Introduction, Flow Model, How services should be delivered and roles of intermediaries.

2. References
• Services Marketing by Jochen Wirtz, Christopher Lovelock, Jayant Chatterjee;
• Services Marketing by Valarie A Zeithaml, Mary Jo Bitner, Dwayne D. Gremler,
Ajay Pandit;
• Services Marketing by Prof M.K Rampal, Dr. Rajeshwari Malik;
• https://www.marketing-schools.org/types-of-marketing/services-marketing/
• http://www1.ximb.ac.in/users/fac/MNT/mnt.nsf/23e5e39594c064ee852564ae004f
a010/0f7c7e867eb152b465257011001ec050/$FILE/Services%20Marketing.ppt
• https://www.marketing-schools.org/types-of-marketing/services-marketing/
• https://acquire.io/blog/customer-service-is-the-new-marketing/

3. Content
• Introduction to service delivery.
• The flow model of service distribution.
• What is being distributed.
• How should a service be distributed.
• Where should a service facility be located.
• The role of Intermediaries.
• Major intermediaries for service delivery.
• Conclusion.

4. Introduction
• The service because of inseparability characteristics are distinguished
through channels which are most short and simple. The place or
distribution of services refers to availability of a service. The
following questions become important:-
• The place or distribution of services is discussed in light of these
questions.
What is being Distributed.
How should a Services be Distributed.
Where should a service facility be located.

5. Distribution in Service Context
• What? How? Where? When?
Responses to these four questions
form the foundation of any service
distribution strategy.
• They determine the customer’s
service experience, which is a
function of how the different
elements of Flower of Service are
distributed and delivered through
physical and electronic channels.
Information
Order Taking
Safekeeping
Billing CORE

6. Place: Distribution of Services
• 4 I’s of characteristics of service (i.e., intangibility, inventory, inconsistency and
inseparability) have led to the typical form of availability of service for distribution.
• The service are simply rented or consumed. This make it essential for availability and
accessibility before consumption.
• This need a distribution system. The distribution system may be defined as channels or
means used by which the service provider gains access to potential buyers of the service
product.
Location
Accessibility
Channel of Distribution
Service inventory/ Storage
Managing Channels

7. Place: Distribution of Services (Cont.…)
• Before the formulation of channel structure following aspects of service
distribution must be taken into consideration:
Actual tangible product which is being distributed.
It involves consumer’s movement to the service location. As consumer is part of the
service operation, the method of selling and environment within which service
product purchase is made becomes part of service experience.
The intermediaries/agents play a key role in recommending services to consumers.
The service organization has to devise promotional/distribution strategies suiting
customer coming directly, through agents or other modes.

9. WHAT
“What flows through
the channel?”
1. Information &
Promotion flow
(e.g., promotional
materials)
2. Negotiation Flow
(e.g., make a
reservation or sell
a ticket).
3. Product Flow (e.g.,
core & remaining
supplementary
services)
HOW
“How Should
services reach the
customer?”
1. Customer visit the
service site.
2. Service providers
go to their
customers.
3. Transaction is
conducted remotely
(e.g., via the
internet, telephone,
mail, and mail)
4. Channel
integration is key.
Where
“Where should
service be
delivered?”
1.Strategic location
consideration(e.g.,
customer needs and
type of service).
2. Tactical
considerations (i.e.,
specific location
characteristics).
3. Location
constraints (e.g., due
to required
economies of scale).
When
“When Should
services be
delivered?”
1.Customers
needs.
2. Economics of
incremental
opening hours
(fixed vs.
variable cost.
3. Availability of
labor.
4. Use of self-
service facilities.

10. Intermediaries
“What task should be delegated to Intermediaries?”
 Roles
 Benefits
 Cost (e.g., of franchises, agents and distributors)
Distribution Service Internationally
“How should the service be distributed?”
 Export the service concept
 Import customers/possessions
 Delivery remotely
Entering International Markets
“How can the value-add be protected?”
 Export the service
 Licensing, franchising, joint venture
 Foreign direct investment

12. If you mention distribution, many people will likely think of moving boxes
through physical channels to distributors and retailers for sale to end-users.
In services though often there is nothing to move.
Experiences, performance, and solutions are not physically shipped and
stored.
Meanwhile, informational transactions are increasingly conducted via
electronic channels.

