Revenue Management of Gondolas

Revenue Management of Gondolas: Maintaining the Balance between Tradition and Revenue In this case the service is basically based on transportation of people through a gondola with gondoliers. In the past, it was used for only transportation; however, nowadays it is used for tourism activities as well. Almost all tourists who come to Venice, their main purpose is taking a tour with the gondolas. During Carnivals and Christmas, and also in summers the demand is at the highest level. People generally buy this tour as a package that the tour operators sold and mostly they don’t know what the real price is for taking tour with gondolas.

On the other hand, people get the service through the hotel that they stay in or they can buy it directly from the gondoliers. When we talk about the nature of service we can say that it is an intangible service that the people evaluate after experience it. The marketing mix elements: Product: The core product of the service is transportation, which is the primary need of people. Actually this is what the customers expect to be served. On the other hand there are many supplementary products that are mutually reinforcing value added enhancements.

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Price: Gondoliers charge 80€ for 40 minutes tour for six passengers and they also add 20€ to the tours that are taken at nights. The reason of it is that the gondoliers don’t want to work at nights that is why the price is higher at nights. The other issue on the pricing is that all the revenue does not go to the gondolas. Some of the revenue goes to the third parties as commission, and this rate is very huge for them. On the other hand there are some non financial costs of doing this job, such as pollution and mass traffic.

Promotion: The service is sold through the hotels, the travel agencies and tour operators, and also directly by the gondoliers. Therefore, the gondoliers think that there is no need for promotion. On the other hand, most of the customers don’t know the real price of the tour because of the fact that they buy them as a package through the third parties. Place: The distribution of the service is both directly and indirectly selling through via third parties. The gondoliers like working with the third parties because of the fact that the service is guaranteed when the third parties.

Process: The process of the service is starting with reservation. People have to make a reservation before they buy the tour. In addition, loading and unloading process are also important. Physical Environment: The appearance of the service is the traditional clothes of the gondoliers and the type of the gondolas. These are some cues that give to the people about the physical information about the service. People who see the gondoliers’ cloth and the shape of the gondolas may think that this service is traditional and cultural.

That is to say all of these are the first impression of the service. People: When a gondolier is hired, he must have some special qualities. The traditional hiring system is that it passes the next generation. That is to say, after the father, the son was going to be the gondolier. However, now the hiring system is harder than the past. There are some tests in order to evaluate the employees’ levels of language and knowledge about the city. Therefore, the younger generations do not want to work there, because they want to take less physically demanding jobs.

Problems: Main problem is the capacity issue. The problem is actually the usage of the capacity. Sometimes, the capacity is fully used but it is not enough to get high revenue. The other problem is huge commission to the third parties. It may be beneficial and useful to work with third parties; however, the commission rates are very high. Therefore, the rates have to be renegotiated. Solutions: We can in traduce revenue management for his case, because those problems are resulted from the lack of the revenue management.

Because of the fact that revenue management has been most effective when applied to operations characterized by: * Relatively fixed capacity * High fixed cost structure * Perishable inventory * Variable and uncertain demand * Varying customer price sensitivity, it will be effective and efficient to use it. When we think about what we should do for the revenue management, first of all we should think about the idea that the demand which we have at different times of the day, of the month and of the year as well.

Secondly, we should set different prices for different times. Lastly, we should try to identify who are those customers that are price sensitive, and who are those customers that are not price sensitive, and that are willing to pay higher prices. Different prices for different people at different prices must be applied for this issue. When we segment our market and set different prices for the people from different segments. For instance, in Christmas the price may be higher than other days in winter. The rate shouldn’t be fixed for all days in the year.

Lastly, it is needed to set fences that are barriers so that one customer can’t jump to another class. This means that different customers are charged differently for what is actually the same product. TRM 361 SERVICE MARKETING CASE REPORT REVENUE MANAGEMENT OF GONDOLAS: MAINTAINING THE BALANCE BETWEEN TRADITION AND REVENUE BESTE ERDAL 2008500021 ——————————————– [ 1 ]. Lovelock Christopher, Essentials of Service Marketing, Page:147 [ 2 ]. Lovelock Christopher, Essentials of Service Marketing, Page:150