What is Perishability?
Perishability is a characteristic of services marketing and is used to refer to services that cannot be stored for sale at a future date or resold.
Perishability is important for businesses because it determines sale prices, inventory levels, and marketing strategies for a given product.
Perishability is most often used within the context of a product.
For example, fruits have a short shelf life and become unsaleable after a certain period.
These qualities determine their sale price and inventory levels.
Stores may run sales to clear out old inventory and even sell fruits at a loss to recoup part of their product investment.
Perishability In Services
The same principles can be applied to perishability in services.
While hotel rooms and airline bookings do not rot with time, their utility can “perish” or become worthless, if it is not used.
If rooms remain unoccupied for long stretches of time, then the hotel may run out of money.
Similarly, empty seats can spell doom for carriers in the airline industry.
In turn, this can influence prices, inventory levels, and marketing strategies for products in these industries.
For example, hotels and airlines offer deep discounts when demand for their product is running low.
Sites like TripAdvisor and Expedia offer cheap rates for last-minute booking of rooms and airline tickets to make sure that goods from their inventory are sold, instead of being marked up as losses.
Conversely, during times of high demand and low supply, prices will run high and service providers may form alliances between themselves to increase supply.
Operations at small businesses are also influenced by their perishability.
Plumbers schedule their appointments several weeks in advance and charge cancellation fees to recoup some of their losses.
Perishability in Services Marketing
Perishability is one of the four characteristics of services marketing.
The others are:
- Intangibility: The characteristic to evaluate a service using tangible evidence, such as providing excellent experience inside their premises.
- Inseparability: The characteristic of providing the same level of quality to each customer.
- Heterogeneity/Variability: The characteristic of providing unique service for a mass-produced product.