13. • In a typical service sales cycle, distribution embraces three interrelated flows, which
partially address the question of what is being distributed:
1.
• Information and promotion flow: distribution of information and promotion materials relating to the
service offer. The objective is to get the customer interested in buying the service.
2.
• Negotiation flow: reaching an agreement on the service features and configuration, and the terms of the
offer, so that a purchase contract can be closed. The objective is often to sell the right to use a service
(e.g., sell a reservation or a ticket).
3.
• Product flow: many services, especially those involving people processing or possession processing,
require physical facilities for delivery. Here, distribution strategy requires development of a network of
local sites For information processing services, such as Internet banking and distance learning, the product
How can be via electronic channel, employing one or more centralized sites.

14. Core Services
A service that is the primary purpose of the transaction.
It actually brings value to the customers.
It’s a service which is KEY from organization’s perspective as well.
E.g., for banking customers, the core services will be provided will be all financial services.
Core Services may vary from industry to industry. Supplementary service may be a Core Service
for some businesses.
E.g., Providing customer support service is supplementary service for Banking Industry but it’s a
Core Services for BPO firms which provide customer assistance support to other Industries.

15. Supplementary Services
The additional services offered by organizations to
augment the core product/service are called
supplementary services. The kind of supplementary
services offered by organizations differs from one
service industry to another. According to Lovelock,
different supplementary services can be clustered
under eight heads.
The eight heads are consultation, hospitality, safe-
keeping, information, order-taking, exceptions,
billing and payment. Some supplementary services
like information and order-taking facilitate effective
utilization of the core-service by customers while some
supplementary services like hospitality and safe-
keeping augment the core product/service.

16. Supplementary Services (Cont..)
The use of supplementary services in
organizations requires managers to make
difficult choices and decisions. Some of the
implications of supplementary services for
managers are designing special packages,
outsourcing of non-core services and
converting supplementary services into
core services.
Sometimes, organizations develop the
necessary expertise in a particular
supplementary service so that they can
adapt it to be a core service. They can
increase their revenues by rendering this
service to other organizations which prefer
to outsource it.

18. • In this a key question is:
• Does the service or the firm’s positioning strategy requires customers to be in
direct physical contact with its personnel, equipment, and facilities or not?
• If so, do customers have to visit the facilities of the service organization, or
will the service organization and personnel and equipment to Customers own
sites?
• Alternatively, can transactions between provider and customer be completed at
arm's length through the use of either telecommunications or physical channels
of distribution?
• For each of these three option, should the firm maintain just a single outlet or
offer to serve customers through multiple outlet at different locations?

19. Nature of Interaction Between Customer and
Service Organization
Availability of Service outlets
Single Site Multiple Sites
Customer goes to service organization
Theater
Car Service Workshop
Café house chain
Car rental Chain
Service Organization comes to customer
House Painting
Mobile car wash
Mail Delivery
Auto Club Road
Delivery
Customer and Service organization transact remotely (mail or
electronic communication)
Credit card Company
Local TV stations
Broadcast network
Telephone
Company

20. Customers Visit the Service Site
• When customers have to visit the service site, key factors that need to be
considered include cost (e.g., rental), customer catchment areas, and the
convenience of service outlet locations for customer.

21. Service Providers Go to Their Customers
• For some types of services, the service provider visits the
customer.
• They must visit the customer's site because the need is
location-specific. When should service providers go to
their customers?
• Going to the customer's site is unavoidable whenever the
object of the service is some immovable physical item
such as installed machinery to be repaired, or a house that
requires pest control treatment.

22. Service Providers Go to Their Customers
(Cont..)
• In other instance, going to the customer is optional. because it’s
more expensive and time-consuming for the service firm to send
personnel and their equipment to travel to the customer than vice-
versa.
• There may be a profitable niche in serving individuals who are
willing to pay a premium for the convenience of receiving
personal visits or home delivery.
• Such as some doctors built business around house calls to visit see
the patient, as customers are glad to pay extra for service that not
only saves the time but is less stressful for the patient.

