02.services marketing(mkt mix)

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Service Product Mix Pricing of services Service Promotion Mix ‘Place’ factor in services marketing ‘People’ in services Service ‘Process’ Capacity planning Capacity scheduling

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Page 1: 02.Services Marketing(Mkt Mix)

Service Product MixPricing of servicesService Promotion Mix‘Place’ factor in services marketing‘People’ in servicesService ‘Process’Capacity planningCapacity scheduling

Page 2: 02.Services Marketing(Mkt Mix)

• Formulating marketing mix for services is as important as for products.

• It is the set of tools that a firm uses to pursue its marketing objectives in the target market

• Service expectation levels of consumers are at an all time high, hence formulation of service marketing mix needs to be done on a professional level, by experts

• Offering quality services is not enough,Proper promotion, sound pricing strategy, placement decisions, hiring right staff and studying consumers enhances service delivery process

• This has resulted in broadening & modification of the market mix i.e due to the inadequacy of the 4p’s an extended mkt mix is devised

Page 3: 02.Services Marketing(Mkt Mix)

Expanded market mix for services

Page 4: 02.Services Marketing(Mkt Mix)

An expanded marketing mix for services

Customers PricePlace & Time

Promotion

Product (service)People Process

Physical evidence

Customers PriceCustomers

Place, cyber-space & time

Page 5: 02.Services Marketing(Mkt Mix)

People◦All human actors who play a part in

service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.

customerservice employeesother customers

Page 6: 02.Services Marketing(Mkt Mix)
Page 7: 02.Services Marketing(Mkt Mix)

Physical Evidence◦ The environment in which the service is

delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.

•atmospheredécor, music etc.

•equipment•facilities•uniforms

Page 8: 02.Services Marketing(Mkt Mix)
Page 9: 02.Services Marketing(Mkt Mix)
Page 10: 02.Services Marketing(Mkt Mix)

Process◦The actual procedures, mechanisms,

and flow of activities by which the service is delivered—the service delivery and operating systems.

service delivery systems•back stage•front stage

procedurespolicies

Page 11: 02.Services Marketing(Mkt Mix)
Page 12: 02.Services Marketing(Mkt Mix)
Page 13: 02.Services Marketing(Mkt Mix)

PEOPLE PHYSICALEVIDENCE

PROCESS

Employees Facility design Flow of activities

Customers Equipment Number of steps

Communicatingculture and values

Signage Level of customerinvolvement

Employee research Employee dress

Other tangibles

Expanded Marketing Expanded Marketing Mix for ServicesMix for Services

Page 14: 02.Services Marketing(Mkt Mix)

Product mix

• Product mix decides the magnitude of success, intensity of profits and satisfaction levels of the consumer

• Factors influence the product mix based on the type of service provided

• Eg: Hotel service, quality of consumersTransport services-emerging lifestyles, levels of urbanizationPersonal care services- trends, tastes, fashion

Page 15: 02.Services Marketing(Mkt Mix)

Service Product Mix Service product is intangible and

perishable , inseparable & heterogeneous in nature.

Conceptualization of the service product Step 1-customer benefit concept

Step 2-service concept

Step 3-Service offer

Step 4-service delivery system

Page 16: 02.Services Marketing(Mkt Mix)

Consumers buy… not…

Speed/comfort An air ticket

Adventure/fun Tour package

Bill paying convenience Credit cards

BeautyBeauty

treatments/cosmetics

Page 17: 02.Services Marketing(Mkt Mix)

Five Product Levels

Potential product

Augmented product

Expected product

Basic product

Core benefit

Page 18: 02.Services Marketing(Mkt Mix)

Levels of a service product Core product – seat in a theatre, room in a

hotel, services in a bank

Expected product – consumer perception (speed in a bank, expertise/accuracy in consultancy services, security in insurance)

Augmented product - additional attraction provided to get an edge over competition, this helps to keep marketing efforts pro active

Potential product – process of discovering new ways to attract more customer, retain existing and fight competition (24x7 call centres, banks open on Sunday)

Page 19: 02.Services Marketing(Mkt Mix)

Designing of service offering Three components are to be kept in mind when we

want to design the service offering. Core service: The most basic component is the core

service and it addresses questions like “What is the customer really purchasing”, “What business are we in?” etc. It supplies the central problem solving benefits that customers seek Ex: Transport solves the need to move from

one location to another etc.

