Distribution in a Services
Context
Distribution impacts the typical sales cycle in three
ways:
1. Information and promotion flow: distribution of
information and promo materials relating to service
offer. Objective: to get the customer to buy the
service
2. Negotiation flow: reaching an agreement on service
features and configuration, terms of offer, so
purchase contract can be closed . Eg sell a ticket
3. Product
flow: services like people/possession
processing require a physical facility for service
delivery. Here distinctive strategy requires
development of local sites. Eg internet banking etc
Information
Read brochure/FAQ; get schedules/
directions; check prices
Consultation
Payment
Conduct e-mail dialog
Use expert systems
Pay by bank card
Direct debit
Billing
Receive bill
Make auction bid
Check account status
Core
Exceptions
Make special requests
Resolve problems
Safekeeping
Order-taking
Make/confirm
reservations
Submit applications
Order goods, check
status
Hospitality
Record preferences
Track package movements
Check repair status
Core: Use Web to deliver information-based core services
Determining Type of
Contact: Options for
Service Delivery
Decisions on when, how, where to deliver
service have an important effects on nature
of customer experience.
They determine the type of encounters with
service personnel, price and other costs
incurred to obtain the service
Does the nature of service or firms
positioning requires customers in physical
contact with personnel, equipment and
facilities
Customers visit service site
Service providers go to customers
Service transaction is conducted remotely
Availability of Service Outlets
Type of Interaction between Customer
and Service Organization
Customer goes to service
organization
Service organization comes
to customer
Customer and service
organization transact
remotely (mail or electronic
communications)
Single Site
Multiple Sites
Theatre
Bus service
Barbershop
Fast-food chain
House painting
Mail delivery
Mobile car wash
Credit card
company
Broadcast network
Local TV station
Telephone company
use of different channels to deliver the same
service cost implications: eg banking services
For complex and high-perceived risk services,
people rely on personal channels eg loans
Individuals with greater confidence and
knowledge about a service/channel use
impersonal and self-service channels
Customers with social motives use personal
channels
Convenience is a key driver of channel choice
Understand customer needs and
expectations, competitive activity, and
nature of service operation
Where should a service be located in a brick
and mortar context
Cost, productivity, access to labor
Past history- fixed hours of work, legal and
social norms
Caused inconvenience
change to 24/7 service
Delivering Services in
Cyberspace
Technological Innovations
Development
of smart mobile telephones and PDAs as
well as Wi-Fi high-speed Internet technology that links
users to Internet from almost anywhere
Voice-recognition
technology
Websites
Smart
-
cards
Store detailed information about customer
Act as electronic purse containing digital money
Increase accessibility of services
Deliver right information or interaction at right time
Create and maintain up-to-date real-time information
Internet facilitates 5 categories of flow
Information
Negotiation
Service
Transactions
Promotion
Electronic channels offer
complement/alternative to traditional physical
channels
Convenience (24-hour availability, save time,
effort)
Ease of obtaining information online and
searching for desired items
Better prices than in many bricks-and-mortar
stores
Broad selection
Recent Developments link Websites, customer
management (CRM) systems, and mobile telephony
Integrating mobile devices into the service delivery
infrastructure can be used as means to:
Access
services
Alert customers to opportunities/problems
Update information in real time
Role of Intermediaries
Many organizations find it cost effective to
outsource certain service tasks. Eg travel
agents booking etc
As created by
originating firm
Core
Core product
As
experienced
by customer
As enhanced
by distributor
Supplementary
services
Core
Total experience
and benefits
Challenges for original supplier
Act as guardian of overall process
Ensure that each element offered by intermediaries fits overall service concept
Popular way to expand delivery of effective
service concept
Franchising is a fast growth strategy, when
Resources
are limited
Long-term commitment of store managers is crucial
Local knowledge is important
Fast growth is necessary to pre-empt competition
Study shows significant attrition rate among
franchisors in the early years of a new franchise
system
One-third
of all systems fail within first 4 years
Three-fourths of all franchisors cease to exist after 12
years
Disadvantages of franchising
Some
loss of control over delivery system and,
thereby, over how customers experience actual
service
Effective quality control is important yet difficult
Conflict between franchisees may arise especially as
they gain experience
Alternative: license another supplier to act on the
original suppliers behalf to deliver core product,
for example:
Trucking
companies
Banks selling insurance products
The Challenge of
Distribution in Large
Domestic Markets
Marketing services (i.e., physical logistics) face
challenges due to:
Distances
involved (geographic areas)
Existence of multiple time zones
Multiculturalism (especially, immigrants and
indigenous people)
Differences in laws and tax rates
companies counter this by:
Targeting
specific market segments
Seeking out narrow market niches
Serving multiple segments across a huge
geographic area is biggest marketing challenge
Distributing Services
Internationally
People processing services require direct contact
with customers
Possession processing involves services to
customers physical possessions
Information-based services include mental
processing services and information processing
services
