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Service Capacity & Demand Management

Demand and capacity are important concepts in services marketing. Capacity refers to the amount of service a business can provide, such as the number of customers or hotel rooms. It depends on factors like staffing, equipment, and space. Businesses should forecast demand, optimize staff schedules, use technology, implement flexible pricing, and consider overbooking or outsourcing to manage capacity effectively. Adjusting capacity to match demand patterns can involve scheduling downtime, cross-training employees, and renting shared facilities.

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220 views11 pages

Service Capacity & Demand Management

Demand and capacity are important concepts in services marketing. Capacity refers to the amount of service a business can provide, such as the number of customers or hotel rooms. It depends on factors like staffing, equipment, and space. Businesses should forecast demand, optimize staff schedules, use technology, implement flexible pricing, and consider overbooking or outsourcing to manage capacity effectively. Adjusting capacity to match demand patterns can involve scheduling downtime, cross-training employees, and renting shared facilities.

Uploaded by

anugaikwad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd

Demand & Capacity

• Capacity and demand are two important concepts in services


marketing.
• Capacity refers to the amount of service that a business can provide
within a given time frame.
• This can include the number of customers a business can serve, the
number of hotel rooms available, or the number of medical
procedures that can be performed in a day.
• Capacity can be impacted by factors such as staffing levels, equipment
availability, and physical space.
Productive service capacity
• Productive service capacity refers to the maximum amount of services
that a business can produce within a given period of time. It is the
amount of service that a business can provide when operating at full
efficiency, given its physical facilities, staffing levels, and other
resources.
• Dependent on
1. Facilities
2. Equipment
3. Labour
Managing Capacity
• Managing capacity effectively is a critical aspect of services marketing.
• Forecast demand: Businesses should analyze historical data, market
trends, and other factors to forecast demand. By understanding when
and how much demand is likely to occur, businesses can adjust their
capacity accordingly.
• Optimize staff schedules: Efficient staff scheduling can help businesses
make the most of their capacity. For example, businesses can
schedule staff to work during peak demand periods and reduce staff
during periods of low demand.
• Use technology: Technology can help businesses optimize their
capacity by automating processes and reducing the time needed to
complete tasks. For example, online booking systems can streamline
the booking process and reduce wait times for customers.
• Implement flexible pricing: Businesses can use flexible pricing
strategies, such as peak and off-peak pricing, to encourage customers
to use their services during periods of low demand.
• Overbooking: Overbooking can be a strategy for managing capacity,
but it must be done carefully to avoid turning away too many
customers and damaging the business's reputation.
• Outsourcing: In some cases, businesses can outsource services to
third-party providers to help manage capacity. For example, a hotel
may outsource laundry services to a third-party provider to free up
capacity for guest services.
• Expansion: If demand consistently exceeds capacity, a business may
need to expand its facilities or invest in new equipment or technology
to increase capacity.
Adjust Capacity to match Demand
1. Schedule downtime during periods of low dwmand
2. Cross-train employees
3. Use part-time employees
4. Invite customers to perform self-service
5. Ask customers to share
6. Create flexible capacity
7. Rent or share facilities and equipment
Understand Demand Patterns
• Do demand levels follow a predictable cycle
• Causes of cyclical variation
• Do demand levels drop randomly

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