week 6 Flashcards
explain the ‘capacity challange’
o Services are perishable and cannot be stockpiled for sale at a later date this a problem for any capacity constrained service that faces wide sings in demand e.g. cinemas, theme parks, fitness centres, golf courses
o The Goal should not be to utilise staff, labour, equipment and facilities as much as possible, but rather to use them as productively as possible
Challenge:
o Stretch or shrink existing capacity levels
o Adjusting capacity to match demand
defining productive capacity
- Physical facilities designed to contain customers e.g. number of seats in a plane, bus or restaurant
- Physical facilities designed for storing or processing goods e.g. car parks, warehouses, jacket rooms
- Service-provision equipment used to process people, possessions or information e.g airport scanners, cash registers
- The number, experience (productivity) and expertise of personnel
- Infrastructure e.g. congested airways, traffic jams or power failures
2 measures of productive capcactity
- % of total time facilities and equipment that are in use
2. % of Physical space e.g. seats or cubic freight space
Adjusting capacity to match demand
Involves tailoring overall level of capacity to match demand
o Schedule downtime during periods of low demand: carry out data processing, repair and maintenance activities wen demand is expected to be low
o Cross-train employees: employees who can peform several functions can be moved to bottleneck points e.g. cinema, supermarket, restaurant
o Use part-time and casual employees, e.g. restaurants, tax consultants
o Invite customers to perform self-service checkout at supermarkets, airports etc
o Ask customers to share e.g. taxi’s, restaurant table
o Create flexible capacity e.g. push two tables (for two) together, reconfigure aero plane seating or hotel room (dividing wall)
o Rent or share extra facilities and equipment e.g. party people
understanding the patterns and determinants of demand
- Predictability = Over a cycle of known duration e.g. day (varies hour to hour) week (varies by day) month (varies by day or week)
- Causes of variation = e.g. school holidays, seasonal changes, public holidays
- Random changes = In demand and related causes, e.g. weather, acts of god, e.g. cinemas busy when wet
look at diagrams
explain the 4 conditions firms may face
- Higher demand than maximum available capacity
- Higher demand than optimal supply levels
- Optimum capacity
- Lower demand than optimal supply levels
explain Higher demand than maximum available capcity:
- Lost business, may seek competitors’ offerings
- Resources under enormous pressure
- Service quality declines
- Overcrowding
explain Higher demand than optimal supply levels:
- Optimal capacity generally 70-90% of a firm’s maximum capacity
- All customers serviced
- Excess pressure on resources
- Long waits and queuing required
- Overcrowding
- Service quality suffers
explain optimum capcity
- Productivity ideal
- Quality service delivered
- Resources utilised at their optimum rate
- No delays
explain lower demand than optimal supply levels
o Productivity and, therefore, profitability decline o Resources under-utilised o Excellent individual service o No waiting o Lack of atmosphere, e.g., rock concert
Using Marketing mix Elements to shape demand patterns:
Price strategies
o Effective pricing depends on marketing manager having an understanding of how demand responds to increases or decrease in price per unit – consider elasticity, and rate fences to stop high buyers taking advantage of cheaper sales
Product variations: e.g. Baby loves Disco, ski resort adds a dry ski run or night skiing options, Tax firm offering consulting services in slack months, restaurant provides entertainment at different times of the day
Modifying the timing and location of delivery (Place)
o Vary the times when the service is available e.g café
o Offer the service to customers at new locations, e.g. car wash at shopping centres, mobile library or blood bank
Communication efforts: Advertising, signage, publicity and sales messages to encourage increase use in off peak times for e.g. “only call 000 if critical”
Short term promotion: e.g. spirit of Tasmania, Cinemas, CBD hotels (business hotels put on weekend deals to attract leisure travellers, making less money but still some preventing perishability)
ways to manage waiting lines
- Rethinking the design of the quieting system
- Installing a reservation system
- Tailoring the quieting system to different market segments
- Managing customer behaviour and their perceptions of the wait
- Redesigning processes to shorten the time of each transaction
look at diagram
inventory demand through reservations and queuing
o Virtual waits e.g. hold someone’s spot; customer remains within “buzzing” range (chemist warehouse) or provides a phone number o Queuing systems can be tailored to market segments e.g. job urgency (hospital), payment of a premium price (e.g. first class priority boarding) o Cultures and queues e.g. Japan, Uk
physiological considerations in waiting
o Uunoccupied time feels longer than occupied time
o Solo waits feel longer than group waits
o Physically uncomfortable waits feel longer than comfortable waits
o Pre and post-process waits feel longer than in-process waits
o Unfair waits are longer than equitable waits
o Unfamiliar waits seem longer than familiar waits
o Uncertain waits are longer than known, finite waits
o Unexplained waits are longer than explained waits
o Anxiety makes waits seem longer
o The more important the service, the longer people will wait
benefits of reservation system
- Customer dissatisfaction due to excessive waits can be avoided
- Reservations make it easier to control and smooth out demand, e.g., earlier restaurant booking
- It enables revenue management and serves to pre-sell a service to different customer segments, e.g., emergency car servicing
- Data from reservation systems also help organisations to prepare operational and financial projections for future periods, e.g., stage show
