17- Service Strategies

Introduction:

The management and marketers of the service firm must address several challenges. Developing a competitive strategy for services is extremely difficult due to their intangibility. People assign different attributes to a service and rate it in various ways. Because of the variety, services cannot be standardised, making it even more challenging to choose a strategy. When deciding on any plan, a service marketer should keep the customers’ needs in mind because each customer’s needs differ.

Demand and supply limits must also be managed, which is crucial and challenging. Demand is a variable that is affected by several circumstances, and service businesses have the difficulty of matching capacity to demand. They may also attempt to manipulate the demand variable to match their capacity. With minimal capacity and tremendous demand, the issue of long line-ups arises. This is one of the areas where the service company loses most of its clients. Customers despise standing in lines. Customers are becoming increasingly impatient as more options and replacements become available. For service businesses, managing waiting lines is also a significant concern.

Competitive Marketing Strategy:

A service company that sells various goods and services must develop unique strategic plans for each business proposition and market in which it competes. Strategic plans would be required for several areas, such as marketing, human resources, and finance. Strategic plans can be divided into three categories:

1. Strategic planning at the corporate level:

The service organisation has several SBUs, and the planning affects their fortunes. The primary purpose is to align the individual SBU strategies with the group’s objectives. For instance, Ratan Tata and his Tata Sons Board of Directors decided that the Tata Group would concentrate on infrastructure, steel, automobiles, telecommunications, information technology, hotels, tea, and chemicals. At this level, decisions were made to abandon FMCG (TOMCO, Lakme), liquor, and office items (Forbes, Forbes & Campbell), among other things.

2. Strategic planning at the business-unit level:

Decisions that influence an individual SBU are made at this level. As a result, if Taj Hotels chooses to grow through acquisition rather than organic methods, the decision will be made at this level.

3. Strategic planning at the functional level:

This will have an impact on the various functions of an SBU.

A few models are frequently used when developing marketing strategies. In the following subsections, we’ll discuss each one individually.

1. Boston Consulting Group Matrix:

This matrix was created over 35 years ago by the management consulting firm Boston Consulting Group (BCG). A service firm uses this grid to classify its SBUs or goods as Stars, Cash Cows, Problem Children (or Question Marks), or Cash Crunch (or Dogs). The respective SBUs’ market share compared to competitors and industry growth rate are used to classify them.

 

• Stars are SBUs (or service products) that operate in a high-growth industry (such as BPOs) and have a large relative market share (like Delhi-based IBM—Daksh). To stay competitive and grow market share, they would need a lot of resources from the service firm.
• Cash Cows are SBUs (or service products) in low-growth or mature industries with significant market shares. This may be due to their early entry into the market. Whenever an industry experiences a downturn, stars change into cash cows, retaining their customers and loyalty while having minimal marketing costs. As a result, cash cows seldom attract new investment and are merely “milked.”
• Problem Children (also known as question marks) are SBUs with a bleak future. The management cannot foresee a bright future or a certain death. The SBUs have a small relative market share, but their industry is thriving and growing rapidly. While their competitors appear to be doing well, they appear to be doing poorly overall. It currently refers to their lack of competitiveness. The management has a choice: either provide more resources to revive the SBU’s fortunes or withdraw assistance and destroy the SBU, cutting losses while it can. The danger is that both decisions could be proven incorrect later: the first could result in opportunity costs for the firm, while the second might result in opportunity loss.
• Cash Crunch (also known as Dogs) refers to SBUs that aren’t doing well in comparison to their competitors (as seen by low market shares) and whose industry isn’t developing (reflected in a very low growth rate).

Uses: Service organisations can use the BCG matrix to build and develop market share for their SBUs. It is mainly used in corporate strategy planning to allocate and reallocate limited resources to various SBUs. The service organisation should pursue a well-balanced portfolio of SBUs (or products), including stars and problem children in the mix, avoiding cash crunch (through divestiture), and harvesting cash cows.

