Services Marketing

MMS (III Sem)

Balancing Demand & Capacity
4 possible scenarios
Excess Demand
Demand exceeds
optimum capacity
Demand & Supply
balance • Higher wait times
Excess capacity
• Higher input costs
• Poor responsiveness
• Higher overheads per • Deficiency in Service
Service unit
• Dissatisfied customers
• Staff motivation affected
• Opportunity for
• Poor Customer competition
perception
• Higher input costs
Productive Service Capacity
• Facilities

• Equipment

• Labour

• Infrastructure
Managing Capacity
1. Stretching capacity levels
• Using Elasticity of the capacity

• Use the facilities for longer periods

• E.g. Extended hours of Banks, Evening / Weekend classes in Education institutes

• Minimise slack time of the capacity

• Simplify service
• E.g. offer simpler menu
Adjusting Capacity to match Demand
• Schedule downtime during low-demand periods
• Cross train employees
• Use part time employees
• Self service model
• Shared model
• Create flexible capacity
• Rent / outsource extra capacity
Demand fluctuation causes
• Predictable cycle
• Variation by hour / day / week / month
• Understand causation
• Income cycle (wages / seasons)
• Billing / tax related cycle
• Academic schedule
• Seasonal / climate changes
• Holidays
• Identify non-fluctuating / baseline customer segment
Wait time psychology
• Unoccupied time v/s Occupied time
• Solo wait v/s Group wait
• Physically comfortable environment
• Pre & Post process wait v/s in-process wait
• Uncertainty v/s certainty
• Unexplained v/s explained
• Anxiety
• Higher value perception
Services examples:
1. Furniture 10. Dentistry
2. Beauty 11. Vehicle servicing
3. Diagnostics 12. Appliance repairs
4. Appliance repairs 13. Education
5. Wildlife tourism 14. Legal services
6. Commercial property leasing 15. Air travel
7. Restaurant 16. Banking
8. Counselling
9. Surgery