Lecture 6 Flashcards
Define productive capacity
- Physical facilities designed to contain customers eg. number of seats in a restaurant
- Physical facilities designed for storing or processing goods eg. car park, cloakroom
- Service provision equipment used to process people, possessions or information eg. airport scanner, cash register
- Number, experience and expertise of personnel eg. trainee badges
- Infrastructure eg. congested airways, traffic jam, power failure
Explain the capacity challenge
=>Stretch/shrink existing capacity
- Some capacity has an elastic ability to absorb extra demand (eg. pack commuters on a train) but the actual level of capacity remains unchanged
- Extend opening hours eg. Melbourne Zoo
- Reduce amount of time that customers or their possessions spend in process (eg. express lunch)
=>Adjust capacity to meet demand (involves tailoring overall level of capacity to match demand)
- Schedule downtime during periods of low demand - carry out dataprocessing, repair and maintenance activities
- Cross-train employees -> employees who can perform several functions can be moved to bottleneck points when needed eg. cinama, restaurant
- Use part-time and casual employees eg. restaurant
- Invite customers to perform self service (co-production) eg. self service checkouts at supermarket
- Ask customers to share eg. taxi, restaurant table
- Create flexible capacity eg. push two tables together, reconfigure hotel room
- Rent or share extra facilities and equipment eg. Mt Buller, Las Vegas Hospital (rents out sections being unused to film producers)
Identify some of the patterns and determinants of demand
- Predictability => over a cycle of known duration eg. day (varies by hour), week (varies by day)
- Causes of variation (eg. school holidays, seasonal changes)
- Random changes => in demand and related causes (eg. weather)
- Can demand patterns for a particular service be disaggregated by segment? (eg. fitness centre - busy early morning during the week (5-11) (people on the way to work before 7, then uni students til about 9 and then mothers who have dropped their children at school until 11)
Explain what happens when demand is higher than maximum capacity, higher than optimal capacity, at optimum capacity and lower than optimum capacity
= Higher demand than maximum capacity
- Lost business, may seek competitor offerings
- Resources under enormous pressure
- Service quality declines
- Overcrowding
= Higher demand than optimal capacity
- Optimal capcaity generally 70-90% of firm’s maximum capcity
- All customers serviced
- Excess pressure on resources
- Long waits and queuing required
- Overcrowding
- Service quality suffers
= Optimum capacity
- Productivity ideal
- Quality service delivered
- Resources uilised at optimum rate
- No delays
= Lower demand than optimal supply levels
- Productivity and profitability decline
- Resources under-utilised
- Excellent individual service
- No waiting
- Lack of atmosphere eg. rock concert
How can a business use the marketing mix elements to shape demand patterns ?
= Pricing Strategies
- Effective pricing depends on the marketing manager having an understanding of how demands respond to increases/decreases in the price per unit (eg. short term promotions in quiet periods)
= Product Variations
- Ski resort adding dry run, restaurant providing entertainment at different times of day
= Modify Time & Location of Delivery (place)
- Vary the times when the service is available eg. shopping centres at Christmas
- Offer the service to customers at a new location eg. car wash at shopping centre, mobile library
= Communication Efforts
- Advertising, signage, publicity and sales, messages to encourage increased use in off-peak
= Short-Term Promotions
- Eg. Spirit of Tasmania, Jetstar (only to be used at certain times/dates)
Explain why waiting lines occur and strategies for managing waiting lines/ benefits of a reservation system
- Waiting lines occur when the number of arrivals exceeds the capacity of the system to process them
- Queue management requires collection of extensive data on arrival patterns (some predictable, some random)
- Solutions to queuing problems need to tackle root causes eg. late arrival of ground staff
Managing waiting lines
- Rethinking design of the queuing system
- Think carefully about the way queuing will work most effectively (eg. express checkout, snake)
- Installing a reservations system
- Tailoring the queuing to different market segments
- Managing customer behaviour and their perceptions of the wait
- Redesigning processes to shorten the time of each transaction
- Virtual waits eg. hold someone’s spot, customer remains within ‘buzzing’ range (eg. Chemist Warehouse)
- Queueing systems can be tailored to market segments eg. job urgency (hospital), payment of premium price (eg. Business class get to enter plane first and no wait time)
- Cultures and queues eg. Japan, UK
= Benefits of reservation system
- Customer dissatisfaction due to exessive waits avoided
- Reservations make it easier to control/smooth out demand eg. earlier restaurant booking
- Enables revenue management and serves to pre-sell a service to different customer segments eg. emergency car servicing
- Data from reservation systems also help organisation prepare operational and financial projections for future periods eg. stage show
What are some of the psychological considerations in waiting
- Unoccupied time feels longer than occupied time
- Solo waits feel longer than group waits
- Physically uncomfortable waits feel longer than comfortable ones
pre/post-process waits feel longer than in-process - Unfair waits longer than equitable
- Unfamiliar waits seem longer than familiar
- Uncertain longer than known, finite
- Unexplained longer than explained
- Anxiety makes waits seem longer eg. cinema queue
- The more important the service, the longer people wait (eg. grand final)
Describe the six main queue configurations and give an example of when each is used
- Single line/single server/single stage
- doctors reception - Single line/single servers at sequential stations
- suitable for small waiting time eg. graduation gowning - Parallel lines to multiple servers
- offers more than one serving station eg. supermarket - Designated lines to designated servers
- assign different lines to different categories of customer eg. express checkout, different check-ins at flight gates - Single line to multiple servers (snake)
- preferred, multiple lines may not move at same speed eg. bank - Single/multiple servers (take a number)
- Vicroads, supermarket deli
Describe some demand management strategies for a restaurant to better manage customer demand fluctuations
WHEN QUIET
- full a la carte
- short-term promotions eg. 30% off on quietest night
- develop loyalty card system
- stimulate student market
WHEN BUSY
- limit choice of menu items to process customers faster
- have two-sittings and require reservation system, discounts for leaving early
- keep prices high (no discounts)
- self-service to improve productivity
