Utsav Mahendra : Distributing Services


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Distributing Services

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Utsav Mahendra : Distributing Services

  1. 1. Chapter 7Distributing Services
  2. 2. Applying the Flow Model of Distribution to ServicesDistribution embraced three interrelated elements• Information and promotion flow• Negotiation flow• Product flow
  3. 3. Information and Physical Processes of the Augmented Service Product (Fig. 7.1)Information Processes Information Payment Consultation Order- Billing Core Taking Exceptions Hospitality Safekeeping Physical Processes
  4. 4. Using Websites for Service Delivery Information Read brochure/FAQ; get schedules/ directions; check prices Payment Consultation Pay by bank card Conduct e-mail dialog Direct debit Use expert systems Billing Order-Taking Receive bill Core Make/confirm reservations Make auction bid Submit applicationsCheck account status Order goods, check status Exceptions Hospitality Make special requests Record preferences Resolve problems Safekeeping Track package movements Check repair status CORE: Use Web to deliver information-based core services
  5. 5. Options for Service DeliveryThere are 3 types of interactions between customers andservice firms• Customer goes to the service provider (or intermediary)• Service provider goes to the customer• Interaction at arm’s length (via the Internet, telephone, fax, mail, etc.)
  6. 6. Method of Service Delivery (Table 7.1) Availability of Service OutletsNature of Interaction Single Site Multiple Sitesbetween Customerand ServiceOrganizationCustomer goes to service Theater Bus serviceorganization Barbershop Fast-food chainService organization goes House painting Mail deliveryto customer Mobile car wash Auto club road serviceCustomer and service Credit card company Broadcast networkorganization transact atarm’s length Local TV station Telephone company
  7. 7. Place vs. Cyberspace Place - customers and  Required for people processing suppliers meet in a physical services  Offers live experiences, social environment interaction, e.g., food services  More emphasis on eye-catching servicescape, entertainment Cyberspace - customers and  Ideal for info-based services  Saves time suppliers do business  Facilitates information gathering electronically in virtual  May use express logistics service environment created by to deliver physical core products phone/internet linkages
  8. 8. “24/7” - Factors EncouragingExtended Operating Hours (Mgt Memo 7.1)  Economic pressure from consumers  Changes in legislation  Economic incentives to improve asset utilization  Availability of employees to work nights, weekends  Automated self-service
  9. 9. 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 information – take orders and accept payment – deliver information-based services• Smart cards that can act as “electronic wallets”
  10. 10. 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
  11. 11. Splitting Responsibilities for Delivering Supplementary Services (Fig. 7.2) As created by As enhanced As experiencedoriginating firm by distributor by customer + = Core Core
  12. 12. FranchisingFranchising 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
  13. 13. Service Process and Market Entry• People Processing Services – Export the service concept – Import customers – Transport customers to new locations• Possession Processing Services – Most require an ongoing local presence, whether it is the customers dropping off items or personnel visiting customer sites• Information Based Services
  14. 14. Barriers to International Trade in Services• Operating successfully in international markets remains difficult for certain services despite efforts of the WTO and control relaxations• Barriers include – Refusal by immigration offices to issue work permits – Heavy taxes on foreign firms – Domestic preference policies – Legal restrictions – Lack of broadly-agreed accounting standards – Cultural differences (esp. for entertainment industry)
  15. 15. Forces for Internationalization Market drivers Competition drivers Technology drivers Cost drivers Government drivers Impact will vary by service type (people, possessions, informat ion)
  16. 16. 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 partners – minority joint ventures
  17. 17. Impact of Globalization Drivers on Different Service Categories (Table 7.2)Globalization People Possession InformationDrivers Processing Processing BasedCompetition Simultaneity of Technology drives Highly vulnerable to production and globalization of global dominance by consumption limits competitors with competitors with leverage of foreign technical edge. monopoly or competitive advantage, competitive but management advantage in systems can be information. globalizedMarket People differ Level of economic Demand for many economically and developments services is derived to culturally, so needs for impacts demand for a significant degree service and ability to services to from economic and pay may vary. individually owned educational levels. goods
  18. 18. Impact of Globalization Drivers on Different Service Categories (Table 7.2, cont’d)Globalization People Possession InformationDrivers Processing Processing BasedTechnology Use of IT for delivery of Need for technology- Ability to deliver supplementary services based service delivery core services may be a function of systems depends on through remote ownership and familiarity possessions requiring terminals may be a with technology. service and the cost function of trade-offs in labor investment in substitution computerization etc.Cost Variable labor rates may Variable labor rates Major cost elements impact on pricing in may favor low-cost can be centralized & labor-sensitive services. locations. minor cost elements localized.Government Social policies (e.g., Policies may Policies may impact health) vary widely and decrease/increase demand and supply may affect labor cost cost & and distort pricing etc. encourage/discourage certain activities