23. The Service Transaction is conducted Remotely
• Development in telecommunication, online technology, and
sophisticated logistics solutions have spurred many new approaches
to service delivery.
• A customer may never see the service facilities or meet service
personnel face to-face when dealing with a service firm through
remote transactions.
• Service encounters with service personnel are more likely via a
customer contact centre. mail, email, chat, or Twitter, and should
physical products, documents or other tangibles (e.g., credit cards
or membership cards) need to reach a customer, logistics providers
offer service firms integrated, reliable, and cost-effective solutions.

24. The Service Transaction is conducted Remotely
(Cont.…)
• When we look at the eight petals of the Flower of
Service, no fewer than five supplementary services
are information based.
• Information, consultation, order-taking, billing, and
payment (e.g., via credit card) can all be transmitted
using online channels.
• Even service businesses that involve physical core
products, such as retailing and repair, are shifting
delivery of many supplementary services to the
Internet, closing physical branches, and relying on
speedy business logistics to enable a strategy of
arm's-length transactions with their customers.
Information
Order Taking
Safekeeping
Billing CORE
Information
process
Physical
process

25. • Web and app-delivered services are becoming increasingly sophisticated, but also more user-
friendly.
• They often simulate the services of a well-informed sales assistant in steering customers toward
items that are likely to be of interest.
• Some even provide the opportunity for "live" email or chat dialog with helpful customer service
personnel.
• Facilitating searches is another useful service on many sites, ranging from browsing available
books by a particular author, to finding flight schedules between two cities on a specific date,
Important factors that attract customers to use online services are:
 Convenience.
 Ease of search (obtaining information and searching for desired items or services)
 A broader selection.
 Potential for better prices
 24/7 service with prompt delivery This is particularly appealing to customers whose busy lives leave them
short of time.

26. Channel Preference Vary Among Customer
• The use of different channels to deliver the same service not only has vastly different cost implications for a
service organization, it also drastically affects the nature of the service experience for the customer.
• Banking services, for instance, can be delivered remotely through computer mobile phone, a voice response
system, a call centre, ATMs face-to-face in a branch, and through a direct visit to a wealthy customer's home in
the case of private banking.
• Although electronic self-service channels tend to be the most cost-effective, not all customers like to use them.
• This means that if we want to migrate customers to new electronic channels, we may require different strategies
for different segments.
• We also need to recognize that some proportion of customers will never voluntarily change from their preferred
high-contact delivery environments.

27. Channel Preference Vary Among Customer (Cont..)
Recent research has explored how customers choose among personal, impersonal, and self-
service channels and has identified the following key drivers:
• For complex and perceived high risk services people tend to rely on personal channels. For example, customers
are happy to apply for credit cards using remote channel, bur prefer a face-to-face that action when obtaining
mortgage.
• Individuals with higher confidence and knowledge about a service and/or the channel are more likely to
impersonal and self-service channels.
• Customers who look for the functional aspects of a transaction prefer more convenience. This often means the
use of impersonal and self-service channel. Customer with social motives tend to use personal channels.
• Convenience is a key driver of channel choice for the majority of consumer Service convenience means saving
time and effort rather than saving money A customer's search for convenience is not just confined to the
purchase of core products but also extend to convenient times and places. People want easy acres to
supplementary services too- especially information, reservations. and problem solving.

28. Channel Integration is Key
Singly or in combination, electronic channels offer a complement or alternative to traditional
physical channels for delivering information-based services.
However, channel integration is key for successfully delivering through multiple channels.
As consumers are using more devices while still using traditional channels (e.g., automated teller
machines (ATM), branches, and call centres), it is important for service organizations to deliver a
seamless and consistent user experience across channels.
New delivery channels have created an inconsistent and frequently disjointed experience for many
customers.

29. Finally:
Service providers have to be careful when channels are priced differently.
Increasingly customers take advantage of price variation among channels and markets, a strategy
known as channel arbitrage“.
For example, customers can ask the expensive full-service broker for advice (and perhaps place a
small order) and then conduct the bulk of their trades via the much lower-priced discount broker.
Service provider need to develop effective pricing strategies that will enable there to deliver value
and capture it through the appropriate channel.

