Session 7

Distributing Services

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7- 1

Distribution in a Services Context

Distribution to most people means movement of goods for

sale to end consumers.

In Services context, we often have nothing to move , as we

deal in experiences
How then does Distribution work in Services context ?

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7- 2

Applying the Flow Model of Distribution to Services

Distribution embraces three interrelated elements

Information and promotion flow

The objective : get the customer interested in the service.

Negotiation flow

Agreement on the service features & terms of offer, to close the purchase contract.

The objective : to sell the right to use a service. E.g.. Sell a reservation or a ticket.

Product flow
People or possession processing services require physical facilities for delivery Information processing services (internet banking, distance edu. through net etc) can be

undertaken via electronic channels.

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7- 3

Distinguishing between Distribution of Supplementary and Core Services

Distribution can relate to the core service as well as the

supplementary services.

Since many core services require a physical location

Club Mahindra Holiday, a movie at Imax or a play at Prithvi Theatre

Supplementary services are informational in nature and can

be distributed widely and cost effectively by other means.

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7- 4

Information and Physical Processes of the Augmented Service Product

Information Processes
Payment

Information Consultation
OrderTaking

Billing Exceptions

Core

Hospitality Safekeeping

Flower of Service
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

Physical Processes
7- 5

Using Websites for Service Delivery

Information
Read brochure/FAQ; get schedules/ directions; check prices

Payment
Pay by bank card Direct debit

Consultation
Conduct e-mail dialog Use expert systems

Billing
Receive bill Make auction bid Check account status Core

Order-Taking
Make/confirm reservations Submit applications Order goods, check status

Exceptions
Make special requests Resolve problems

Hospitality
Record preferences

Safekeeping
Track package movements Check repair status

CORE: Use Web to deliver information-based core services

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

7- 6

Options for Service Delivery

There are 3 types of interactions between customers and service firms

Customer goes to the service provider (or intermediary)

Service provider goes to the customer

Interaction at arms length (via the Internet, telephone, fax,
mail, etc.)
Online tech solutions, banking, repairs

Clinics, supermarkets, Salons

Landscapist, Vet, caterer

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7- 7

Method of Service Delivery

Availability of Service Outlets Nature of Interaction Single Site Multiple Sites between Customer and Service Organization
Customer goes to service organization

Service organization goes to customer

Customer and service organization transact at arms length

Theater Barbershop House painting Mobile car wash Credit card company Local TV station

Bus service Fast-food chain Mail delivery Auto club road service Broadcast network Telephone company

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7- 8

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

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

7- 9

Decisions about Place and time

Where should be delivered in a brick and Mortar Context ? Locational

constraints
Noise and environmental factors airports Geographic factors Ski and holiday resorts Economies of scale Specialized hospitals, malls

Ministores (ATMs, Retail outlets at petrol pumps,Subway etc) From Airports to Air Malls

When should services be delivered ?

In the past there was limited service availability, today the standard

has become 24/7 service

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7 - 10

24/7 - Factors Encouraging Extended Operating Hours

Economic pressure from consumers Changes in legislation

Economic incentives to improve asset utilization

Availability of employees to work nights, weekends Automated self-service

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7 - 11

Place vs. Cyberspace

Place - customers and
Required for people processing services suppliers meet in a physical Offers live experiences, social environment interaction, e.g., food services More emphasis on eye-catching servicescape, entertainment

Cyberspace - customers

and suppliers do business electronically in virtual environment created by phone/internet linkages

Ideal for info-based services Saves time Facilitates information gathering May use express logistics service to deliver physical core products

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7 - 12

Service Delivery in Cyberspace 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
Amazon.com

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7 - 13

The role of Intermediaries

Splitting Responsibilities for Delivering Supplementary Services Many service firms find it cost effective to delegate certain tasks, usually supplementary service elements.

As created by originating firm

As enhanced by distributor

As experienced by customer

Core

Core

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7 - 14

Franchising
Franchising has become a popular way to expand delivery of all 7Ps to multiple sites, without the level of investment capital that would be needed for self owned sites. It 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

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

7 - 15