WEEK 8: REVENUE MANAGEMENT 1
Week 8 Discussion: Revenue Management
Kelli Ware
School of Business, Liberty University
July 4, 2025
Ways Nordstrom can Take Advantage of Revenue Management
Luxury high fashion retailers such as Nordstrom have an elevated level of dynamism
inherent within its supply chain due to the perishable nature of the goods being sold (Chopra,
2018 & Aviv et al., 2019). As such revenue management strategies that include both dynamic
and differential pricing must be integrated in a balanced manner to ensure profitability and
mitigate inventory overages (Chopra, 2018). In the use of dynamic pricing Chopra (2018)
suggests charging higher prices during the beginning of a season and implement cascading
discounts as the sales seasons conclude to ensure revenue optimization. Because consumers are
WEEK 8: REVENUE MANAGEMENT 2
savvy, differential pricing should be used to garner sales from exclusivity seeking consumers that
desire to be the first to wear or be seen in luxury fashion and are not deterred by higher prices
(Chopra, 2018). The combination of dynamic and differential pricing based on data driven
decisions is coined by Aviv et al. (2019) as responsive pricing which allow fashion retailers to
make responsive pricing adjustments based on data gathered from strategic consumers that
influence the market allowing demand uncertainty become integrated within the pricing
strategy rather than a reaction driver.
Ways a Manufacturer can Take Advantage of Revenue Management
In order to profit from a differential pricing revenue management strategy,
manufacturers must segment their consumer market based on order timing (Chopra, 2018).
Those willing to order well in advance will get the products for a lower price and those ordering
with shorter notice will have to pay a higher price (Chopra, 2018). Another revenue
management strategy that would benefit manufacturers is dynamic pricing as modeled by
Cheng et al., (2024) where a twotiered pricing structure is used and products are sold wholesale
in one tier and retail in the other based on product lifecycle and demand fluctuations. This
specific strategy is effective for manufacturers of new-generation products as long as the quality
of what is produced appeases consumers that are quality sensitive (Cheng et al., 2024).
Drawbacks to this strategy are associated with fluctuations in consumer behavior in that there is
a potential for those in the higher-priced segmentation to drop to the lower priced tier (Chopra,
2018). Manufacturers should focus on becoming more agile to ensure they can bounce back
when consumer behavior
shifts.
Ways a Trucking Company can Take Advantage of Revenue Management
Trucking companies run the risk of daily spoilage due to unused capacity resulting from
low demand. Similar to manufacturing companies, trucking companies should implement
differential pricing as a revenue management strategy to maximize profits according to demand
WEEK 8: REVENUE MANAGEMENT 3
and willingness to pay (Chopra, 2018). Depending on consumer type, logistical urgency and
types of services need, trucking firms can create pricing structures that differ based on the
collection of needs demanded by their consumers (Chopra, 2018). During low demand periods,
trucking companies should either offer discounts for truck rentals to companies like Amazon
that oftentimes need to augment logistics capacity to transport goods during peak periods
specific to their company (i.e. Amazon Prime Days) (Chopra, 2018). Differential pricing also helps
trucking companies to allocate limited capacity by selecting high-margin load and return haul
opportunities to reduce the likelihood of wasted capacity (Chopra, 2018). Each of these
strategies will yield greater profitability than simply using fixed fees for services (Chopra, 2018).
Ways a Warehouse Owner can Take Advantage of Revenue Management
There are multiple revenue management tactics that warehouse owner can use such as
overselling, differential pricing and dynamic. With access to a backup space, warehouse owners
with large enough capacity can rent or oversell space parcels to several customers, allowing
them to generate more income especially if they can quickly access the augmented space
(Chopra, 2018). Additionally, Transchel and Minner (2008) advocate for staggered space
scheduling that ensures capacity is not wasted, maximizes space utilization and promotes
increased revenue generation. In using differential pricing, warehouse owners can segment their
customers based on storage needs such as volume, capacity, length of time, and temperature
and charge tiered pricing based on the combination of the service needs (Chopra, 2018).
Warehouse owners in the retail space can also implement dynamic pricing based on inventory
levels, order fulfillment, and replenishment cycles that fluctuate based on the retail season;
charging more during peak seasons to ensure revenue fluctuations have minimal impact on
profits (Transchel & Minner, 2008). The flexibility of space utilization affords warehouse owners
greater flexibility in their pricing strategies to optimize profits.
