INDIVIDUAL ASSIGNMENT

QUESTION 1:

To know your production cost, simply add up all your production and marketing
expenses, and divide by your production area to make an amount that makes sense
to you (for smaller producers, less business expenses equal better profit)" (acres,
beds, square feet) (Fournier, 2017). To get a rough estimate of your total costs,
divide the money you have spent by the pounds of marketable produce you get from
each unit and you will at least have an idea of your production costs per pound.
Large scale producers should be able to identify their production costs and cost per
crop, and field, and apply that to total marketable yield to become competitive.

Setting prices is the most fundamental activity of a revenue manager. On a regular

basis, the higher prices lead to fewer bookings. however, if demand is high enough,
customers are willing to pay a fair price, then it could lead to profitable transactions
with lower-value customers. demographics to reach affluent consumers. Resulting in
an increase in demand from customers who are sensitive to price decreases (Smith,
2016).

Revenue management involves selling your perishable goods inventory to the right
people at the right time and driving up revenue. Please be aware that other products
like your amenities and food and beverage offerings will also contribute to your end-
of-of-life treatment plan. Price is a key consideration in determining the success of a
product or service. Producers and retailers earn profits while providing consumers
and competitors with ethical pricing (Anon, 2013). Other competitors' prices,
availability, convenience, and other factors may still influence the consumer's
perception of fair pricing. Business laws serve to shield businesses and customers
from many unscrupulous pricing tricks. It's worth reviewing pricing strategies to
make sure you don't break the law or get yourself in a sticky situation.

Frequently, revenue management systems will provide them with detailed

information on previous transactions, including the number of (un)sold seats (and
waitlisted passengers, et cetera) for specific flights, at specific times of the day,
week, or month. Additionally, they may forecast future booking patterns. These
systems typically indicate when and where demand for specific destinations exists.
They could indicate which flights are more likely to sell quickly than others, as they
reveal the total number of bookings received to date (Kimes, 2012). They can be
used to analyse booking patterns by comparing current data to historical data.
Additionally, they could provide historical data on punctuality, no-shows, go-shows,
and denied-boarding, among other metrics.
QUESTION 2:

A strong pricing strategy is critical for a business to establish an offer price that is
competitive, maximises revenue, and generates a profit. There are various ways to
set prices in business, according to the variables. If you set a price for each unit, you
have to assume a particular percentage of sales will be profitable; if you set a
market share, you need to assume the entire quantity is profitable. In one form or
another, the price can be used to exclude competitors from the market, to stabilise
its market share, or to stay in the market (Bitran, 2015).

Moreover, setting prices is an essential ingredient for any kind of business strategy.
The most important aspects a customer considers when evaluating a product is the
price. Real-time competition has gotten significantly fiercer with the growth of e-
commerce. You must observe your competitor's pricing strategy when pricing your
products or services. There is nothing difficult about comparing prices online.
Customers know the monetary value of a product so well. Setting the price should
also consider the market conditions and customers' needs (Chapman, 2016).

The prices at which businesses set also take into consideration other factors such as
cost, competition, and price sensitivity. in order to ensure profitability, firms must
consider all three stages of the production process: the cost of producing the item,
the expenses of the operation, and the level of profitability (Kimes, 2012).

For an examples:

Store A offers a pair of running shoes for RM 99. Store B does more on price, so
they try to undercut their main rival by selling shoes for RM 95 each in order to win
the comparison.
Brand A enjoys a stranglehold on the toothpaste industry. Brand B wants to have
researched the market price of toothpaste and discovered that it is selling for RM 9
per tube, which gives it a unique leverage. In order to give a psychological pricing
advantages to its main competitor, Brand A is launching its product at an average of
RM 8.99.

The two top selling smartphones in the industry are product C and D. New Product E
is planning to launch a new smartphone with Product E. It discovered that Product D
has a little better average performance than Product C, but is sold at a higher price.
product "E" manufacturers plan to introduce their smartphone with leading-edge
quality features and a selling price of RM 570 It is a slightly more expensive than the
average of their closest competitors, but this service has better features.

A classic example of a competitor-based pricing strategy is between Pepsi and Coca

Cola. They're competing for average over pricing, quality and features, but Pepsi has
a slightly lower price than its competitors.
QUESTION 3:

When a customer purchases a product, he is not only spending money, but also
other resources. These are referred to as non-monetary costs, and they are incurred
through the expenditure of time, convenience, effort, and psychology (Kimes, 2012).
Economists have recognised in recent years that consumers make other sacrifices in
order to obtain products and services. Thus, demand is not solely determined by
monetary prices but also by other costs. Non-monetary costs have developed into a
critical component of social marketing.

Non-monetary costs are additional sources of sacrifice that consumers perceive

when purchasing and using a service. Time costs, search costs, and psychological
costs frequently factor into the decision to purchase or repurchase a service and
may be more important considerations than monetary price at times (Bitran, 2015).
Customers will exchange money for the following additional costs:

Time cost:

The majority of services require direct consumer participation and thus consume
real-time: both time spent waiting and time spent interacting with the service
provider. Consider the investment you make in exercise, physician visits, and
navigating crowds to attend a concert or baseball game. Not only are you paying for
these services; you are also devoting time to them. Time is sacrificed in order to
receive service in a variety of ways.

