LINGAYAS VIDYAPEETH

SCHOOL OF COMMERCE
AND MANAGEMENT

ASSIGNMENT
OF
SERVICE MARKETING

Submitted To- Submitted By-

Ms. Alisha Gunjan
16BMI24M

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Question - Write a detailed note on demand and capacity of managing services.
Answer - Demand is the amount of a particular economic good or service that a
consumer or group of consumers will want to purchase at a given price
Managing Capacity means managing the limits of an organization's resources,
such as its labor force, manufacturing and office space, technology and equipment,
raw materials, and inventory
 THE UNDERLYING ISSUE: LACK OF INVENTORY CAPABILITY
• Lack of Inventory capability is the main constraint in services marketing.
• Fluctuations lead to:
(a)Excess demand: the level of demand exceeds max capacity
(b)Excess capacity: demand is below optimum
(c)Demand exceeds optimum capacity: No one is turned away, but quality may
still suffer
(d)Demand and supply are balanced at the level of optimum capacity: Staff and
facilities are occupied at ideal level

 UNDERSTANDING CAPACITY CONTRAINTS

• Time: Medical, legal, accounting, consulting
• Labor: Medical firm, legal firm, accounting firm, consulting firm, health clinic
• Equipment: Courier services, travel services, health clubs, network services
• Facilities: Hospitals, hotels, restaurants, airlines, schools, theatres

 UNDERSTANDING DEMAND PATTERNS

• Charting demand patterns: Those organizations which have computerized
customer information systems can do the charting demand over relevant periods. If
seasonality is a suspected problem then graphing should be done for data from the
past year.

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• Predictable cycles: Variations in demand can be caused by many factors. Some
are predictable -while some are not. Tourism services have peak periods at certain
holidays and at weekend days. Generally, one or more causes can be identified
when there exists a predictable pattern.
• Random demand fluctuations: Random variations in demand are there in every
kind of services. There is no predictable cycle. For example, Medical Service
facilities in case of occurrence of a Natural Calamity
• Demand patterns by market segment: Disaggregation of demand by market
segmentation is possible if an organization has detailed records on customer
transactions or the analysis may reveal that the demand from one segment is
predictable whereas the demand is relatively random from another segment. For
example, for a bank, the visits from its commercial accounts may occur daily at a
predictable time whereas personal account holders may visit the bank at random
intervals.