8/14/2019 Love Lock 07

1/18

Chapter7

Distributing Services

8/14/2019 Love Lock 07

2/18

8/14/2019 Love Lock 07

3/18

Information and Physical Processes of theAugmented Service Product

Exceptions

Billing

Paymen

t

InformationProcesses

InformationConsultation

Safekeeping

PhysicalProcesses

Order-Taking

Core

Hospitality

8/14/2019 Love Lock 07

4/18

8/14/2019 Love Lock 07

5/18

Options for Service Delivery

Customer goes to the service provider (or intermediary)

Service provider goes to the customer Interaction at arms length (via the Internet, telephone, fax,

mail, etc.)

There are 3 types of interactions between customers and

service firms

8/14/2019 Love Lock 07

6/18

Method of Service Delivery

Availability of Service OutletsNature of Interactionbetween Customerand ServiceOrganization

Single Site Multiple Sites

Customer goes to serviceorganization

Theater

Barbershop

Bus service

Fast-food chain

Service organization goes tocustomer

House painting

Mobile car wash

Mail delivery

Auto club road service

Customer and serviceorganization transact at armslength

Credit card company

Local TV station

Broadcast network

Telephone company

8/14/2019 Love Lock 07

7/18

Place vs. Cyberspace

Place- customers andsuppliers meet in a physicalenvironment

Cyberspace- customersand suppliersdo businesselectronically in virtual

environment created byphone/internet linkages

Required for people processingservices

Offers live experiences, socialinteraction, 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 serviceto deliver physical core

products

8/14/2019 Love Lock 07

8/18

24/7 - Factors EncouragingExtended Operating Hours

Economic pressure fromconsumers

Changes in legislation

Economic incentives toimprove asset utilization

Availability of employeesto work nights, weekends

Automated self-service

8/14/2019 Love Lock 07

9/18

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 sitesprovide informationtake orders and accept paymentdeliver information-based services

Smart cards that can act as electronic wallets

8/14/2019 Love Lock 07

10/18

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

8/14/2019 Love Lock 07

11/18

Splitting Responsibilities for DeliveringSupplementary Services

As created byoriginating firm

As enhancedby distributor

As experiencedby customer

+Core = Core

8/14/2019 Love Lock 07

12/18

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

8/14/2019 Love Lock 07

13/18

Service Process and Market Entry

People Processing Services Export the service concept Import customers Transport customers to new locations

Possession Processing ServicesMost 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

8/14/2019 Love Lock 07

14/18

Barriers to International Trade in Services

Operating successfully in international markets remainsdifficult for certain services despite efforts of the WTO and

control relaxations

Barriers includeRefusal by immigration offices to issue work permitsHeavy taxes on foreign firmsDomestic preference policiesLegal restrictions

Lack of broadly-agreed accounting standardsCultural differences (esp. for entertainment industry)

8/14/2019 Love Lock 07

15/18

Forces for Internationalization

Market drivers

Competition drivers

Technology drivers

Cost drivers

Government drivers

Impact will vary by servicetype (people, possessions,information)

8/14/2019 Love Lock 07

16/18

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 partnersminority joint ventures

Control service enterprise abroad direct investment in new business buyout of existing business

8/14/2019 Love Lock 07

17/18

Impact of Globalization Drivers on DifferentService Categories

GlobalizationDrivers

People Processing PossessionProcessing

Information Based

Competition Simultaneity ofproduction andconsumption limitsleverage of foreigncompetitive advantage,but management systemscan be globalized

Technology drivesglobalization ofcompetitors withtechnical edge.

Highly vulnerable toglobal dominance bycompetitors withmonopoly orcompetitive advantagein information.

Market People differeconomically andculturally, so needs forservice and ability to paymay vary.

Level of economicdevelopments impactsdemand for services toindividually ownedgoods

Demand for manyservices is derived to asignificant degree fromeconomic andeducational levels.

8/14/2019 Love Lock 07

18/18

Impact of Globalization Drivers on DifferentService Categories

GlobalizationDrivers

People Processing PossessionProcessing

InformationBased

Technology Use of IT for delivery ofsupplementary servicesmay be a function ofownership and familiarity

with technology.

Need for technology-based service deliverysystems depends onpossessions requiring

service and the costtrade-offs in laborsubstitution

Ability to deliver coreservices throughremote terminals maybe a function of

investment incomputerization etc.

Cost Variable labor rates mayimpact on pricing in labor-sensitive services.

Variable labor rates mayfavor low-cost locations.

Major cost elementscan be centralized &minor cost elementslocalized.

Government Social policies vary widelyand may affect labor costetc.

Policies maydecrease/increase cost&encourage/discouragecertain activities

Policies may impactdemand and supplyand distort pricing