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Identification And Implementation Of Appropriate Revenue Management Systems
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The Basics of Revenue Management:
On the basis of operations research and other management science methodology, Revenue Management implements specific mathematical and statistical principles to generate information on the following:
• Anticipation of consumer needs and behavior in a dynamically varying market scenario
• Establishment of the best way to assign prices to inventories, such that the products and services are accessible to each and every consumer
• Dispatching this information to all the sales and distribution units that deal with customers in reality
How to Implement Revenue Management?
Although the application of Revenue Management seems easy, the implementation of the revenue management systems is quite difficult. There are various challenges associated with it. So what can be done to effectively apply the concepts of Revenue Management? The steps to employ the perfect system for Revenue Management are listed below:
Identification of the Befitting Method: The current practice of Revenue Management suggests the availability of vendor-related or in-house strategies that are very costly and time consuming. On the application of such a procedure, the people and processes associated with the business are affected in a bad manner. Therefore, before the execution of a particular Revenue Management plan, the organization should study to confirm whether the concerned methods effectively meet their requirements.
Reduction of the Execution Plan: The main goal of Revenue Management is to increase the profit margin of the company. So how can profit be maximized with a simplified plan of action? It can be accomplished in the following ways:
• Usage of Open Systems Platform: Companies must enforce the usage of Internet and Wireless Applications, Protocols and Platforms. Revenue Management software must be able to predict the total investment capacity depending on the available infrastructure. This will ensure lower execution costs and minimize failure and training costs.
• Flexibility of Framework: The Revenue Management software should be component oriented and must be accessible to all the existing databases and servers.
• Implementation of Plans: Though Revenue Management incorporates certain prediction and maximization models, the advantages of either cannot be achieved until all models are properly integrated. Businesses must avoid investing millions on ideas that take at least three years to yield results. Therefore initially only the important Revenue Management metrics must be implemented. In other words, stress must be laid on acquiring accurate data, involving consumers comfortable with such metrics and continuous modification to the prediction models until ample historical data can be assembled.
Pricing Strategy: Demand Forecasting and pricing strategies play an important role in proper application of Revenue Management. In the absence of appropriate demand forecasting, no optimization for resource provision can be accomplished. Companies must decide which prices should reach specific users using various channels.
Updated Revenue Management Database: Methods of data retrieval, transformation and subsequent storage must be automated, along with a frequent implementation of mathematical and statistical tools. Also for execution of operations and better productivity, simplified interfaces should be mandated.
Revenue Management must be undertaken by those business firms which not only want to stay, but to excel in their respective industries.
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