Revenue Management of the Professional Firms

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Table of Contents

Introduction
Revenue Management
Applying Revenue Management
Conclusion
Reference List

Introduction

As discussed by Lovelock and Wirtz (2011), revenue management is a complex structure of supply-demand variables management in a business environment. The authors note that service businesses have “become adept at varying their prices in response to the price sensitivity of various market segments at various times of day, week or season” (Lovelock & Wirtz 2011, p. 34). Thus, this analytical treatise attempts to explicitly discuss how revenue management might be applied to professional firms such as a consultancy business, a restaurant, and a golf course. Besides, the treatise explores the rate fences for each business and the rationale for selecting each rate fence.

Revenue Management

In the past few decades, deregulation of many service sectors across the globe has created the need to integrate an important coordination that is capable of revenue management in line with the market demand. Basically, revenue management has become a solution for systematic management of catalogues, outlays, and competence for services. There, revenue management is “the art and science of price driven profit maximization” (Kowalkowski, Kindstrom, & Brehmer 2011, p. 185).

Applying Revenue Management

Restaurant environment

Revenue management in the restaurant environment may be applied in managing duration of meals, capacity utilization, categories of customers, price elasticity, and cheque size expansion. Basically, these processes determine the level of profits since efficiency in each of them may translate into overall performance improvement (Kowalkowski, Kindstrom, & Brehmer 2011, p. 185). Revenue management comes in handy in managing internal channels through which these segments may be integrated in the profit maximization strategy (Frow, Ngo, & Payne 2014).

In order to successfully implement revenue management in the above segments, it is imperative to integrate rate fences such as physical rate fence (amenities and table location) and non physical rate fences (happy hours and fairness). Under the physical fences, the management of a restaurant might introduce luxury charges and special tables to a group of customers. This will go a long way in customer stratification for increased profits (Anderson & Narus 1995).

Under the non-physical rate fences, the restaurant might introduce special time referred to as the happy hour. During this time, the restaurant is in a position to cleverly present price differences. For instance, the lunch prices may be discounted by 20% while dinner prices increased by 20%. Although such a situation indicates perfect economical equivalent, the customers might actually believe that the ‘reduced’ prices are ideal. Therefore, “the perceived fairness of price fences” (Kowalkowski, Kindstrom, & Brehmer 2011, p. 183) might be employed in the service framing.

Consultancy environment

The revenue management might be integrated in segments within consultancy environment such as managing customers, costs, and capacity building. These segments are critical in streamlining operations to ensure that the profits are maximized. Therefore, when these segments are integrated in the revenue management system, a consultancy firm may not only be in a position to expand its market but also to guarantee quality of services to different classes and types of customers requiring consultancy services (Frow, Ngo, & Payne 2014).

The proposed rate fences for this kind of business are physical and non-physical rate fences. Under the physical rate fences, a consultancy firm might ensure that the staffs consist of experts within different fields of consultancy, resources are selected on the basis of project complexity, and prioritisation is affirmed for different consultancy projects. The appropriate non-physical fence is setting discounts, especially for big and regular clients. The rates payable to the consultants might be related to the type of a consultancy project. In the end, the consultants will feel motivated and improve on their performance (Anderson & Narus 1995; Kowalkowski, Kindstrom, & Brehmer 2011, p. 185).

Golf course environment

Revenue management might be applied in the golf course environment through managing prices (different packages for life-time, part-time, and one-time members), capacity management (managing the enrolments of members during hours considered peak in the course), and revenue generation (for different categories of members on a monthly and yearly basis). Through concentration on monthly-members revenue, a golf course service might increase its average revenue through series of offers, discounts, and special subscriptions (Lovelock & Wirtz 2011).

The physical rate fences of a golf course business might include offering premium services such as individual trainers and separate section for the customers who can afford them. The non-physical rate fence that a golf course business might offer is customised packages for customers categorised as premium. Basically, considering aspects such as quality equipment and competitive prices, the golf course service might be marketed as offering very fair prices to clients (Frow, Ngo, & Payne 2014).

Conclusion

From the above discussion, it is apparent that revenue management forms the epicentre of quality services and customer satisfaction. Depending on the sector, revenue management strategies differ. However, the principles remain the same across the three sectors within the consultancy, restaurant, and golf course business environments. In the three sectors, the rate fences are packaged on the basis of fairness frame to win customer confidence.

Reference List

Anderson, J, & Narus, J 1995, “Capturing the values of supplementary services.” Harvard Business Review, vol. 3, no. 1, pp. 75-83.

Frow, F, Ngo, V, & Payne, A, 2014, “Diagnosing the supplementary services model: Empirical validation, advancement and implementation.” Journal of Marketing Management, vol. 30, no. 2, pp. 138-171.

Kowalkowski, C, Kindstrom, M, & Brehmer, P 2011,”Managing industrial service offerings in global business markets.” Journal of Business & Industrial Marketing, vol. 26, no. 3, pp. 181-192.

Lovelock, H, & Wirtz, J, 2011, Services marketing: People, technology, strategy, Upper Saddle River, NJ: Pearson Prentice-Hill.

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