Correspondence: Irene C L Ng, School of Business and Economics, University of Exeter, Streatham Court, Rennes Drive, Exeter EX4 4PU, UK. Tel: +44 (0) 1392 263250; Fax: +44 (0) 1392 263242; E-mail: Irene.ng@exeter.ac.uk

¹Irene C. L. Ng is an associate professor of marketing and the Director for the Centre for Service Research at the School of Business and Economics, University of Exeter (UK). Irene was previously the CEO of SA Tours, the largest tour operator in Southeast Asia based in Malaysia, Singapore and China and the founder and CEO of Empress Cruise Lines, a cruise company turning over $250m per annum.

²Roger Maull is a professor of Management Systems at the School of Business and Economics, University of Exeter, UK.

³Philip Godsiff is a doctoral candidate at the School of Business and Economics, University of Exeter, UK.

Received 1 December 2007; Revised 1 December 2007; Published online 22 February 2008.

Abstract

This paper argues that advanced demand exhibit three characteristics — that of being probabilistic, stochastic and deterministic. Deterministic demand results in revenue management practices being cross-functional. The paper proposes a new revenue management system that integrates four decision sets of the firm: the value set, the segmentation set, the sensitivity set and the forecasting set. An integrated revenue management system also links the concept of capacity to the attributes promised by the firm to the customer. The paper then proposes that service firms that do not sell 'unitised' services such as seats or rooms have to define and capture its amorphous capacity and through capacity limitation, create advanced demand and practice strategic revenue management.