Answer to Question #207079 in Management for Amina

Question

If an organization like an airline uses yield-management techniques, guests end up paying different prices for what is essentially the same service. What are the implications of that difference, if any, for guest expectations, service quality, value, and guest experience?

Answer 1

Guest expectations- Yield management techniques helps in understanding guest expectations well and makes it easier to cater to the right customers and carry out price changes driven by customer preference.

Service quality- Yield management will enable airline organization to understand which areas are untapped and enable them to formulate a plan to tap the same and improve the service quality. For example, low prices may be offered to leisure-oriented guests who usually book tickets early, as opposed to corporate guests who show up at short notice periods and can hence be charged more.

Value- Yield management does not stop at the pricing stage. Mechanisms for price control must also be in place in scenarios that cause visible price discrimination. To achieve this, airline organization manager must calculate the impact of a price change on the demand and from different segments in advance. In addition, these insights must be made with a robust competitor rate monitoring system, lest the strategy falls flat.

Guest experience- yield management should not be overly aggressive or extreme. The most important outcome is the guest experience and the reputation of the airline organization.

Poor reviews and a diminished reputation have a knock on effect on airline future bookings. Thus, if an aggressive yield management strategy is adopted it would be wise to consider the impacts on guest satisfaction and online reviews, rather than meeting short term budgets.