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Production and Operations Management
Notes forward. If few seats are lying vacant in an aeroplane, they cannot be stored or carried forward
for the next trip. There are very few services with a constant demand pattern over a period of
time. Many show considerable variations due to seasonal and cyclical nature of the service
demand and also due to unpredictable demand patterns. The perishable nature of service demands
greater attention to demand management of a service.
Notes The service marketer will like to smoothen the troughs and crests in demand
patterns and schedule production processes of services in such a way that there is an
optimal consumption at the point of production and consumption of that service. The
demand and supply patterns should match both in short term and long term by using
pricing and promotion tools to resolve demand-supply imbalance. Airlines offer discounted
fares before departure to maximize the benefits of supply by offering tickets at a low
price.
Inability to Own Services
This characteristic of not owning a service emanates from the characteristics of intangibility and
perishability. The buyers can acquire title of goods in a transaction process and continue to do so
as and when they wish. On the other hand, when a service is performed, no ownership is
transferred from the seller to the buyer. The buyer is only buying the right to a service process.
So there is a difference between inability to own the service and the rights a buyer may acquire
to have a service carried out at sometime in the future. This aspect has an implication for
distribution of services. A wholesaler or a retailer cannot take a title, contrary to the case with
goods. So direct distribution methods are more common and wherever intermediaries are used,
they are used as co-producer or co-creator of value for the consumer.
Task The degree of intangibility and inseparability are the true crucial issues in service
marketing. Explain how these two factors influence marketing of a large corporate hospital.
Self Assessment
Fill in the blanks:
1. The intangible characteristics that define services include reliability, care and ………………
2. The perishable nature of service demands greater attention to ……………… management
of a service.
3. Variability in services has an impact not only on customer satisfaction but also in the
……………… process of services.
4. A service is defined as any activity or benefit that one player offers to another in an
exchange process, which is essentially ……………… and does not result in ownership of
anything.
5. The aspect of inability to own services has an implication for ……………… of services.
3.2 Service Matrix
The Service Process Matrix is a categorization matrix of service industry firms based on the
characteristics of the individual firm’s service processes. The matrix was derived by Roger
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