Distributing Services

Team 4 Saranya -22045 Yazhini-22120 Arun prasath-22067 Vetri kumaran - 22116

Applying the Flow Model of Distribution to Services

Distribution embraced three interrelated elements

Information and promotion flow Negotiation flow Product flow

Information and Physical Processes of the Augmented Service Product (Fig. 7.1) Information Processes

Information Consultation Payme nt

Core OrderTaking

Billing

Exceptio Hospitality ns Safekeeping

Physical Processe s

Using Websites for Service Delivery

Information
Read brochure/FAQ; get schedules/ directions; check prices

Payment
Pay by bank card Direct debit

Consultation
Conduct e-mail dialog Use expert systems

Billing
Receive bill Make auction bid Check account status Core

Order-Taking
Make/confirm reservations Submit applications Order goods, check status

Exceptions
Make special requests Resolve problems

Hospitality
Record preferences

Safekeeping
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Track package movements Check repair status

CORE: Use Web to deliver information-based core services

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 arms length (via the Internet, telephone, fax, mail, etc.)

Method of Service Delivery (Table 7.1)

Availability of Service Outlets

Nature of Interaction Single Site between Customer and Service Organization Theater Customer goes to service organization Barbershop Service organization House painting goes to customer Mobile car wash Customer and service Credit card organization transact company at arms length Local TV station

Multiple Sites

Bus service Fast-food chain Mail delivery Auto club road service Broadcast network Telephone company

Place vs. Cyberspace

Place - customers and

suppliers meet in a physical environment

Cyberspace - customers

Required for people processing services Offers live experiences, social interaction, e.g., food services More emphasis on eye-catching servicescape, entertainment Ideal for info-based services Saves time Facilitates information gathering May use express logistics service to deliver physical core products

and suppliers do business electronically in virtual environment created by phone/internet linkages

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
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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
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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

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Splitting Responsibilities for Delivering Supplementary Services (Fig. 7.2)

As created by originating firm

As enhanced by distributor

As experienced by customer

Core

Core

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Franchising
Franchising is a fast growth strategy, when

Resources are limited Long-term commitment of store managers is crucial Local knowledge is important Fast growth is necessary to pre-empt competition
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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

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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)

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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)
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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
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Impact of Globalization Drivers on Different Service Categories (Table 7.2)

Globalization Drivers Competition People Processing Simultaneity of production and consumption limits leverage of foreign competitive advantage, but management systems can be globalized Possession Processing Technology drives globalization of competitors with technical edge. Information Based Highly vulnerable to global dominance by competitors with monopoly or competitive advantage in information.

Market

People differ Level of economic economically and developments culturally, so needs for impacts demand for service and ability to services to pay may vary. individually owned goods

Demand for many services is derived to a significant degree from economic and educational levels.

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Impact of Globalization Drivers on Different Service Categories

Globalization Drivers Technology People Processing Possession Processing Information Based Ability to deliver core services through remote terminals may be a function of investment in computerization etc. Major cost elements can be centralized & minor cost elements localized.

Use of IT for delivery of Need for technologysupplementary based service services may be a delivery systems function of ownership depends on and familiarity with possessions technology. requiring service and the cost trade-offs in labor substitution Variable labor rates Variable labor rates may impact on pricing may favor low-cost in labor-sensitive locations. services.

Cost

Government

Social policies (e.g., health) vary widely and may affect labor cost etc.

Policies may Policies may impact decrease/increase demand and supply cost & and distort pricing encourage/discourage 18 certain activities