The document outlines the service delivery process and highlights the roles of employees and customers in this process. It discusses various service distribution methods including direct delivery, intermediaries, and electronic channels, detailing their advantages and disadvantages. Additionally, it emphasizes the importance of customer participation and strategies to enhance their roles as productive resources in service delivery.

1. 14-1
Service Delivery process:

2. 14-2
Learning Outcomes:
• Examine the modes of service distribution in the modern
context
• Analyze the employee’s role in services delivery process of
organizations
• Evaluate the customer’s levels of participation in service
production and delivery using examples
• Ascertain the methods in managing customers as partial
employees to increase productivity in service delivery
process.

3. 14-3

4. 14-4
Service Distribution
Direct Delivery Of
Service.
Delivery of Service
through Intermediaries

5. 14-5
Direct Delivery of Service
• Services are generally intangible &
experimental in nature.
• It allows the service principal (service
producer) to deliver the service directly to
the customer.
• Example-IBM Global Services.

6. 14-6
Delivery of Service through
Intermediaries
• Intermediaries often deliver services & perform
several imp. functions for service principals
(service producer).
• Services such as haircutting, dry cleaning, etc are
produced by the intermediaries (the franchisee)
using the process developed by the service
principal.
• The primary types of intermediaries
used in service delivery are
franchises, agents, brokers and
electronic channels.

7. 14-7
Direct or Company–Owned
Channels
• In this services are distributed directly
from provider to the customer.
• Some of these are local services–doctors,
dry cleaners and hairstylists (their area of
distribution are limited).
• Others are national chains with multiple outlets
but are considered direct channels because the
provider owns all the outlets.
• Example- Starbucks, the popular chain of coffee
shops in United States.

8. 14-8
Advantages
Advantages & Disadvantages
• The company has the complete control over the outlets and can
maintain consistency in service provision.
• Standards can be established & will be carried out as planned as
the company itself monitors & rewards proper execution of the
service.
• A final benefit of the company-owned channels is that the
company owns the customer relationship.

9. 14-9
Advantages & Disadvantages
• The company must bear all the financial risk.
• When expanding, the firm must find all the capital.
• Partnering or joint venture is almost always
preferred to company-owned channels.
Disadvantages

10. 14-10
Channel Flows

11. 14-11
Options for Service Delivery

12. 14-12

13. 14-13

14. 14-14

15. 14-15

16. 14-16

17. 14-17

18. 14-18
Channel as Partnership
Cooperation Collaboration
Relationship
Marketing
Coordination

19. 14-19
Franchising
Franchising
Most common type of distribution
in services
Franchising is a relationship or partnering in
which the service provider– the franchiser-develops
& optimizes a service format that it licenses for
delivery by other parties- the franchisees

20. 14-20
Agents And Brokers
• An Agent is an intermediary who acts on behalf of a
service principal (such as real estate agent) or a
customer and is authorized to make agreements between
the principal and the customer.
• A Broker is an intermediary who brings buyers and
sellers together while assisting in negotiation. Brokers
are paid by the party who hired them, rarely become
involved in financing or assuming risk and are not long-
term representatives of buyers or sellers.
• Examples- Real estate brokers,
Insurance brokers, Security brokers.

21. 14-21
Electronic Channels
• Electronic channels are the only service
distributors that do not require direct human
interaction.
• Examples- Telephone, Television channels,
Internet and Web.

22. 14-22
Benefits
• Consistent Delivery for standardized services.
• Low Cost.
• Customer Convenience.
• Wide distribution.
• Customer choice and ability to customize
• Quick Customer feedback

23. 14-23
Challenges
• Price Competition.
• Changes in Consumer Behavior.
• Security Concerns.
• Refusal to deal.
• Exclusive Territory.

24. 14-24
CUSTOMER
COMPANY
Service delivery
Gap 3: The
Service
Performance Gap
Customer-driven
service designs
and standards
Provider Gap 3
11-24

25. 14-25
Key Factors Leading to Provider Gap 3
11-25

26. 14-26
Employees’ Roles in Service
Delivery
• Service Culture
• The Critical Importance of Service
Employees
• Boundary-Spanning Roles
• Strategies for Delivering Service Quality
Through People
• Customer-Oriented Service Delivery
11-26

27. 14-27
Service Culture
“A culture where an appreciation for good
service exists, and where giving good
service to internal as well as ultimate,
external customers, is considered a natural
way of life and one of the most important
norms by everyone in the organization.”
- Christian Grönroos
11-27

28. 14-28
The Critical Importance of Service
Employees
• They are the service.
• They are the organization in the customer’s eyes.
• They are the brand.
• They are marketers.
• Their importance is evident in:
– the services marketing mix (people)
– the service-profit chain
– the services triangle
11-28

