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Perceived Fairness of Yield Management. Case Study

In: Business and Management

Submitted By anchoyse
Words 611
Pages 3
Reference: Kimes, S.E. (2002). Perceived fairness of yield management. Cornell Hotel and Restaurant Administration Quarterly, 43, 21-30. doi: 10.1177/0010880402431002

Kimes investigated yield management and whether customers perceive it fair. The first objective was to determine if customers believe maintenance of a profit through raising the price to be fair. The second objective was to discover if increase in prices that leads to increase in profit identified by customers as unreasonable. The third objective of the research was to find out whether the same price with decreased costs is considered reasonable from customers prospective. When implementing yield management, managers should consider long-term profits as well as short-term profits. Otherwise, the consequences can be disastrous (Hayes & Abernathy, 1980 in Kimes, 2002). The previous researches also have found that perceived fairness is very important in managing long-term profits (Thaler, 1985 in Kimes, 2002). To better understand the definition of fairness the author discussed the concept of a “reference transaction” (Kahneman, Knetsch & Thaler in Kimes,2002). This concept implies that customer have a clear vision of how the transaction should be conducted and how much it should cost. Also, to understand the position of a customer in a transaction, the researcher mentioned the position of a customer where the value to one should equal to the value to the firm (Kahneman, et al., in Kimes,2002). The author discussed a principle that states that customers realize they are to receive a reasonable price while the company is to get a reasonable profit (Kahneman, et al., in Kimes,2002). To gather data the author created an eight-question survey that was distributed among travelers in the Starter Hotel in Ithaca, NY. The author used a seven-point scale where 1 was considered as highly...

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