Core delivery process: The second component concerns the core delivery process i.e - how the core product is delivered to the customer, the customer’s role in the process, how long the process is and style of service offered.

Page 20: 02.Services Marketing(Mkt Mix)

Supplementary services: This is the third component and it augment(increases) , facilitates & enhances The core service by making it easy to use and by

increasing the value and appeal. Competitive advantage can be established through

the supplementary services when core product reaches maturity.

Supplementary services provide the necessary differentiation for success.

Each of the supplementary elements may require their own delivery system and

Flowcharting offers an excellent way to under stand & identify the many types of supplementary services accompanying a core product

Page 21: 02.Services Marketing(Mkt Mix)

IDENTIFYING AND CLASSIFYING SUPPLEMENTARY SERVICES: Supplementary services can be identified

as-

Page 22: 02.Services Marketing(Mkt Mix)

THE service flower

iinformation

Order tak

ingBilling

paym

ent

Exc

epti

on

consultation Safe keeping

Hos

pita

lity

Page 23: 02.Services Marketing(Mkt Mix)

Delivery process of supplementary services

Core Communication facilities

Payment options

(porter

Check in check out

parking

reservations

mealsRoom service

Theodoore Levitt

Page 24: 02.Services Marketing(Mkt Mix)

Service product decision

A service provider may start with a single service, than provide a range of services or develop a new offering or enter a new market

These service product decision can be made by using product/market matrix called Ansoff matrix-

Page 25: 02.Services Marketing(Mkt Mix)
Page 26: 02.Services Marketing(Mkt Mix)

Market penetration-no change in service or market—strategies to improve demand/market share

a) Increase frequency-- introduce schemes b) attract non-users c) grabbing competitors share

Market development—geog, age-group, social class

Diversification—new service-new market

New service development—new service in existing market

Page 27: 02.Services Marketing(Mkt Mix)

Managing services offering

Methods of New service development Service improvements Process line extension Supplementary services/new service Product line extension. major innovation

Page 28: 02.Services Marketing(Mkt Mix)

Steps in new service development

Idea generation

concept screening

testing the concept

design service & assess market potential

cost analysis

test marketing

final launch

Page 29: 02.Services Marketing(Mkt Mix)

* Need identification – size of market – cost-benefit analysis – introduction of new product

* product life cycle– launch growth maturity decline

Page 30: 02.Services Marketing(Mkt Mix)

Designing of new service Re-engineering service process—cost,

speed & productivity consideration Use of flow charts, blue prints, review

alternative delivery methods, eliminate supplementary services, rethink the process

Using research to design new service-ask customers what features & price will create value

Page 31: 02.Services Marketing(Mkt Mix)

Factors to be noted while developing service product mix• Enrich peripheral services

• Understand service quality expectations

• Study behavioral profile of the consumers (offering product is as important as formulating it)

• Take support of information technologies

• Product for all (single product for all/offer different specialisation in same product)

Page 32: 02.Services Marketing(Mkt Mix)

What is a Brand?

Attributes Benefits Values

Culture

User

Personality

Page 33: 02.Services Marketing(Mkt Mix)

Branding of services

Difficult to create a distinct brand image for services due to lack of consistency in service delivery—need for the entire org to work towards it.

Even so brand loyalty is high for services

Need for patronage in order to obtain optimum satisfaction

Page 34: 02.Services Marketing(Mkt Mix)

Brand loyalty depends on

Past experience

Availability of substitutes

Cost of switching

Perceived risk involved in purchase of services

Page 35: 02.Services Marketing(Mkt Mix)

Brand Equity

No Brand Loyalty(customer will change)

No Brand Loyalty(customer will change)

Satisfied Customer(no reason to change)Satisfied Customer

(no reason to change)

Satisfied & Switching CostSatisfied & Switching Cost

Values the Brand(brand as friend)

Values the Brand(brand as friend)