Limitations: The BCG matrix is a helpful strategic tool, but it is openly simplistic, with the drawback that it relies on only two elements to evaluate whether or not an SBU gets budget allocation. Second, it was created in the United States and is suitable for service companies that operate in a mature, market-oriented environment. Mixed economies, such as those of the newly liberalised East Bloc nations and others like India and Sweden, may not be as well suited. Instead of utilising industry growth rate and market share, Magdolna Csath, a Hungarian economist, changed the BCG matrix by utilising two other parameters: environmental opportunities and a service firm’s competitive strength. The approach helps evaluate a service firm’s current and future SBUs or product portfolio.

2. General Electric Business Screen:

This approach can also allocate limited resources across a service firm’s SBUs or service items and establish marketing and corporate-level plans for them. General Electric created the business screen with the support of consulting company McKinsey & Co., and it builds on the BCG matrix’s limitations and shortcomings.

To classify SBUs or items in its portfolio, the business screen considers market attractiveness and business position / SBU strength. Both elements appear to be subjective, yet they are based on a set of criteria that assist SBUs and products be rated:

1. Market Attractiveness

• Market size
• Market growth rate
• Market entry barriers
• Competition – number and type of competitors
• Technological requirements
• Profit margins, etc.

 

2. SBU Strength/Business Position

• SBU size
• Market share
• Research and development capabilities
• Power or strength of differential advantage(s)
• Cost controls
• Production capabilities and capacities

Management expertise and depth, etc.

The ratings of the SBUs are arrived at quite systematically:

• Criteria are assigned weights
• Each SBU / product is rated concerning all criteria
• Overall ratings are calculated for all SBUs / products
• Each SBU / product is then rated as high, medium or low according to market attractiveness and then the business position / SBU
• Different service firms, in actuality, have different criteria, which can be incorporated into their analytical

The SBUs or items are plotted on a three-dimensional grid following the ratings. The location on the GE business screen will convey the SBU or product evaluation to the service marketer, and resources can be allocated accordingly. The following is the location as well as the proper strategy:

• Upper left cells and Invest strategy:

Any SBU in this cell is in the best position to grab market opportunities because of its high market attractiveness in terms of market potential and high business strengths, capacity, and other factors. The service firm should provide resource support to these SBUs or goods to strengthen and build them.

• Three cells running diagonally from the lower left to the upper right of the screen represent a Protect strategy:

These cells’ SBUs and products generate funds for the service firm, which can be used to fund new SBUs and goods. As a result, it is critical to employ a defensive strategy to safeguard a cash generator. Selected investments should also be made to support these SBUs.

• Two cells just below the diagonal cells represent the Harvest strategy:

These two cells’ SBUs or products aren’t particularly strong in their capabilities, and they don’t have particularly appealing markets, compelling decision-makers to forego those additional resources in favour of maximising returns with the current allocation. If there is a chance to sell something for a profit, take it with both hands.

• Lower right cell and the Divest strategy:

SBUs or goods in this cell are underperforming, with no appealing market and insufficient resistance to permit a turnaround. They must be removed from the service organization’s portfolio.

In most cases, service organisations are not trapped by a single strategy; instead, they opt for a mix of strategies regarding resource allocation.

3. Michael Porter’s Strategies for Competitive Advantage:

For strategies at the SBU level, Michael Porter encourages service firms to examine the size and differences in the market they target and their chosen advantage(s) first and then pick suitable strategies. His theories argue that there are three techniques to acquire a distinct “competitive advantage” for a service firm: cost leadership, differentiation, and concentration. This kind of business is known as cost leadership. It emphasises being low-priced, widely-acclaimed service providers who meet the needs of a large consumer base with a standardised service offering. This company does it by fiercely diligent about operating savings and then underpricing its competitor. Porter advises efficient facilities, systems, and processes; efficient facilities, systems, processes and facilities, systems, and processes are ideas to help save money and improve efficiency.

