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CONSIDER THIS. A successful chain of stores vending a large of gifts, cards and novelties recently announced discounts up to 50% for customers, who would brave the summer noon and shop.
INTRODUCTION
INTRODUCTION
In any sector, to fulfill the demand, there should be a backup of capacity.
Sectors which are dealing with this issue are : Airlines, restaurants, beauty parlors
e.t.c.
Balance can be made on either side, but the fact lies in finding the root of the
problem and then applying the solution
DEMAND DISAGGREGATIO N
CONSEQUENCES CONTD
2.SUPPLY: OPTIMUM SUPPLY, DEMAND: WELL-BALANCED
Customer
No delays Service quality delivered Pleasant amount of crowding
Employee
Utilization at an ideal rate
Business
Ideal productivity
Employees
Excess pressure on all staffs & facilities Service quality suffers
Business
Maximum profit
MAJOR CONSTRAINTS
TIME
FACILITIES
LABOUR
EQUIPMENT
Constraints on Capacity
Nature of the Constraint
Time
Type of Service
Legal Consulting Accounting Medical Law firm Accounting firm Consulting firm Health clinic Delivery services Telecommunication Network services Utilities Health club Hotels Restaurants Hospitals Airlines Schools Theaters Churches
Labor
Equipment
Facilities
Industries. Services cannot be inventoried, returned, or resold. Opportunity to sell services is quickly lost. Idle services during slow times represent revenue lost forever. This is Known as Perishability Factor .
EXAMPLES OF PERISHABILITY
0 A restaurant is serving food on a daily basis. One day
there is a strike. Can it serve the same food on the other day? 0 Sure. If it wants to go out of business!!!. But otherwise, the restaurant will have to serve fresh food because the previous food prepared would have perished. 0 services such as a doctors treatment, a hair dressers haircut, a movie or airline ticket etc cannot be saved for later use. They can be used only once else they perish. Thats perishability in services marketing.
FIXED CAPACITY
1..Capacity of the service remain fixed
Cont.
2..Intangible and uninventoriable
Cont.
3..Fixed resources like equipment and physical facilities
DEMAND DISAGGREGATION
Aggregate data collection, doesnt gives proper insights about the sources of demand.
This understandin g can be used by marketer, in the case of high demand, in the selection of customers
then it is a good position to develop strategies for matching demand and capacity.
With this strategy an organizations seeks to shift customers away from periods in which demand exceeds capacity, perhaps by convincing them to use the services during period of slow demand.
(A) Strategies for Shifting Demand to Match Capacity Demand Too High
Offer incentives to customers for usage during nonpeak times. Take care of loyal or regular customers first.
Shift Demand
One approach is to change the nature of the service offering, depending upon on the season of the year, day of the week, or time of day. For example: Airlines even change the configuration of their planes seating to match the demand from different market segment.
Approaches for Shifting Demand to Match Capacity (contd.) Modify Timing and Location
This approach help the service firms to adjust their hours and days of service delivery to more directly reflect the customer demand.
Differentiate on Price
The common response during slow demand is to discount the price of the service.
For example, Business travelers are far less price sensitive than are families traveling for pleasure.
For example: A reservation system in the theatre permits to develop specific knowledge about the demand for various shows in a day and on different days in a week.
This information can be used to develop optimal solution.
The fundamental idea is to adjust, stretch, and align capacity to match customer demand rather then working on shifting demand to match capacity.
Strategies for adjusting capacity to Match Demand(contd.) Use part-time employees Request overtime work from employees. Rent or share extra facilities and equipment Ask customers to share and Invite to perform self-service Schedule downtime during periods of low demand
Because the 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
occupied time
Anxiety makes waits seem longer
finite waits
Solo waits feel longer than group waits
will wait
Example: Restaurants, Transportation companies, Theatre etc service providers use reservation systems to alleviate long waits.
Because of Demand- Supply imbalances Therefore, Service capacity need to be fixed, and
Sometimes demand cant be modified, therefore get an insight of peak demand period
Efficiency Maximisation
Wider exposure of workers to service systems & learn diverse skills needed for different operations
Involve Customers