There might be companies that you have not considered being placed right above

There might be companies that you have not considered

This preview shows page 20 - 22 out of 46 pages.

competitors. There might be companies that you have not considered being placed right above or below you in the search engines. This might drive your guests to them and cutting into your market share (ValoremGroup, 2014). Competitive sets include a company’s competitors based on coverage area, similarity of product, service or market segment and shared customer demographics. The ones that are not included are the competitors who are considered short-lived or seasonal. These sets are dynamic lists that change together with the market and customers (Marketing MO, n.d.). As for the market share, it examines the total sales of a company compared to the total industry sales. In other words, it calculates the sales percentage a company has of a market. This will help the company see their position compared to the competition and help the improve it. When it comes to fair share it suggests the share of the market that is rightfully a company’s share. A company’s fair share should always be 100 % and if it is not, it means that the competition has been able to steal a portion on the comp any’s market. 4 Pricing In this chapter we will discuss pricing as a part of revenue management tool and also as a business management tool on its own. Pricing can be used as a differentiator to acquire more demand or it can be used strategically to created higher revenue per room. Before revenue management, pricing was only considered as a part of the marketing mix’s 4Ps. This will also be taken into discussion as pricing needs in revenue management need to be considered as an entity with everything else. As Gabor Forgacs (2010) says, the strategic approach sees pricing in a larger context and not just as a nightly race to the highest possible revenue. 4.1 Basics of pricing When it comes to pricing strategies the key objective is to estimate the value created for customers and then set prices which reflect that value. A company might decide to price against their competitors, but the most valuable pricing
Image of page 20
21 strategies are the ones that follow the conditions and state of the market and the demand. In the hotel industry it is also very important to follow these factors at a segment level. As an example, price optimization as a tactic involves constantly optimizing multiple variables such as price sensitivity, price ratios and inventory to fully maximize revenue and gain from the value the customer perceives. A tactic which is successful and supported by analytics, can hugely increase a firms’ profitability. Philip Kotler (2005) suggests that after setting the price for a product it has nothing to do with selling it. It is the value that sells the product and the price just needs to communicate the value to the customer. This is the essence of a good pricing strategy or tactic in revenue management.
Image of page 21
Image of page 22

You've reached the end of your free preview.

Want to read all 46 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes