As a consequence of implementing revenue management systems, many service firms, for example, airlines, hotels, and car rentals, systematically overbook capacity, thus striving to maximize the revenue at one particular point in time, that is one flight, one night, and one day. The academic literature has not addressed how customers behaviorally respond to overbooking experiences, such as downgrading, denied service, or upgrading. Here, it is used the econometric technique of conditional difference-in-differences analysis to study the effect of such incidences on customer usage patterns in an airline context. It is found that customers who experience negative consequences of revenue management significantly reduce the amount of their transactions with the airline, whereas upgraded customers exhibit only weak positive responses. The effects of the negative events are stronger for high-value customer groups, whereas significant effects of positive events can be found only for a low-value customer group. The results suggest the need for a stronger focus on customer reactions to revenue management practices. On a more general level, the study contributes to a more interdisciplinary view of service management by demonstrating the need for a closer interaction between management functions, for example marketing and operations, in developing and managing concepts of companywide importance.
Behavioral consequences of overbooking service capacity
Journal of Marketing ; 71 , 4 ; 36-47
2007
12 Seiten, 2 Bilder, 4 Tabellen, 50 Quellen
Article (Journal)
English
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