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MCS 1000 (215)
Chapter 20

Chapter 20 Introductory Marketing Notes

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University of Guelph
Marketing and Consumer Studies
MCS 1000
Douglas Adlam

Chapter 20 Marketing Balancing Demand Against Productive CapacityFluctuations in Demand Threaten Service Productivity Many services face wide swing in demand sometimes caused by change of season IE Ski resorts have wide change of activities offered from season to season Goal of service firm should be to utilize staff labor equipmentfacilities as productively as possibleDefining Productive Capacity The term refers to the resources or assets that a firm can use to create goodsservices Main form of capacity limitation is probably beds rooms seats etc1 Physical facilities designed to contain customers and used for peopleprocessing services or mental stimulus processing services Eg Medical Clinic College Classroom Airline etc2 Physical Facilities Designed for Storing or Processing Goods that either belong to customers or are being offered for sale to customersPipelines parking lots houses railroad freight wagons etc3 Physical Equipment Used to Process People Possessions or infoAirport security detectors toll gates Bank ATMS etc4 Labor is a key element of productive capacity in all highcontact servicesmany low contact ones Hire right amount of staff so that customers arent kept waiting or rushed5 Infrastructure Capacity problems of this nature may include crowded airways traffic jams on major highways power failures etc If capacity is always used efficientlyprofitably that would be ideal Its difficult to achieve this ideal Demand levelstimeeffort required to process each person or thing may also vary widely at any point in the processFrom Excess Demand to Excess Capacity At any given point a fixedcapacity service may face any of the 4 conditions1 Excess Demand Demand for a service at a given time that exceeds the organizations ability to meet needs2 Demand Exceeds Desired Capacity conditions are crowded service quality seems lower and customers feel dissatisfied3 DemandSupply are Well Balanced at the level of desired capacity Stafffacilities are busy but not overworkedcustomers receive g
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