Walmart has recognised that low-cost pricing is a significant competitive advantage, and it has made a concerted effort to gain operational efficiency in supply chain and logistics and drive down the price of its items sourced from its vendors. The company’s colossal cost structure enables it to gain a competitive edge by selling products at a reduced price, prompting a competitive response that forces competitors out of business and resulting in substantial profits obtained from business based on volume

Each of the industry’s six markets views a distinct offering as unique, therefore a differentiation strategy would benefit a service organisation by providing distinct services for all six of those markets. One of the fundamental purposes of brand building is to establish a distinct visual representation of the firm’s service products. Careful planning, high-quality processes, inventive designs, or unique product traits and characteristics are required for this. Since there are very few companies offering the service, it is not likely that the service firm will demand a high price and focus on a small market.

Scope of target market

 

A strategy focused on a specific customer segment is taken by a service firm or SBU (Special Business Unit) when they put all of their effort and resources into meeting the needs of a particular customer group. The organisation then provides this sector with services customised to suit their individual needs. It is possible to define a specific target segment by:

• Geographical location (FM radio services, newspaper services, Bank of Madura, which was predominantly in South India before being merged with ICICI Bank, etc.),
• specialised needs of the customers(a not-for-profit service organisation managing an old age home, Monginis franchising system to cater to lifestyle foods like cakes, pastries, patties, croissants, etc. prosthesis and medical aids like Jaipur Foot marketing company, ICICI starting a subsidiary only for shipping needs through SCICI which got swallowed in the reverse merger, RBI hiving off its Agricultural and Rural Development Cell, ARDC, into a full-fledged institution National Bank for Agriculture and Rural Development, NABARD),

A segment might be a consumer group based on age (teens), maternal and child market (Johnson & Johnson), and one focused on the outdoors and sports (Patagonia) (Countryside, the adventure sports company).

The service industry’s ability to concentrate on pleasing its target clients exemplifies its ability to set a clear strategy. The strategy’s focus is to employ one of the following two methods: one of the techniques is known as Differentiation, and the other is known as Cost Leadership. Advertising guru Pressman works with financial services advertising, whereas B-school for the advertising profession in Ahmedabad, India, is called Mudra Institute of Communications. SOTC, before it was bought over by Swiss outbound travel management company Kuoni, was focused on just inbound tour packages. The main factors that motivated firms to expand their international businesses were more predictable and manageable infrastructure outside and a better understanding of Indian clients and their preferences. Due to their offering a “home-like” meal, they were able to get themselves on top with their “Ghar ka khana” (‘Food like at home’) advertisements.

4. The Ansoff Grid:

Market strategies also employ the Product-Market Growth Matrix, which Professor Igor Ansoff first designed to build a service-based company.

Growth becomes an objective to meet the firm’s purpose of making more money. This will enhance the company’s competitive position and generate profits. Growth can only be achieved by a stronger grasp of the service firm’s markets and offerings and by applying this knowledge strategically and purposefully. This is the fundamental concept behind the Ansoff model, which identifies four possible growth strategies for the service organisation.

This model, called the Ansoff model, incorporates the company’s services and clients. Additionally, it divides the various services offered by the firm into those that are already a part of the service organization’s portfolio and those that are entirely new; in this manner, it identifies the firm’s customers as those who are currently utilising the services it offers and those who are the new group being targeted. In terms of expanding, Ansoff had the opportunity to go into detail about four possible growth options. Which individuals/characters are in question?

• Market Penetration Strategy: With this strategy, the firm attempts to increase the total amount of business it does by enticing clients who currently use its services to use more of them. Using an example, A cell phone operator will group customers according to their usage level to facilitate business. Customers who utilise more of the cell phone operator’s services will be given greater attention. In contrast, customers who utilise fewer services will be handled in a lower-priority manner.  To increase its outreach, it will focus on getting a more significant portion of its audience—namely, medium and light users—to communicate and use other services, such as text messaging, games, downloading ringtones, and more.

To increase its outreach, it will focus on getting a more significant portion of its audience—namely, medium and light users—to communicate and use other services, such as text messaging, games, downloading ringtones, etc.

