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Title: Marketing - Managing demand within service markets
Description: Why demand fluctuates, price discrimination, managing service capacity and yield management
Description: Why demand fluctuates, price discrimination, managing service capacity and yield management
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Lecture 7 - Managing demand within service markets
Balancing demand and capacity in service markets
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?
- most services are perishable
- Resources need to be used productivity, people I
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staff
- fixed-capacity services face 4 problems:
Excess demand
demand exceeds optimum capacity
Implication of variations in demand relative to capacity
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?
- service capacity is the number of service resources which are available for service production
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Characteristics of service are derived from customer integration into the service process I
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perish
ability/heterogeneity contribute to these issues e
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Overbooked flights linked to customer noshows
U certainty of demand patterns
People being people e
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Wasted appointment as doctors
Demand gaps create vacant facilities but fixed costs without providing revenue
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VC are still generated
Price discrimination
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g
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g
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Different service - to meet the need e
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Business class economy
fares
B) Price discrimination - different points of consumption due to inseparability e
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Train prices for diff
destinations
C) Price discrimination - by time of production e
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Telephone rates
Managing customer demand - queues and reservation systems
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g
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g
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They pre sell a service providing people turn up
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Capacity gap and demand gap
Demand gaps:
Empty beds in hospital
Unoccupied nurses
Empty rooms in hotel
Empty restaurants
Unused business areas I
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conference rooms
Managing service capacity can happen pre or in-process
4 types of service capacity management activities
A - determining the capacity level
B - Short-term capacity adjustments
C - demand adjustments
D - waiting time management
Yield management
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Prices vs duration - predictable/unpredictable, fixed/variable
Control of duration methods
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Reduce times between customers - tactic to increase revenue per available inventory unit e
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Turning around aircrafts quickly
Price - differential pricing, customers develop reference prices, dangers of alienating customers
Proper price mix - logical mix of prices must be offered, must be clear distinction between prices
offered, relies on information on price elasticities
Rate fences - I
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qualifications that must be met to receive a discount, physical e
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Room type,
amenities or non-physical, time specific services, rack rates used by hotel booking
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- many operational challenges e
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Holding out for the best price
- cant achieve it without good forecasting techniques
- yields of whole business need to be maximised rather than one aspect e
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Hotel room and
restaurant
- Consumer mistrust of the us of variable pricing
- peak demand service may deliver poor quality
Title: Marketing - Managing demand within service markets
Description: Why demand fluctuates, price discrimination, managing service capacity and yield management
Description: Why demand fluctuates, price discrimination, managing service capacity and yield management