Exploring revenue management in spas: Yield management concepts in
Yield Management
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AMDOCS > CUSTOMER EXPERIENCE SYSTEMS INNOVATION Information Security Level 2 – Sensitive © 2011 – Proprietary and Confidential Information of Amdocs 1 Yield Management December 2011 Tomer Oster & Segev Cohen
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Yield Management . December 2011. Tomer Oster & Segev Cohen. The threat: non-profitable price models . Trend #1: Increase in the number of devices. Connected devices passed 5 Billion in 2010 – IMS, 2010 . Kinect Xbox units shipped in 2 months . Connected TVs shipped in 2010 . - PowerPoint PPT Presentation
Transcript of Yield Management
AMDOCS > CUSTOMER EXPERIENCE SYSTEMS INNOVATION
Information Security Level 2 – Sensitive © 2011 – Proprietary and Confidential Information of Amdocs1
Yield Management
December 2011
Tomer Oster & Segev Cohen
AMDOCS > CUSTOMER EXPERIENCE SYSTEMS INNOVATION
Information Security Level 2 – Sensitive © 2010 – Proprietary and Confidential Information of Amdocs2
The threat: non-profitable price models
AMDOCS > CUSTOMER EXPERIENCE SYSTEMS INNOVATION
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Connected devices passed 5 Billion in 2010 – IMS, 2010
Trend #1: Increase in the number of devices
3M iPads sold in 3 months 8M
Kinect Xbox units shipped in 2 months
27MConnected
TVs shipped in 2010
AMDOCS > CUSTOMER EXPERIENCE SYSTEMS INNOVATION
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Core Services
40.0
25.0
5.01.01.0
5 minutes of video
1 hour of browsing
1 MP31 email with picture
100 emails
New Applications
0.140.10
1 160 characters SMS
1 minute of voice
Capacity RequiredMB
Gross margins on voice are ~90%
Trend #2: Bandwidth-intensive services
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The outcome: non-profitable price models
3,000,000,000
2,500,000,000
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
0
Video On Demand Streaming Audio VoIP Anti-virus On-line
Service Consumer Price
Bandwidth Requirements
Number of bits sent for $1 revenue
Video On Demand $10 per movie
4 Mb/second * 1.5 hours = 21600 Mb 2.16*109 (1)
Voice over IP $0.05 per minute
16Kb/sec * 1 minute call = 960 Kb 1.9*107 (2800)
Anti-virusOn-line
$1 per month 100Kb * 2 updates = 200Kb 2*105 (10,800)
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Optional Solution: Yield Management
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Toll Roads
> The Service:> Charging pricing method for toll roads
> Pricing method:> Tolls are continually adjusted
according to traffic condition - adjusting the price to the time when tolled lanes get relatively busy
> Key takeaways:> Price will differ based on congestion> Identified as the most viable approach
to reduce traffic congestion and generating revenues for highway agencies
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Transportation Alternatives
> The Service: > Reduce unnecessary driving, promote
environmentally sound transportation
> Pricing method:> Use price to signal when drivers should
consider taking mass transit, reschedule their trip or pay a higher fee for driving.
> Use reduced prices for car pools> Give tax relieves for companies
enabling/enforcing working from home
> Key takeaways:> Real effect on congestion results –
maximize the use of the existing traffic roads
> Suggesting an alternative attractive offering
08:00
11:00
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Looking for a Better Place
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Concert Seats
> The Service:> Popular Concert seats tickets
> Pricing method:> No printed price on the ticket> Changing prices at regular intervals
based on actual consumer demand> Sensitive to changes in demand over the
lifecycle of the product> If the seats are selling well, the price of
the ticket will go up… and up – kind of stock market
> Key takeaways:> Perishable product based on product
lifecycle> Prices are not limited for popular
concerts seats
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The Airline Industry
> The Service:> Airline tickets
> Pricing method:> Dynamically modulate prices over
time by adjusting the number of seats available in each pre-defined fare class
> Adding new type of seats like:> Original: creating new classes like
Business which gets 1.5 more space then regular seat but cost 2 times the price
> Preferred Couch (taking extra money for seats before emergency exists due to more leg room)
> Options on Business class – paying extra money for option to upgrade to business class in case room is available
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> The Cellular Company is the owner of the network that subscribers are using to consume services
> The demand for capacity is rising but the revenue per bit is dropping so simply investing in enlarging the network is not a profitable solution
> Propose the cellular company other solutions to maximize profit and management of the network assets
Mission Statement
