Page 384 - Marketing Management

DESIGNING AND MANAGING SERVICES | CHAPTER 13 361

PERISHABILITY Services cannot be stored, so their perishability can be a problem
when demand fluctuates. Public transportation companies must own much more
equipment because of rush-hour demand than if demand were even throughout the
day. Some doctors charge patients for missed appointments because the service value
(the doctor’s availability) exists only at the time of the appointment.
Demand or yield management is critical—the right services must be available to
the right customers at the right places at the right times and right prices to maximize
profitability. Several strategies can produce a better match between service demand
23
and supply. On the demand side:
• Differential pricing will shift some demand from peak to off-peak periods.
Examples include low matinee movie prices and weekend discounts for car
rentals. 24
• Nonpeak demand can be cultivated. McDonald’s pushes breakfast service, and
hotels promote minivacation weekends.
• Complementary services can provide alternatives to waiting customers, such as
cocktail lounges in restaurants and automated teller machines in banks.
• Reservation systems are a way to manage the demand level. Airlines, hotels,
and physicians employ them extensively.
On the supply side:
Disney’s innovative FASTPASS
• Part-time employees can serve peak demand. Colleges add part-time teachers when enroll-
system helps to match supply and
ment goes up; stores hire extra clerks during holiday periods.
demand for its Disney World
• Peak-time efficiency routines can allow employees to perform only essential tasks during
theme park rides.
peak periods. Paramedics assist physicians during busy periods.
• Increased consumer participation frees service providers’ time. Consumers fill out their own
medical records or bag their own groceries.
• Shared services can improve offerings. Several hospitals can share medical-equipment purchases.
• Facilities for future expansion can be a good investment. An amusement park buys sur-
rounding land for later development.
Many airlines,hotels,and resorts e-mail short-term discounts and special promotions to self-selected
customers.After 40 years of making people stand in line at its theme parks,Disney instituted FASTPASS,
which allows visitors to reserve a spot in line and eliminate the wait. Polls revealed 95 percent like the
change. Disney’s vice president, Dale Stafford, told a reporter, “We have been teaching people how to
stand in line since 1955, and now we are telling them they don’t have to. Of all the things we can do and
all the marvels we can create with the attractions, this is something that will have a profound effect on
the entire industry.” 25

The New Services Realities

Service firms once lagged behind manufacturers in their use of marketing because they were small,
or they were professional businesses that did not use marketing, or they faced large demand or lit-
tle competition. This has certainly changed. Some of the most skilled marketers now are service
firms. One that wins praise for its marketing success is Singapore Airlines.

Singapore Airlines (SIA) Singapore Airlines is consistently recog-
nized as the world’s “best” airline—it wins so many awards, it has to update its Web site
monthly to keep up to date—in large part due to its stellar holistic marketing. Famous for
pampering passengers, SIA continually strives to create a “wow effect” and surpass cus-
tomers’ expectations. It was the first to launch individual video screens at airplane seats.
Thanks to the first-of-its-kind $1 million simulator SIA built to mimic the air pressure and humidity inside
a plane, the carrier found that taste buds change in the air and that, among other things, it needed to cut
back on spices in its food. SIA places a high value on training; its “Transforming Customer Service (TCS)”
program includes staff in five key operational areas: cabin crew, engineering, ground services, flight oper-
ations, and sales support.The TCS culture is also embedded in all management training, company-wide. It