MarketingManagement.pdf

202 CHAPTER11 DESIGNING ANDMANAGINGSERVICES

Perishability

Services cannot be stored; once an airplane takes off or a movie starts, any unsold

seats cannot be held for future sale. Perishability is not a problem when demand for

a service is steady, but fluctuating demand can cause problems. For example, public-

transportation companies have to own much more equipment because of higher

rush-hour demand, just as Charles Schwab must have sufficient server capacity to han-

dle its brokerage customers’ on-line trading during peak stock market periods.

Service providers can deal with perishability challenges in a number of ways.

Table 4.3 shows some strategies proposed by Sasser for better matching demand and

supply in a service business.^9

MARKETING STRATEGIES FOR SERVICE FIRMS

In addition to the traditional four Ps of marketing, service providers must pay atten-

tion to three more Ps suggested by Booms and Bitner for services marketing: people,

physical evidence, and process.^10 Because most services are provided by people,the

selection, training, and motivation of employees can make a huge difference in cus-

tomer satisfaction. Ideally, service employees should exhibit competence, a caring atti-

tude, responsiveness, initiative, problem-solving ability, and goodwill.

Companies should also try to demonstrate their service quality through physical

evidenceand presentation. Thus, a hotel such as the Four Seasons will develop a look

Table 4.3 Strategies for Improving the Match between Demand and Supply

Demand-Side Strategies Supply-Side Strategies

Usedifferential pricingto shift demand from

peak to off-peak periods; movie theaters and

car rental firms do this by lowering prices

during off-peak periods.

Cultivate nonpeak demandto build sales during

off-peak periods; hotels do this with their

weekend minivacation packages.

Develop complementary servicesto provide

alternatives for customers during peak periods;

many banks do this by providing drop-off

boxes for deposits and payments.

Install reservation systemsto better manage

demand levels; airlines, hotels, and physicians

employ such systems extensively.

Hire part-time employeesto meet peak demand;

restaurants, stores, and Web-based businesses

often bring in temporary staffers to help out

during holidays and other peak periods.

Introduce peak-time efficiency routinesto keep

productivity high during periods of high

demand; paramedics often assist physicians

during busy periods.

Increase consumer participationto speed

transactions; this is one reason why

supermarkets are experimenting with self-

service checkouts where shoppers scan and

bag their own groceries.

Plan facilities for future expansionto increase

supply; an amusement park can buy

surrounding land for later development as

demand increases.

Share serviceswith other providers to help

manage demand; hospitals can do this by sharing

medical-equipment purchases and scheduling.

Source:Adapted from W. Earl Sasser, “Match Supply and Demand in Service Industries,”Harvard Business

Review,November-December 1976, pp. 133–40.