The Strategic Levers of Yield Management

1. The Strategic Levers of Yield Management
Discussion Leader: Jon W. Hensley
Executive Ph.D. in Business Administration, Florida Atlantic University
MAR 7936: Seminar in Marketing
Cheryl Burke Jarvis, Ph.D.
Kimes, S. E., & Chase, R. B. (1998). The Strategic Levers of Yield
Management. Journal of Service Research, 1(2), 156–166.

2. The Strategic Levers of Yield Management
• Yield management is a variable pricing strategy that uses
an understanding of customer behavior to capitalize on
fluctuating demand, allowing you to generate the
maximum possible revenue from a finite supply of
available offers.
• Servicing the right customer
• At the right time
• At the right price

3. Yield Management Model: Manage the 4 Cs of Perishable Service:
Calendar
(how far in advance
reservations are made)
Clock
(the time of day service
is offered)
Cost
(the price of the
service)
Capacity
(the inventory of
service resources)
Manage
Customer Demand
$
Maximum Profitability

4. How to Manage the 4 C’s

5. How to Manage the 4 C’s

6. Price/Duration Quadrant Model
(Kimes & Chase, 1998)

7. Florida Atlantic Movie Theater Manager
How might a movie theater manager be able
to move from quadrant 1 to quadrant 2?
How are we already seeing this in the movie
theater market?
Price
Fixed Variable
Duration
Predictable
Quadrant 1
Movie Theater
Quadrant 2
Unpredictable
Quadrant 3 Quadrant 4
?

8. Florida Atlantic Bistro Manager
How might a restaurant manager be able to
move from quadrant 3 to quadrant 2?
Price
Fixed Variable
Duration
Predictable
Quadrant 1 Quadrant 2
Unpredictable
Quadrant 3
Restaurant
Quadrant 4

9. Is Yield Management Practical in Retail?
Where might the typical retail clothing store stand on
this table?
How might the price and duration levers be
manipulated to optimize retail revenues?
What are the limitations of this model?
Price
Fixed Variable
Duration
Predictable
Quadrant 1 Quadrant 2
Unpredictable
Quadrant 3 Quadrant 4