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Chapter 5:

 DistributingServices ThroughPhysicalAndElectronic Channels

Services Marketing 7e, Global Edition

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Overview Of Chapter 5

Distribution in a Services Context

Options for Service Delivery

Place and Time Decisions

Delivering Services in Cyberspace

The Role of Intermediaries

The Challenge of Distribution in Large Domestic Markets

Distributing Services Internationally

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What is Distribution ?

 Distribution: The way in which something is shared out among

a group or spread over an area.

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Distribution in a Services

Context

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Distribution in a Services Context

In a services context, weoften don’t move physicalproducts

Experiences, performances,

and solutions are not beingphysically shipped andstored

More and more informational

transactions are conductedthrough electronic and notphysical channels

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Applying the Flow Model ofDistribution to Services

The three interrelated elements of distribution are:

Information and promotion flow

To get customer interested in buying the service

Negotiation flow

To sell the right to use a service

Product flow

To develop a network of local sites

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Distinguishing(unique) betweenDistribution of Supplementary andCore Services

Most core services requirephysical locations

Many supplementaryservices are informational;

can be distributed widelyand cost-effectively viaother means

Telephone

Internet

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Information and Physical Processesof Augmented(increased) Service Products

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Using Websites for Service Delivery

Order-TakingMake/confirm reservationsSubmit applicationsOrder goods, check status

SafekeepingTrack package movementsCheck repair status

Information ProcessPhysical Process 

Core

ConsultationConduct e-mail dialogUse expert systems

Hospitality

Record preferences

BillingReceive billMake auction bid

Check account status

ExceptionsMake special requests

Resolve problems

PaymentPay by bank card

Direct debit

InformationRead brochure/FAQ; get schedules/

directions; check prices

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Options for Service Delivery

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Channel Preferences Vary AmongCustomers

For complex(multifaceted) and high- perceived(supposed) risk services,people tend to rely(trust) on personal channels (e.g. mortgage dealingthey will use face to face)

Individuals with greater confidence and knowledge about a

service/channel tend(have a habit of)to use impersonal(easy to use)and self-service channels

Customers with social motives(reasons)tend to use personal channels

Convenience is a key driver of channel choice

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Place and Time Decisions

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Place Decisions of Service Delivery

Cost, productivity, and access to labor are key determinantsto locating a service facility

Location constraints(limitations)

Operational requirement (e.g., airports)

Geographic factor (e.g.,ski resorts)

Need for economies of scale (e.g., hospitals)

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Time of Service Delivery

Traditionally, scheduleswere restricted

Service availability limited todaytime, 40-50 hours a week

Today

For flexible, responsiveservice operations: 24/7

service, 24 hours a day, 7days a week, all around theworld

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Delivering Services in

Cyberspace

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Service Delivery InnovationsFacilitated by Technology

Technological Innovations Development of “smart” mobile telephones and PDAs, and

presence of Wi-Fi

Voice-recognition technology

Websites

Smart cards- Store detailed information about customer- Act as electronic purse containing digital money

Electronic channels can be offered together with physicalchannels, or replace physical channels

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E-Commerce: Move to Cyberspace

What are the factors that encourage you to use virtualstores?

Convenience

Ease of search

Broader selection

Potential for better prices

24-hour service with prompt (quick) delivery

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Role of Intermediaries(Mediators)

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Franchising

Definition: An authorization granted by a government orcompany to an individual or group enabling them to carry outspecified commercial activities, for example acting as an agentfor a company's products.

  "Toyota granted the group a franchise“

  “Mobily, STC & Zain telecome granted the group a franchise.

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Franchising

Franchisor provides training, equipment, and supportmarketing activities.

Franchisees invest time and finance, and follow copy andmedia guidelines of franchisor.

Advantages:

Expand delivery of effective service concept without a high level ofmonetary investment

Franchisees are motivated to ensure good customer service andhigh-quality service operations

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Franchising

Disadvantages of franchising Loss of control over delivery system and how customers

experience actual service

Effective quality control is difficult

Conflict between franchisees may arise especially as they gainexperience

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Challenge of Distribution in

Large Domestic Markets

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