SERVICES MARKETING

CHAPTER: 05

DISTRIBUTING SERVICES THROUGH PHYSICAL AND

ELECTRONIC CHANNELS

PRESENTED TO:
DR ALI REHMAN
 GROUP MEMBERS

• Husnain Naveed 15-BS-R-067

• Hamza Younas 15-BS-S-072
• Adnan Fayyaz 15-BS-S-096
• Rabiya Zafar 15-BS-S-101
 INTRODUCTION
Being global is an instant?... Or Does It Takes Forever ?
• Some services spread like wildfire and rapidly, like UBER,
Trip Advisor etc
• Some services take time to being global like DHL, FedEx
etc
• Information processing being global instantly because they
don’t need any finances and management time!
• On the other hand, people possession processing services
takes time to global because they requires a lot of finances
and management time!!
 Distribution in a Services Context
• In a services context, we often don’t move physical
products
• Experiences, performances, and solutions are not being
physically shipped and stored
• More and more informational transactions are conducted
through electronic and not physical channels
• What?
• How?
• Where?
• When?
Key Questions for service distribution
strategy:
WHAT? What flows through the channel ?

HOW? How should service reach the customer?

WHERE? Where should service be delivered?

WHEN? When should service be delivered ?

 What is being distributed?
ELEMENTS DEFINE EXAMPLES

1. Information Distribute information and Air Asia introduce low

and promotion flow promotion materials relating to fare concept in
the services offer. Malaysia air
transportation
The objective - to get the services
customer interested in buying
the service
2. Negotiation flow Reach an agreement on the Sell a reservation or a
service features and ticket according
configuration, and the terms of specific time and
the offer – the purchase contract price
can be closed

The objective – to sell the right

to use a service
 ELEMENTS DEFINE EXAMPLES

3. Product flow Distribution strategy Example of information

requires development of processing services ,
a network of local sites. such as internet banking,
distance learning and
The objective – To etc.
develop a network of
local sites For information
processing services the
product flow can be
undertaken via electronic
channels, employing one
or more centralized sites.
Supplementary and Core Services
• Core services for people processing and possession
processing services require physical locations

• Core services for mental stimulus processing and information

processing can be distributed electronically

• Supplementary services can be tangible or intangible in nature;

latter can be distributed widely and cost-effectively via
nonphysical channels
 Telephone
 Internet
How should a services be distributed?
Customers visit service site

Customer catchment areas

Convenience of service factory locations for customers
Statistical analysis homework

Service providers go to customers

Compass group, largest food service chain,,
Unavoidable when object of service is immovable e.g Tree
pruner
More expensive and time-consuming for service provider
CONTINUE..
Service transaction is conducted remotely
Any information based product instantly deliver via
telecommunication
By the help of remotely services, delivering concepts are
more easy then physical logistics
 Web and app-delivered services
Convenience
Ease of search
A broader selection
Potential for better places
24/7 services with prompt delivery
Information and Physical Processes of
Augmented Service Product
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 with social motives tend to use personal
channels
• Convenience is a key driver of channel choice
WHERE SERVICES SHOULD BE
DISTRIBUTED ?
 Strategic location considerations
• Site location must be consistent with its marketing
strategy and target segment
• Understand customer needs and expectations
• Competitive activity and nature of services
• Firms should make it easy for people to access
frequently purchased services
• Retail banks or fast-food restaurants
• Trade of between ease of access and convenience for
customer versus cost of providing that access and
convenience
 Tactical location considerations
• Population size and characteristics
• Pedestrian and vehicular traffic and its characteristics
• Convenience of access for customer
• Competitors in this area
• Nature of nearby business and stores
• Availability of labor
• Availability of site locations. Rental costs and contractual
conditions
 Locational constraints
• Customers convenience is important, the need for
economies of scale and operational requirements may
restrict choice of locations
• Major hospitals offer many different healthcare services at
a single location
• Customers require complex, in patient treatment must go
to service factory rather than be treated at home
• An ambulance can be sent to pick them up
• Medical specialists and general practitioners
often locate their office near hospital because
it saves time
 Innovative location strategies
• Innovative distribution strategies can be the powerful new
services model
• Mini stores
1)ATMS
2)Restaurants without kitchen
• Firms offering one type of service business are
purchasing space from another provider in a
complementary field
• Bank branches in small supermarkets
• Dunkin Donuts and subway sharing space with fast food
restaurant such as burger king
Locating in multi purpose facilities
• The best locations for consumer services are close to
where customer live or work
• Modern buildings are often designed to be multipurpose
1) Atm
2)Restaurants
3)Hair salon
4)Several stores
5) Health club
6)Children day care facility
 Factors that encourage extended
operating Hours
• Pressure from consumers
• Changes in legislation
• Economic incentives to improve asset utilization
• Availability of employees to work during “unsocial”
hours
• Automated self-service facilities
ROLE OF INTERMEDIARIES
Splitting Responsibilities
for Service Delivery
Challenges for original supplier
Act as guardian of overall process
Ensure that each element offered by
intermediaries fits overall service concept
Franchising
• Franchisor provides training, equipment, and support
marketing activities.