Devoted to Brand

Devoted to Brand

Page 36: 02.Services Marketing(Mkt Mix)

An Overview ofBranding Decisions

BrandingDecision

•Brand

•No brand

Brand-SponsorDecision

•Manu-facturerbrand

•Distribu-tor(private)brand

•Licensedbrand

Brand-Name

Decision

brandnames•Blanketfamilyname•Separatefamilynames•Company-individual•Individualnames

Brand-Repositioning

Decision

•Reposi-tioning

•Noreposi-tioning

Brand-StrategyDecision

•Lineextension

•Brandextension

•Multi-brands

•Newbrands

•Cobrands

Page 37: 02.Services Marketing(Mkt Mix)

Brand Strategies

BrandExtension

New

Bra

nd

Nam

e

Product Category

LineExtension

Existing

Existing

MultibrandsNew NewBrands

BrandExtension

New

LineExtension

Existing

Existing

MultibrandsNew NewBrands

Page 38: 02.Services Marketing(Mkt Mix)

Good Brand Names:

SuggestProductBenefits

Distinctive

Lack PoorForeign

LanguageMeanings

SuggestProductQualities

Easy to:PronounceRecognizeRemember

Page 39: 02.Services Marketing(Mkt Mix)

Pricing of services

• Research and expertise pertaining to the pricing of services is found lacking

• Pricing approaches developed for products are applied to services too

• The challenge is to determine a price at which the service product is sold and also gives profitable returns

• The price must be acceptable to the target customer & should accurately reflect on the other elements of the marketing mix

Page 40: 02.Services Marketing(Mkt Mix)

Three differences between pricing for goods & services Customer have limited knowledge

regarding reference prices for services

Price is an important signal of quality

Monetary price is not the only relevant price to the customer

Page 41: 02.Services Marketing(Mkt Mix)

Pricing objectives

Survival

Maximization of current profit

Maximization of current revenue

prestige/ image

Patronage & user based objective

Page 42: 02.Services Marketing(Mkt Mix)

Foundation for setting service price

Page 43: 02.Services Marketing(Mkt Mix)

Approaches/structure of pricing1. Cost based pricing - difficult as very

small portion of tangible goods sold, intangible service difficult to price, profit considerations also included after total cost is computed. The formula for cost based pricing is

Price = direct cost + overhead cost + profit margin

Draw back :- Defining the unit in which service is

purchased

Cost are difficult to identify

Calculation of peoples time

Page 44: 02.Services Marketing(Mkt Mix)

2. Competition based pricing – Does not mean charging the same price as the competitors but only using it as a base for determining ones own price .

Used usually were services are almost standardized or in case of oligopoly markets

Drawbacks :- Competitors may not be the best parameter,

service standards/delivery processes may differ.

Small firms may charge comparatively low

prices

Page 45: 02.Services Marketing(Mkt Mix)

3. Demand based pricing --

It is associated with the customer rather than the cost or competition

Relationship between price & demand

Drawbacks:-

Considers only the monetary aspect of cost of service, however non-monetary cost & benefit must be factored

Customer is willing to pay higher price when he is able to save time & effort

Page 46: 02.Services Marketing(Mkt Mix)

4. Value based pricing— How customer defines value Customers are weighing the perceived

benefits against the perceived cost they will incur

Recognize trade off customers are willing to make

Quantify non-monetary & monetary value to the customer

People perceive different set of values, identify one or more bundle that addresses a segment.

Page 47: 02.Services Marketing(Mkt Mix)

• Perception of value for a consumer –the price determines the value attached by the service provider & it should correspond with the customers perception of value

• There are various factors that influence price to be charged:-

• Range of service offered• Demand & capacity constraints• Kind of organization• Market structure• Competitors price

Page 48: 02.Services Marketing(Mkt Mix)

Pricing strategies for capturing & communicating valueSatisfaction based pricing – Service guarantees,

benefit driven or flat rate pricing

Relationship pricing – encourages a customer to expand his dealings with service provider

Efficiency pricing- understanding , managing & reducing cost . Providing value for money. Reducing monetary burden to the consumers by providing best service and a cost effective one. Efficiency through innovation, making it difficult for competitors to imitate

