(2): 125–135. Kunnumkal, S. (2014) Randomization approaches for network revenue management with customer choice behaviour. Production and 0perations Management 23(9): 1617–1633.CrossRef Kunnumkal, S. and Topaloglu, H. (2010) computing time-dependent bid prices in network revenue management problems. Transportation Science 44(1): 38–62.CrossRef Lieberman, W.H. (1993) Debunking the myths of yield management. Cornell Hotel & Restaurant Administration Quarterly 36(1): 34–41.CrossRef Lieberman, W.H. (2002) Revenue management: What lies ahead? Debunking the myths of yield management. Journal of Revenue and Pricing Management 1(2): 189–195.CrossRef Liu, Q. and van Ryzin, G. (2008) On the choice-based linear programming model for network revenue management. Manufacturing and Service Operations Management 10(2): 288–310.CrossRef Martin-Consuegra, D., Molina, A. and Esteban, A. (2007) An integrated model of price, satisfaction and loyalty: An empirical analysis in the service sector. Journal of Product and Brand Management 16(7): 459–468.CrossRef Martinez, M.E.A., Borja, M.A.G., Jimenez, J.A.M. and Trinquecoste, J.-F. (2011) Yield management and consumer price perception on the internet. African Journal of Business Management 5(23): 9779–9786. Mathies, C. and Gudergan, S. (2007) Revenue management and customer centric marketing – How do they influence travellers’ choices? Journal of Revenue and Pricing Management 6(4): 331–346.CrossRef Mathies, C., Gudergan, S. and Wang, P.Z. (2013) The effects of customer-centric marketing and revenue management on travelers’ choices. Journal of Revenue and Pricing Management 52(4): 479–493. Mauri, A.G. (2007) Yield management and perceptions of fairness in the hotel business. International Review of Economics 54(2): 284–293.CrossRef McGill, J. and van Ryzin, G. (1999) Revenue management: Research overview and prospects. Transportation Science 33(2): 233–256.CrossRef McMahon-Beattie, U. (2011) Trust, fairness and justice in revenue management: Creating value for the consumer. Journal of Revenue and Pricing Management 10(1): 44–46.CrossRef McMahon-Beattie, U., Yeoman, I. and Mudie, P. (2002) Customer perceptions of pricing and the maintenance of trust. Journal of Revenue and Pricing Management 1(1): 25–34.CrossRef Meissner, J. and Strauss, A.K. (2012) Network revenue management with inventory sensitive bid prices and customer choice. European Journal of Operational Research 216(2): 459–468.CrossRef Meissner, J., Strauss, A.K. and Talluri, K. (2013) An enhances concave programme relaxation for choice network revenue management. Production and Operations Management 22(1): 71–87.CrossRef Milla, S. and Shoemaker, S. (2008) Three decades of revenue management: What’s next? Journal of Revenue and Pricing Management 7(1): 110–114.CrossRef Ng, I.C.L., Maull, R. and Godsiff, P. (2007) An integrated approach towards revenue management. Journal of Revenue and Pricing Management 7(2): 185–195.CrossRef Noone, B. and McGuire, K. (2013) Pricing in a social world: The influence of non-price information on hotel choice. Journal of Revenue and Pricing Management 12(5): 385–401.CrossRef Oliver, R.L. and Swan, J.E. (1989) Consumer perceptions of interpersonal equity and satisfaction in transactions: A field survey approach. Journal of Marketing 53(April): 21–35.CrossRef Ovchinnikov, A. and Milner, J.M. (2012) Revenue management with end-of-period discounts in the presence of customer learning. Production and Operations Management 21(1): 69–84.CrossRef Palmer, A. and McMahon-Beattie, U. (2008) Variable pricing through revenue management: A critical evaluation of effective outcomes. Management Research News 31(3): 189–199.CrossRef Pinchuk, S. (2009) Changing revenue management and marketing using a new customer life cycle system. Journal of Revenue and Pricing Management 8(1): 109–111.CrossRef Paas, L. and Kuijlen, T. (2001) ‘Towards a general definition of customer relationship management. Journal of Database Marketing 9(1): 51–60. Parvatiyar, A. and Sheth, J.N. (2001) Customer relationship management: Emerging practice, process, and discipline. Journal of Economic and Social Research 3(2): 1–34. Reinartz, W.J., Krafft, M. and Hoyer, W.D. (2004) The customer relationship management process: Its measurement and impact on performance. Journal of Marketing Research 41(3): 293–305.CrossRef Simpson, R.W. (1989) Using network flow techniques to find shadow prices for market and seat inventory control. Proceedings of technical report memorandum, M89-1. Flight Transportation Laboratory, MIT, Cambridge. Sharif Azadeh, S., Hosseinalifam, M. and Davard, G. (2015) The impact of customer behaviour modules on revenue management systems. Computational Management Science 12(1): 99–109.CrossRef Talluri, K.T. and van Ryzin, G.J. (2004) Revenue management under a general discrete choice model of consumer behaviour. Management Science 50(1): 15–33.CrossRef Taylor, W. and Kimes, S.E. (2011) The effect of brand class on perceived fairness of revenue management. Journal of Revenue and Pricing Management 10(3): 271–284.CrossRef Wang, X.L. and Bowie, D. (2009) Revenue management: The impact on business-to-business relationships. Journal of Services Marketing 23(1): 31–41.CrossRef Wirtz, J.L. and Kimes, S.E. (2007) The moderating role of familiarity in fairness perceptions of revenue management pricing. Journal of Service Research 9(3): 229–240.CrossRef Wirtz, J.L., Kimes, S.E., Ho, J.P.T. and Patterson, P. (2003) Revenue management: Resolving potential customer conflicts. Journal of Revenue and Pricing Management 2(3): 216–226.CrossRef Yeoman, I. (2013) The importance of consumer behaviour. Journal of Revenue and Pricing Management 12(5): 383–284.CrossRef Zablah, A.R., Bellenger, D.N. and Johnston, W.J. (2004) An evaluation of divergent perspective on customer relationship management: Towards a common understanding of an emerging phenomenon. Industrial Marketing Management 33(6): 475–489.CrossRef Zhang, D. (2011) An improved dynamic programming decomposition approach for network revenue management. Manufacturing and Service Operations Management 13(1): 35–52.CrossRef",
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T1 - Revenue management, pricing and the consumer