• Market Development Strategy:

This market development approach is chosen by a service organisation when it sees that its old market is drying up, and that its old clients are undergoing a change in their preferences. A service organisation is sure that its existing offers have the potential to succeed, so it keeps providing service items to existing clients but also targets wholly new clients. Other than simply selling the service product, service product repositioning will also fall under this marketing strategy. When speaking of the newly targeted customers, it will appear that these offers are new to them, which accurately describes new products. Consequently, the marketing communications and promotions will focus on persuasion, education, and awareness.

In partnership with Goa Beach Tourism Markets, Maharashtra Tourism Development Corporation conducted market research on the domestic tourist market to determine which 32 Indian beaches were most appropriate for the 32 beaches recommended by foreign tourist organisations after the slow flow of foreign tourists stopped after 9/11.

• Product Development Strategy:

The service organisation strives to create new customer offerings for the company’s existing and past customers. Also, to begin with, the company must develop their customer base by acquiring new customers. And once that process is complete, they must fully understand and have established trust with their customers. To continue to provide additional needs for services, the company offers them themselves. With the prior service, customers already have a level of trust and familiarity, and they have also previously had the chance to experience the quality of service, and they have formed a positive opinion about the service encounter (most important for services, due to the inherent intangibility of the service offer). Existing consumers’ loyalty means they are more likely to explore new service offerings and stay longer as customers, while service marketers can result in quicker growth and reduced expenses.

Because SBI has its finger on the community’s pulse, it entered the life insurance industry, which caters to older consumers, and banking, which focuses on those with older customer bases.

• Diversification Strategy:

In choosing riskier diversification options, firms must recognise that these may result in higher levels of financial risk. The firm lacks the resources to count on the perceived value of previously implemented products and market recognition. Going into new frontiers is quite unusual for you. When the firm perceives it needs more significant growth, it adopts a diversification strategy. This is so since a diversification strategy is used when a firm wants to get ahead in the current industry or service and to track current customers. It also has plenty of money, so it chose this method.

Maharashtra Auto Industries manufactures automobiles and has entered the real estate business by acquiring GESCO. Through their ‘white knight’ acquisition of Maharishi Holiday Resorts and Mahindra Vacation Clubs, these companies will soon create holiday resorts and time-share service organisations.

• Marketing Strategy at the Functional Level:

An approach to a marketer’s strategy will refer to a plan of action owned only by the top marketing management, which is usually lengthy and complete and has a widespread impact on the entire organisation and the market. It consists of the following activities:

• Conduct a situation analysis
• Develop marketing objectives
• Select target markets, after appropriate segmentation and measure market demand
• Determine positioning and differential advantage(s)
• Design strategic marketing mix(es)

Each of the following steps in a situation analysis must be completed sequentially:

1. Inform marketing strategy by analysing and evaluating prior marketing plans and forecasting their probable future impact. This will serve as a study guide to assist in modifying the plans and help the company avoid the “reinventing the wheel” pitfall, which also entails the danger of changing for the sake of change.
2. Identify the service firm’s external and internal environmental elements, such as demographic, macroeconomic, and market trends. The external environment comprises political, economic, sociocultural, legal, and technological elements. The internal environmental factors are numerous and diverse. Still, they include marketing resources such as employee qualifications (their skills and experience), customers and potential customers, R&D capability, including the power of information management (knowledge management), financial health (access to funds), and many others.
3. Perform an analysis of the market opportunity accessible for the service provider. Before beginning market outreach, service marketers must analyse opportunities to avoid wasting time and resources. One possibility is that the corporation may be introducing a new service product or broadening its existing business operations into a new location or market.

The market opportunity for a service firm has two vital implications:

• There is a gap between demand and supply
• Existing players do not satisfactorily serve the existing market.

Market opportunity identification involves the analysis of the following:

• Size of the market – present and potential
• Marketing strategies of the competition and the depth of their value benefits

This can be illustrated thus:

• Marketing programmes required to penetrate the desired market successfully
• Identifying the key success factors in the service industry and aligning them with the service firm’s strengths and weaknesses.

