Chapter 5 Flashcards
If you mention distribution, many people will likely think of moving boxes through physical channels to distributors and retailers for sale to end-users.
DISTRIBUTION IN A SERVICE
CONTEXT
In services though, often there is nothing to move.
Experiences, performances, and solutions are not physically shipped and stored.
DISTRIBUTION IN A SERVICE
CONTEXT
Meanwhile, informational transactions are increasingly conducted via electronic
channels.
In a typical service sales cycle, distribution embraces three interrelated flows, which partially address the question of what is being distributed:
DISTRIBUTION IN A SERVICE
CONTEXT
WHAT IS BEING DISTRIBUTED?
In a typical service sales cycle, distribution embraces three interrelated flows, which partially address the question of what is being distributed:
- ________________________________ — distribution of information and promotion materials relating to the service offer.
The objective is to get the customer interested in buying the service.
Information and promotion flow
WHAT IS BEING DISTRIBUTED?
In a typical service sales cycle, distribution embraces three interrelated flows, which partially address the question of what is being distributed:
- __________________________ — 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).
Negotiation flow
WHAT IS BEING DISTRIBUTED?
In a typical service sales cycle, distribution embraces three interrelated flows, which partially address the
**____________________— 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 flow can be via electronic channels, employing one or more centralized sites.
Product flow
WHAT IS BEING DISTRIBUTED
- The flow perspective on what is being distributed can relate to the ____________
as well as to supplementary services of the Flower of Service.
core service
WHAT IS BEING DISTRIBUTED
- Distinguishing between core and supplementary services is important, as
many core services require a ________________, which severely restricts
distribution.
physical location
WHAT IS BEING DISTRIBUTED
- For instance, a live performance of a Broadway show must take place at a
_________ in Manhattan (until it goes on tour).
theater
WHAT IS BEING DISTRIBUTED
However, many of the _____________ _________ can be distributed widely and
cost-effectively via other means.
supplementary services
HOW SHOULD SERVICES BE
DISTRIBUTED?
Does the service or the firm’s positioning strategy require customers to be in direct ____________ with its personnel, equipment, and facilities?
physical contact
HOW SHOULD SERVICES BE
DISTRIBUTED?
(As we saw in Chapter 1, this is ___________ for people-processing services, but may not be necessary for other categories.)
If so, do customers have to visit the facilities of the service organization, or will the service organization send personnel and equipment to customers’ own sites?
unavoidable
HOW SHOULD SERVICES BE
DISTRIBUTED?
Alternatively, can ______________ between provider and customer be completed at arm’s length through the use of either telecommunications or physical channels of distribution?
(The three possible options are shown in the first column of Table)_
transactions
Be familiar with how services can be ___________ using three main options, and understand the importance of distinguishing between distributing core and supplementary services
distributed
HOW SHOULD A SERVICE BE
DISTRIBUTED?
Customers visit the service ____
site
HOW SHOULD A SERVICE BE
DISTRIBUTED?
The ____________ of the service factory locations and operational schedules are important when the customer has to
be physically present.
convenience
HOW SHOULD A SERVICE BE
DISTRIBUTED?
__________ providers go to customers
Service
HOW SHOULD A SERVICE BE
DISTRIBUTED?
Unavoidable when the service is _________
immovable
HOW SHOULD A SERVICE BE
DISTRIBUTED?
More ____________ and time-consuming for the service provider
expensive
HOW SHOULD A SERVICE BE
DISTRIBUTED?
Service transaction is conducted __________
remotely
HOW SHOULD A SERVICE BE
DISTRIBUTED?
Achieved with the help of _____________ and telecommunications
logistics
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.
CHANNEL PREFERENCES VARY
AMONG CUSTOMERS
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
CHANNEL PREFERENCES VARY
AMONG CUSTOMERS
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 channels, but prefer a face-to-face transaction when obtaining a mortgage.
Individuals with higher confidence and knowledge about a service and/or the channel are more likely to use 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 channels.
Customers with social motives tend to use personal channels.
Convenience is a key driver of channel choice for the majority of consumers.
Service convenience means saving time and effort rather than saving money.
Channel Preferences Vary Among
Customers
Channel Preferences Vary Among
Customers
For complex and perceived high-risk services, people tend to rely on __________ channels.