29. 14-29
The Service Marketing Triangle
11-29

30. 14-30
The Service Marketing Triangle
Internal Marketing
Interactive Marketing
External Marketing
Company
(Management)
Customers
Providers
“Enabling the
promise”
“Delivering the promise”
“Making the
promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler 11-30

31. 14-31
Aligning the Triangle
• Organizations that seek to provide
consistently high levels of service
excellence will continuously work to align
the three sides of the triangle.
• Aligning the sides of the triangle is an
ongoing process.
11-31

32. 14-32
Services Marketing Triangle
Applications Exercise
• Focus on a service organization. In the context
you are focusing on, who occupies each of the
three points of the triangle?
• How is each type of marketing being carried out
currently?
• Are the three sides of the triangle well aligned?
• Are there specific challenges or barriers in any of
the three areas?
11-32

33. 14-33
Making Promises
• Understanding customer needs
• Managing expectations
• Traditional marketing communications
• Sales and promotion
• Advertising
• Internet and web site communication
11-33

34. 14-34
Keeping Promises
• Service delivery
– Reliability, responsiveness, empathy, assurance,
tangibles, recovery, flexibility
• Face-to-face, telephone & online
interactions
• The Customer Experience
• Customer interactions with sub-contractors
or business partners
• The “moment of truth”
11-34

35. 14-35
Enabling Promises
• Hiring the right people
• Training and developing people to deliver
service
• Employee empowerment
• Support systems
• Appropriate technology and equipment
• Rewards and incentives
11-35

36. 14-36
Ways to Use the
Services Marketing Triangle
• Overall Strategic
Assessment
– How is the service
organization doing on all
three sides of the triangle?
– Where are the
weaknesses?
– What are the strengths?
• Specific Service
Implementation
– What is being promoted
and by whom?
– How will it be delivered
and by whom?
– Are the supporting systems
in place to deliver the
promised service?
11-36

37. 14-37
The Service Profit Chain
11-37

38. 14-38
Boundary Spanners Interact with Both Internal
and External Constituents
11-38

39. 14-39
Boundary-spanning Roles
• Boundary spanners:
– Provide a critical link between the external
customer environment and the internal
operations of the organization
– Serve a critical function in understanding,
filtering, interpreting information and resources
to and from the organization and its external
constituencies
– High stress!!!
11-39

40. 14-40
Boundary-spanning Roles
• What are these jobs like?
– Emotional labor
• The labor that goes beyond the physical or mental
skills needed to deliver quality service.
• Often requires suppression of true feelings
– Many sources of potential conflict
• person/role
• organization/client
• interclient
– Quality/productivity tradeoffs
11-40

41. 14-41
Strategies for Delivering Service Quality
through People
11-41

42. 14-42
Strategies for Delivering Service
Quality through People
• Hire the right people
• Compete for the best people
• Hire for service competencies and service inclination
• Be the preferred employer
• Develop people to deliver service quality
• Train for technical and interactive skills
• Empower employees
• Promote teamwork
11-42

43. 14-43
Benefits and Costs of Empowerment
• Benefits:
– Quicker responses to customer
needs during service delivery
– Quicker responses to
dissatisfied customers during
service recovery
– Employees feel better about
their jobs and themselves
– Employees tend to interact with
warmth/enthusiasm
– Empowered employees are a
great source of ideas
– Great word-of-mouth
advertising from customers
• Costs:
– Potentially greater dollar
investment in selection and
training
– Higher labor costs
– Potentially slower or
inconsistent service delivery
– May violate customers’
perceptions of fair play
– Employees may “give away the
store” or make bad decisions
11-43

44. 14-44
Strategies for Delivering Service
Quality through People (continued)
• Provide needed support systems
• Measure internal service quality
• Provide supportive technology and equipment
• Develop service-oriented internal processes
• Retain the best people
• Include employees in the company’s vision
• Treat employees as customers
• Measure and reward strong service performers
11-44

45. 14-45
Traditional Organizational Chart
Manager
Supervisor
Front-
line
Employe
e
Customers
Front-
line
Employe
e
Front-
line
Employe
e
Front-
line
Employe
e
Supervisor
Front-
line
Employe
e
Front-
line
Employe
e
Front-
line
Employe
e
Front-
line
Employe
e
11-45

46. 14-46
Customer-Focused Organizational
Chart
11-46

47. 14-47
Inverted Services Marketing
Triangle
11-47

48. 14-48
CUSTOMERS’ ROLE IN
SERVICE DELIVERY
1. Service is all about experience.
2. In “ The future of competition” Venkat Ramaswamy says
active customer interaction creates a far higher value than a
static product offer. Its not just about putting customer at the
centre, but experience. Its about creating value together.