4. Analyse the previous marketing strategies used to target the customer groups and the key indicators of performances or the Key Result Areas (KRAs). Peter F. Drucker identified eight KRAs:

• Market Share
• Innovation
• Productivity
• Physical and Financial Resources
• Profitability
• Manager Performance and Development
• Employee Performance and Attitude
• Social Responsibility

 

5. Perform a SWOT assessment by identifying and evaluating the service firm’s areas of strength to leverage on, overcome, or dilute its weaknesses, seize opportunities, avoid threats, or find ways and means to meet challenges. Strengths and weaknesses are internal components of a service organisation’s process, pointing at its capabilities and competencies.

Prioritize marketing objectives based on their urgency and importance. The impact of each goal on the appropriate marketing region and the competitiveness of the service firm should then be evaluated. Once this procedure is completed, resources should be allocated to each plan and aim.

Service Recovery Strategies:

As per Tax and Brown, “Service recovery is a process that identifies service failures, effectively resolves customer problems, classifies their root cause, and yields data that can be integrated with other measures of performance to assess and improve the service system”.

By implementing a service recovery system, service organisations are given a second chance to remedy any errors during the initial service delivery. If the issue is remedied and the consumer is satisfied, he may abandon his plans to go to a competitor. If the business continues to deliver excellent service, it may be able to gain a loyal customer. This satisfied customer could tell his friends and family how the company responded to his concerns and resolved his issues. This will aid in developing a positive image of the company among potential customers and function as word-of-mouth advertising for the company. The following guidelines should be kept in mind when creating an effective service recovery system:

1. Track and Anticipate Recovery Strategies:

Service businesses should try to determine whether their customers are dissatisfied with their service or any other part of the business. Periodic customer surveys and regular customer interaction can help identify any faults on the part of the organisation. Some customers may be upset with substandard service but do not complain to the company or express their concerns openly. Such clients may minimise their commercial relations with the company and eventually stop using its services. With technology, businesses can track and seek to interact with such clients.

Example: A private marketing firm that routinely uses the services of one hotel for its workers’ business trips begins to use the services of another hotel at the request of its employees. If the first hotel had implemented a competent database management system, it would have been able to detect a decline in business from a corporate account and take the required steps to resurrect the account.

Customers should be encouraged to contact companies if they have a concern with the quality or delivery of a service. The complaint filing method should be straightforward, quick, and extensively publicised to raise customer knowledge.

Management should analyse the complexities of the service process regularly and identify places with a risk of failure or delay. This proactive strategy can assist management in avoiding some customer-related issues. It should devise effective processes to deal with any difficulties that may arise in the future and resolve them as quickly as possible to the client’s satisfaction.

2. Solve Problems in Quick Time:

One of the main reasons why customers are hesitant to bring their complaints to the company’s attention is that they believe it would be ineffective. They may have formed this viewpoint based on personal experience or information from friends. On the other hand, some customers express their dissatisfaction with the company and want a quick response. When a firm fails to satisfy the client’s expectations and resolve the problem, the client loses faith in the firm and its services.

Customers who complain have given the organisation a second chance to fix its error; management should recognise this. Customers may be lost permanently if they fail to deliver even after being given a second chance. Management should encourage staff to take advantage of the opportunity to remedy their mistakes and provide improved service. They should be taught that by exceeding customers’ service standards, they can turn dissatisfied customers into satisfied and loyal ones again. Customers’ complaints should be addressed immediately, and problems should be remedied to their satisfaction. The company’s employees should be made aware of the consequences of poor service in terms of losing an existing customer and negative publicity generated by the unsatisfied client. The more time it takes for a corporation to resolve a client complaint, the more damage it will do. Furthermore, the delayed healing process diminishes the odds of keeping a dissatisfied customer. Moreover, the slow recovery process reduces the chances of retaining a customer dissatisfied with its service.

3. Adequate Training to Front Line Employees:

Employees should be educated on the importance of providing excellent customer service. They should be thoroughly trained to provide consistent, error-free services. They should also be prepared to cope with difficult situations when their efforts to provide excellent service to consumers fall short.

