by Beatriz Ladrón | Feb 7, 2023 | Revenue Management
A more efficient operation adapted to the market
Empty seats on a bus are one of the most recurring problems for many bus companies. Each seat that stops selling represents a loss and vulnerability in long-term operations. Far from being a new problem in the transportation industry, this was precisely the one that inspired US airlines to seek a solution in the late 1970s. The result is what is now known as Revenue Management.
What is Revenue Management?
Revenue Management is a technique that consists of obtaining historical data such as schedules, destinations, pricing of higher demand, and occupancy rate. This information is analyzed to find trends and implement sales strategies that maximize revenue.
In other words, it is a business process capable of generating forecasts and proposing strategies and price initiatives on time, promoting the growth and profitability of your business, based on an understanding of the company, the environment, the competition, and consumers, along with analysis tools and data crossing.
It provides a wide view of the business because it involves different areas of the organization and consolidates information from various sources to generate proposals and make decisions. Thus, Revenue Management replaces the basic models for defining sales prices, so that neither sales nor brand prestige is depreciated.
What is the Revenue Management process?
The methodology begins with the collection and storage of historical inventory data, such as prices, demand, high seasons, and other constant factors in the line operation. Market segmentation is then performed to set prices and maximize revenue.
Subsequently, demand, inventory, and market share forecasts are carried out to finally combine the data and make decisions to set the correct prices for the right customer at the right time and through the right channel. The Revenue Management process is cyclical, so it is in constant feedback and updating.
by Beatriz Ladrón | Jul 22, 2022 | Revenue Management
Reservamos SaaS provides bus companies with a tool that allows them to analyze their market and promote effective pricing strategies.
A fundamental characteristic of digital travelers is the power technology has given them to analyze the available offer and make much smarter purchasing decisions according to their needs and budget.
Digital sales channels provide travelers an advantage to compare prices, find out about route and schedule options, search for the best option, and access a purchasing experience from any mobile device in just a few clicks. Today more than ever, access to information and analysis of the available options becomes an advantage for travelers when choosing a destination or planning the next vacation.
But what happens when users are better informed about the options available to them than the companies themselves? Being aware that digital travelers today spend more time researching before making a purchase decision, forces bus lines to be one step ahead, to maintain a competitive advantage.
Being present at the right moment of a traveler’s search and offering the correct price at the precise moment can be the difference between acquiring a new passenger or the user choosing another more convenient option.
And while various factors intervene to guarantee optimal purchasing experiences, such as having a dynamic, efficient, and secure eCommerce, as attractive marketing strategies that boost digital sales. There are also fundamental factors, such as price, availability, schedules, and destinations, that could help bus companies to increase competitiveness and revenue.
Visualize the market behavior
Reservamos SaaS has developed technology solutions that drive the growth of bus lines worldwide to help them connect more effectively with digital travelers.
A key solution for this is the Competitor Monitor, a web tool that allows price analysts, data analysts, operations managers, and sales managers, among other members of the bus company, to visualize and analyze the behavior of the market, making better decisions on pricing strategies and inventory optimization.
The Monitor is a module that is part of BrainPROS, which facilitates the analysis of public market data through technology used in other sectors, such as airlines.
Through this technology, bus companies have updated and automatic market information at their fingertips, such as routes, schedules, capacity, and prices, using Data Science techniques.
With this tool, bus lines can:
- Optimize and automate market analysis processes and their performance.
- Understand the demand curve existing on a route and make decisions about inventory, such as openings or schedule changes.
- Know the average, minimum, and maximum price of a route.
- Determine price sensitivity among digital travelers.
- Analyze the evolution of prices and acceptance of different types of services.
The future of smart pricing
The new consumer trends among digital travelers force industries, such as the bus sector, to transform to provide an attractive offer that meets market needs.
Before, travelers had to adapt to the available tourist offer and the holiday periods. But, technology has meant that trips are no longer anchored only to temporalities nor to the usual tourist destinations. Today digital travelers are looking for everything from short weekend domestic trips to longer stays for digital nomads or people who carry out their work and economic activities remotely. This has prompted the tourism sector to increase its dynamism and abandon flat rates, to adapt to a traveler who has the freedom to move to any destination, at any time.
