This class exists in these courses :
• IÉSEG > IESEG Degree - Programme Grande École > Semester 2 > 2,00 ECTS

Prerequisites

The course is pitched to be as least technical as possibile, concentrating on business aspects and benefits instead of mere technical skills. Yet a certain familiarity with mathematics and descriptive statistics is required as there will not be much time to cover all the basics. A basic knowledge of MS Excel 2010, economics principles of dynamics of demand/offer/pricing may help, together with familiarity with cartesian plotting and the reasoning in graphical terms about data.

Learning outcomes

At the end of the course, the student should be able to:
• Understand the basic principles of Revenue Management and its application to a variety of business sectors and industries
• Master basic RM calculations
• Understand the practicalities and implications of RM in the real world not just in theory - formulas and complicated algorithms - with an appreciation of the advantages that it can bring to a business
• Perform analysis and issue reccomandations for actions of management
• Be an ambassador of RM in the future workplace, helping to spread this useful practice in time of crisis such as those we are in at the moment, where every Euro counts
• Be a better manager and make better use of RM services where present

This is a course for those who are interested to learn how it is possible to achieve maximum revenue from a ‘perishable’ asset. A typical example of perishable assets is the seat of a plane, on a certain date, route and time, which once left empty is ‘lost’ for good as a potential source of instant revenue. Built around examples from the airline industry, which is the main user of these fast spreading techniques, the course expand also in other industries (hotels, restaurants, rent-a-cars, theatres and more) via a mix of interactive business games in class, lectures and business cases. It explores both mainstream types of revenue management, the one that leverage prices and that which leverage quantities. It is an introductory course that aims at explaining the basics and does not require higher mathematical knowledge that is normally necessary in this topic; it does nevertheless require certain sympathy for numerical reasoning. It is a very novel topic that is becoming more and more strategic in all streams of the service economy, which now accounts for 70% of GDP in OECD countries (i.e. downstream energy sector). Increasingly employed in new services' subsectors, RM is becoming a key function in many companies, departing the traditional cradle of applied mathematics where it was developed, to land on board of directors and wider management audiences at many levels. The course will cover also organisational issues related to the adoption of these techniques and will touch upon several aspects of its management, from segmentation to pricing and inventory control, among others. By definition, as a discipline, Revenue Management (or RM - sometimes referred to as Yield Management) must operate extremely closely with Marketing, Sales and Operations; this course we will only address issues of pricing related to RM (not other classic pricing issues).

Course description

Introduction to Revenue Management (RM)
RM evolution and its use
Fundamental concepts and principles
Quantity RM
Overbooking
Price RM
Implementation
RM 'survival' rules
Conclusion and final exam

Various RM business case reviews will be used for presentations and discussion in class, following preparation by mini-groups of students. Active participation, an inquisitive mindset and some curiosity for the topic is expected.

Some class group work may be transformed in individual exercise as deemed by the teacher (TBC), Highly interactive participation required during the whole course and in particular for eventual business games..

Class type

Class structure

Teaching methods

• Lecture
• Presentation
• Research

Assessment

20% individual class participation (This is personal participation to the discussion in class and eventual interactive games, not mere presence), 30% for a group exercise work and oral presentation of results in class (part of which may be transformed in individual exercise as deemed by the teacher), 50% for final exam (Friday last hour of class (mostly MCQ but may contain one or more open questions); some calculations may be required)