�ݺ�ߣ

�ݺ�ߣ © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 9 – Page 1
Chapter 9:
Balancing Demand
and Productive
Capacity
Services Marketing 7e, Global Edition

Overview of Chapter 9
 Fluctuations in Demand Threaten Service Productivity
 Managing Capacity
 Analyze Patterns of Demand
 Managing Demand
 Inventory Demand Through Waiting Lines and Queuing Systems
 Customer Perceptions of Waiting Time
 Inventory Demand Through Reservation Systems

Fluctuations in Demand
Threaten Service Productivity

Defining Productive Capacity?
 Productive capacity can take several forms in services
 Physical facilities designed to contain customers (beds ,rooms
,seats, classrooms)
 Physical facilities designed for storing goods (parking, warehouse)
 Physical equipment used to process possessions or people.(ATM,
gym)
 Staffing Labor in restaurants and hospitals (nurses, waiters, call
center staff)
 Capacity in accessing public Infrastructure to deliver service
quality (highways)

From Excess Demand to
Excess Capacity
Excess
demand
Too much demand relative to maximum
capacity
Demand
exceeds
optimum
capacity
Service quality is perceived to have
decreased
Optimum
capacity
Staff is not overworked and customers
receive good service
Excess
capacity Too much capacity relative to demand

Variations in Demand Relative to
Capacity
VOLUME DEMANDED
TIME CYCLE 1 TIME CYCLE 2
Maximum Available
Capacity
Optimum Capacity
(Demand ≈ Supply)
Low Utilization
(may send bad signals)
Demand>Capacity
(business is lost)
Demand>
optimum capacity
(quality declines)
Excess capacity
(wasted resources)
CAPACITY UTILIZED

Addressing Problem of
Fluctuating Demand
Two basic approaches of which most firms use a mix of:
1. Adjust level of capacity to meet demand
2. Manage level of demand
 Use marketing strategies to smooth out peaks
 Inventorying demand until capacity becomes available

Managing Capacity

Managing Capacity
 Enables more people to be served at same level of capacity
 Stretch and shrink:
 Offer inferior extra capacity at peaks (e.g., subway standing customers)
 Use facilities for longer/shorter periods (extend working hours like
evening classes and banks)
 Reduce amount of time spent in process by minimizing slack time
(present menus fast, and bills )

Managing Capacity
Adjusting capacity to match demand
 Rest during low demand (repair, maintenance and vacations for
employees)
 Cross-train employees (to perform variety of tasks)
 Use part-time employees
 Customers perform self-service (automated checkout stations at
supermarkets)
 Ask customers to share (taxi sharing at reduced costs)
 Create flexible capacity
 Rent/share facilities and equipment

Managing Demand

Managing Demand
1. Take no action
 Let demand find its own levels
2. Interventionist approach (marketing mix)
 Reduce demand in peak periods
 Increase demand when there is excess capacity
3. Inventorying demand until capacity becomes available
 Formal wait and queuing system
 Reservation system

Interventionist approach:
Marketing Mix Elements to Shape
Demand Patterns
1. Use price to manage demand (increase price in high season and
reduce price in low season)
2. Change product elements (new services to target new segments during
off season) changing menu during Ramadan, Carlos, frozen food at the
beginning of the pandemic
3. Modify place and time of delivery
 No change (same location ,same time)
 Vary times when service is available (open malls till 1 am on weekends),
cinema during feasts
 Offer service to customers at a new location (mobile car wash services,
delivery meals, catering)
4. Promotion and Education( promote speed of service and availability

Inventory Demand Through
Waiting Lines and Queuing
Systems

Waiting Is a Universal
Phenomenon!
 An average person may spend up to 30 minutes/day waiting
in line—equivalent to over one week per year!
 Nobody likes to wait
 It's boring, time-wasting, and sometimes physically
uncomfortable

Why Do Waiting Lines Occur?
 Because number of arrivals at a facility exceeds capacity of
system to process them at a specific point in the process
 Queues are basically a symptom of unresolved capacity
management problems
 Not all queues take form of a physical waiting line in a
single location
 Some are virtual (e.g., phone)

Queuing Systems can be Tailored to
Market Segments
 Urgency of job (hospitals)
 Emergencies vs. non-emergencies
 Duration of service transaction (express lanes at
supermarket)
 Number of items to transact
 Complexity of task
 Payment of premium price (first class airlines)
 Importance of customer (VIP in banks)
 Frequent users/high volume purchasers vs. others

Customer Perceptions of
Waiting Time

Ten Propositions on Psychology of
Waiting Lines
Sources: Maister; Davis&Heineke; Jones &Peppiatt
Feels longer than
Unoccupied time (wifi,magazines) Occupied time
Solo waits Group waits
Physically uncomfortable waits Comfortable waits (standing, cold
weather or hot)
Pre- and post-process waits In-process waits (pre or post
purchase)
Unexplained waits Explained waits
Unfamiliar waits Known, finite waits
Unfair waits Fair waits
unvalued waits Valued waits

Inventory Demand Through
Reservations System

Characteristics of Well-Designed
Reservations System
 Fast and user-friendly for customers and staff
 Responsive to customer queries and needs
 Offers options for self service (e.g., through an online
reservations system)
 Accommodates preferences (e.g., room with a view)
 Deflects demand from unavailable first choices to
alternative times and locations

Summary
 At any moment in time, a fixed-capacity service may face
 Excess demand
 Demand exceeding optimum capacity
 Demand and supply well-balanced at the level of optimum capacity
 Excess capacity
 To balance demand and capacity, a firm can:
 Manage capacity
 Take no action and let demand find its own levels
 Reduce demand in peak periods
 Increase demand when there is excess capacity
 Inventory demand using wait & queuing, and reservation systems
 Capacity can be managed through:
 Stretching or shrinking capacity levels
 Adjusting capacity to match demand
 Creating flexible capacity

Summary
 Demand can be managed through
 Analysis of patterns
 To be reshaped by marketing strategies
 Waiting is a universal phenomenon. Waits can be reduced by
 Rethinking and redesigning the queuing system
 Managing customers’ behavior and their perceptions of the wait
 Installing an effective reservation system focused on yield

�ݺ�ߣ

services marketing chapter nine 9 m.pdf

More Related Content

services marketing chapter nine 9 m.pdf