49. 14-49
CUSTOMERS’ ROLE IN
SERVICE DELIVERY
3. Service delivery is all about customer driven approach, unlike the 4P’s
approach which is product driven focusing on 4A’s : Awareness,
Availability, Accessibility, Affordability
• Customers play a very vital role in successful delivery of service as
customers are often present in the place where service is produced
(Delivered)
• Customers alone can influence whether the delivered service is as per
customer defined specifications.
• Other customers who are present in the Service scape can also influence
the Service positively or negatively.

50. 14-50
Customer Roles in Service Delivery
Productive Resources
Contributors to
Quality and
Satisfaction
Competitors

51. 14-51
Customers as Productive
Resources
• “partial employees”
– contributing effort, time, or other resources
to the production process
• customer inputs can affect
organization’s productivity
• key issue:
– should customers’ roles be expanded?
reduced?

52. 14-52
Customers as Contributors to Service
Quality and Satisfaction
• Customers can contribute to
– their own satisfaction with the service
• by performing their role effectively
• by working with the service provider
– the quality of the service they receive
• by asking questions
• by taking responsibility for their own satisfaction
• by complaining when there is a service failure

53. 14-53
Customers as Competitors
• customers may “compete” with the service
provider
• “internal exchange” vs. “external exchange”
• internal/external decision often based on:
– expertise
– resources
– time
– economic rewards
– psychic rewards
– trust
– control

54. 14-54
Levels Of Customer Participation

55. 14-55
THE IMPORTANCE OF
CUSTOMERS IN SERVICE
DELIVERY
Low: Consumer Presence
Required during Service
Delivery
Products are standardized
Service is provided
regardless of any individual
purchase
Payment may be the
Only required customer
Input.
End Consumer Examples
Airline travel
Motel stay
Fast-food restaurant
Business–to Business
Customer Examples
Uniform cleaning service
Pest control
Interior greenery maintenance
service
Moderate: Consumer Input
Required for Service Creation
Client inputs customize a standard
service
Provision of service requires customer
Purchase
Customer inputs ( information materials)
Are necessary for an adequate outcome,
but the service firm provides the service
Haircut
Annual Physical exam
Full-service restaurant
Agency created advertising
Campaigning
Payroll service
Freight transportation
High: Customer Co creates the
Service Product
Active client participation guides the
customized service.
Service cannot be created apart from the
customer’s purchase and active
participation.
Customer inputs are mandatory
And cocreate the outcome.
Marriage Counseling
Personal training
Weight reduction program
Major illness or surgery
Management consulting
Executive Management seminar
Installation of computer network.
Level of Customer Participation:

56. 14-56
LEVEL OF CUSTOMER
PARTICIPATION
• The level of participation of customers varies from Service to
Service.
• In “High level of participation.” Eg. B to B projects like
providing software solutions & consultancies.
• In “Moderate level of participation” customers inputs are
necessary to facilitate effective delivery of service.

57. 14-57
LEVEL OF CUSTOMER
PARTICIPATION
• In entertainment service very “low level of participation” is
required. Service provider provides the Service & only the
customer’s presence is required to avail the service
• In many Service deliveries other customers also affect the
service delivery in a positive or negative way. This can
influence the customer’s perceptions of Service quality and
affect customer satisfaction.

58. 14-58
HOW CUSTOMERS WIDEN GAP
3
• Lack of understanding of their roles
• Not being willing or able to perform their roles
• No rewards for “good performance”
• Interfering with other customers
• Incompatible market segments

59. 14-59
STRATEGIES FOR ENHANCING
CUSTOMER PARTICIPATION

60. 14-60
STRATEGIES FOR ENHANCING
CUSTOMER PARTICIPATION
 Define customers’ job
1. Helping oneself: through active participation,
customers may become productive resources.
2. Helping others: mentoring programs in university.
3. Promoting the company: recommendation
4. Individual differences: not every one want to
participate

61. 14-61
STRATEGIES FOR ENHANCING
CUSTOMER PARTICIPATION
 Recruit, educate and reward customers
1. Recruit the right customers who are comfortable
with roles and communicate responsibilities.
2. Educate and train customers through socializing
org. values, abilities and skills, customer orientation
(universities), customer education (hospitals) and
customer information (McDonald's)
3. Reward customers for their contributions
4. Avoid negative outcomes of inappropriate customer
participation

62. 14-62
STRATEGIES FOR ENHANCING
CUSTOMER PARTICIPATION
 Manage the customer mix
Compatibility management: a process of first attracting
homogeneous consumers to the service environment, then
actively managing both the physical environment and
customer to customer encounters in such a way as to
enhance satisfying encounters and minimizing
dissatisfying customers.
Strategies:
1. Homogeneous customers
2. Locational proximity
3. Codes of conduct ( dresses and smoking attitudes)

63. 14-63
Customers as Partial Employees