Page 49: 02.Services Marketing(Mkt Mix)

Satisfaction based pricing Service guarantees—a powerful re-

assurance, gives them a recourse-usually a price reduction or a refund. It symbolizes co commitment—enhances confidence

Benefit driven— based on how it is used & how it creates value. Service that directly benefits customer. Customers feels more satisfied & less uncertain, if the price of a service is related to the benefit it delivers

Flat rate pricing—where service prices are un predictable & cost are badly managed

Page 50: 02.Services Marketing(Mkt Mix)

Relationship pricing Long term contract– price & non-price

incentives are offered to strengthen the existing relationship & build a new one.

Price bundling– selling two or more service selling together. Provides various benefits to the service provider.

Managing the perception of value— value is subjective, not possible to assess the true value of services especially for credence qualities, hence necessary to communicate

Page 51: 02.Services Marketing(Mkt Mix)

Reducing the related monetary & non- monetary cost– price paid also includes non-monetary cost which is of 4 types –

Time cost Physical cost Psychological cost Sensory cost Price discrimination (different prices for

different consumers), penetration, skimming, follow the competitor, are also few of the strategies for pricing effectively used

Page 52: 02.Services Marketing(Mkt Mix)

Service Promotion MixGuidelines for an optimum promotion mix

• Develop word of mouth communication network (Customers refer friends etc)

• Don’t over-promise• Tangibilize the intangible factors• Feature working relationships between

customer and service provider• Propagate minimum/zero variance in

service delivery• Focus on service quality dimension• Position & differentiate the service via

the delivery process• Make the service more easily

understood

Page 53: 02.Services Marketing(Mkt Mix)

Developing promotion strategy• Select target market

• Develop firm’s positioning strategy

• Develop promotion/communication budget and mix

• Define communication objectives (in line with PLC)

• Divide communication objectives and target audience – for users, non users, etc.

Page 54: 02.Services Marketing(Mkt Mix)

Elements of promotion mix• Advertising – TV, radio, newspapers,

magazines, outdoor, POP etc.

• Publicity

• Sales promotion – gifts, contests, discounts, commission, fairs

• Personal selling

• Word of mouth

• Telemarketing

Page 55: 02.Services Marketing(Mkt Mix)

Alternate techniques Samples Price/ quality discount Coupons Promotional offers Future discount Gift coupons, scratch cards

Page 56: 02.Services Marketing(Mkt Mix)

Place in services

Page 57: 02.Services Marketing(Mkt Mix)

Place in services

The decision regarding location are the most crucial and accessibility and availability form an significant base for location decisions.

Accessibility refers to convenience with which the service can be purchased & availability refers to the extent to which the service is obtainable.

Mainly considered in terms of location, time & cost (channels involved in distribution)

Page 58: 02.Services Marketing(Mkt Mix)

Factors influencing choice of location Nature of interaction required Nature of service Customers needs & wants Dependency of other services Use of technology

The three possible interaction between service provider & customer:-

The customer goes to the service provider The service provider goes to the customer Interact at arms length

Page 59: 02.Services Marketing(Mkt Mix)

Decision about location• Nature of services

Low contact services: remote sites, less expensive

High contact services: accessibility, visibility, customer convenience eg hospitals , airports

location constraints: operational requirements eg airports, resorts with certain special facilities, economies of scale

locating in multi purpose facilities; near work places, airports

Multi stores– ATM, subway, fast-food

Page 60: 02.Services Marketing(Mkt Mix)

Direct distribution The inseparable, intangible and the

perishable nature of services makes direct distribution an indispensible option for ensuring quality and care to the customer

Advantages of direct distribution Greater control & monitoring Closer and amicable relationship with the

customers Ensure confidentiality & secrecy Elimination of certain costs Effective internal & external communication

Page 61: 02.Services Marketing(Mkt Mix)

Channels decisions Channel decision may be influenced by foll factors Ease and accessibility for the customers

The added value or service or benefit they provide

The cost to the company & the margins they seek

Their reputation and reliability

Their expertise, ability and compatibility

The vital role that they play

Page 62: 02.Services Marketing(Mkt Mix)

Primary channels in service distribution

Services created by company

Franchises

Electronics

Agents/brokers

Target customer

Widely used distribution channels in service include- Agent or brokerFranchised or contracted service deliveriesElectronics

Page 63: 02.Services Marketing(Mkt Mix)

Decisions about time Today for some highly responsive service

operations the standard has become 24/7, never the less there are many firms who resist the trend of 7 days operation.