AU - McMahon-Beattie, Una

AU - McEntee, Mairead

AU - McKenna, Robert

AU - Yeoman, Ian

AU - Hollywood, Lynsey

N1 - Reference text: Anderson, C. and Carroll, B. (2007) Demand management: Beyond revenue management. Journal of Revenue and Pricing Management 6(4): 260–263.CrossRef Belobaba, P.B. (2002) Back to the future? Directions for revenue management. Journal of Revenue and Pricing Management 1(1): 87–89.CrossRef Chapuis, J.M. (2012) A cross-cultural analysis of passenger’s reactions to revenue and pricing management. Journal of Revenue and Pricing Management 12(1): 16–25.CrossRef Chen, C.-C. and Schwartz, Z. (2013) On revenue management and last minute booking dynamics. International Journal of Contemporary Hospitality Management 25(1): 7–22.CrossRef Choi, S. and Mattila, A.S. (2006) The role of disclosure in variable hotel pricing. Cornell Hotel and Restaurant Administration Quarterly 47(1): 27–35.CrossRef Currie, S.M. and Rowley, I.T. (2010) Consumer behaviour and sales forecast accuracy: What’s going on and how should revenue managers respond? Journal of Revue and Pricing Management 9(4): 374–376.CrossRef Dana, J.D. (2008) New directions in revenue management research. Production and Operations Management 17(4): 399–401.CrossRef Dickinson, C.B. (2001) ‘CRM – Enhanced revenue management in the hospitality industry. Hospitality Upgrade Summer: 136–138. Dwyer, F.R., Schurr, P.H. and Oh, S. (1987) Developing buyer-seller relationships. Journal of Marketing 51(April): 11–27.CrossRef Fiala, P. (2012) A framework for solving network revenue management problems with customer choice behaviour. Central European Journal of Operations Research 20: 383–392.CrossRef Freeland, L. (2007) Adoption of customer-centric cargo revenue management: Brief history of cargo revenue management vs passenger revenue management. Journal of Revenue and Pricing Management 6(4): 284–286.CrossRef Gallego, G., Iyengar, G., Phillips, R. and Dubey, A. (2004) Managing flexible products on a network. Technical Report TR-2004-01. New York: Department of Industrial engineering and Operations research, Columbia University. Grayson, K. and Ambler, T. (1999) The dark side of long-term relationships in marketing services. Journal of Marketing Research 36(1): 132–141.CrossRef Haddad, R.L. (2015) Exploration of revenue management practices – case of an upscale budget hotel chain. International Journal of Contemporary Hospitality Management 27(8): 1791–1813.CrossRef Hanif, M., Hafeez, S. and Riaz, A. (2010) Factors affecting customer satisfaction. International Research Journal of Finance and Economics 60: 44–51. Helm, S.V. (2013) How corporate reputation affects customers’ reactions to price increases. Journal of Revenue and Pricing Management 12(5): 402–415.CrossRef Huppertz, J.W., Arenson, S.J. and Evans, R.H. (1978) An application of equity theory to buyer-seller exchange situations. Journal of Marketing Research 15(May): 250–260.CrossRef Jain, D. and Singh, S.S. (2002) Customer lifetime value research in marketing: A review and future directions. Journal of Interactive Marketing 16(2): 34–46.CrossRef Jonas, D. (2001) Carriers melding revenue management and CRM systems. Business Travel News, 26 March, pp.18–19. Johnson, M., Gustafsson, A. and Roos, I. (2005) The effects of customer satisfaction relationship commitment dimensions, and triggers on customer retention. Journal of Marketing 69(4): 210–218.CrossRef Kahneman, D., Knetsch, J. and Thaler, R. (1986a) Fairness as a constraint on profit seeking: Entitlements in the market. American Economic Review 76(September): 728–741. Kahneman, D., Knetsch, J. and Thaler, R. (1986b) Fairness and the assumptions of economics. Journal of Business 59(4): 285–300.CrossRef Kimes, S.E. (1989) Yield management: A tool for capacity constrained service firms. Journal of Operations Management 8(4): 348–363.CrossRef Kimes, S.E. and Wirtz, J. (2002) Perceived fairness of demand-based pricing for restaurant. Cornell Hotel and Restaurant Administration Quarterly 43(1): 31–37.CrossRef Kimes, S.E. and Wirtz, J. (2003) Has revenue management become acceptable? Journal of Service Research 6(2): 125–135. Kunnumkal, S. (2014) Randomization approaches for network revenue management with customer choice behaviour. Production and 0perations Management 23(9): 1617–1633.CrossRef Kunnumkal, S. and Topaloglu, H. (2010) computing time-dependent bid prices in network revenue management problems. Transportation Science 44(1): 38–62.CrossRef Lieberman, W.H. (1993) Debunking the myths of yield management. Cornell Hotel & Restaurant Administration Quarterly 36(1): 34–41.CrossRef Lieberman, W.H. (2002) Revenue management: What lies ahead? Debunking the myths of yield management. Journal of Revenue and Pricing Management 1(2): 189–195.CrossRef Liu, Q. and van Ryzin, G. (2008) On the choice-based linear programming model for network revenue management. Manufacturing and Service Operations Management 10(2): 288–310.CrossRef Martin-Consuegra, D., Molina, A. and Esteban, A. (2007) An integrated model of price, satisfaction and loyalty: An empirical analysis in the service sector. Journal of Product and Brand Management 16(7): 459–468.CrossRef Martinez, M.E.A., Borja, M.A.G., Jimenez, J.A.M. and Trinquecoste, J.