31. • Today’s consumer is convince oriented, a good location is essential
when the service is distributed directly from originator to consumer.
• Some service marketers, in an attempt to reduce inseparability factor,
have broadened their distribution base by extending their locations.
• E.g.,
ATM’s are located at various places at convenient location, away from the main
bank to facilitate service delivery.
Many courier companies have opened distribution and collection centers at
different parts of the city.
Health care organizations provides mobile units for X-Rays, blood examination
through mobile vans.
Delhi Public Library has set up a mobile library which is covering various parts
of Delhi.
Indian Oil Ltd. started a mobile services for providing fuels at your doorsteps.

32. How then should service managers make decisions on the places
where service is delivered?
• Frequently, a two-step approach is used:
First, strategic location considerations are developed to help identify
the general types of location a service firm should aim for.
Second, tactical considerations are used to choose between specific
sites of a similar type that fit the overall location strategy.

33. Strategic Location Consideration
• The site location is an integral part of the overall service strategy, it must be at a location that is
consistent with its marketing strategy and target segments for an extended period of time.
• To develop a location strategy, start by understanding customer needs and expectations,
competitive activity, and the nature of the service operation.
• The distribution strategies used for some of the supplementary service elements may differ from
those used to deliver the core product itself.
• For instance, as a customer, you're probably willing to go to a particular location at a specific
time to attend a sporting or entertainment event. But you probably want greater flexibility and
convenience when reserving a seat in advance, so you may expect the reservations service to be
open for extended hours, to offer booking and credit card payment by phone or the Internet, and
to deliver tickets through postal or electronic channels.

34. Strategic Location Consideration (Cont..)
• In general, firms have to trade-off between ease of access and convenience for their customers
versus the cost of providing that access and convenience!
• Markets can often be segmented by accessibility preferences and price sensitivity.
• There will always be segments that are willing to pay premium for ease of access and
convenience (even if that applies only to certain consumption situations such as the occasional
pizza TV dinner at home for home delivery services), and segments that are willing to travel and
spend time for a lower price.

35. Tactical Location Considerations
• In the second step for selecting a specific site, key factors that need to be considered include:
• Population size and characteristics (i.e., to assess the density and number of target customers
that could be served with this site).
• Pedestrian and vehicular traffic and its characteristics (i.e., to assess the number of target
customers passing a site that could be served with this outlet).
• Convenience of access for customers (e.g., public transportation, availability of parking).
• Competitors in this area.
• Nature of nearby businesses and stores.
• Availability of labour.
• Availability of site locations, rental costs, and Contractual conditions (e.g., length of lease,
legal restrictions) and regulations (e.g., on zoning and opening hours).

36. Locational Constraints
• Airports, for instance, are often inconveniently located relative to traveller’s homes,
offices, or destinations. Because of noise and environmental factors, finding suitable
sites for construction of new airports or expansion of existing ones is a very difficult
task. But to make airport access more convenient the DMRC installed fast rail link
like the Airport express line.
• Major hospitals offer many different healthcare services at a single location,
requiring a very large facility. Customers requiring complex, in-patient treatment
must go to the service factory rather than be treated at home. However, an
ambulance or even a helicopter - can be sent to pick them up. Medical specialists, as
opposed to general practitioners, often find it convenient to locate their offices close
to a hospital because it saves them time when they need to treat their patients.
Although customer convenience is important, the need for economies of scale and
operational requirements may restrict choice of locations.

37. Innovative Location Strategies
• Innovative distribution strategies can be at the core of powerful new service models.
• Mini-stores and related location strategies, and locating in multi purpose facilities are one
of the best examples for Innovative location strategies.
• Mini-stores. An interesting innovation among multisite service businesses involves
creating numerous small service factories to maximize geographic coverage Examples
include:
• Automated kiosks are one example. ATMs offer many of the functions of a bank branch
within a self-service machine that can be located within stores, hospitals, colleges,
airports, and office buildings. Automated vending machines for stamps purchase and
payment of bills is another example

38. Innovative Location Strategies (Cont..)
• Another approach results from separating the front and back stages
of the operation Taco Bell's innovative K-Minus strategy involves
restaurants without kitchens Food preparation takes place in a
central location. The meals are then shipped to restaurants (which
can now devote more of their expensive floor area to customer use)
and to other "points of access" (such as mobile food carts), where
the food can be reheated before serving.
• Increasingly, firms offering one type of service business are
purchasing space from another provider in a complementary field.
Perhaps you've noticed small bank branches inside supermarkets,
and food outlets such as Dunkin Donuts and Subway sharing space
with a fast-food restaurant such as Burger King.

