By EyeforTravel.com Correspondent in Amsterdam<br><br>A new dynamic pricing strategy to drive more direct business, and
Published: 24 Nov 2005
By EyeforTravel.com Correspondent in Amsterdam
A new dynamic pricing strategy to drive more direct business, and simplification of the pricing structure are among the major initiatives taken by P&O Ferries taken this year for sustaining consistency
"Cheapest prices can be found via our P&O ferries website. (Also), the revenue management system structure is remapped to ensure consistency in the pricing and inventory hierarchy. We further simplified the pricing structure to achieve the main share of our business via our direct pricing curves," says Gerard-Jan van Wageningen, revenue and pricing manager, P&O Ferries, one of the speakers during the EyeforTravel.com's 'Revenue Management and Pricing in Travel Europe 2005' held in Amsterdam.
Elaborating on the main elements of the pricing strategy, Wageningen referred to:
. Pricing philosophy - To base price on demand and time to be able to respond to competitor activities.
. Sailing type pricing - Sailing type templates for pricing ladder and inventory management profile.
. Charging basis - Car (vehicle) as basic unit of pricing.
. Inventory management- Price buckets fill as demand increases; low fare bucket availability can be increased if latest forecast shows weak demand.
. Ticket types/rules - Semi flexible - Changeable tickets (for fee); Restricted tickets for tactical use
. Booking lead time - EBOs replaced by lead-in prices, supported by fare search
. Trip length - 3 price curve templates (DT/SB/LB) presented as single leg
. Price promise - Upwards only pricing, Cheapest fares on POFerries.com
Sharing the feedback from its customer research, Wageningen said that there were indications there were too many price permutations and combinations; It's confusing, it's complex, difficult to find cheapest sailings; perception that prices are high; Experienced customer base have a strong aversion to paying full price for ferry tickets (awareness that prices fall (with promotions) closer to sailing time); Experienced customers are taking action to obtain lower prices and flexibility - purchasing cheap tickets early to gain flexibility then cancel and re-purchase if cheaper promotion prices become available, - ticket abuse, purchasing short duration tickets for long stay; Dissatisfaction with existing pricing policy.
P&O Ferries had cut the cost of peak summer rates in July this year. On such initiatives, he told EyeforTravel.com: "Based on the overall strategy and revenue objectives the pricing strategy is set based on the forecast, expected demand, utilisation and competitive price levels. When any of the factors changes significantly e.g competitior pricing a potential revision to the price levels and or inventory allocation is evaluated."
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