1. Marketing: Its Most Important Function

2. Variations in Demand Relative to Capacity VOLUME DEMANDED TIME CYCLE 1 TIME CYCLE 2 Maximum Available Capacity Optimum Capacity (Demand and Supply Well Balanced) Low Utilization (May Send Bad Signals) Demand exceeds capacity (business is lost) Demand exceeds optimum capacity (quality declines ) Excess capacity (wasted resources) CAPACITY UTILIZED – Use marketing strategies to smooth out peaks, fill in valleys

3. Causes of Seemingly Random Changes in Demand Levels Weather Health problems Accidents, Fires, Crime Natural disasters Question: Which of these events can be predicted?

4. Analyzing Drivers of Demand Understand why customers from specific market segments select this service Keep good records of transactions to analyze demand patterns – Sophisticated software can help to track customer consumption patterns Record weather conditions and other special factors that might influence demand

5. Overall Usage Levels Comprise Demand from Different Segments Not all demand is desirable Keep peak demand levels within service capacity of organization Marketing cannot smooth out random fluctuations in demand – Fluctuations caused by factors beyond organization’s control (for example: weather) – Detailed market analysis may reveal that one segment’s demand cycle is concealed within a broader, random pattern

6. Hotel Room Demand Curves by Segment and Season B h = business travelers in high season B l = business travelers in low season T h = tourist in high season T l = tourist in low season BhBh BhBh BlBl BlBl ThTh ThTh TlTl TlTl Price per room night Quantity of rooms demanded at each price by travelers in each segment in each season Note: hypothetical example

7. Benefits of Reservations Controls and smoothes demand Pre-sells service Informs and educates customers in advance of arrival Saves customers from having to wait in line for service (if reservation times are honored) Data captured helps organizations – Prepare financial projections – Plan operations and staffing levels

8. Characteristics of Well-Designed Reservations System Fast and user-friendly for customers and staff Answers customer questions Offers options for self service (e.g., the Web) Accommodates preferences (e.g., room with view) Deflects demand from unavailable first choices to alternative times and locations Includes strategies for no-shows and overbooking – Requiring deposits to discourage no-shows – Canceling unpaid bookings after designated time – Compensating victims of over-booking

9. Setting Hotel Room Sales Targets by Segment and Time Period (Fig.9.7) Out of commission for renovation Loyalty Program Members Transient guests Weekend package Groups and conventions Airline contracts 100% 50% Week 7 (Low Season) MNights:Tu Time WThFSSu Loyalty Program Members Transient guests W/E package Groups (no conventions) Airline contracts Week 36 (High Season) MTuWThFSSu Capacity (% rooms)

10. Information Needed for Demand and Capacity Management Strategies Historical data on demand level and composition, noting responses to marketing variables Demand forecasts by segment under specified conditions Segment-by-segment data Fixed and variable cost data, profitability of incremental sales Meaningful location-by-location demand variations Customer attitudes toward queuing Customer opinions of quality at different levels of capacity utilization