BUS100 Professional Communication Skills | Assignment
Added on 2020-03-04
8 Pages1898 Words51 Views
Running head: RELATIONSHIP BETWEEN PRICE, DEMAND AND REVENUERelationship between Price, Demand and RevenueName of the StudentName of the UniversityAuthor Note
1RELATIONSHIP BETWEEN PRICE, DEMAND AND REVENUEIf a firm drops price, does it always increase its demand and revenue?Annotated Bibliography Source 1: Estimating flight-level price elasticities using online airline data: A first steptoward integrating pricing, demand, and revenue optimization, peer reviewed journal article Mumbower, S., Garrow, L.A. and Higgins, M.J., 2014.Estimating flight-level priceelasticities using online airline data: A first step toward integrating pricing, demand, andrevenue optimization.Transportation Research Part A: Policy and Practice,66, pp.196-212.In this article, the price-demand conditions and dynamics of flight ticket booking andthe factors on which these dynamics depend are taken into account. To study these dynamics,the article chooses Jet Blue Flights, a commercial airline and studies its business in fourmajor transcontinental markets around the world (Jetblue.com, 2017). Using Least SquareMethods, the article studies the price elasticity in this sector and derives several interestingrelationships (Rao 2015). The price sensitivity of the business travellers are found to be lessthan that of those who avail flights for informal purposes; short distance flights’ pricesensitivity are found to be considerably high and high price sensitivity is also found in case ofpromotional strategies taken by the competitors. The authors prescribes designing price slabs according to customers, depending uponthe price elasticity of flight ticket demands of different types of clientele, which can increasethe revenue of the study enterprise in the long run (Varian 2014). However, a more extensivestudy of these factors on the revenues of other goods and services could have made the articlea robust one. Nevertheless, it can be used to form the methodological construct of theassignment to study whether a price drop always increases demand and profit of a firm(Wieseke, Alavi and Habel 2014).
2RELATIONSHIP BETWEEN PRICE, DEMAND AND REVENUESource 2: Getting the Prices Right,An Evaluation of Pricing Parking by Demand in SanFrancisco, journal article Ovchinnikov, A. and Milner, J.M., 2012. Revenue management with end‐of‐period discountsin the presence of customer learning.Production and operations management,21(1), pp.69-84.The article deals with the problem of disparity in demand and supply of parkingspaces in San Francisco, both in the budget parking spaces as well as the highly priced ones.This poses a serious problem for majority of drivers, barring a few who find a cheap parkingspace easily. Others need to waste fuel to drive around in search of a parking space(Jahanshani et al. 2014). On the other had the overpriced parking spaces remain underoccupied due to low demand, thereby experiencing loss of revenue. According to this article,San Francisco has implemented a dynamic pricing programme for parking spaces, where theprice is set according to the demand of drivers, block wise (Cowan 2012). The article gives an insight of how dynamic demand-specific pricing can help inmaximising revenue. In spite of the fact that the article only remains constricted in oneparticular kind of service market in one geographical location, San Francisco, the underlyingeconomic concept of the article is robust and applicable in general scenarios and therefore,the article can be used in the concerned assignment as a conceptual base (Peppers and Rogers2016). Source 3: NZ Post prices to rise due to falling mail volumes, newspaper article Stuff.co.nz, J. (2017).NZ Post prices to rise due to falling mail volumes. [online] Stuff.Available at: http://www.stuff.co.nz/business/90720902/nz-post-stamp-prices-to-rise-due-to-falling-mail-volumes [Accessed 15 Aug. 2017].
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