Search cost:

When a consumer decides to purchase a product/service, he makes an effort to find

the best option among the available options. This effort is referred to as "search
cost" and is a non-monetary cost. Search costs—the time and effort required to
identify and select from available services—are also higher for services than for
physical goods. Prices for services are rarely displayed on service establishments'
shelves for customers to inspect while they shop, and thus are frequently unknown
until a customer decides to experience the service. Another factor that contributes to
search costs is that, with the exception of brokers in insurance or financial services,
each service establishment typically offers only one "brand" of a service, which
means that a customer must initiate contact with several different companies to
obtain information from multiple sellers.

Convenience Cost:

Additionally, there are convenience (or, perhaps more accurately, inconvenience)

costs associated with services. Customers incur a cost when they must travel to a
service, and the cost increases when travel is difficult, as it is for elderly persons.
Convenience cost refers to the inconvenience a person endures in order to obtain a
product/service. It is a type of non-monetary cost. For instance, if the service hours
do not correspond to the customers' available time, they must rearrange their
schedules to accommodate the business's. This results in inconvenient.

Psychological Cost:

The psychological costs associated with receiving certain services are frequently the
most painful non-monetary costs. Fear of not understanding (insurance), fear of
rejection (bank loans), and fear of uncertainty (including fear of high costs) all
constitute psychological costs that customers bear when purchasing and using
services. All change, even positive change, imposes psychological costs on
consumers, which they factor into their service purchases.
QUESTION 4:

Revenue management is a sophisticated form of supply and demand management

that incorporates both pricing and inventory management strategies. It is, in
essence, the process of allocating the appropriate type of capacity to the appropriate
customer at the appropriate time and at the appropriate price. It focuses the
organisation on profitability maximisation through disciplined forecasting of
consumer behaviour at the micro-market level and inventory control at each price
level. In a variety of industries, revenue management has resulted in increased
profitability.

For example, ABC Airline reported that revenue management benefits total RM 1.4
billion over three years, or approximately 4% to 5% of revenue. Similarly, Hertz car
rentals reported a 5% increase in average revenue per rental due to the
implementation of its revenue management system. Pezzo Restaurants increased
revenue by 5.1% as a result of revenue management. With such impressive results
in the airline, car rental, hotel, and restaurant industries, it's unsurprising that
revenue management is gaining traction in other sectors such as shipping,
performing arts, media and broadcasting services, professional services, and even
hospital services. It has been demonstrated that firms that implement a
comprehensive revenue management system and develop a strong revenue
management culture over time increase revenue and profitability significantly.

While it is critical to maintain realistic expectations, increasing your perceived value

does not have to come with such high risks. Here are a few strategies for improving
customer perception and increasing recurring revenue. 8 Differential pricing
strategies such as price discrimination, demand-based pricing, and off-peak pricing
may alter the reference price and transaction, causing customers to perceive current
transactions as unfair, and even as price gorging (Smith, 2016). Apart from
perceived injustice, Ron and Sarah may perceive a greater financial risk associated
with their next hotel service purchase. This is because multi-tier pricing makes
determining the reference price difficult; as a result, avid consumers are uncertain
whether they are always getting a good deal. Both perceived unfairness and an
increase in perceived financial risk have a negative impact on the firm's goal of
increasing customer satisfaction and acquiring customer goodwill.

Revenue management firms frequently use demand-based pricing to generate

demand during off-peak periods. Conflicts with customers may arise when such
discounting practises attract unsuitable segments and alter the nature of the service
that regular customers have come to expect (Chapman, 2016). For instance, the
business patrons of a fine dining establishment may resent the boisterous tour
groups attracted to lunch at deeply discounted prices. Alternatively, the manager of
a high-priced public golf course in the United States reported that his regular
customers who played during the week (a typically low-demand period) were less
than pleased to learn they would be sharing the course with children attending a
golf camp.

Revenue management may also result in capacity overstretching, as when

overbooked passengers are upgraded to business or first class cabins. Extending
beyond a certain capacity frequently alters the nature of the service, resulting in
substandard quality and customer dissatisfaction (Bitran, 2015). To mitigate these
conflicts, possible strategies include spatially segregating customers, differentiating
service benefits, and establishing guidelines for optimal capacity utilisation.
References

Anon. (2013). 'Simon says', Scorecard, The Revenue Management Quarterly. First
Quarter.

Bitran, G. R. (2015). An application of yield management to the hotel industry

considering multiple day stays'. Operations Research.

Chapman, S. N. (2016). 'Demand/capacity management in health care: an

application of yield management', Health Care Management Review, .

Fournier, S. D. (2017). 'Preventing the premature death of relationship marketing', .

Harvard Business Review.

Kimes, S. E. (2012). 'Perceived fairness of demand-based pricing for restaurants', .

Smith, B. C. (2016). Yield management at American Airlines,' Interfaces.