-F. (2011) Yield management and consumer price perception on the internet. African Journal of Business Management 5(23): 9779–9786. Mathies, C. and Gudergan, S. (2007) Revenue management and customer centric marketing – How do they influence travellers’ choices? Journal of Revenue and Pricing Management 6(4): 331–346.CrossRef Mathies, C., Gudergan, S. and Wang, P.Z. (2013) The effects of customer-centric marketing and revenue management on travelers’ choices. Journal of Revenue and Pricing Management 52(4): 479–493. Mauri, A.G. (2007) Yield management and perceptions of fairness in the hotel business. International Review of Economics 54(2): 284–293.CrossRef McGill, J. and van Ryzin, G. (1999) Revenue management: Research overview and prospects. Transportation Science 33(2): 233–256.CrossRef McMahon-Beattie, U. (2011) Trust, fairness and justice in revenue management: Creating value for the consumer. Journal of Revenue and Pricing Management 10(1): 44–46.CrossRef McMahon-Beattie, U., Yeoman, I. and Mudie, P. (2002) Customer perceptions of pricing and the maintenance of trust. Journal of Revenue and Pricing Management 1(1): 25–34.CrossRef Meissner, J. and Strauss, A.K. (2012) Network revenue management with inventory sensitive bid prices and customer choice. European Journal of Operational Research 216(2): 459–468.CrossRef Meissner, J., Strauss, A.K. and Talluri, K. (2013) An enhances concave programme relaxation for choice network revenue management. Production and Operations Management 22(1): 71–87.CrossRef Milla, S. and Shoemaker, S. (2008) Three decades of revenue management: What’s next? Journal of Revenue and Pricing Management 7(1): 110–114.CrossRef Ng, I.C.L., Maull, R. and Godsiff, P. (2007) An integrated approach towards revenue management. Journal of Revenue and Pricing Management 7(2): 185–195.CrossRef Noone, B. and McGuire, K. (2013) Pricing in a social world: The influence of non-price information on hotel choice. Journal of Revenue and Pricing Management 12(5): 385–401.CrossRef Oliver, R.L. and Swan, J.E. (1989) Consumer perceptions of interpersonal equity and satisfaction in transactions: A field survey approach. Journal of Marketing 53(April): 21–35.CrossRef Ovchinnikov, A. and Milner, J.M. (2012) Revenue management with end-of-period discounts in the presence of customer learning. Production and Operations Management 21(1): 69–84.CrossRef Palmer, A. and McMahon-Beattie, U. (2008) Variable pricing through revenue management: A critical evaluation of effective outcomes. Management Research News 31(3): 189–199.CrossRef Pinchuk, S. (2009) Changing revenue management and marketing using a new customer life cycle system. Journal of Revenue and Pricing Management 8(1): 109–111.CrossRef Paas, L. and Kuijlen, T. (2001) ‘Towards a general definition of customer relationship management. Journal of Database Marketing 9(1): 51–60. Parvatiyar, A. and Sheth, J.N. (2001) Customer relationship management: Emerging practice, process, and discipline. Journal of Economic and Social Research 3(2): 1–34. Reinartz, W.J., Krafft, M. and Hoyer, W.D. (2004) The customer relationship management process: Its measurement and impact on performance. Journal of Marketing Research 41(3): 293–305.CrossRef Simpson, R.W. (1989) Using network flow techniques to find shadow prices for market and seat inventory control. Proceedings of technical report memorandum, M89-1. Flight Transportation Laboratory, MIT, Cambridge. Sharif Azadeh, S., Hosseinalifam, M. and Davard, G. (2015) The impact of customer behaviour modules on revenue management systems. Computational Management Science 12(1): 99–109.CrossRef Talluri, K.T. and van Ryzin, G.J. (2004) Revenue management under a general discrete choice model of consumer behaviour. Management Science 50(1): 15–33.CrossRef Taylor, W. and Kimes, S.E. (2011) The effect of brand class on perceived fairness of revenue management. Journal of Revenue and Pricing Management 10(3): 271–284.CrossRef Wang, X.L. and Bowie, D. (2009) Revenue management: The impact on business-to-business relationships. Journal of Services Marketing 23(1): 31–41.CrossRef Wirtz, J.L. and Kimes, S.E. (2007) The moderating role of familiarity in fairness perceptions of revenue management pricing. Journal of Service Research 9(3): 229–240.CrossRef Wirtz, J.L., Kimes, S.E., Ho, J.P.T. and Patterson, P. (2003) Revenue management: Resolving potential customer conflicts. Journal of Revenue and Pricing Management 2(3): 216–226.CrossRef Yeoman, I. (2013) The importance of consumer behaviour. Journal of Revenue and Pricing Management 12(5): 383–284.CrossRef Zablah, A.R., Bellenger, D.N. and Johnston, W.J. (2004) An evaluation of divergent perspective on customer relationship management: Towards a common understanding of an emerging phenomenon. Industrial Marketing Management 33(6): 475–489.CrossRef Zhang, D. (2011) An improved dynamic programming decomposition approach for network revenue management. Manufacturing and Service Operations Management 13(1): 35–52.CrossRef

