Part 5 Ch13 Delivering service through electronic channels and intermediaries Flashcards
Multi-channel Strategy
delivering a service through various channels, providing customers with multiple options for interaction
- Channels: Online, telephone, agent, branch, etc.
- Objective: Offer customers diverse ways to engage with the service.
Omni-channel Strategy
Enables an organization to address customer needs seamlessly through a single interface, even if interactions occur across different channels.
- Single Interface: The organization uses one platform to interact with customers.
- Coordination: Interacts with other parties, ensuring a cohesive customer experience.
Benefits of Electronic Service Distribution
- Consistent Delivery for Standardized Services:
Ensures uniform service quality for standardized offerings. - Low Cost:
Facilitates cost-effectiveness in service delivery. - Customer Convenience:
Enhances convenience for customers by providing multiple access points. - Wide Distribution:
Enables broad availability of services across various locations. - Customer Choice and Ability to
Customize:
Offers customers the flexibility to choose and customize services according to their preferences. - Quick Customer Feedback:
Allows for rapid feedback from customers, aiding in continuous improvement.
Challenges in Electronic Service Distribution
1) Price Competition:
- Intensified competition based on pricing strategies.
2) Inability to Customize with Highly Standardized Services:
- Difficulty in providing customized options for highly standardized services.
3) Lack of Consistency due to Customer Involvement:
- Inconsistencies may arise when customers actively participate in the service.
4) Changes in Consumer Behavior:
- Adaptation challenges when consumer preferences and behaviors shift.
5) Security Concerns:
- Risks related to the security of distributed services and customer data.
6) Competition from Widening Geographies:
- Facing competition from service providers expanding into new geographical areas.
Importance of Mobile Apps
Growth in Smartphones and Tablets:
- leverage the widespread adoption of smartphones and tablets.
- delivering a variety of services.
Mobile Apps: Location-Based Services
- Smartphone’s GPS Technology:
Utilizes GPS technology to provide location-based services. - Enhanced Personalization:
Enables service providers to tailor offerings based on the user’s location.
Challenges of Mobile Service Delivery
- Consumer Mobility:
Services can be challenging to deliver as consumers are often “on the move” for work or leisure. - Regulatory Restrictions:
Regulations and laws may impose restrictions on the provision of certain mobile-based services (e.g., banking services).
SOME ISSUES IN DELIVERING
SERVICES THROUGH “OTHERS”
- Inseparability and Service Quality
- Lack of Titles and Rights for Services
- Intangibility and Perishability of Services
Inseparability and Service Quality
Services are produced and consumed simultaneously, making it challenging when involving others.
Question:
Would service quality be the same as if delivered by the “original” service provider?
Lack of Titles and Rights for Services
Services cannot be owned, leading to difficulties in establishing titles or rights for most services.
Intangibility and Perishability:
Services are intangible, and perishability means inventories cannot exist.
How to store a process, given that many channels used by goods producers are not feasible for service firms?
Service principal (originator):
Creates the service concept.
(like a manufacturer
Service deliverer (intermediary):
Entity that interacts with the customer in the execution of the service.
(like a distributor/wholesaler)
FRANCHISING
Suitability for Franchising: Standardization and Duplication:
Franchising works well with services that can be standardized and duplicated
Service provider (franchisor) develops and optimizes a service format that is licensed for delivery by other parties (franchisees).
Benefits for Franchisers
1) Leveraged Business Format:
- Enables leveraged business format for greater expansion and increased revenues.
2) Consistency in Outlets:
- Ensures consistency in service delivery across different franchise outlets.
3) Knowledge of Local Markets:
- Leverages the local knowledge of franchisees for effective market penetration.
4) Shared Financial Risk and More Working Capital:
- Involves shared financial risk with franchisees, providing more working capital for the franchiser.
Challenges for Franchisers
1) Difficulty in Maintaining and Motivating Franchisees:
- Challenges in maintaining and motivating franchisees to adhere to standards and guidelines.
2) Highly Publicized Disputes and Conflict:
- Potential for highly publicized disputes and conflicts with franchisees.
3) Inconsistent Quality:
- Risk of inconsistent service quality across franchise outlets.
4) Control of Customer Relationship by Intermediary:
- Franchisers may face challenges in maintaining direct control over the customer relationship when intermediaries are involved.
Agents in Service Intermediation
Agent:
An intermediary who acts on behalf of a service principal or a customer and is authorized to make agreements between the two.
Roles:
Selling agents work with the principal to sell offerings.
Purchasing agents help customers (e.g., buyers) make purchases.
Brokers in Service Intermediation
An intermediary who brings buyers and sellers together while assisting in negotiations.
Characteristics:
- Paid by both parties.
- No long-term relationships.
- Rarely becomes involved in financing or risks.
Benefits of Distributing Services through Agents and Brokers
1) Reduced Selling and Distribution Costs
2) Intermediary’s Possession of Special Skills and Knowledge:
- Agents and brokers often possess specialized skills and knowledge related to the service, enhancing the distribution process.
3) Wide Representation:
- Allows for a wide and diverse representation of the service in different markets through multiple intermediaries.
4) Knowledge of Local Markets:
- Leverages the local market knowledge of agents and brokers for effective service distribution.
5) Customer Choice:
- Provides customers with a broader choice of services through the diverse offerings represented by agents and brokers.
Challenges of Distributing Services through Agents and Brokers
1) Loss of Control Over Pricing:
- Franchisers may face challenges in maintaining direct control over the pricing of services when intermediaries are involved.
2) Representation of Multiple Service Principals and Offerings:
- Agents and brokers often represent multiple service principals and offerings, potentially leading to conflicts and challenges in maintaining a cohesive brand image.
Common Issues Involving
Intermediaries
- Conflict over Objectives:
- Intermediaries may have different objectives and performance metrics, leading to conflicts with the service provider. - Difficulty in Controlling Quality and Consistency:
- Difficulty in controlling the quality and consistency of service across various outlets or intermediaries. - Tension Between Empowerment and Control
- Tension arises between empowering intermediaries and maintaining control over the service delivery process. - Channel Ambiguity
- Uncertainty regarding who determines standards for service quality in the channel.
Strategies for Effective Service
Delivery through Intermediaries
1) Control
2) Empowerment
3) Partnering
Control Strategies
- Measurement:
Utilize metrics and key performance indicators (KPIs) to measure and monitor the performance of intermediaries. - Review:
Regularly assess and review the activities and outcomes of intermediaries to ensure alignment with service standards.
Partnering Strategies
- Alignment of Goals:
Ensure that the goals of the service provider and intermediaries are aligned to achieve mutual success. - Consultation and Cooperation:
Foster a collaborative relationship through ongoing consultation and cooperation to enhance service delivery.
Empowerment Strategies
- Help the Intermediary Develop Customer-Oriented Service Processes:
- Support intermediaries in developing processes that prioritize customer satisfaction and align with service objectives. - Provide Needed Support Systems:
- Offer the necessary tools, resources, and support systems to empower intermediaries in delivering high-quality services. - Change to a Cooperative Management Structure:
Implement a cooperative management structure that encourages active participation and engagement from both the service provider and intermediaries.
