The four major characteristics of services are intangibility, inseparability, variability and perishability. Managers could efficiently incorporate these characteristics into their strategies and increase firms’ profit. For example, yield management (also called revenue management) is a differential pricing strategy utilizing the perishability characteristic. Yield management is to charge the right customer the right price at the right time. Service providers often have capacity constraints (think about hotels, airlines, and restaurants). For example, if a flight departs from Chicago to New York City with half of its seats empty, this means the profit associated with the empty seats is gone. Leisure travelers often book their seats ahead of time, and have flexible schedules. On the other hand, business travelers often book the tickets at last minute, and most often, the payment could be reimbursed by the company. Overall, leisure travelers are more price sensitive, and business travelers are less price sensitive. Thus, for the same flight, the airline company could charge a low price when it is 2 month till the departure time to encourage leisure travelers to book. When the departure time gets closer and when the number of unsold seats reduces, the ticket price increases. Please discuss how to incorporate these service characteristics (intangibility, inseparability, variability and perishability) into marketing strategies (such as the yield management example we discussed above). You could use your own experience or articles from Businessweek etc to support your argument.

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1Intangible services are in simple terms something that cannot be seen or touched For example travel and tourism education repair brokerage services e... View the full answer