Factors that encourage extended operating hours:-

Economic pressure from consumers Changes in legislation To improve asset utilization Automated self service facilities Availability of workers to work for extended

hours Pressure from competition

Page 64: 02.Services Marketing(Mkt Mix)

Strategies for effective service delivery1. Control strategy—the pre requisites for

employing control strategy are –uniqueness of the service offer, strong consumer demand, high loyalty in target mkt

Approaches to implement control strategies:-• Measurement• Review

2. Partnering strategies— learn about end users, improve delivery quality, communicate honestly

• Approaches to partnering• Integration of goals• Participation & co-operation

Page 65: 02.Services Marketing(Mkt Mix)

3 . Empowerment strategy- effective in the following context:-

• Service principal is new to the market• Lacks sufficient power to manage the channel• The service intermediary is more talented

• Approaches to empowerment:-• Provide needed support• Train the intermediary to deliver quality

service• Enable to develop customer driven service

processes• Change to co-operative management structure

Page 66: 02.Services Marketing(Mkt Mix)

‘People’ in services• Includes both, employees and consumers -

moment of truth is dependent on both

• Most demanding job in the service business are the so called front line jobs, they play a key role in anticipating customers needs, building customer relations, loyalty, customization, recovery etc

• Importance can be summed up as i) they are the core part of the product ii) they represent the firm iii) they are the brand

• Success depends on firms commitment to HR

Page 67: 02.Services Marketing(Mkt Mix)

Classification of employees High contact services – hospitals, education Low contact services -- post office, couriers Professional service employees Consumer service employees

Challenges faced & sources of conflicts

Emotional labor boundary spanning Personl/role conflict Organization/client conflict Inter client conflict

Page 68: 02.Services Marketing(Mkt Mix)

Strategies for customer oriented service delivery • Hire right people• i) competing for the best people• ii)hiring for service competence & service

inclination• iii) being the preferred employer

• Develop/train employees to deliver services as per standards

• i) Training for technical & interactive skills• ii) Empowering employees-3 power tools • iii) Promoting team work

• Provide needed support system to employees

Page 69: 02.Services Marketing(Mkt Mix)

• Retaining the best employees• i)Rewards & appreciation & recognization• ii)Including employees in companies vision

• Study target market/potential & current customers

* Observe service delivery process, keeping ‘people’ in mind

• Give due importance to consumers feedback

• Employ CRM – identify, attracting, differentiating and retaining customers

Page 70: 02.Services Marketing(Mkt Mix)

‘Physical evidence in services * Includes everything tangible, its like packaging and acts like a silent salesman.

• It plays a major role in shaping service experience & delivering customer satisfaction, shaping first impression & managing differentiation.

• It applies to all types & sizes of service org, though use of physical evidence is extensive in services like hospitals, hotels and minimal in insurance service, postal services, laundry services etc

• Due to the intangibility physical evidence is used as an vital quality proxy & firms take great pain to signal quality & portray a desired image

Page 71: 02.Services Marketing(Mkt Mix)

Service environment is also called as servicescape

Many servicescape may be purely functional , as they are not the only one that shape customers perception

Impact of service environment on buying behavior:-

A) as an attention creating medium B) as a message creating medium C) as an effect creating medium

Designing a service env is considered an art & takes considerable time & efforts. It requires consideration about ambient conditions, space, functionality etc

Page 72: 02.Services Marketing(Mkt Mix)

Types of physical evidence Peripheral evidence:- those items that

confirm the service or are complementary to the service

Essential evidence:-includes physical elements integral to the service though may not be always passed on.