PY - 2016/4/8

Y1 - 2016/4/8

N2 - Revenue Management (RM) emerged as a specific discipline in the mid-1980s. However,despite the fact that it has been seen as a set of techniques to influence customer demand and exploit theconsumer surplus, there has been a tendency for much of the research in the area to lack a consumer focus.What research there is tends to focus on three main areas, namely, the algorithm modelling of consumerbehaviour, consumer trust and fairness and consumer-centric marketing. The purpose of this article thereforeis to consolidate and synthesise existing consumer focused research in RM in these three key areas.

AB - Revenue Management (RM) emerged as a specific discipline in the mid-1980s. However,despite the fact that it has been seen as a set of techniques to influence customer demand and exploit theconsumer surplus, there has been a tendency for much of the research in the area to lack a consumer focus.What research there is tends to focus on three main areas, namely, the algorithm modelling of consumerbehaviour, consumer trust and fairness and consumer-centric marketing. The purpose of this article thereforeis to consolidate and synthesise existing consumer focused research in RM in these three key areas.

KW - revenue management

KW - consumer behaviour modelling

KW - trust

KW - fairness

KW - consumer-centric

KW - marketing

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DO - 10.1057/rpm.2016.17

M3 - Article

VL - 0

JO - Journal of Revenue and Pricing Management

T2 - Journal of Revenue and Pricing Management

JF - Journal of Revenue and Pricing Management

SN - 1476-6930

ER -