4. Module 3 Session 5 - Service Delivery System

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

Session 7

Distributing Services


Distribution in a Services Context

Distribution to most people means movement of goods for sale to end consumers.

In Services context, we often have nothing to move , as we deal in ‘experiences’

How then does Distribution work in Services context ?


Applying the Flow Model of Distribution to Services

Information and promotion flow The objective : get the customer interested in the service.

Negotiation flow Agreement on the service features & terms of offer, to close the purchase contract.

The objective : to sell the right to use a service. E.g.. Sell a reservation or a ticket.

Product flow

People or possession processing services require physical facilities for delivery

Information processing services (internet banking, distance edu. through net etc) can be

undertaken via electronic channels.

Distribution embraces three interrelated elements


Distinguishing between Distribution of Supplementary and Core Services

Distribution can relate to the core service as well as the

supplementary services.

Since many core services require a physical location Club Mahindra Holiday, a movie at Imax or a play at Prithvi Theatre

Supplementary services are informational in nature and can

be distributed widely and cost effectively by other means.


Information and Physical Processes of the Augmented Service Product

Exceptions

Billing

Payment

InformationProcesses

InformationConsultation

Safekeeping

Physical Processe

s

Order-TakingCore

Hospitality

Flower of Service


Using Websites for Service Delivery

SafekeepingTrack package movements

Check repair status

CORE: Use Web to deliver information-based core services

Core

ConsultationConduct e-mail dialogUse expert systems

Order-TakingMake/confirm reservationsSubmit applicationsOrder goods, check status

HospitalityRecord preferences

BillingReceive bill

Make auction bidCheck account status

ExceptionsMake special requests

Resolve problems

PaymentPay by bank card

Direct debit

InformationRead brochure/FAQ; get schedules/

directions; check prices


Options for Service Delivery

Customer goes to the service provider (or intermediary)

Clinics, supermarkets, Salons

Service provider goes to the customer Landscapist, Vet, caterer

Interaction at arm’s length (via the Internet, telephone, fax,

mail, etc.) Online tech solutions, banking, repairs

There are 3 types of interactions between customers and

service firms


Method of Service Delivery

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


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 informationtake orders and accept paymentdeliver information-based services

Smart cards that can act as “electronic wallets”


Decisions about Place and time

Where should be delivered in a brick and Mortar Context ? Locational constraints

Noise and environmental factors – airports

Geographic factors – Ski and holiday resorts

Economies of scale – Specialized hospitals, malls

» Ministores (ATMs, Retail outlets at petrol pumps,Subway etc) – From Airports to Air Malls

When should services be delivered ?

In the past there was limited service availability, today the standard has become 24/7 service


“24/7” - Factors Encouraging Extended Operating Hours

Economic pressure from consumers

Changes in legislation

Economic incentives to improve asset utilization

Availability of employees to work nights, weekends

Automated self-service


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


Service Delivery in Cyberspace - 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

Amazon.com


The role of Intermediaries

Splitting Responsibilities for Delivering Supplementary Services

As created by originating firm

As enhanced by distributor

As experienced by customer

+Core = Core

Many service firms find it cost effective to delegate certain tasks, usually supplementary service elements.


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 has become a popular way to expand delivery of

all 7Ps to multiple sites, without the level of investment

capital that would be needed for self owned sites.

It is a fast growth strategy, when

4. Module 3 Session 5 - Service Delivery System

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