Question

what is yield or revenue management is and why estimating a demand curve for a firm's product or service using regression analysis can increase revenue compared to charging the same price to all of a firm's customers. What condition has to be met for price discrimination to be effective?

Answer 1

Yield management is a variable pricing strategy based on understanding anticipating and influence consumer behaviour in order to maximize revenue or profit from a fixed time limited resources such as airlines hotel reservation for advertising inventory.yield management inverse strategic control of inventory to sell the right product to the right customer at the right time for the right price this process is called a price discrimination in which customers consuming identical goods or services are charged different prices. Yield management is a large revenue generator for saral major industries former chairman and CEO gave yield management its name and has collected the single most important technical development in transportation management since we entered deregulation.

The purpose of a regression analysis to obtain the mathematical equation for a line that describes the average relationship between the dependent and independent variables it should not be confused with the population regression line discussed whether the population regression is based on entire population or the the simple regression line is based on the sample.

Conditions which has to be kept for price discrimination to be effective are:-

Price discrimination is when are sellers sell specific commodity or service to different buyers at different prices for reasons not concerning differences in costs.

For example:-

• A logical physician charges more to rich patients as compared to poor patients for the same service.
• Electricity companies sell electricity at a cheaper rate in rural areas as compared to urban areas.

Effective conditions to meet price discrimination are:-

• The seller must have some control over the supply of his product.
• The seller should be able to divide the market into at least two submarkets or more.
• The price elasticity of the product must be different,friend in simple words even if the seller increase the price such buyers do not reduce the purchase volume.
• Buyers from the low price market should not be able to sell the product to buyers from the high price market.