Page 296 - DMGT522_SERVICES MANAGEMENT

Unit 14: Yield Management in Services

Firms will always suffer from the Catch-22 dilemma: Adopt technology for decisive Notes
competitive advantage; but development of technology can make goods and services
obsolete, too. At the same time, it can also be instrumental in creating an entire industry
and a market. The personal computer is a case in point. It has created an entire industry
and developed new market opportunities.
Question:
What should be kept in mind is that management of new age technologies is an ongoing
affair?

14.3 Summary

This unit attempts to give an overview of the functions in as simple manner as possible.

There are major ways in which improvements in productivity can be brought out:
Improving staff performance through training, Introducing systems and technology,
Reducing service levels, Customer interaction, managing capacity by controlling supply.

In certain service organisations the capacity is fixed and it is rather difficult to increase the
same as the industry might be capital intensive.

It could also be that demand exhibits a certain seasonality pattern.
In such service organisations, one of the major marketing challenges is demand
management.

It might be generating demand during low demand periods or shifting demands to low
demand periods during peak hours, when demand exceeds capacity.

14.4 Keywords

Productivity is usually described as the ratio of output of a production process to an aggregate
value of inputs.
Demand: An economic principle that describes a consumer’s desire and willingness to pay a
price for a specific good or service. Holding all other factors constant, the price of a good or
service increases as its demand increases and vice versa.
Supply: The total amount of a product (good or service) available for purchase at any specified
price.
Yield: The income return on an investment. This refers to the interest or dividends received from
a security and are usually expressed annually as a percentage based on the investment’s cost, its
current market value or its face value.
Productivity: Productivity equals value divided by time.
CRS: Computerised Reservation System
14.5 Review Questions

1. What do you understand by ‘productivity’ and how is it relevant in a service organisation?
2. Is it possible to improve productivity in an organisation where employees are not willing
to cooperate? Give justification to your answer by taking the case of a specific service
organisation.
3. Visit a nearby star category hotel and identify what methods it adopts to manage
productivity when the demand for its services goes up during the wedding season.

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