• Franchisees invest time and finance, and follow copy and

media guidelines of franchisor.

• Advantages:
• Expand delivery of effective service concept without a high level of
monetary investment
• Franchisees are motivated to ensure good customer service and
high-quality service operations
Franchising
• Disadvantages of franchising
• Loss of control over delivery system and how customers
experience actual service
• Effective quality control is 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
• Trucking companies
• Banks selling insurance products
Challenge of Distribution in
Large Domestic Markets
The Challenge of Distribution in Large
Domestic Markets

• Distributing services (i.e., physical logistics) faces

challenges due to:
• Distances involved
• Multiple time zones
• Multiculturalism
• Differences in laws and tax rates
Distributing Services
Internationally
 Factors Favoring Adoption of Transnational
Strategies
Transnational strategy involves integration of strategy formulation and its
implementation across all countries in which company elects to do business

 Market Drivers
Common customer needs across countries
Corporate customers seek to standardize and simplify suppliers used
in different countries – ad agencies, logistics suppliers, Big 4
accounting firms

 Government Drivers
Favorable trade policies, compatible technical standards,
common marketing regulations
Factors Favoring Adoption of Transnational
Strategies

 Competition Drivers
Competitors from overseas; interdependence of countries
Firms may be obliged to follow competitors into new markets to
protect own positions elsewhere

 Technology Drivers
Advances in information technology – miniaturization and mobility
of equipment, digitization of voice

 Cost Drivers
Economies of scale
Lower operating costs
How Service Processes Affect International
Market Entry

 People processing services require direct contact with

customers
 Export service concept
- Acting alone or in partnership with local suppliers
e.g., chain restaurants, hotels, car rental firms

 Importcustomers
- Inviting customers from overseas to firm’s home country
e.g., hospitals catering to “medical tourism”

 Transport customers to new locations

- Passenger transportation (air, sea, rail, road)
How Service Processes Affect International Market

 Possession processing
involves services to customer’s physical possessions
- 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:
Foreign Exchange Programs
 Export the information via telecommunications and transform it
locally
 Data can be downloaded via CDs or DVDs
Impact of Globalization Drivers on Various Service
Categories

Globalization People Possession Information

Drivers Processing Processing Based

Competition Simultaneity of Technology Highly vulnerable to

production and drives global dominance by
consumption limits globalization of competitors with
leverage of foreign competitors monopoly or
competitive advantage, with technical competitive
but management edge. advantage in
systems can be information.
globalized.

Market People differ Level of economic Demand for many

economically and development services is derived to
culturally, so needs for impacts demand for a significant degree
service and ability to services to from economic and
pay may vary. individually owned educational levels.
goods.
Globalization People Processing Possession Information
Drivers Processing Based
Technology Use of IT for delivery of Need for technology- Ability to deliver
supplementary services based service core services
may be a function of delivery systems through remote
ownership and depends on terminals may
familiarity with possessions be a function of
technology. requiring service and investment in
the cost trade-offs in computerization
labor substitution , etc.

Cost Variable labor rates Variable labor rates Major cost

may impact pricing in may favor low-cost elements can
labor- sensitive locations. be centralized
services. and minor
cost elements
localized.

Government Social policies (e.g., Policies may Policies may

health) vary widely and decrease/increase impact
may affect labor cost, cost and demand and
etc. encourage/discourage supply and
certain activities distort pricing
Barriers to International Trade in Services

 Passage of free-trade legislation is important

facilitator of transnational operations
 Notable developments: NAFTA, Latin American economic
blocs, EU

 Despite efforts of WTO and GATT, barriers still exist:

 Restrictions on international airline operating rights
 Heavy taxation
 Legal restrictions
 Lack of broadly agreedupon accounting standards
 Cultural issues