For example, customers are happy to apply for credit cards using remote channels, but
prefer a face-to-face transaction when obtaining a mortgage.
personal
Channel Preferences Vary Among
Customers
Individuals with higher confidence and knowledge about a service and/or the channel are more likely to use ____________ and ____________________.
impersonal
self service channels
Channel Preferences Vary Among
Customers:
Customers who look for the _________ aspects of a transaction prefer more convenience. This often means the use of impersonal and self-service channels.
functional
Channel Preferences Vary Among
Customers:
Customers with _________motives tend to use personal channels.
social
Channel Preferences Vary Among
Customers:
______________ is a key driver of channel choice for the majority of consumers.
Convenience
Channel Preferences Vary Among
Customers:
_________ convenience means saving time and effort rather than saving money.
Service
DISTRIBUTION OF SUPPLEMENTARY
SERVICES IN CYBERSPACE
Five of the supplementary services are ________________-based
information
DISTRIBUTION OF SUPPLEMENTARY
SERVICES IN CYBERSPACE
These services can all be distributed _____________. They are:
Information
Consultation
Order-taking
Billing
Payment
electronically
DISTRIBUTION OF SUPPLEMENTARY
SERVICES IN CYBERSPACE
Distribution of information, consultation and order-taking has
reached ____________________ levels in global service industries (e.g., hotels, airlines, car rental companies)
very sophisticated
Information and Physical Processes of
______________ ________________________
Augmented Service Product
USING _____________ FOR SERVICE
DELIVERY
WEBSITE
IMPORTANT FACTORS THAT ATTRACT
CUSTOMERS TO USE __________________
Convenience
Ease of search (obtaining information and searching for desired items
or services).
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.
ONLINE SERVICES
WHERE SHOULD A SERVICE
FACILITY BE LOCATED?
Unless a service is delivered __________, location decisions for physical sites
have to be made.
A _________ site location requires a sizable investment and a long-term commitment.
Due to its fixed nature as a result of long leases and high investments into a site, a firm _________ easily move to another site or convert to another format.
remotely
physical
cannot
WHERE SHOULD A SERVICE
FACILITY BE LOCATED?
Even if sunk costs are written off, moving to another location causes the
problem of a proportion of loyal customers and employees being ________; the farther the distance between the new and old locations, the bigger the ______.
lost
WHERE SHOULD A SERVICE FACILITY BE
LOCATED?
How then should service managers make decisions on the places where
service is delivered?
Frequently, a two-step approach is used;
First, _________ location considerations are developed to help identify the
general types of location a service firm should aim for.
Second, ___________ considerations are used to choose between specific sites of
a similar type that fit the overall location strategy.
strategic
tactical
STRATEGIC LOCATION
CONSIDERATIONS
The site ________ is an integral part of the overall service strategy; it must be at a
location that is _________ with its marketing strategy and target segments for an extended period of time.
location
consistent
STRATEGIC LOCATION
CONSIDERATIONS
To develop a ______________, start by understanding customer needs and
expectations, competitive activity, and the nature of the service operation.
location strategy
STRATEGIC LOCATION
CONSIDERATIONS
_________ should make it easy for people to access frequently purchased services,
especially those that face active competition .
Examples include retail banks and fast-food restaurants. However, customers
may be willing to travel further from their homes or workplaces to reach specialty services
Firms
TACTICAL LOCATION
CONSIDERATIONS
In the second step for selecting a specific site, key factors that need to be considered include:
________________ and characteristics (i.e., to assess the density and number of target customers that could be served with this site).
Population size
TACTICAL LOCATION
CONSIDERATIONS
In the second step for selecting a specific site, key factors that need to be considered include:
___________ 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).
Pedestrian
TACTICAL LOCATION
CONSIDERATIONS
In the second step for selecting a specific site, key factors that need to be considered include:
____________ of access for customers (e.g., public transportation, availability of
parking).
Convenience
TACTICAL LOCATION
CONSIDERATIONS
In the second step for selecting a specific site, key factors that need to be considered include:
_______________ in this area.
Competitors
TACTICAL LOCATION
CONSIDERATIONS
In the second step for selecting a specific site, key factors that need to be considered include:
____________of nearby businesses and stores.
Nature
TACTICAL LOCATION
CONSIDERATIONS
In the second step for selecting a specific site, key factors that need to be considered include:
Availability of _________.
labor
TACTICAL LOCATION
CONSIDERATIONS
In the second step for selecting a specific site, key factors that need to be considered include:
___________ of site locations, rental costs, and contractual conditions (e.g., length of lease, legal restrictions) and regulations (e.g., on zoning and opening hours).
Availability
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.
STRATEGIC LOCATION
CONSIDERATIONS
To develop a location strategy, start by understanding customer needs and
expectations, competitive activity, and the nature of the service operation.
STRATEGIC LOCATION
CONSIDERATIONS
Firms should make it easy for people to access frequently purchased services,
especially those that face active competition.