Employees should be able to identify any faults or errors in the service process as quickly as feasible, report them to the appropriate person, and begin the service recovery process. Customers should not take it personally and become enraged if they blame them for delays or service defects; instead, they should gently accept responsibility for the difficulty caused. They should reassure clients that the error will be corrected and that any losses will be repaid.

Managing Demand, Supply and Productivity:

Understanding and sketching a pattern of demand variation is the first step toward managing service demand. It’s also crucial to comprehend why some market sectors are experiencing higher demand than others at a given time.

An organisation must track and sketch the level of demand for its services over time. This can be done quickly and precisely if an organisation has a client database and a record of changing demand levels over time. Companies that do not have access to a computerised database can use more ad hoc solutions. Companies should monitor demand levels daily, weekly, and monthly.

Because demand for various services varies seasonally, organisations should acquire and collect data regularly to forecast future demand levels. In some circumstances, monitoring demand levels hourly may be necessary.

Tracking the demand for a restaurant’s or a fast food centre’s services hourly, for example, could be beneficial in determining demand patterns.

Some demand patterns can be predicted readily, while demand patterns for other services can only be comprehended by drawing demand levels on a chart.

Demand Patterns:

After gathering data on demand levels in charts, an organisation should examine them for predictable demand patterns. To satisfy organisational needs, patterns over a day on an hourly basis, a week daily, or a year every month should be collected.

Predictable patterns can be seen in some services during regular or specified periods.

For example, a significant population might be seen at theme parks, movie theatres, and restaurants on weekends and holidays. The number of people in movie theatres varies depending on the show’s time. Evening shows frequently draw a larger audience.

Similarly, when it comes time to file tax returns, employees prefer to invest more in various financial services, and as a result, demand for financial services rises during that time.

After identifying a regular cycle, an organisation should investigate the reasons behind these demand changes. Seasonal conditions, income or wage payment dates, school vacation time, and tax payment or refund cycles are all possible causes. For example, several discotheques reduce the price of admission on weekdays to attract patrons on such days.

Some demand patterns follow predictable cycles, while others are haphazard or ad hoc. However, the causes of these demand patterns can usually be determined. Changes in weather conditions, for example, may have unpredictable effects on entertainment and recreational services. Similarly, random demand patterns for services such as healthcare and insurance have no particular pattern or style, save that demand is apparent when an outbreak or tragedy spreads.

A service firm’s capacity is equivalent to a product manufacturer’s supply. Capacity refers to a service organization’s ability to meet demand and the extent to which it can do so. Capacity can be increased or decreased to meet demand patterns. However, in some services, this is not possible since capacity-determining elements like time, labour, equipment, and other production facilities are fixed and cannot be expanded or contracted in response to demand:

• Time: In some service firms, the availability of time with the service provider is the key restriction to raising capacity or growing supply. The ability of professionals such as lawyers, surgeons, consultants, and others to use their time productively determines their revenue.
• Labour: Large service firms hire employees to provide services to clients. They are constrained by labour availability or unavailability during peak service demand periods. There may be times when a company’s demand exceeds its capacity, and it lacks the skilled labour needed to complete the process. In a competitive market with low demand during the off-season, it may be impossible for the service provider to hire additional staff.
• Equipment: Due to the restricted equipment available with the service provider, service organisations that require equipment to carry out their activities may suffer capacity limits. For example, a dentist may be unable to deliver suitable services to a patient due to the lack of contemporary machines.
• Facilities: Several service organisations have capacity limits due to their restricted facilities. For example, a restaurant may be unable to accept additional patrons due to a lack of tables, or an airline may be unable to provide tickets to passengers due to a lack of available seats.

Altering Demand to Match Capacity (Supply):

To effectively create strategies that can match demand and capacity, a service organisation should make efforts to identify demand patterns and capacity restrictions. An organisation has two possibilities for matching demand and capacity. It can shift demand to accommodate capacity or increase or decrease capacity to accommodate demand changes.

When demand for a particular service exceeds capacity at a certain point, businesses apply the demand shift approach, in which customers are shifted to utilise the service later when demand is lower. For example, telephone charges are cheap in the early mornings and late evenings to divert some demand from peak hours.

