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sm7 ch09 Distribution
sm7 ch09 Distribution
Chapter 5:
Distributing Services
Through Physical
And Electronic Channels
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 1
Overview Of Chapter 5
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 2
Services Marketing
Distribution in a Services
Context
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 3
Distribution in a Services Context
Services Marketing
In a services context, we
often don’t move physical
products
Experiences, performances,
and solutions are not being
physically shipped and
stored
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 4
Applying the Flow Model of
Distribution to Services
Services Marketing
Negotiation flow
To sell the right to use a service
Product flow
To develop a network of local sites
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 5
Distinguishing between Distribution
of Supplementary and Core Services
Services Marketing
Many supplementary
services are informational;
can be distributed widely
and cost-effectively via
other means
Telephone
Internet
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 6
Information and Physical Processes
of Augmented Service Products
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 7
Using Websites for Service Delivery
Services Marketing
Information
Read brochure/FAQ; get schedules/
directions; check prices
Payment Consultation
Pay by bank card Conduct e-mail dialog
Direct debit Use expert systems
Billing Order-Taking
Receive bill Core Make/confirm reservations
Make auction bid Submit applications
Check account status Order goods, check status
Exceptions
Make special requests Hospitality
Resolve problems Record preferences
Safekeeping
Track package movements
Check repair status
CORE: Use Web to deliver information-based core services
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 8
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 9
Distribution Options for Serving
Customers
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 10
Six Options For Service Delivery
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 11
Channel Preferences Vary Among
Customers
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 12
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 13
Place Decisions of Service Delivery
Services Marketing
Location constraints
Operational requirement (e.g., airports)
Geographic factor (e.g., ski resorts)
Need for economies of scale (e.g., hospitals)
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 14
Place Decisions of Service Delivery
Services Marketing
Ministores
Creating many small service factories to maximize geographic
coverage
Separating front and back stages of operation
Purchasing space from another provider in complementary field
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 15
Time of Service Delivery
Services Marketing
Traditionally, schedules
were restricted
Service availability limited to
daytime, 40-50 hours a week
Today
For flexible, responsive
service operations: 24/7
service, 24 hours a day, 7
days a week, all around the
world
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 16
Services Marketing
Delivering Services in
Cyberspace
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 17
Service Delivery Innovations
Facilitated by Technology
Services Marketing
Technological Innovations
Development of “smart” mobile telephones and PDAs, and
presence of Wi-Fi
Voice-recognition technology
Websites
Smart cards
- Store detailed information about customer
- Act as electronic purse containing digital money
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 18
E-Commerce: Move to Cyberspace
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 19
E-Commerce: Move to Cyberspace
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 20
Services Marketing
Role of Intermediaries
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 21
Splitting Responsibilities
for Service Delivery
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 22
Franchising
Services Marketing
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
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 23
Franchising
Services Marketing
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
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 24
Services Marketing
Challenge of Distribution in
Large Domestic Markets
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 25
The Challenge of Distribution in
Large Domestic Markets
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 26
Services Marketing
Distributing Services
Internationally
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 27
Factors Favoring Adoption of
Transnational Strategies
Services Marketing
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
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 28
Factors Favoring Adoption of
Transnational Strategies
Services Marketing
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
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 29
How Service Processes Affect
International Market Entry
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 30
How Service Processes Affect
International Market Entry
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 31
Impact of Globalization Drivers on
Various Service Categories
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 32
Impact of Globalization Drivers on
Various Service Categories
Services Marketing
Cost Variable labor rates may Variable labor rates may Major cost elements
impact pricing in labor- favor low-cost locations. can be centralized
sensitive services. and minor cost
elements localized.
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 33
Barriers to International Trade in
Services
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 34
Summary
Services Marketing
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 5 – Page 36