Examples include retail banks and fast-food restaurants. However, customers
may be willing to travel further from their homes or workplaces to reach specialty
services
STRATEGIC LOCATION
CONSIDERATIONS
Population size and characteristics (i.e., to assess the density and number of target customers that could be served with this site).
TACTICAL LOCATION
CONSIDERATIONS
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).
TACTICAL LOCATION
CONSIDERATIONS
Convenience of access for customers (e.g., public transportation, availability of
parking).
TACTICAL LOCATION
CONSIDERATIONS
Competitors in this area.
TACTICAL LOCATION
CONSIDERATIONS
Nature of nearby businesses and stores.
TACTICAL LOCATION
CONSIDERATIONS
Availability of labor.
TACTICAL LOCATION
CONSIDERATIONS
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).
TACTICAL LOCATION
CONSIDERATIONS
Although customer convenience is important, the need for economies of scale and operational requirements may restrict choice of locations.
Cost, productivity and access to labor are key determinants to locating a service facility
LOCATIONAL CONSTRAINTS
Operational Requirements –Airports for instance, are often inconveniently located relative to travelers’ 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.
LOCATIONAL CONSTRAINTS
Need for Economies of scale-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.
LOCATIONAL CONSTRAINTS
Innovative distribution strategies can be at the core of powerful new service
models.
INNOVATIVE LOCATION STRATEGIES
Mini-stores and related location strategies, and locating in multi-purpose
facilities are in the following sections. What these strategies have in
common is that accessibility is a key component of these services’ value
propositions.
INNOVATIVE LOCATION STRATEGIES
INNOVATIVE LOCATION STRATEGIES
An interesting innovation among
multi-site service businesses involves
creating numerous small service
factories to maximize geographic
coverage.
Examples include:
Automated kiosks are one example.
ATMs offer many functions of a bank
branch within a self-service machine
located within stores, hospitals,
colleges, airports, and office
buildings.
Note: Automated kiosks like ATM located inside convenience stores
MINI-STORES.
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
INNOVATIVE LOCATION STRATEGIES
WHEN SHOULD SERVICE BE
DELIVERED?
In the past, most professional and retail services in the industrialized countries followed traditional programming to have an availability of around _________ hours per week.
40 or 50
WHEN SHOULD SERVICE BE
DELIVERED?
To a large extent, this routine reflected __________ (and even legal requirements or trade union agreements) on the appropriate working hours for people and for the sale of
products.
This situation was ____________ for the people who work because they had to
do their shopping during the lunch hour or on Saturdays.
social norms
inconvenient
WHEN SHOULD SERVICE BE
DELIVERED?
Historically, most __________ cultures discouraged the opening of stores on Sundays, and in many cases, this was banned by law, reflecting a long tradition based on religious practices
Today, the situation has changed. For some highly responsive service operations, the standard has become ______service — ________ a day, ___days a week, around the world
Christian
24/7
24 hours
7
FACTORS THAT ENCOURAGE
EXTENDED OPERATING HOURS
There are at least five factors driving the move towards extended operating hours and seven-day operations.
The trend that originated in
the ___ and _________ has since spread to many other countries around
the world.
________ from consumers.
Changes in _________.
________ incentives to improve asset utilization
Availability of employees to work during “________” hours
_________ self-service facilities
US & CANADA
** Pressure
** legislation
** Economic
** unsocial
*** Automated
SERVICE DELIVERY INNOVATIONS
FACILITATED BY TECHNOLOGY
- Technological Innovations
Development of “______” mobile telephones and PDAs, and Wi-Fi high-
speed Internet technology that links users to Internet from almost anywhere
______-recognition technology
_____ sites
Smart ______
- Store detailed _________ about customer
- Act as electronic purse containing digital __________
___________ channels can be offered together with physical channels,
or take the place of physical channels
smart
Voice
Web
cards
information
money
Electronic
Among the factors luring customers to virtual stores are:
Convenience
Ease of search
Broader selection
Potential for better prices
24-hour service with prompt delivery
E-COMMERCE: MOVE TO
CYBERSPACE
Recent Developments link websites, customer management (CRM)
systems, and mobile telephony
E-COMMERCE: MOVE TO
CYBERSPACE
Integrating mobile devices into the service delivery infrastructure
can be used as means to:
Access services
Alert customers to opportunities/problems
Update information in real time
E-COMMERCE: MOVE TO
CYBERSPACE
Having discussed what is being distributed and how, let’s discuss who
should be involved in delivering which parts 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?
THE ROLE OF INTERMEDIARIES
In practice, many service organizations find it cost-effective to outsource
certain aspects of distribution. Most frequently, this delegation concerns
supplementary service elements. For instance, despite their increased use
of telephone call centers and the Internet, cruise lines and resort hotels still rely on travel agents to handle a significant portion of their customer
interactions such as giving out information, taking reservations, accepting payment, and ticketing.