However, some customers may refuse to change, and an organisation may lose revenue because it cannot accommodate these clients. For example, a busy restaurant at capacity cannot handle additional patrons. These consumers may choose to dine elsewhere, resulting in a loss of revenue for this establishment.

To operate at total capacity, an organisation works harder to attract clients during periods of low demand. To meet their capacity, businesses use a variety of strategies to boost or shift demand. The following are a few of these methods:

A Variation in the Original Service Offer:

This strategy requires an organisation to adapt its service offering to seasonal, weekly, or daily demand swings. During the non-marriage season, caterers who serve at weddings may choose to serve at birthday parties or business events. As a result, the basic benefits of a service can be changed to match demand and the organization’s capacity to deliver it. However, before revising the initial service offering, businesses should assess the benefits and drawbacks, as it would necessitate changes to marketing mix aspects such as staffing, advertising, and pricing.

Communicating with Customers:

Customers must be informed about peak rush hours so that they may comprehend the pattern and adjust their business hours accordingly. Some clients may hesitate to conduct business during peak hours because service delivery may be delayed or the service may fall short of expectations. For example, bankers are typically highly busy during the first few days of the month and on Mondays when banks reopen after a day off. Because of this, some clients may choose to conduct business with the bank later in the month and on days other than Monday.

Changing Service Delivery Timings:

Service providers should track when customers need or desire to interact with them. Maintaining appropriate business hours would benefit both customers and service providers. For example, salons usually have a big rush on Sundays, so they can open a little earlier and close later on Sundays.

Difference in Prices:

Some service organisations may adjust their charges to transfer demand from high-demand to low-demand periods. For example, theatre owners frequently lower the prices of morning shows to attract more patrons, while fast food restaurants lower their prices during lunchtime.

This, however, necessitates caution on the part of businesses, as clients may expect the exact costs at their subsequent engagement with the service provider. Furthermore, there is a risk that the service provider will attract other market segments rather than their core market segment.

Altering Capacity to Meet Demand:

The following are some of the strategies:

Employ Part-time or Contract Workers:

Businesses hire part-time or contract labour rather than full-time staff to satisfy changing demands. For example, during high-demand seasons such as festival season, retailers recruit more floor executives, and consultants hire more workers towards the financial year’s end when demand for their services is at its greatest.

Outsource:

Today’s businesses use This relatively common strategy to deal with demand fluctuations. When hiring additional staff to satisfy a temporary surge in demand is too costly, companies hire other companies that specialise in doing the essential functions or tasks. This is useful since an organisation may save money and time on training new personnel, and they won’t have to worry about having too much manpower when business slows down during a downturn. Organizations, for example, hire HR consultants to handle their recruitment needs.

Share Facilities or Rent Equipment:

Another way businesses might accommodate demand fluctuations is to share their facilities. On Sundays, when the school is closed for students, a school can be rented out to conduct FIITJEE or IMS coaching lessons. From a different perspective, a facility or piece of equipment can be rented because buying new equipment that will not be used at other times is not viable. If a small-time caterer wins a massive contract for a short time, he might rent huge cooking utensils rather than buy them.

Schedule downtime during low-demand periods:

Maintenance, repair, and renovation work should be scheduled during periods of low demand so that equipment and facilities can be stretched beyond capacity during periods of high demand. This technique should also be used for workers by allowing them to unwind. For example, a restaurant’s maintenance work can be done when the establishment is vacant at noon to make it look good when guests arrive.

Cross-Training Employees:

This entails teaching employees to execute tasks other than their regular duties to prevent underutilization of labour in the workplace. These multi-skilled personnel can be reassigned to high-demand duties. For example, employees who specialise in manicures in a salon could be trained in pedicures so that they may serve those clients if there is a high demand for pedicures.

Modify Facilities or Move Equipment:

During periods of high or low demand, facilities might be creatively adjusted. Swimming pools, for example, can be used as a facility to coach individuals in swimming during summer school vacations.

