ABSTRACT
There are many challenges for managers and marketers in the service and experience economy. Among these complexities are the perishability of service – since a service can rarely be ‘stored’ for later use – and the many associated implications this has for organizations. This chapter provides an overview of perishability (which is one of the four service challenges (IHIP) explored in Chapter 2) and presents a set of concepts and principles necessary for service managers to understand. This chapter dives into the different ways service managers can seek to better balance supply and demand by utilizing marketing techniques to increase demand and/or temporarily increase or decrease capacity. The tenuous nature of the interrelationships between supply, demand, price, and quality are explored, as are ways to leverage technology to better bring these forces together. Inevitably, service organizations will experience imbalances, especially when successful or during busy seasons. This chapter provides an understanding of the concept known as ‘the psychology of waiting’ and how managers can address inevitable waits, as well as exploring how customer expectations have evolved and on-demand service models have emerged in response. Overall, this chapter provides guidance for how service managers and marketers can implement strategies to balance capacity and demand, to successfully navigate the challenges of perishability and achieve operational efficiency.