WEEK 8: REVENUE MANAGEMENT 4
Why Some Luxury Retailers use Outlet Stores and How it Helps Most Valuable Customer
Outlet stores are useful tools for retailers such as Saks Fifth Ave to segment their
customers into differentiated categories so they can target price-sensitive consumers that desire
luxury goods but are not willing to pay full price (Chopra, 2018). Li et al. (2017) supports this
strategy arguing that the dual-channel tactic allows them to maintain both consumer types in
separate locations keeping higher premium goods available to quality sensitive consumers
resulting in revenue gains and expanded market share. Saks can also use dynamic pricing to
stimulate demand during slow season by offering discounts at outlets to stimulate inventory
turnover preventing spoilage (Chopra, 2018). Additionally, outlet stores being located in
multiple areas outside of the original premium location increases brand awareness and
recognition and provides opportunities to keep consumers within their market by allowing them
to vacillate between both spectrums of the brand (Li et al., 2017). High-end retailers that open
outlet stores must be mindful of the potential of cannibalization and ensure that they introduce
new products that are not available in the outlet stores to maintain the element of exclusivity
that makes it a luxury brand (Li et al., 2017).
Revenue Management Strategies for Hair Salons
The variety of services offered at hair salons allows owners the flexibility to create a
revenue management strategy that uses many tactics simultaneously. Hair salons can use
differential pricing strategies segment their clients by service needs and willingness to pay
charging higher prices to consumers on high demand weekend and lower prices to clients who
book services during slower weekdays (Chopra, 2018). This will help to drive demand on days
weekdays when salon capacity is underutilized and maintain both price sensitive and quality
sensitive clients. Dynamic pricing should be implemented during high demand holiday periods
such as Mother’s Day in addition to weekends when higher prices can be charged and revenues
increased (Chopra, 2018). Overbooking can be utilized to manage potential revenue losses due
to no-show appointments or last-minute cancellations especially during high-demand periods
WEEK 8: REVENUE MANAGEMENT 5
(Chopra, 2018). While not specifically tied to hair care services, hair salons should offer
subscription options for recurring services such as haircuts, style maintenance and chemical
service touch ups for regular clients to manage revenue and secure customer loyalty.
Ways a Golf Course can Take Advantage of Revenue Management
Golf courses experience high demand during favorable weather, which is typically in the
spring and summer months but can occur randomly during the fall and winter. As such, dynamic
pricing would work best where course management adjust prices based on the season charging
higher prices during the warm months and lower prices during periods of lower usage to attract
price-sensitive customers (Chopra, 2018). In using differential pricing as a secondary option,
course managers can adjust membership pricing and services offered based on consumer
demand as exclusivity is a valuable tool in driving up golf course pricing which can in turn lead to
higher revenue. Moreover, bundling, and upselling service experiences and incentives can also
manipulate demand to increase capacity usage during off-peak season (Chopra, 2018). Another
revenue management that could prove lucrative to golf courses is the use of contracts with large
organizations that host golf tournaments for their company employees and clients which will
generate steady and reliable revenue to supplement the fluctuations in demand during the year
(Chopra, 2018).
References
Aviv, Y., Wei, M. M., & Zhang, F. (2019). Responsive Pricing of fashion products: the effects of
demand learning and strategic Consumer behavior. Management Science, 65(7), 2982–
3000. https://doi.org/10.1287/mnsc.2018.3114
Cheng, M., Wu, S., Zhang, J., & Yu, X. (2023). Unlocking the advantages of differential pricing:
A two period model integrating consumer identifiable information and advertising ‐
effort.
Managerial and Decision Economics, 45(2), 1119–1133.
https://doi.org/10.1002/mde.4055
WEEK 8: REVENUE MANAGEMENT 6
Chopra, S. (2018). Supply Chain Management (7th ed.). Pearson Education.
https://libertyonline.vitalsource.com/books/9780134732459
Li, Z., Ryan, J. K., & Sun, D. (2017). Selling through outlets: The impact of quality, product
development risk, and market awareness. International Journal of Production
Economics, 186, 71–80. https://doi.org/10.1016/j.ijpe.2017.02.001
Transchel, S., & Minner, S. (2008). Dynamic pricing and replenishment in the warehouse
scheduling problem—A common cycle approach. International Journal of Production
Economics, 118(1), 331–338. https://doi.org/10.1016/j.ijpe.2008.08.046
