Page 76 - DMGT522_SERVICES MANAGEMENT

Unit 3: Nature/Characteristics of Services

He will thus be prepared with his expansion plans of more network facilities, retail stores, Notes
capacities and personnel and be ready to implement them. The service provider will be
ready to catch the incoming customers and will not suffer from lost opportunity.

2 Falling demand: There could be many reasons for declining demand for a particular
service offer: direct competition, substitute competition, unattractive pricing, poor service
delivery, etc. Falling demand for video parlour services due to the popularity of satellite
broadcasting TV channels is another case of technology changing the pattern of demand
for services.
Declining popularity of pool parlours, once the rage in Mumbai and other metros, may be
ascribed to the fact that multiplexes shopping malls and beer pubs were seen as better
place to hang out, by both sexes of the affluent, hedonistic metropolitan youth.
Whatever be the reasons, the service marketer should identify the declining demand,
measure the rate of decline, analyse the causes, bring forth innovative marketing
programmes to arrest the trend or else if the service category itself is on the decline, get
out of the market and cut losses.
3. Zero demand: The market may not be having a need of a particular service offer because of
various demographic, socio-economic and sometimes geo-demographic factors. The service
marketer has a choice either create demand for the service by finding out the needs, wants
and desires of the market or do not enter the market.
People in certain localities may not be interested in home delivery as they dislike strangers
coming into their homes, especially when the men folk are not at home. Even courier
services are badly hit due to this social factor. Thus, modern retailing or non-store retailing
may not take off in that place. There may not be any demand for English or foreign
language courses in rural Rajasthan. Similarly, there really may not be any demand for
counselling centres in rural India or Western Union money transfer facilities in an area
where there is no migration of people – no reason to either send or receive money.
Correct reading of the demand will prevent marketers from wrong investments.
4. Full Demand: In this situation, the service marketer will find that the demand is equal to
supply. It is an ideal situation for the firm but danger lurks when a new entrant brings out
his offer. Then either the market has to increase the consumption or else the players battle
it out amongst themselves fighting for the same pie. Normally price wars are inevitable,
margins fall and the viability of the service firms comes into question. Only the fittest
tend to survive; mergers and acquisitions become the norm or else the weaker players
face closure and bankruptcy.
In the US, there was deregulation of the airlines in the Reagan Administration (1980-88).
This brought numerous players into the fray. But with recessions from two successive oil
shocks (1973 and 1979), people were less inclined to travel. It took a toll on the industry
when the players resorted to massive price wars; bankruptcies, mergers were very common.
The unthinkable happened – airline legends like PanAm and Trans World Airlines (TWA)
closed down. Similarly in the US, long-distance telephony witnessed massive competition
when more players entered the market with the same fibre-optics technology. There were
more lines than customers’ requirements. Behemoth WorldCom, a result of frenetic mergers
and some very famous players like MCI, lost their identity in the acquisitive game.
WorldCom never recovered from the enviable growth and collapsed in a slew of scandals.
5. Overfull demand: This takes place when demand far outstrips supply, and the service
marketer is not able to handle the demand. This implies that there are either fewer capable
players or entry barriers and regulation against free market enterprise. Either way, the
service marketer cannot be complacent and has to be prepared for demarketing his service.

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