Elements of physical evidence:- Physical environment– elaborate and

lean Communication Price Personnel Corporate image & identity

Page 73: 02.Services Marketing(Mkt Mix)

Elements of physical env

Atmospheric

Sight- size, layout ,lighting color

Sound- music , volume , pitch

Smell- fresh, appetizing, scented

Touch- temp, comfort

ServicescapeExterior design

SignageParking

LandscapeSurrounding env

InteriorsEquipmentsFacilities

Layout , etc

Page 74: 02.Services Marketing(Mkt Mix)

Environmental dimensions

Page 75: 02.Services Marketing(Mkt Mix)

Designing of service scape will depend upon :-

The degree of interaction between the customer and the employee, which can be as follows:-

Self service– customer performs most of the service

Interpersonal service– where both are present Remote service– where there is little or no

involvement On the degree of complexity— Low complex are referred to as lean service

scape and more complex as elaborate service scape, elaborate service scape communicates heavily through physical evidence

Page 76: 02.Services Marketing(Mkt Mix)

Communication:- Tangibilizing the service Tangibilizing the message Price:-it is a visible indicator of service

quality & level Too low price Too high price

Personnel- customer contact employees are important in providing physical evidence

Corporate image & identity

Page 77: 02.Services Marketing(Mkt Mix)

Significance of physical evidence Shaping first impression

Managing trust

Managing service quality

Managing differentiation

Re-positioning

Improving productivity

Page 78: 02.Services Marketing(Mkt Mix)

Service process

Service design should essentially satisfy the customers as well as be operationally efficient . It involves series of activities, their sequence, tech, methodology & procedures that have to be efficiently performed for delivery of service.

Service process involves three concepts:- A series of procedure Creation & delivery of the service Customer involvement & participation

Page 79: 02.Services Marketing(Mkt Mix)

Factors to be considered while designing service process

• Nature of service -divergence, complexity• Service location• Customer participation• Level of contact• The service itself:a) Process basedb) Technology, machinery, equipment based

Basic concepts for designing a process * Process should be broken into logical

steps * process should be flexible * should include the concept of deviation

Page 80: 02.Services Marketing(Mkt Mix)

Two types of service process Line & flow operation Job shop process

Decisions in service process planning Basic technological decision Specific equipment decision Location & layout decision People’s decision Operation structure Process flow decision—blue print, flow

charts, & benchmarks

Page 81: 02.Services Marketing(Mkt Mix)

blue print as a key tool in service design

It is the visual depiction of the process of service delivery, the roles of the employees & customers & the visible elements of the service. A picture that portraits the whole service offering.

It takes an holistic view about the delivery process mechanism keeping in mind the customer

A blue print should address the following aspects:- Service staff should understand what is required of them Customer should have knowledge of his role The time frame involved for each activity should be

stated

Page 82: 02.Services Marketing(Mkt Mix)

Components of service blue print

Customer Action

Support processes

Line of interaction

Line of visibility

Contact employees action

Line of internal interaction

Page 83: 02.Services Marketing(Mkt Mix)

Components of blue print Customer Action – above the line of

interaction

Contact Employees actions- a) between the line of interaction and line

of visibility. b) between line of visibility and line of

internal interaction

Support processes – behind the line of internal interaction

Page 84: 02.Services Marketing(Mkt Mix)

Steps in developing a service blue Steps in developing a service blue printprint Understanding the service to be blue printed

Identifying all the key activities involved in the service delivery & specify the linkage between them

distinguish between the on stage from the back stage activities

Service blue print should clarify interaction between customer & the employees & see the customers point of view

Identifying of support activities & fail(critical) points

Giving physical evidence to each customer action step

Create a script for the employees as well as the customers which can help in identifying potential problems or failures

Page 85: 02.Services Marketing(Mkt Mix)

Flow charting for services Involves presentation of the process

visually & in sequence

Useful in defining the points in the process where the consumer uses core service & where he uses the supplementary service

Next step would be to put all these customer interactions linearly into a sequence in which they occur

Page 86: 02.Services Marketing(Mkt Mix)

An overview of 7 P’s for An overview of 7 P’s for ServicesServices

Page 87: 02.Services Marketing(Mkt Mix)