39. Innovative Location Strategies (Cont..)
• Locating in Multi-Purpose Facilities: The most obvious locations for consumer services
are close to where customers live or work.
• Modern buildings are often designed to be multi-purpose, featuring not only office or
production space but also services such as a bank (or at least an ATM), a restaurant, a hair
salon, several stores, and maybe a health club.
• Some companies even include a children's day-care facility to make life easier for busy
working parents.
• The most obvious locations for consumer services are close to where customers live or
work. Modern buildings are often designed to be multi-purpose, featuring not only office or
production space but also services such as a bank (or at least an ATM), a restaurant, a hair
salon, several stores, and maybe a health club. Some companies even include a children's
day-care facility to make life easier for busy working parents.

41. • The next part is Who should be involved in delivering which part of the service. (i.e., information,
negotiation, and the core and remaining supplementary services) to the customer.
• Should a service organization deliver all aspects of its service itself, or should it involve
intermediaries to take on certain parts of service delivery?
• In practice, many service organizations find it cost-effective to outsource certain aspects of
distribution.
• There are three types of participants, i.e., service provider, intermediaries and customers.
• All the organizations or people participating in distribution process are known as channels of
distribution.
• Direct channel of distribution is common for some of the services while in services additional
channels are used to achieve better growth and to fill the unutilised capacity.
• Intermediaries are now playing an important role in delivering the services.

42. Splitting Responsibility for Service Delivery
• The core product and certain supplementary elements such as information,
consultation, and exception are delivered by the original supplier.
• The delivery of other supplementary services is delegated to an intermediary to
complete the offering as experienced by the customer.
• In other instances, several specialist outsourcers might be involved as
intermediaries for specific elements.
• The challenge for the original supplier is to act as the guardian of the overall
process, ensuring that each element offered by the intermediaries fits the overall
service concept in order to create a consistent and seamless branded service
experience.

43. Splitting Responsibility for Service Delivery
(Cont..)
CORE
CORE CORE
As Created by Originating Firm As Enhanced by Distributors As experienced by Customers
Core Products with some
supplementary services
Supplementary Services Total experience
and Benefits

44. Benefits & Cost of Alternative Distribution Channel
• In addition to outsourcing certain tasks to intermediaries, they are
frequently used to achieve reach and generate business.
• Each channels offers different benefits and also has vastly different costs.
• The lowest cost distribution channel would b the service firm’s own
website.
• The most expensive channels are often online distribution

45. Key Hospitality
Industries
Customers
Hotels
Cruise Lines
Airlines
Car Rental
Theme Parks
Entertainment
Restaurants
Alternative Sales Channels in Hospitality
Industry
Tour Operator Travel Agent
Travel Agent
Tour Operator
Online Intermediary
Direct Sales via Local Operations

46. The Role and Value-add (i.e., benefits)
and costs of every intermediary has to
be carefully considered when designing a
firm’s distribution strategy.

48. Major Intermediaries for Service Delivery
Services
Franchisees Electronics Agents/Brokers

49. Franchising
• It is a type of contractual vertical marketing system that involves a continuing
relationship in which a franchisor (parent company) provides the right to use a
trademark plus various forms of management assistance in return for payments from
franchisee (the owner of the individual business unit).
• The Franchise System in the combination of franchisor and franchises.

50. Types of Franchising
Product Franchise:
• Manufacturers use the product franchise to govern
how a retailer distributes their product.
• The manufacturer grants a franchisee the authority
to distribute goods by the manufacturer. The
franchisee must pay a fee or purchase a minimum
inventory of stock in return for these rights.
• Examples or Product Franchises include Baskin
Robbins, Ford Motors Company.

51. Types of Franchising
• Business Format Franchising:
• The business format franchisee also gets to use the franchisor’s
trademark, but more importantly, it gets the entire system to operate
the business and market the product and/or service.
• The franchisor offers a detailed plan and procedures on almost every
aspect of the business, provides initial and ongoing training and
support.
• The company will usually provide a significant amount of assistance
to the business owner in starting and managing the company.
• The franchisee pays a fee or royalty in return.

