Page 292 - DMGT522_SERVICES MANAGEMENT

Unit 14: Yield Management in Services

Developing off-peak pricing schemes will help in shifting the demand from peak periods to Notes
non-peak periods. Resorts and hotels do offer off-season packages to shift the demand and even
the telephone corporations have differential pricing to shift demand to non-peak hours. Retail
chains or departmental stores offer straight discounts on the total bill if purchases are made
during non-peak hours.

Note Part-time employees is one of the solutions to increase capacity

However, such a strategy may not always work. It has also been observed that organisations,
during the slack season, impart training their staff, do maintenance of equipment, clean premises
to prepare for next season. During this period if demand builds up, there are chances of customers
walking out dissatisfied. It might even affect the business in the peak season because of negative
word of mouth.
Another method, which can help in shifting demand from peak period, is developing
complementary or facilitating services. Such services would not only attract consumers away
from bottleneck operations at peak times but might also provide an alternative service while
they are in queue for the capacity restricted operations.
For example, at a casino, a lounge with wide screen television showing some exciting movie or
a bar would shift some of the tourists from restricted capacity service operations. Such a strategy
would not only give additional revenue but also an opportunity to differentiate the service offer
from the competitors.
Lastly, the reservations strategy can also help in managing demand and, thus, customer satisfaction.
Table reservations in a restaurant, reservation of cinema tickets in advance are some examples
of such a strategy.

Caselet Case: Indian Railways –The Juggernaut Turns Around

ndian Railways (IR), a state-owned railway company, had a near monopoly in the
Icountry’s rail transport. It was also the second largest with 63,028 route kilometers,
108,706 track kilometers and busiest rail networks in the world. IR was the world’s largest
commercial utility employer, with more than 1.6 million employees. A legacy from the
British rule, IR had been a socio-economic entity, striving to achieve its justifiable economic
existence. With the liberalisation of Indian economy since 1991, the policies of the railways
became obsolete. To become economically viable in the competitive era, IR faced hurdles
like duality of objectives, hazards of safety considering its organisational size and the
emergence of competition from other means of transport like airlines, particularly low
cost airlines.

In 2001, IR was written off as the burgeoning responsibility for the government. Experts
opined that by obliging to political and social agendas, IR failed to utilise its capacity and
achieve its profit goals. Amidst criticism, IR stabilized its financial situation in 2002-03. In
2004, Laloo Prasad Yadav (Lalu), a famous political leader, was given charge of Ministry of
Railways, one of the most sought after portfolios in the government owned utilities of
India. He proved to be a dark horse, as under his leadership, IR adapted and implemented
cost effective strategies to raise the revenues. For the first time the passenger fares and
freight rates were not hiked to increase revenues but the, per train load was increased by
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