7. service demand management


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7. service demand management

  1. 1. Introduction There are three characteristics in a society that are needed to generate demand for a service. These are desire, affordability and willingness to purchase. Every product, including services will have a minimum demand, but the minimum demand may not be adequate enough to the marketer to achieve organizational objectives. One of the primary responsibilities of a marketing organization is to manage demand to a desirable level.
  2. 2. Demand situations Negative demand: the market response to an offer of a service firm can be negative. People are aware of features of the service and the benefits offered, but the evaluation of offer might lead them to take a decision that is not is favor of a service offer. Passenger refusing a bus conductors call to board the bus
  3. 3.  No demand: this demand situation exists either due to unawareness, insufficient information about the service due to consumers indifference. Marketer should focus on promotional campaign and communicating the right reason for preferring services offered by the firm. Bus with no passenger in it.
  4. 4.  Latent demand: in any given environment it is impossible to have a set of products that are capable of offering total satisfaction to all the needs and wants of a society. There exists the gap between desirable and available. Latent gap is nothing but the gap between desirability and availability. Latent demand is a business opportunity and services firm should orient themselves to identify such opportunities and exploit them at the right time. Passenger travelling in an ordinary bus but dreaming of luxury bus.
  5. 5.  Seasonal demand: some services will find demand only during a particular season in year. Seasonal demand creates many problems to service organisations. These include idling the capacity, fixed cost and excess expenditure on promotion.
  6. 6. Demand patterns Irregular demand Falling demand Demand to the level of optimum capacity Demand exceeding capacity Demand below the optimum capacity Excess demand
  7. 7. Strategies for demandmanagement Strategies for shifting demand to match service capacity(I) Communicating busy day and timings(II) Providing incentives during non peak hours(III) Identifying regular customers and serving them first(IV) Scheduling service segmentwise
  8. 8.  Strategies to increase the demand(I) Aggressive promotion(II) Entry into new segments(III) Offering price incentives(IV) Change in service timings(V) Providing service convenience to the customer(VI) Promote word of mouth communication
  9. 9. Flexing capacity to meet lowdemand Performance maintenance and renovations Schedule vacations Schedule employee training Lay off employees
  10. 10. Flexing capacity to meet highdemand Stretch time, labor, facilities and equipment Cross train employees Hire part time employees Overtime from employees Rent or share facilities Rent or share equipment Sub contract
  11. 11. Waiting line strategies Employing operational logic Establishing a reservation process Differentiate waiting customer Making waiting fun