YIELD

MANAGEMENT
Presented by:

Buo, Kimberly
Carl, Charlene
Castilleos, Carl Jerald
Chuakunhong, Jesmine
Chung, Railey
Coronado, Samantha

Presented to Prof. Chuchi Alcoseba

RDIMCON / HIB21 / BS-IHM
DLS-CSB
 What is Yield Management ?

■ The process of allocating the right type of

capacity to the right kind of customer at the
right price and at the right time so as to
maximize revenue or yield.
 What is a Yield?

■ Yield is the Income minus the Expenses and

also called the “Profit Margin”
 Where did Yield Management originated?

■ “Deregulation” is generally regarded as the “catalyst” for

yield management in the airline industry, to overlook the
role of global distribution systems. In short, it originated
from the Airline Industry.
What do Yield Management includes ?
Mainly:
■ Variable Pricing Strategies
■ Inventory Strategies
■ Several aspects of Management Control
■ Multidisciplinary Handling Strategies
1. Variable Pricing Strategies

■ Based on understanding, anticipating and

influencing consumer behavior in order to
maximize revenue or profits from a fixed, time-
limited resource
2. Inventory Strategies

■ Inventory-focused branch of ”Revenue

Management” which involves strategic control of
inventory to sell it to the right customer at the right
time for the right price.
3. Several aspects of Management
Control
■ Including Rate Management, Revenue
Streams Management, and Distribution
Channel Management.
4. Multidisciplinary Aspects

■ It blends elements of marketing, operations,

and financial management into a highly
successful new approach.
What are the conditions for Yield Management
?

There are 3 Essential conditions for Yield Management to be

applicable:

1.) That there is a fixed amount of resources available for sale.

2.) That the resources sold are perishable (there is a time limit to
selling the resources, after which they cease to be of value).
3.) That different customers are willing to pay a different price for
using the same amount of resources.
 What is the connection of Yield
Management to Revenue Management?

■ As a stated before, Yield Management is an

Inventory-Focused branch of Revenue Management
 What is Revenue Management?

■ The essence of this discipline is in understanding

customers' perception of product value and
accurately aligning product prices, placement and
availability with each customer segment.
 Essence of Yield Mangement
in the Hotel Industry
■ Hotels use this system in largely the same way, to
calculate the rates, rooms and restrictions on sales in
order to best maximize their return.
■ Yield management teams in the hotel industry have
evolved tremendously over the last 10 years and in
this global economy selling rooms and services at the
right price, at the right time, to the right people.
 PROs of Yield Management

■ Wide prices options – gives the feeling to buy or choose

cheaper services for customers
■ Relevant solutions for companies to maximize revenue
■ Increases competitive advantages through utilization of
different price factors
■ Improves sales through price optimization
 CONs of Yield Management

■ Sense of unfairness for majority of customers who likes low

constant prices within different periods of time
■ Can create an opportunistic behavior on the part of
customers
■ Perception problems from discounts to service quality
 Conclusion

■ Yield Management is a key marketing or pricing tool

for profit maximization in some industries but in some
cases, it can also alienate customers. Nevertheless,
the problem of high fixed costs and inventory makes
filling of aircraft seats and hotel rooms so compelling
thatYield Mangement is essential.
THANK YOU !