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Distributing services
through physical and
electronic channels
Intermediaries Franchisees
Aspects of the service delivery are When the core service is outsourced, this
commonly outsourced to is called Franchising. E.g. Subway
intermediaries
Franchisors recruit entrepreneurs
For example, hotels rely on travel (franchisees) to invest time and money to
agents and booking agents to run the business in a specific locality
promote, inform customers and The franchisor provides the brand,
take reservations and payment training, materials and national marketing
The original service business initiatives
serves as the guardian of the The franchisee runs the business and pays
overall process to ensure a a royalty to the franchisor
consistent and seamless service The fastest growing franchise categories
experience for customers are health and fitness, publications,
security and consumer services
Flowcharting
Flowcharting …….
Is a step-by-step map of the service
delivery process from the customer’s
perspective
Empowers the firm to manage and control
individual parts of the service delivery
system
Identifies weak points in service delivery
Identifies opportunities for improving or
enhancing efficiencies in service delivery
Helps to prevent service failures
Flowcharting – alternative versions
Flowcharting for an existing service process is
referred to as ‘service mapping’
Flowcharting for a new or revised service process
is called ‘service blueprinting’ (this includes ‘front
stage’ and backstage’, links between activities and
points of contact between staff and customers)
Flowcharting identifies potential ‘fail points’ and
leads to contingency plans and appropriate service
recovery systems
Three requirements for blueprinting to be effective:
Must show time dimensions in diagrammatic form
Must identify and handle errors, bottlenecks,
reiterations
Must precisely define how much variation from
standards can be allowed without affecting customer
evaluations of quality and timeliness
First phase blueprint for upmarket
fine dining restaurant
Lecture 5
Continued
Understanding costs and
developing pricing
strategy
Non-monetary objectives
• Cover costs
• Low fees to encourage participation
• Emphasize fairness, equity and affordability
Three Foundations of Pricing Strategy
For example, how many cheap seats should be sold on any flight and how far in
advance of the flight date?
• Revenue management dictates that customers who are prepared to pay most for
their seat should be first to be allocated capacity
• But…customers willing to pay higher prices tend to book closer to the time of the
flight’s departure
• Therefore, retain high quality, sought-after seats for this segment at the final stage
of booking
Revenue management for Services
For revenue management to work effectively requires two or more segments that
attach different value to the service and have different price elasticities
Balancing Productive
Capacity and Demand
Schedule downtime
Cross train Invite customers during low demand
staff to self serve
The End