Services Marketing

unit-4B,5 B MBA-3rd 2009-11
Managing service delivery Balancing demand and capacity

Topics
• Service blueprinting • Design and layout of service delivery • Capacity and demand management.

Learning Objectives • To understand the role of design and lay out in service delivery • To be familiarise with the process of blueprinting of a service process • To understand the role of customer in the service delivery process • To understand the relationship between Capacity and demand • To understand the use of an effective reservation system .

Issues in service delivery Intangible Performance not the object Process = experience = importance Service Characteristics Perishable Demand and Capacity balance Promote specific periods when necessary Capacity can’t be stored Inventory demand Use resources productively = increasing capacity Inseparable Design Customer’s involvement Into the delivery process Educate customers ―how it works‖ Personal information = Important Managing customer behaviour .

Specify physical evidence 3. Support processes involving other service personnel 9. ------------line of visibility (between front stage and backstage)------------7. ------------line of interaction (customers and front stage personnel)-------5. Identify principal customer actions 4.Service Blueprinting: Key Components 1. Support processes involving IT . Front stage actions by customer-contact personnel 6. Define standards for front stage activities 2. Backstage actions by customer contact personnel 8.

lobby.Simplified Example: Blueprinting a Hotel Visit Physical Evidence Stage Hotel exterior. employees. bellhop Go to room Arrive. valet park Doorman greets. key Make Customer reservation Actions Employee Actions Face-to-face Phone Contact Rep. gives key to room Line of Interaction Front Line of Visibility Backstage Make up Room . confirms Valet Parks Car Enter data Register guest data Elevator. room. valet takes car Check-in at reception Receptionist verifies. corridor. records.

Developing a Blueprint – Some Basic Advice •Identify key activities in creating and delivering the service •(theatrical metaphor) Distinguish between front stage. what customers experience. can drill down for more detail in specific areas . and back stage •Chart activities in sequence •Show how interactions between customers and employees are supported by backstage activities and systems •Establish service standards for each step •Identify potential fail points •Focus initially on “big picture” later.

Service Firms as Teachers: Well-trained Customers Perform Better • Firms must teach customers roles as coproducers of service • Customers need to know how to achieve best results • Education can be provided through: – – – – – – – Brochures Advertising Posted instructions Machine-based instructions Websites. assist customers . including FAQs Service providers Fellow customers • Employees must be well-trained to help advise.

causing problems for the firm itself. other customers Why do jaycustomers matter? • Can disrupt processes • Affect service quality • May spoil experience of other customers Can you give some examples of jaycustomers? .The Problem of Customer Misbehavior – Identifying and Managing ―Jaycustomers‖ What is a jaycustomer? A customer who behaves in a thoughtless or abusive fashion. employees.

efficient use of service Belligerent – angrily abuses service personnel (and sometimes other customers) physically and/or emotionally Family Feuders – fight with other customers in their party Vandal – deliberately damages physical facilities. furnishings. and equipment Deadbeat – fails to pay bills on time • • • What should a firm do about them? • Try to avoid attracting potential jaycustomers • Institute preventive measures • Control abusive behavior quickly • Take legal action against abusers • BUT firm must act in ways that don’t alienate other customers .Six Types of ―Jaycustomer‖ • • • Thief – seeks to avoid paying for service Rule breaker – ignores rules of social behaviour and/or procedures for safe.

Balancing supply and demand .

Relating Demand to Capacity: Four Key Concepts • Excess demand: too much demand relative to capacity at a given time • Excess capacity: too much capacity relative to demand at a given time • Maximum capacity: upper limit to a firm’s ability to meet demand at a given time • Optimum capacity: point beyond which service quality declines as more customers are serviced .

Variations in Demand Relative to Capacity VOLUME DEMANDED Demand exceeds capacity (business is lost) CAPACITY UTILIZED Maximum Available Capacity Optimum Capacity (Demand and Supply Well Balanced Demand exceeds optimum capacity (quality declines) Excess capacity (wasted resources) Low Utilization (May Send Bad Signals) TIME CYCLE 1 TIME CYCLE 2 Lovelock and Wirtz (2004:260) .

possessions. or information • Labour used for physical or mental work • Public/private infrastructure—e. airports. highways. internet bandwidth. electricity. .Defining Productive Capacity in Services • Physical facilities to contain customers • Physical facilities to store or process goods • Physical equipment to process people.g..

