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Distributing services!!
25
Slide © by Lovelock, Wirtz and Chew 2009 Essentials of Services Marketing Chapter 1 - Page 1 CHAPTER 5 Distributing Services Through Physical and Electronic Channels
Transcript
No Slide TitleEssentials of Services Marketing
Electronic Channels
Essentials of Services Marketing
Determining Type of Contact: Options for Service Delivery
Place and Time Decisions
Delivering Services in Cyberspace
The Role of Intermediaries
Essentials of Services Marketing
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
In a services context, we often move nothing
Experiences, performances and solutions are not being physically shipped and stored
More and more informational transactions are conducted through electronic and not physical channels
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Service providers go to customers
Unavoidable when object of service is immovable
Needed for remote areas
Service transaction is conducted remotely
Achieved with help of logistics and telecommunications
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
(Table 5.1)
Another way to look at it: Can a service provider add or change
the service outlet structure to increase sales/add convenience?
Examples: Movie Rentals / Electric Power / Food / Education
Read online article: Houston Aims to be Electric Car Capital Feb. 16, 2010 Source: http://news.cnet.com/8301-11128_3-10454610-54.html?tag=newsEditorsPicksArea.0
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Channel Preferences Vary Among Customers
For complex and high-perceived risk services, people tend to rely on personal channels
Individuals with greater confidence and knowledge about a service/channel tend to use impersonal and self-service channels
Customers who are more technology savvy
Customers with social motives tend to use personal channels
Convenience is a key driver of channel choice
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Essentials of Services Marketing
Places of Service Delivery (1)
Cost, productivity and access to labor are key determinants to locating a service facility
Locational constraints
Operational requirements
Hospitals
Essentials of Services Marketing
Ministores
Automated kiosks
Taco Bell
Dunkin Donuts with Burger King
Locating in Multipurpose Facilities
Service Stations
Essentials of Services Marketing
Today
For flexible, responsive service operations:
24/7 service – 24 hours a day, 7 days a week, around the world (Service Insights 5.2)
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Essentials of Services Marketing
Five of the supplementary services are information-based
These services can all be distributed electronically. They are:
Information
Consultation
Order-taking
Billing
Payment
Distribution of information, consultation and order-taking has reached very sophisticated levels in global service industries (e.g., hotels, airlines, car rental companies)
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Information and Physical Processes of Augmented Service Product (Fig 5.11)
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Technological Innovations
Development of “smart” mobile telephones and PDAs, and Wi-Fi high-speed Internet technology that links users to Internet from almost anywhere
Voice-recognition technology
Web sites
Smart cards
Act as electronic purse containing digital money
Electronic channels can be offered together with physical channels, or take the place of physical channels
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Convenience
Recent Developments link websites, customer management (CRM) systems, and mobile telephony
Integrating mobile devices into the service delivery infrastructure can be used as means to:
Access services
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Essentials of Services Marketing
Challenges for original supplier
Act as guardian of overall process
Ensure that each element offered by intermediaries fits overall service concept
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Franchising (1)
Popular way to expand delivery of effective service concept, without a high level of monetary investments compared to rapid expansion of company-owned and -managed sites
Franchisor provides training, equipment and support marketing activities. Franchisees invest time and finance, and follow copy and media guidelines of franchisor
Growth-oriented firms like franchising because franchisees are motivated to ensure good customer service and high-quality service operations
Study shows significant attrition rate among franchisors in the early years of a new franchise system
One third of all systems fail within first four years
Three fourths of all franchisors cease to exist after 12 years
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Disadvantages of franchising
Some loss of control over delivery system and, thereby, over how customers experience actual service
Effective quality control is important but yet difficult
Conflict between franchisees may arise especially as they gain experience
Alternative: license another supplier to act on the original supplier’s behalf to deliver core product, e.g.
Trucking companies
Essentials of Services Marketing
Essentials of Services Marketing
Export service concept
e.g., chain restaurants, hotels, car rental firms
Import Customers
e.g., hospitals catering to “medical tourism”
Transport customers to new locations
Passenger transportation (air, sea, rail, road)
How Service Processes Affect International Market Entry (1)
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Possession processing involves services to customer’s physical possessions
e.g., repair and maintenance, freight transport
Information-based services include mental processing services and information processing services
Export the service to a local service factory
Hollywood film shown around the world
Import customers
Data can be downloaded via CDs or DVDs
Slide © by Lovelock, Wirtz and Chew 2009
Essentials of Services Marketing
Distribution in services often involve moving nothing and many information-based services can be distributed electronically
Options for service delivery include:
Customers visit the service site
Service providers go to their customers
Service transaction is conducted remotely
Channel preferences vary among customers
Place and time decisions include where services should be delivered in bricks-and-mortar context, when it should be delivered
Delivery in cyberspace is facilitated by technology and e-commerce allows 24-hour delivery, saving time and effort
Intermediaries play roles in distributing services
Franchising brings both advantages and disadvantages to the firm
Service processes affect international market entry differently
Summary of Chapter 5: Distributing Services

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