On the other hand, some equipment can be relocated from one location to another to provide services at customers’ convenience. For example, the mobile bill payment option allows customers to pay without going to a specific location.

Due to the multifaceted nature of service occupations, managing productivity is complex. Fast food employees, for example, have various responsibilities, such as cooking food, delivering food to clients, providing all necessary amenities to make their visit memorable and joyful, and taking payment from consumers.

Personnel in some service organisations may also be responsible for stock management, cleaning, and maintenance. The multipurpose nature of the responsibilities assigned to service staff makes measuring, monitoring, and improving performance difficult.

Managing Waiting Lines:

The main components of the queuing system are the waiting line(s) and the number of servers available. When waiting in a line, consider the length of the line, the number of lines, and queue discipline.

• Length:

 Practically, an endless line regarding the service system’s capability is long.

A line of vehicles backed up for miles at a bridge crossing, and people who must queue around the block to purchase tickets at a play are examples of infinite potential length.

Due to legal limits or physical space constraints, gas stations, loading docks, and parking lots have limited line capacity. This makes the waiting line problem more complicated, not just in terms of service system utilisation and waiting line computations but also in the form of the actual arrival distribution. The newcomer denied admittance into the line due to a shortage of space may rejoin the crowd later or seek assistance elsewhere. In the finite population example, either action makes a clear difference.

• Number of Lines:

 Multiple lines refer to single lines that develop in front of two or more servers and single lines that converge at a central redistribution point. Multiple lines in a busy facility have the disadvantage of causing arrivals to shift if several preceding services are short or customers in other lines require a quick service time.

• Queue discipline:

 A queue discipline is a priority rule or combination of rules that determines the order in which clients in a waiting line are served. The rules you choose can have a significant impact on the overall functioning of the system. The number of clients in line, the average waiting time, the range of waiting time variability, and the effectiveness of the service facility are only a few of the elements that are influenced by the priority rules chosen.

The following are some valuable ways to manage waiting lines:

• Determine an acceptable waiting time for your customers.
• Determine a standard acceptable time for which your customers are willing to wait to avail of the service. Set operational objectives based on what is acceptable to the customer.

 

• Try to divert your customer’s attention when waiting:

 This can be a good technique to cope with the problem of long lines. These days, service businesses give music, videos, magazines, a children’s play area, and other amenities to make consumers forget they’re waiting. Customers become engrossed in these activities and are less likely to complain about the time spent waiting.

• Inform your customers of what to expect:

 This is especially critical if the wait time is expected to be longer than usual. Tell them why the wait is longer than usual and what you’re doing to reduce the line. For instance, a pizza delivery boy may notify the customer that he would be late due to inclement weather. This will offer the customer the impression that the service company cares about him.

• Keep employees not serving the customers out of sight?

 Nothing irritates a customer who is waiting in line more than seeing personnel who could be serving them working on something else. If an employee performs maintenance or back office work, he or she should be kept out of the waiting area so that consumers cannot see him.

• Segment Customers:

 Give a dedicated line to customers who need things done quickly so they don’t have to wait for the slower consumers. Customers who are served swiftly in a particular line are satisfied, but those who have been waiting for a long time in the other line may become irritated when they observe this.

• Train your servers to be Friendly:

Greeting customers by name or paying particular attention to them might go a long way toward alleviating the bad feelings associated with a long wait. Rather than simply telling waiters to “be pleasant,” psychologists recommend instructing them on when to do specific friendly actions like smiling, such as greeting clients, taking orders, and offering change (in a convenience store). Tests using such precise behavioural activities have revealed significant increases in the customer’s perception of the servers’ friendliness.

• Encourage customers to come during the slack periods:

Customers should be informed of times when they won’t have to wait, as well as peak hours, as this may help to smooth the load. For example, in a bank, employees can tell customers about peak hours and encourage them to visit during off-peak hours.

• Take a long-term perspective toward getting rid of the queues:

 Create a strategy for serving your clients in new ways. Develop strategies for automating or speeding up the process in some way, as needed. This doesn’t imply you shouldn’t provide personalised service; some clients want it.