Page 276 - DMGT510_SERVICES_MARKETING

Unit 14: Service Strategies

Demand Patterns Notes

After capturing the data on demand levels in the form of charts, an organization should and
observe the charts for predictable demand patterns.

Example: The patterns over a day on an hourly basis, over a week on a daily basis or
over a year on a monthly basis should be captured, to meet the organizational needs.
In some services however, predictable patterns can be noticed during regular or specific periods.

Example: The crowd at theme parks, movie halls, and restaurants would be large during
the weekends or holidays. The crowd in movie halls can also vary according the time of shows.
The evening shows usually attract more crowds.
Similarly, employees tend to invest more in various financial services when it is time to file
their tax returns and as a result, the demand for financial services increases during that period.
After an organization has identified a predictable cycle, it should further try to analyze the
reasons for these fluctuations in demand. These causes can be anything ranging from seasonal
conditions to date of payment of salary or wages, and from vacation time for schools to tax
payment or refund cycles.

Example: Some discotheques lower the price of entry during weekdays to attract people
during those days.
Some of the demand patterns show predictable cycles, whereas, others are random or adhoc in
nature. However, causes associated with these demand patterns can be identified most of the
times.

Example: The impact of changes in weather conditions on entertainment and recreational
services may not be predictable. Similarly, random demand patterns for services like healthcare
and insurance have no specific pattern or style except that the demand is highly visible when
there is an epidemic spread or calamity.

Capacity of a service firm is similar to the supply by firm manufacturing products.
Capacity can be defined as the ability of a service organization to meet its demand and the extent
to which it can do it. Capacity can be expanded or contracted to suit the demand patterns.
However, this is not possible in some services as factors determining capacity such as time,
labour, equipment, and other production facilities are fixed and cannot be expanded or contracted
with demand:
Time: The main constraint for expanding the capacity or increasing supply in some service

businesses is the availability of time with the service provider. The income of professionals
like lawyers, doctors, consultants, etc., depends on their ability to use their time in a
productive manner.

Labour: Large service firm hire employees to offer services to the customers. They face

capacity constraints in the form of availability or unavailability of labour during service
demand. There might be situation where the firm has excess demand and it doesn’t have
equipped labour to carry the process. Or it may not be feasible for the service firm to hire
additional workers in a competitive market which exhibits low demand during the off
season.

LOVELY PROFESSIONAL UNIVERSITY 271