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Distribution in services
 

Distribution in services

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    Distribution in services Distribution in services Presentation Transcript

    • Distributing Services through Physical and Electronic Channels 2 nd P: place and time
    •  Examine the role that distribution plays in services  Determine challenges faced by people-processing, possession-processing, and information based services  Implications of delivery through physical and electronic channels  Understand the role of intermediaries  Determine the drivers of globalization of services
    • Distribution in a Services Context
    • Experiences, performances and solutions are not shipped or stored 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 dist strategy requires development of local sites. Eg internet banking etc
    • 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
    • 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
    • Customer goes to service organization Service organization comes to customer Customer and service organization transact remotely (mail or electronic communications) Theatre Barbershop Bus service Fast-food chain House painting Mobile car wash Credit card company Local TV station Mail delivery Broadcast network Telephone company Type of Interaction between Customer and Service Organization Single Site Multiple Sites Availability of Service Outlets
    • Customers visit the service site •Location convenience, operation schedules – imp if customer has to be physically present-thro service delivery or for transaction •Models used for location analysis: traffic, retail gravity transport etc •Focus on less people processing Service providers go to customers •Supplier visits the customer •Catering services, corporate services Transact remotely •Never see facilities or meet personnel face to face •Few service encounters through mail, email etc
    •  use of diff 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
    • • Operational requirements determine the location. Eg airport • Geographic constraint,economies of scale Eg multispecialty hospital Location constraints • Small service factories to maximize geographic coverage • Eg banks in supermarkets Ministores • Closer to customers residential/workplace • Petrol pumps with retail chains Locating in multipurpose facility
    •  Past history- fixed hours of work,legal and social norms  Caused inconvenience  change to 24/7 service
    • Delivering Services in Cyberspace
    •  Eg Swissotel  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
    • Challenges for original supplier  Act as guardian of overall process  Ensure that each element offered by intermediaries fits overall service concept As created by originating firm As enhanced by distributor As experienced by customer +Core = Core Core product Supplementary services Total experience and benefits
    •  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 supplier’s 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  Large U.S. 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 customer’s physical possessions  Information-based services include mental processing services and information processing services
    •  People processing services require direct contact with customers - Export the service concept: act alone or in partnership with local suppliers,reach out to new customers,or follow existing corporate or individual customers or both. Eg chain restaurants - Import customers: customers are invited to service factory with distinct appeal eg bentota ,Goa,medical tourism - Transport customers to new locations: operate new routes and destinations
    •  Possession processing involves services to customer’s physical possessions. Eg repair an dmaintenance ,cleaning,warehousing
    •  Information-based services include mental processing services and information processing services: mental processing and information processing - Export service to local factory: college courses - Import customers Eg students studying abroad - Export info via telecom and transform it locally: downloading data
    •  Passage of free-trade legislation is important facilitator of transnational operations  Despite efforts of WTO and GATT, operating in international markets still difficult
    •  Transnational strategy involves integration of strategy formulation and its implementation across all countries  Market drivers of common customers across countries and corporate standardization leading to supplier consolidation  Competition  Technology  Cost  Government policies
    •  Export information-based services  Use third parties to market/deliver service concept  Control service enterprise abroad
    • Globalizatio n 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 development impacts demand for services to individually owned goods Demand for many services is derived to a significant degree from economic and educational levels
    • 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 labour substitution Ability to deliver core services through remote terminals may be a function of investment in computerization, etc. Cost Variable labour rates may impact on pricing in labour-sensitive services Variable labour rates may favor low-cost locations Major cost elements can be centralized and minor cost elements localized Government Social policies (e.g., health) vary widely and may affect labour cost, etc. Policies may decrease/increase cost and encourage/ discourage certain activities Policies may impact demand and supply and distort pricing
    •  Distribution enables information and promotion flow, negotiation flow, and product flow  Physical and electronic channels play different roles in the distribution and need to compliment each other  The original service supplier should manage the overall process of supplementary services to the customer  The drivers of globalization of services are competition, technology, cost and government  People processing services, possession processing services, and information-based services impact five groups of drivers differently