Chapter 5 Summary – Distributing Services through Physical and

Electronic Channels
Distribution in a services context is quite different from the distribution of material goods.
A sales cycle involves dissemination of promotional material of the service offer in order to
increase the interest of the customer to buy the service, negotiation to reach an agreement
regarding the offer and development of a distribution channel for the service. Distribution of core
product and supplementary services can be distinguished in the sense that information flow is
about consultation, negotiation is about order-taking, billing and payment and product flow
relates to the core product, hospitality and safekeeping.

There are three types of distribution options for serving customers – customer goes to
the service organization, service providers go to the customer and service transaction is
conducted remotely. If the customer has to be present at the service site, the location of the site
is of paramount importance as it has to be convenient for the customer to reach there. In services
which need to be delivered at the client location, service providers charge for the additional time
spent and expenses they incur. Remotely conducted service encounters engage the services of
integrated logistics firms and the Internet to deliver their offerings. The channel used to deliver
the service will have an impact not only the cost to the service organization but also on the nature
of service experience for the customer. Some customers are skeptic about using electronic
channels and prefer high-contact delivery environments. According to recent research, people
rely on personal channels for complex and high perceived-risk services and on self-service
channels if they have higher than average confidence and knowledge about the service.
Sophisticated customers indulge in channel arbitrage if service providers are not able to capture
complete value delivered.

Decisions on the delivery and availability of the service need to taken by understanding
the nature of the service operation, customer expectation and competitor activity. Convenience
services such as savings banks and food joints are situated at the hub of activity. ATMs which
offer services like cash deposit and withdrawal, pin change etc. are located near hospitals,
universities, theatres and offices. Many businesses are located in modern buildings that offer

Group No. 04 | Marketing of Services

customers multi-purpose facilities. People are ready to go the service site in case of specialty
services like health-care and aviation. Unlike the conventional eight hours a day and five days a
week timings, services are transforming into highly responsive, 24 hours a day and seven days a
week timing to cater to the globalized world.

Technological advancement in computer science and telecommunications have opened

up several channels of customer engagement. Smartphones, voice recognition technology,
websites and smart cards are some examples of innovations that have encashed on emerging
cyberspace systems. The e-commerce boom and the rise of companies like Amazon and Flipkart
has integrated mobile devices into the service delivery infrastructure. Customers can access the
service, receive alerts about opportunities and problems and update themselves with the click of
a button.

Certain service organizations partner with intermediaries to deliver a complete offering

to their customers. The most popular concept is franchising where the management of the core
product is also transferred to the franchisee. The franchisor trains the franchisee in operations
and marketing and promotes it through the existing brand value.

Distribution of services in a large domestic or an international market throws up several

challenges. Logistics, cultural differences, local laws, government tax rates and climatic and
topographical differences are some issues of concern. Service providers target customers based
on market segment and industry type in these segments. Multinational organizations adopt
transnational strategies based on market drivers, competition, technology based drivers, cost
drivers (economies of scale) and government regulations. The European Union, for example, is a
single market for many industries because of the use of Euro, a common currency and minimal
import-export regulations amongst the countries. International services can be people-
processing, possession processing or information based. The service may be exported, the
customer may be imported or information may be transformed locally by a service provider.
However, operating across countries remains a challenge due to constraints of place and time.

Group No. 04 | Marketing of Services