A great advantage of the Competitor Monitor is that the tool does not require any integration with the technology of the bus company, which enables its use from the beginning and encourages a data culture among the members of the company by optimizing market analysis.
Some of the lessons that have been observed and that can be highlighted from the use of the tool are:
- Improvement in the distribution of schedules.
- Optimization in price variability.
- Understanding the distribution of supply in the market.
- Adjustments in the offer according to the market behavior and travelers’ consumption.
- Fundamentals for making decisions based on data.
By having an overview of market behavior, bus companies can implement recruitment strategies, add discounts, activate promotional coupons, or develop effective marketing strategies that encourage the purchase of tickets. And it also helps reduce costs, personalize the offer, and reach the main goal: increase competitiveness and revenue.
The specialization and experience of Reservamos SaaS allow us to safely accompany the digital transformation of bus companies, increase their revenue and streamline their operations.
Contact us at [email protected] to learn more about the Competitor Monitor.
by Beatriz Ladrón | Jun 10, 2022 | Dynamic Prices, Revenue Management
Currently, it is impossible to have an eCommerce without using a dynamic prices strategy.
Nowadays, it is impossible to say that you have an eCommerce without knowing what dynamic prices are. Although the concept is not new, it is one of the trends sweeping the digital market and that you must implement as a strategy in your eCommerce.
Players
To all this, what are dynamic prices? It is simply a strategy for companies to establish flexible prices based on current market demand and supply. It is also known as “price discrimination”, and the purpose is to maximize the average income margin of your products and/or services, adapting them in a matter of minutes, hours or days, depending on the type of market and in accordance to variables you set. It is such a necessary practice that José Luis Moreno, Regional Vice President of Hispanic Operations for Greyhound Lines (and Reservamos SaaS client), commented in our webinar:
What company doesn’t do revenue management today? If we hadn’t launched with the dynamic pricing strategy, we wouldn’t have had the impact and growth that we have had.
The game strategy
There are several ways to execute dynamic prices, a tool that we can help you implement in your eCommerce:
- Segmented prices: based on segmentation, companies use machine learning to offer different prices to different groups based on some demographic data and using A/B tests.
- Penetration Pricing: based on your competitors you can be the one that sells the cheapest, the one that offers the most expensive, or a hybrid of the two, which is the most recommended. Depending on the relevance of your competitor and your position in the market, you can choose to sell above or below their prices, without punishing your margin and positioning yourself in a market segment.
- Time-Based Pricing: In the case of the tourism industry, travel costs vary depending on anticipated purchases. Using lower prices with greater anticipation of purchase and higher when the date of the trip approaches.
- Quantity-based pricing: If your service or product is in short supply, your pricing strategy is crucial. With a greater shortage, you can increase prices with a more assertive strategy.
- Changing market conditions: the industry situation can change due to diverse factors, and you must act accordingly. During Covid 19 we have seen a lot that companies modifying their prices to adjust to the new normal.
Marker
What are the benefits of dynamic pricing? You can make faster and more profitable changes in terms of sales to increase your company revenue and act with much more flexibility and anticipation. Another great benefit is that you automatically learn from your market trends, which will help you move your product. You can use dynamic prices to encourage recurrence and loyalty to your brand. And finally, this strategy allows you to reach more passenger segments. For example, through an attractive pricing strategy, a family group planning to travel by car may choose to take the bus. With this solution, you are accurate to your pricing strategy, with controlled margins, without losing competitiveness in the industry.
The winner
Some of the largest eCommerce in the world, such as Amazon, have implemented dynamic prices, having unprecedented success, in addition to this, from retail stores to supermarkets with online sales. However, in the air ticket prices, we see a better example of this strategy, being the airline industry the forerunner of this implementation.
What makes airfare so tending to price fluctuations? First of all, they know their users and their needs. Leisure travelers often plan their vacations well in advance, and business travelers often make reservations days or hours in advance. As the departure date approaches, the seats are more expensive. In addition to the periodicity, they modify prices during holiday seasons, increasing their margin due to high demand.
With dynamic prices, you take advantage of market opportunities and compete on equal terms, often with an advantage over your competitors. To maximize the benefit of your bus line eCommerce through dynamic prices, contact us.
