7 distributing srvices.ppt

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 7 - 1
Chapter 7
Distributing Services

Applying the Flow Model of Distribution to
Services
 Information and promotion flow: refers to distribution of information and
promotional material to interest the customer in buying the service.
 Negotiation flow focuses on reaching an agreement on the service
features and terms of offer, so that purchase contract can be made.
 Product flow: many people or possession processing services require
physical facilities for delivery. In Information processing services,
product flow can take place via electronic channels.
Delivering a service to customers involves decisions about
where, when and how. In services, there is often nothing to
move, as experiences are not being shipped or stored. Thus,
here distribution embraces three interrelated elements

Information and Physical Processes of the
Augmented Service Product (Fig. 7.1)
Exceptions
Billing
Payment
Information
Processes
Information
Consultation
Safekeeping
Physical
Processes
Order-
Taking
Core
Hospitality

Using Websites for Service Delivery
Safekeeping
Track package movements
Check repair status
CORE: Use Web to deliver information-based core services
Core
Consultation
Conduct e-mail dialog
Use expert systems
Order-Taking
Make/confirm reservations
Submit applications
Order goods, check status
Hospitality
Record preferences
Billing
Receive bill
Make auction bid
Check account status
Exceptions
Make special requests
Resolve problems
Payment
Pay by bank card
Direct debit
Information
Read brochure/FAQ; get schedules/
directions; check prices

Options for Service Delivery
 Customer goes to the service provider (or intermediary)
 Service provider goes to the customer
 Interaction at arm’s length (via the Internet, telephone, fax,
mail, etc.)
There are 3 types of interactions between customers and
service firms

Method of Service Delivery (Table 7.1)
Availability of Service Outlets
Nature of Interaction
between Customer
and Service
Organization
Single Site Multiple Sites
Customer goes to service
organization
Theater
Barbershop
Bus service
Fast-food chain
Service organization goes
to customer
House painting
Mobile car wash
Mail delivery
Auto club road service
Customer and service
organization transact at
arm’s length
Credit card company
Local TV station
Broadcast network
Telephone company

Place vs. Cyberspace
 Place - customers and
suppliers meet in a physical
environment
 Cyberspace - customers
and suppliers do business
electronically in virtual
environment created by
phone/internet linkages
 Required for people processing
services
 Offers live experiences, social
interaction, e.g., food services
 More emphasis on eye-catching
servicescape, entertainment
 Ideal for info-based services
 Saves time
 Facilitates information gathering
 May use express logistics service
to deliver physical core products

“24/7” - Factors Encouraging
Extended Operating Hours (Mgt Memo 7.1)
Economic pressure from
consumers
Changes in legislation
Economic incentives to
improve asset utilization
Availability of employees to
work nights, weekends
Automated self-service

Technology Revolutionizes Service Delivery:
Some Examples
 Smart mobile telephones to link users to Internet
 Voice recognition software
 Automated kiosks for self-service (e.g. bank ATMs)
 Web sites
provide information
take orders and accept payment
deliver information-based services
 Smart cards that can act as “electronic wallets”

E-Commerce:
Factors that Attract Customers to Virtual Stores
 Convenience (24-hour availability, save time, effort)
 Ease of obtaining information on-line and searching for
desired items
 Better prices than in bricks-and-mortar stores
 Broad selection

Splitting Responsibilities for Delivering
Supplementary Services (Fig. 7.2)
As created by
originating firm
As enhanced
by distributor
As experienced
by customer
+
Core = Core

Franchising
 Resources are limited
 Long-term commitment of store managers is crucial
 Local knowledge is important
 Fast growth is necessary to pre-empt competition
Franchising is a fast growth strategy, when

Service Process and Market Entry
People Processing Services
 Export the service concept
 Import customers
 Transport customers to new locations
Possession Processing Services
 Most require an ongoing local presence, whether it is the
customers dropping off items or personnel visiting customer sites
Information Based Services
 Export the service to a local service factory
 Import customers
 Export the information via telecommunications and transform it
locally

Barriers to International Trade in Services
 Operating successfully in international markets remains
difficult for certain services despite efforts of the WTO and
control relaxations
 Barriers include
Refusal by immigration offices to issue work permits
Heavy taxes on foreign firms
Domestic preference policies
Legal restrictions
Lack of broadly-agreed accounting standards
Cultural differences (esp. for entertainment industry)

Forces for Internationalization
Market drivers
Competition drivers
Technology drivers
Cost drivers
Government drivers
Impact will vary by service
type (people, possessions,
information)

Modes of Internationalization
 Export information-based services
 transmit via electronic channels
 store in physical media, ship as merchandise
 Use third parties to market/deliver service concept
 licensing agents
 brokers
 franchising
 alliance partners
 minority joint ventures
 Control service enterprise abroad
 direct investment in new business
 buyout of existing business

Impact of Globalization Drivers on Different
Service Categories (Table 7.2)
Globalization
Drivers
People
Processing
Possession
Processing
Information
Based
Competition Simultaneity of
production and
consumption limits
leverage of foreign
competitive advantage,
but management
systems can be
globalized
Technology drives
globalization of
competitors with
technical edge.
Highly vulnerable to
global dominance by
competitors with
monopoly or
competitive
advantage in
information.
Market People differ
economically and
culturally, so needs for
service and ability to
pay may vary.
Level of economic
developments
impacts demand for
services to
individually owned
goods
Demand for many
services is derived to
a significant degree
from economic and
educational levels.

Impact of Globalization Drivers on Different
Service Categories (Table 7.2, cont’d)
Globalization
Drivers
People
Processing
Possession
Processing
Information
Based
Technology Use of IT for delivery of
supplementary services
may be a function of
ownership and familiarity
with technology.
Need for technology-
based service delivery
systems depends on
possessions requiring
service and the cost
trade-offs in labor
substitution
Ability to deliver
core services
through remote
terminals may be a
function of
investment in
computerization etc.
Cost Variable labor rates may
impact on pricing in
labor-sensitive services.
Variable labor rates
may favor low-cost
locations.
Major cost elements
can be centralized &
minor cost elements
localized.
Government Social policies (e.g.,
health) vary widely and
may affect labor cost
etc.
Policies may
decrease/increase
cost &
encourage/discourage
certain activities
Policies may impact
demand and supply
and distort pricing

7 distributing srvices.ppt

More Related Content

Similar to 7 distributing srvices.ppt (20)

More from mukundsha (6)

Recently uploaded (20)

7 distributing srvices.ppt