52. Types of Franchising
• Manufacturing Franchises:
• These types of franchises provide an organization
with the right to manufacture a product and sell it to
public, using the franchisor’s name and trademark.
• This type of franchise is found most often in the food
and beverage industry but can be applied to other
industries

53. Agents & Brokers
• Unlike merchant wholesaler, agents and brokers do not take title to the
merchandise.
• In service environment, their primary function is to sell services, in return for
which they get a commission from the service provider.
i. Agents
• Agents are wholesalers that do not take title of products. They work for
commission or fee as payment for their services and are comprised of
manufacturers/service provider’s agent, selling agents and commission merchants.

54. Services Providers Agents
• They work for two or more related services from non competing service creators
in a specific geographic territory.
• E.g., a travel agent represents all Airlines and does the booking for passengers
travelling by Airlines for a fee or commission and may also provide booking for
tour related services for a tour operator.
• A service may employ agents (LIC Agents) each with a unique product-territory
mix.
• Agents have limited association with the marketing program or price structure of
the service.

55. ii) Selling Agents
 Selling agents sell full range of services of a service provider and are responsible
for all aspects of marketing of those services under a contractual agreement.
 In fact they are empowered to negotiate on behalf of the service providers.
 They perform the function of wholesaling without taking the title of the product.
 They mostly work for small firms.
 e.g., A travel agent who is authorized selling agent of a hotel may negotiate a
block booking on behalf of the hotel under contractual obligation.

56. Brokers
• Brokers do not have any affiliation with any particular service provider.
• They specialize in certain areas and bring buyers and seller together to negotiate the
contract.
• E.g., real estate broker does not have the title of the property but brings, property owner
who wants to sell and a customer who wants to buy, together for negotiation. He gets a
fee/commission of their deal.
• A broker may represent many non-competing brands in a metropolitan area. Brokers are
very common in financial service industries.
• E.g., Commercial stock brokers are licensed sales representatives who advise business
client, take orders and then acquire stocks for the clients. For these services, they get the
brokerage or commission.

57. Electronic Channels
• Number of technological advances have taken place due to immense use of EDI
(Electronic data interchange).
These advances led to:
• Increased use of self service operations e.g., many marketing firms have put their services
on the website and those who need get it by self service e.g., all publishers have a website
giving details of the books published.
• Providing data bank services e.g., a service provider may require information to make a
mailing list to target a specific audience.
• Electronic banking, m-banking, app-based banking.
• Online booking, online payment cancellation etc..

58. Electronic Channels (Cont..)
• Distribution of service through electronic channel
is without any direct human interaction because
services are distributed through a service
distribution system.
• This channel requires a pre-designed service and
system to deliver it.
• Delivery of service through alternate channels,
like ATMs , Call centers, Internet and Kiosks is
growing at an ever-increasing pace.

59. • What? How? Where? When? Responses to these four questions from the foundation of any
service distribution strategy.
• The customer’s services experience is a function of how the different elements of services are
distributed and delivered through selective physical and electronic channels.
• In addition to “what” and “how”, service marketing strategy must address issues of place and time,
paying as much attention to speed, scheduling, and electronic access as to the more traditional
notion of physical location.
• Here, the rapid growth of the Internet and broadband mobile communications is especially exciting
for service firms, and many elements of service are informational in nature.

60. References
• Services Marketing by Jochen Wirtz, Christopher Lovelock, Jayant Chatterjee;
• Services Marketing by Valarie A Zeithaml, Mary Jo Bitner, Dwayne D. Gremler,
Ajay Pandit;
• Services Marketing by Prof M.K Rampal, Dr. Rajeshwari Malik;
• https://www.marketing-schools.org/types-of-marketing/services-marketing/
• http://www1.ximb.ac.in/users/fac/MNT/mnt.nsf/23e5e39594c064ee852564ae004f
a010/0f7c7e867eb152b465257011001ec050/$FILE/Services%20Marketing.ppt
• https://www.marketing-schools.org/types-of-marketing/services-marketing/
• https://acquire.io/blog/customer-service-is-the-new-marketing/