Willy Wonka and the Hockey Game

A factor that differentiates services from products is the inherent difficulty in balancing supply of service capacity with the demand for it.

If a product’s demand outstrips the capacity for it, a company can produce more to create more sales, increase the price to create more profit, or both. World famous brands such as Apple and Harley Davidson are masters as manufacturing scarcity in order to drive margins and sales in future periods.

In the case of services, capacity has to be matched as closely as possible to demand, knowing that there will still be gaps.

Once a flight is sold out of seats, Southwest can’t sell more seats for that flight, nor can they reprice the existing seats to gain more margin. On the other hand, once a room at a Marriot goes empty for the night, that “inventory” of service capacity has forever perished, and there will never be revenue associated with it.

Add to this the conundrum of the one-of-a-kind service experience. The Super Bowl is a great example, where demand for tickets vastly outstrips capacity to provide them. The result: Tickets can be priced excessively high, to the point where much of the live audience for the game is corporate hospitality, and most fans of the teams involved are hosting parties in their home theatres.

Here’s an interesting spin on a one-of-a-kind event: Every year the NHL hosts an outdoor “pond-hockey”-style game called the Winter Classic, where two teams meet in a match that counts only in the regular season standings. For 2009, in Chicago, there were more than 240,000 ticket requests for the game played at Wrigley Field.

This year, Fenway Park will be the venue on January 1st for a game between the Boston Bruins and Philadelphia Flyers. The interesting part is how you get in:

First “dibs” goes to season ticket holders of the Bruins and Flyers. Makes sense. These are the people that form the revenue lifeblood of the franchises, they should have first option.

A selection of tickets is held back by the NHL for youth hockey programs. Great move. Children are the lifeblood of professional sports. It’s an horrific shame that with ticket prices what they are, kids are getting squeezed out of live sporting events.

The remaining tickets will be granted in a drawing, amongst all who request them, as options to purchase a single lot of two tickets. Register to “win”, and you have a shot at attending. Regardless of geography, regardless of means (you still have to by the tix, between $50 and $350 per), regardless of connections. Its egalitarian. It lends a Willy Wonka feel to the experience, where fans (myself included) will be watching on lottery day to see if I get to buy the tickets.

A masterful way to keep make the game more accessible to greater numbers and make the excitement for the event build long before it actually takes place. The NHL has come up with a unique solution to providing fair distribution of supply to an event with extremely limited available capacity to serve.

Obviously not an everyday scenario, but enough to make you think about how you distribute your available capacity across the customers demanding your services.