Transcript Chapter 2_Distributing Services - UL2011-2012

Chapter 2
Distributing Services
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
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Applying the Flow Model of Distribution to
Services
Distribution embraced three interrelated elements
 Information and promotion flow
 Negotiation flow
 Product flow
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
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Information and Physical Processes of the
Augmented Service Product (Fig. 7.1)
Information
Processes
Payment
Information
Consultation
OrderTaking
Core
Billing
Exceptions
Hospitality
Safekeeping
Physical
Processes
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
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Using Websites for Service Delivery
Information
Read brochure/FAQ; get schedules/
directions; check prices
Consultation
Payment
Conduct e-mail dialog
Use expert systems
Pay by bank card
Direct debit
Billing
Order-Taking
Receive bill
Make auction bid
Check account status
Core
Exceptions
Make/confirm reservations
Submit applications
Order goods, check status
Hospitality
Make special requests
Resolve problems
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
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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 arm’s length (via the Internet, telephone, fax,
mail, etc.)
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
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Method of Service Delivery (Table 7.1)
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
arm’s length
Theater
Barbershop
House painting
Mobile car wash
Credit card company
Local TV station
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
Bus service
Fast-food chain
Mail delivery
Auto club road service
Broadcast network
Telephone company
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Place vs. Cyberspace
 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
 Place - customers and
 Cyberspace - customers
and suppliers do business
electronically in virtual
environment created by
phone/internet linkages
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
 Ideal for info-based services
 Saves time
 Facilitates information gathering
 May use express logistics service
to deliver physical core products
Services Marketing 5/E
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“24/7” - Factors Encouraging
Extended Operating Hours (Mgt Memo 7.1)
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
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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
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E-Commerce:
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
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
2 - 10
Splitting Responsibilities for Delivering
Supplementary Services (Fig. 7.2)
As created by
originating firm
Core
As enhanced
by distributor
+
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
As experienced
by customer
=
Services Marketing 5/E
Core
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Franchising
Franchising is a fast growth strategy, when
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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
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Service Process and Market Entry
 People Processing Services
 Export the service concept
 Import customers
 Transport customers to new locations
 Possession Processing Services
 Most require an ongoing local presence, whether it is the
customers dropping off items or personnel visiting customer sites
 Information Based Services
 Export the service to a local service factory
 Import customers
 Export the information via telecommunications and transform it
locally
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
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Barriers to International Trade in Services
 Operating successfully in international markets remains
difficult for certain services despite efforts of the WTO and
control relaxations
 Barriers include
 Refusal by immigration offices to issue work permits
 Heavy taxes on foreign firms
 Domestic preference policies
 Legal restrictions
 Lack of broadly-agreed accounting standards
 Cultural differences (esp. for entertainment industry)
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
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Forces for Internationalization
Market drivers
Competition drivers
Technology drivers
Cost drivers
Government drivers
Impact will vary by service
type (people, possessions,
information)
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
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Modes of Internationalization
 Export information-based services
 transmit via electronic channels
 store in physical media, ship as merchandise
 Use third parties to market/deliver service concept
 licensing agents
 brokers
 franchising
 alliance partners
 minority joint ventures
 Control service enterprise abroad
 direct investment in new business
 buyout of existing business
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
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Impact of Globalization Drivers on Different
Service Categories (Table 7.2)
Globalization
Drivers
People
Processing
Possession
Processing
Information
Based
Competition
Simultaneity of
production and
consumption limits
leverage of foreign
competitive advantage,
but management
systems can be
globalized
Technology drives
globalization of
competitors with
technical edge.
Highly vulnerable to
global dominance by
competitors with
monopoly or
competitive
advantage in
information.
Market
People differ
economically and
culturally, so needs for
service and ability to
pay may vary.
Level of economic
developments
impacts demand for
services to
individually owned
goods
Demand for many
services is derived to
a significant degree
from economic and
educational levels.
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
2 - 17
Impact of Globalization Drivers on Different
Service Categories (Table 7.2, cont’d)
Globalization People
Drivers
Processing
Use of IT for delivery of
Technology
supplementary services
may be a function of
ownership and familiarity
with technology.
Possession
Processing
Information
Based
Need for technologybased service delivery
systems depends on
possessions requiring
service and the cost
trade-offs in labor
substitution
Ability to deliver
core services
through remote
terminals may be a
function of
investment in
computerization etc.
Cost
Variable labor rates may
impact on pricing in
labor-sensitive services.
Variable labor rates
may favor low-cost
locations.
Major cost elements
can be centralized &
minor cost elements
localized.
Government
Social policies (e.g.,
health) vary widely and
may affect labor cost
etc.
Policies may
decrease/increase
cost &
encourage/discourage
certain activities
Policies may impact
demand and supply
and distort pricing
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
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