Crush chaos at Ikea store opening (Edmonton. People became agitated and eventually they started trying to charges the doors One woman pushed her way forward screaming with excitement. North London 2005) The did not put in place the right infrastructure to deal with that. .

leg room) – extend/cut hours of service • Chase demand (adjust capacity to match demand) – – – – schedule downtime in low demand periods use part-time employees rent or share extra facilities and equipment cross-train employees • Flexible Capacity (vary mix by segment) .Capacity Management Strategies • Level capacity (fixed level at all times) • Stretch or shrink – offer inferior extra capacity at peaks (e. bus as alternative to train) – vary seated space per customer (e. elbow room.g.g.

coastal tides) .Predictable Demand Patterns and Their Underlying Causes (Table 9-1) Predictable Cycles of Demand Levels – – – – – day week month year other Underlying Causes of Cyclical Variations – – – – – – – employment billing or tax payments/refunds pay days school hours/holidays seasonal climate changes public/religious holidays natural cycles (e.g.

Alternative Demand Management Strategies • Take no action – let customers sort it out • Increase demand (when demand is too low) – lower prices – communication. including promotional incentives – vary product features to increase desirability – more convenient delivery times and places • Reduce demand (When demand is too high) – higher prices – communication promoting alternative times • Inventory demand by reservation system • Inventory demand by formalized queuing .

single server.Alternative Queuing Configurations (Fig. single stage Single line. 9-4) Single line. single servers at sequential stages Parallel lines to multiple servers Designated lines to designated servers Single line to multiple servers (“snake”) “Take a number” (single or multiple servers) 28 30 31 26 32 29 25 21 20 24 27 23 .

others . economy • Importance of customer – frequent users/loyal customers vs.Tailoring Queuing Systems to Market Segments: Criteria for Allocation to Designated Lines • Urgency of job – emergencies vs. non-emergencies • Duration of service transaction – number of items to transact – complexity of task • Payment of premium price – First class vs.

Unoccupied time feels longer 2. Unexplained waiting seems longer 6. Waiting seems longer to new or occasional users 10. Uncertain waiting is longer than known. Jones & Peppiatt . Davis & Heineke. finite waiting 5. Preprocess/postprocess waiting feel longer than inprocess 3. Waiting alone feels longer than in groups 8. Physically uncomfortable waiting feels longer 9. Unfair waiting is longer than equitable waiting 7. People will wait longer for more valuable services Sources: Maister.Ten Propositions on the Psychology of Waiting Lines 1. Anxiety makes waiting seem longer 4.

Benefits of Effective Reservations Systems • Controls and smoothes demand • Pre-sells service • Informs and educates customers in advance of arrival • Customers avoid waiting in line for service (if service times are honoured. giving specific time) • Data capture helps organizations prepare financial projections .

Fast & user friendly For customer & staff Strategies for non-shows & over-booking Can answer customer questions Well-designed reservation system Provide alternative choices When 1st choice is unavailable Accommodate preference Options for self-service .

Setting Capacity Allocation Sales Targets for a Hotel by Segment and Time Period Capacity (% rooms) 100% Week 7 (Low Season) Week 36 (High Season) Executive service guests Out of commission for renovation Executive service guests Transient guests 50% Weekend package Transient guests W/E package Groups and conventions Groups (no conventions) Airline contracts Nights: M Tu W Th F S Sn Airline contracts Time M Tu W Th F S Sn (Fig. 9-5) .

Information Needed for Demand and Capacity Management Strategies • Historical data on demand level and composition. profitability of incremental sales • Site-by-site demand variations • Customer attitudes towards queuing • Customer evaluations of quality at different levels of capacity utilization . noting responses to marketing variables • Demand forecasts by segment under specified conditions • Fixed and variable cost data.

Sign up to vote on this title
UsefulNot useful