THE ROLE OF INTERMEDIARIES
____________ is an authorization granted by the government or company to an
individual or group enabling them to carry out specified commercial activities,
for example acting as an agent for a company’s product.
Franchising
___________is one of the most common distribution strategies used, but a
range of alternative distribution intermediaries are also available
Franchising
This is done without the level of monetary investment needed for rapid
expansion of company-owned and -managed sites.
Franchising
Local marketing activities are typically paid for by the franchisee, but they
must adhere to copy and media guidelines prescribed by the franchisor
Franchising
__________ is an agreement or license between two legally independent parties
which gives.
Franchise
____________- a person or group of people who has the right to market a product
or service using the trademark or trade name of another business.
Franchisee
____________-has the obligation to provide rights and support to franchisees.
Franchisor
____________ recruits entrepreneurs who are willing to invest their time, effort, and equity in managing a previously developed service concept.
In return, the franchisor provides training on how to operate and market the, sells necessary supplies, and provides promotional support at a national or regional level.
Franchisor
FRANCHISING DISADVANTAGES
While franchising has many success stories, it also has some disadvantages.
Some loss of _______ over delivery system and, thereby, over how customers experience actual service
Effective ________ control is important
but yet difficult
Conflict between ____________ may arise especially as they gain experience
control
quality
franchisees
THE CHALLENGE OF DISTRIBUTION IN
________________________________
There are important differences
between marketing services within a
compact geographic area and
marketing services in a federal nation
covering a large geographic area, such
as the US, Canada, or Australia
LARGE DOMESTIC MARKET
Many firms distribute their services
internationally, including cnn, reuters,
google, amex, starbucks, hertz, citibank,
and mckinsey.
What are the driving forces pushing these firms to go international or even global? and when service companies plan to go international, how should they enter new markets
DISTRIBUTING SERVICES
INTERNATIONALLY
FACTORS FAVORING ADOPTION OF
TRANSNATIONAL STRATEGIES
Several forces or industry drivers influence the trend toward ___________ and the creation of transnationally integrated strategy.
As applied to _________, these forces are market drivers, competition drivers, technology drivers, cost drivers, and
government drivers. Their relative significance may vary by type of service.
globalization
services
FACTORS FAVORING ADOPTION OF
TRANSNATIONAL STRATEGIES
Market factors stimulating the
move toward transnational
strategies include common
customer needs across many
countries, global customers who
demand consistent service from
suppliers around the world, and
the availability of international
channels in the form of efficient
physical supply chains or
electronic networks.
MARKET DRIVERS
FACTORS FAVORING ADOPTION OF
TRANSNATIONAL STRATEGIES
The presence of competitors from different countries, interdependence of countries, and the transnational policies of competitors themselves are among the key competition drivers that exercise a powerful force in many service industries.
Firms may be obliged to follow their
competitors into new markets in order to protect their positions elsewhere. Similarly, once a major player moves into a new foreign market, a scramble for territory among competing firms may ensue
COMPETITION DRIVERS
FACTORS FAVORING ADOPTION OF
TRANSNATIONAL STRATEGIES
Technology drivers tend to center around advances in information technology — such as enhanced performance and capabilities in
telecommunications, computerization, and software; miniaturization of equipment; and the digitization of voice, video, and text — so that all can be stored, manipulated, and transmitted
in the digital language of computers.
For information-based services, the growing availability of broadband telecommunication channels with their capability of moving vast amounts of data at great speed is playing a
major role in opening up new markets
TECHNOLOGY DRIVERS.
FACTORS FAVORING ADOPTION OF
TRANSNATIONAL STRATEGIES
Big is sometimes beautiful from a cost
standpoint.
There may be economies of scale to be gained from operating on an
international or even global basis, in
addition to sourcing efficiencies as a
result of favorable logistics and lower
costs in certain countries.
Lower operating costs for
telecommunications and transportation,
accompanied by improved
performance, facilitate entry into
international markets.
COST DRIVERS
FACTORS FAVORING ADOPTION OF
TRANSNATIONAL STRATEGIES
Government policies can serve to encourage or discourage the development of a transnationally integrated strategy.
Among these drivers are favorable trade policies, compatible technical standards, and common marketing regulations.
The passage of free trade legislation in recent years has been an important facilitator of transnational operations.
For instance, the actions taken by the
European Commission to create a single
market throughout the EU is a stimulus to the creation of pan-European service strategies in numerous industries.
GOVERNMENT DRIVERS
