Prof.

Pradip P Chatterjjee

Prof. Pradip P Chatterjjee

SALES REVENUE
Selling the

RIGHT - PRODUCT TO RIGHT - CUSTOMER AT RIGHT - TIME AT RIGHT PRICE THROUGH RIGHT - CHANNEL TO MAXIMISE REVENUE OR YIELD

Prof. Pradip P Chatterjjee

YIELD
UNIT OF MEASUREMENT PROVIDING A CONSISTENT INDICATION OF BUSINESS PERFORMANCE

Prof. Pradip P Chatterjjee

REVENUE MANAGEMENT
WHEN A PHYSICALLY IDENTICAL PRODUCT CAN

BE SOLD TO DIFFERENT MARKET SEGMENTS FOR DIFFERENT PRICES THROUGH DIFFERENT CHANNELS UNDER DIFFERENT CONDITIONS
HIGHER REVENUE = HIGHER PROFIT

Prof. Pradip P Chatterjjee

MARKET SEGMENT
MARKET SEGMENT is a group of customers with a

buying behaviour pattern influenced by: - PRICE SENSITIVITY - LEAD TIME - WILLINGNESS TO PAY - NEED FOR FLEXIBILITY - DIFFERENT PERCEPTION OF VALUE

Prof. Pradip P Chatterjjee

REVENUE MANAGEMENT PARAMETERS

- 1) ANALYSE EXISTING DEMAND PATTERNS
- 2) PREDICT FUTURE DEMAND PATTERNS - 3) MATCH DEMAND / SUPPLY PATTERNS

Prof. Pradip P Chatterjjee

REVENUE MANAGEMENT PARAMETERS

1) ANALYSE EXISTING DEMAND PARAMETERS
a) b) c) d) e)

Use Historical Data Seasonal Lead time Unsatisfied Demand Use tools & appropriate methods

Prof. Pradip P Chatterjjee

2) PREDICT FUTURE DEMAND PATTERNS a) Economic Conditions b) Social Variations c) Local sources d) Local events e) Identify Competition f) Monitor changes in supply pattern

Prof. Pradip P Chatterjjee

3) MATCH DEMAND / SUPPLY REQUIREMENTS

a) Monitor Competition b) Review and Adjust c) Adjust Strategy using all tools, not ONLY PRICING d) Record ALL CHANGES

Prof. Pradip P Chatterjjee

TOOLS OF REVENUE MANAGEMENT

1) PRICING 2) DISCOUNT ALLOCATION 3) DURATION CONTROL 4) CAPACITY MANAGEMENT 5) SUPPLY CONTROL 6) MONITOR AND ADJUST SITUATIONS BASED ON DEMAND & SUPPLY

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PRICE v/s VALUE

** THERE IS NO RIGHT PRICE FOR ANY PRODUCT # EVERY PRODUCT HAS A DIFFERENT VALUE FOR DIFFERENT CUSTOMERS AT DIFFERENT TIMES # COMPETITORS ACTIVITIES MAY INFLUENCE THE CUSTOMER PERCEPTION OF YOUR PRODUCTS VALUE # BUILD DIFFERENCE BETWEEN GREAT VALUE & CHEAPLY VALUED

Prof. Pradip P Chatterjjee

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Cost Analysis in Marketing

Functional analysis of marketing costs Alternative methods for analysis of marketing costs A few marketing problem involve in marketingdecision Strategic cost analysis
Prof. Pradip P Chatterjjee 12

DECISION PARAMETERS
Decisions have to be taken in an enterprise mainly with regard to

planning and controlling its operations.

Two types of decision: a) single-shot b) Repetitive

Management is interested in the futurity of the present decisions

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MARKETING COST ANALYSIS

Cost analysis is essentially to generate and provide financial and

quantitative data to decision-makers A proper analysis of marketing costs aids in: a) Determine marketing cost of each product b) Controlling cost c) Analysis of cost d) Computation of cost
Prof. Pradip P Chatterjjee

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MARKETING COST ANALYSIS

Marketing cost analysis is carried out in two stages:

a) Reclassification from accounting headings into functional cost groups b) Allocation of functional cost group to control units

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Functional Analysis Of Marketing Costs

Direct Selling cost Advertising and sales promotion cost Market research Distribution cost

Credit and collection

Financial and general administration
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Alternative methods for analysis of marketing costs

Order Getting and Order Filling costs

Fixed and Variable Costs

Cost Effectiveness Analysis Relevant cost analysis

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Strategic Cost Analysis

Managing cost Best-Cost Producer Identify, analyze, and use strategically important resources Porter (competitive strategy)

- The 5 DIAMOND factors

Prof. Pradip P Chatterjjee 18

Customers Value Chain Analysis

ABC Approach:-volume-based overhead allocation is

replaced by transaction based overhead allocation

Cost drivers Significant difference in product costing in a situation

where both standard products and non-standard or tailor made products are manufactured using about the same manufacturing facilities.

Costs of non-standard products are actually much higher

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ANY QUESTIONS ?

Prof. Pradip P Chatterjjee

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