Question: Revenue management was once the exclusive domain of the airline

Revenue management was once the exclusive domain of the airline industry. But it has since spread its wings into the hotel business, auto rentals, and now even professional sports, with the San Francisco Giants, Boston Celtics, and Orlando Magic as leaders in introducing dynamic pricing into their ticketing systems. Dynamic pricing means looking at unsold tickets for every single game, every day, to see if the current ticket price for a particular seat needs to be lowered ( because of slow demand) or raised ( because of higher- than- expected demand).

1. After researching revenue (yield) management in airlines, describe how the Magic system differs from that of American or other air carriers.
2. The Magic used its original pricing systems of several years ago and set the price for a Terrace V, Zone 103 seat at $ 68 per game. There were 230 such seats not purchased as part of season ticket packages and thus available to the public. If the team switched to the 7- price dynamic system (illustrated in Table 13.11), how would the profit contribution for the 45- game season change? (Note that the 45 game season includes 4 pre- season games).
3. What are some concerns the team needs to consider when using dynamic pricing with frequent changes inprice?

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  • CreatedMarch 20, 2014
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