Profit impact of revenue management in the process industry

Abstract

The application of revenue management (RM) has been extensively studied in the service industry, where today it is widespread. However, thus far, research has given little attention to its profit impact on the process industry (PI). This article presents findings of a quantitative study based on 603 respondents belonging to PI companies in North America and Europe. RM is regarded as contributing to profit, but the results of this study show that the impact differs between North America and Europe both with respect to the period of time RM is used and to the perception of RM. Moreover, the greater the turnover and the level of internationalization, the more likely a company is to use RM. The impact of RM in terms of profit is increasing with firm revenue, period of use but varies between North America and Europe. Both the a priori estimation of profit improvement due to RM before its introduction and the a posteriori realized profit improvement are positive; they increase with the period of use and differ between Europe and North America, being higher in the latter region. The main barriers to RM implementation are the lack of awareness of this approach, the inability to identify suitable systems, an unclear price strategy definition and the lack of management attention. North America and Europe assess the importance of some barriers differently. If companies decide not to introduce RM, this is typically due to the fact that other projects or activities have higher priority rather than that the benefits or potential of RM are not recognized.