Managing demand & capacity Fluctuating demand and perishable nature

of services poses a major challenge for service organizations

This problem becomes especially prominent for any capacity constraint service & can be effectively solved by two ways:-

Adjusting capacity to meet the change in the demand through proper operations & H.R management

And by managing the level of demand through devising effective marketing strategies

Page 88: 02.Services Marketing(Mkt Mix)

Managing capacity

Tailoring of capacity level(stretching or shrinking)

Some capacity is elastic in absorbing extra demand eg transportation services, hotels & restaurants by switching to higher capacity or by extending the time

Chasing demand strategy:- Schedule down time during period of low demand

Use part time employees

Rent or share extra facilities & equipments

Cross train employees

Page 89: 02.Services Marketing(Mkt Mix)

Managing Demand The problem is familiar “it is either feast or

famine!”

At any given point a service provider may face one of the four conditions:-

Excess demand– denied service, business lost Demand exceeds optimum capacity:- quality

may suffer Demand and supply are well balanced:- ideal

situation Excess capacity- low productivity , low

utilization.

Page 90: 02.Services Marketing(Mkt Mix)

Managing demand First it is important to understand the patterns

of demand as there may be seemingly random causes.

Several factors affect demand & thus service provider should approach the situation in the foll manner:-

1) Examine whether the demand follows the predictable cycle or not-- & than try to identify that underlining factor

2) Examine whether demand level changes randomly

3) Examine whether it can be associated to a particular segment & than divide demand by market segment

Page 91: 02.Services Marketing(Mkt Mix)

Five common approaches to manage demand Take no action

Reduce demand Increase demand Inventorying demand by Queuing & reservation

strategies to manage demand

Using marketing mix elements to shape demand

Product variation

Modifying the timing and location of delivery

Pricing strategies

Communication efforts

Page 92: 02.Services Marketing(Mkt Mix)

Inventorying demand through queuing & reservation

Strategies to deal with Queuing system

a) Employ operational logic- configure queues

b) Establish a reservation process

c) Differentiate waiting customers on the basis of:-

Importance Urgency of job payment of premium price Duration of service transaction

Page 93: 02.Services Marketing(Mkt Mix)

Capacity planning Throws light on the quality and quantity of service needed in

future

Market conditions, likes, tastes, expectations of consumers are studied

Their potential is rated

Lapses in current process are identified and corrective measures taken

Firm tries to match the service offerings to the market demand

Problems - Task of predicting behaviour of users is difficult

Unavailability of sufficient lead time in many cases

Page 94: 02.Services Marketing(Mkt Mix)

Capacity planning important for

• Staying in business

• Fighting competition

• Enhancing profits

• Enhancing growth curve of the service firm

• Preparing the firm for anticipated/sudden changes in demand, quality of services, new trends, changing tastes etc (Decreasing response time)

Page 95: 02.Services Marketing(Mkt Mix)

Capacity scheduling

• Based on capacity planning

• It helps schedules capacity according to the plan – man, machines, money, materials

• A detailed scheduling of need and usage of above factors is essential on a time map

• Helps optimum utilisation of time and other resources

• Reduces wastages

Page 96: 02.Services Marketing(Mkt Mix)

Case

A passenger with a confirmed ticket on early morning flight from Ahmedabad to Mumbai could reach Ahmedabad only by 3.30 pm because the train by which he was traveling to Ahmedabad got marooned due to floods at night. He reached Ahmedabad traveling by special buses arranged by the railways.

When he went to the airlines reservation office in town, the assistant wanted to know whether he had any certificate from the railways confirming all this. He did not. He was then told as per rules, he had to be treated a ‘No Show’ and he would get no refund on the earlier ticket. He could buy a fresh ticket for either of the evening flights, both of which were late and fully booked. He could take his chances at the airport. He agreed.

The assistant then endorsed the morning ticket for either of the evening flight (without any extra charges) and told him to go to the airport immediately and enter his name among the wait-listed passengers. When he reached the airport in about 30 minutes, he found that his name was already among the wait-listed passengers. Apparently the assistant in the office had called up and entered his name in the list