surveys, and comparison shopping. Customer needs vary in different areas.

This allows firms to

develop region-specific customer satisfaction programs. Firms can also develop customer
information databases and systems for more personalized service, especially online.
Page Ref: 360
Objective: 1
Difficulty: Moderate
117) Several strategies exist for managing the supply and demand of services. List the strategies
for managing each and give an example of each strategy.
Answer: Several strategies can produce a better match between service demand and supply.
On the demand side, these strategies include the following:
a. Differential pricing: This will shift some demand from peak to off-peak periods. For
example, low matinee movie prices and weekend discounts for car rentals.
b. Nonpeak demand: This can be cultivated. For instance, McDonald's pushes its breakfast
service, and hotels promote minivacation weekends.
c. Complementary services: These can provide alternatives to waiting customers. For example,
cocktail lounges in restaurants and automated teller machines in banks.
d. Reservation systems: These are one of the many ways to manage the demand level. For
instance, airlines, hotels, and physicians employ them extensively.
On the supply side, these strategies include the following:
a. Part-time employees: They can serve peak demand. For example, colleges add part-time
teachers when enrollment goes up and stores hire extra clerks during holiday periods.
b. Peak-time efficiency: These routines can allow employees to perform only essential tasks
during peak periods. For instance, paramedics assist physicians during busy periods.
c. Increased consumer participation: This frees service providers' time. For example
consumers can fill out their own medical records or bag their own groceries.
d. Shared services: These can improve offerings. For instance, several hospitals can share
medical-equipment purchases.
e. Facilities for future expansion: This can be a good investment. For example, an amusement
park can buy surrounding land for later development.
Page Ref: 361
Objective: 1
Difficulty: Moderate
118) Define customer failures and list four methods to tackle them.
Answer: Customer failures refer to situations where service problems arise from a customer's
lack of understanding or ineptitude. Some of the methods to solve such situations include the
following:
a. Redesigning processes and redefining customer roles to simplify service encounters
b. Incorporating the right technology to aid employees and customers
c. Creating high-performance customers by enhancing their role clarity, motivation, and ability
d. Encouraging "customer citizenship" so that customers help customers
Page Ref: 364
Objective: 2
Difficulty: Moderate