The Strategic Levers of Yield Management

Abstract

Yield management, controlling customer demand through the use of variable pricing and capacity management to enhance profitability, has been examined extensively in the services literature. Most of this work has been tactical and mathematical rather than managerial. In this article, the authors suggest that a broader view of yield management is valuable to both traditional and nontraditional users of the approach. Central to this broader view is the recognition of how different combinations ofpricing and duration can be used as strategic levers to position service firms in their markets and the identification of tactics by which management can deploy these strategic levers. The authors also propose that further development of yield management requires that when the service is delivered be treated as a design variable that should be as carefully managed as the service process itself.