Services Marketing and Retail Management
Elective - Semester 4 (January – May 2017)
Harjot Singh, LM TSM, Thapar University
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Distributing Services
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Applying the Flow Model of Distribution to
Services
Distribution embraced three interrelated elements
• Information and promotion flow
• Negotiation flow
• Product flow
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Information and Physical Processes of the Augmented
Service Product
Information
Processes
Information
Payment Consultation
Order-
Billing Core
Taking
Exceptions Hospitality
Safekeeping
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Physical
Processes
Using Websites for Service Delivery
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 Hospitality
Make special requests
Record preferences
Resolve problems
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Safekeeping
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 arm’s length (via the Internet,
telephone, fax, mail, etc.)
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Method of Service Delivery
Availability of Service Outlets
Nature of Interaction Single Site Multiple Sites
between Customer
and Service
Organization
Customer goes to service Theater Bus service
organization
Barbershop Fast-food chain
Service organization goes House painting Mail delivery
to customer
Mobile car wash Auto club road service
Customer and service Credit card company Broadcast network
organization transact at
arm’s length Local TV station Telephone company
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Place vs. Cyberspace
Place - customers and Required for people processing
suppliers meet in a physical services
Offers live experiences, social
environment interaction, e.g., food services
More emphasis on eye-catching
servicescape, entertainment
Cyberspace - customers and Ideal for info-based services
suppliers do business Saves time
electronically in virtual Facilitates information gathering
environment created by May use express logistics service
phone/internet linkages to deliver physical core products
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“24/7” - Factors Encouraging
Extended Operating Hours
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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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
As created by As enhanced As experienced
originating firm by distributor 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
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– Import customers
– Export the information via telecommunications and transform it locally
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
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• Control service enterprise abroad
– direct investment in new business
– buyout of existing business
Impact of Globalization Drivers on Different Service
Categories
Globalization People Possession Information
Drivers Processing Processing Based
Competition Simultaneity of Technology drives Highly vulnerable to
production and globalization of global dominance by
consumption limits competitors with competitors with
leverage of foreign technical edge. monopoly or
competitive advantage, competitive
but management advantage in
systems can be information.
globalized
Market People differ Level of economic Demand for many
economically and developments 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.
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goods
Impact of Globalization Drivers on
Different Service Categories (cont’d)
Globalization People Possession Information
Drivers Processing Processing Based
Technology Use of IT for delivery of Need for technology- Ability to deliver
supplementary services based service delivery core services
may be a function of systems depends on through remote
ownership and familiarity possessions requiring terminals may be a
with technology. service and the cost function of
trade-offs in labor investment in
substitution computerization etc.
Cost Variable labor rates may Variable labor rates Major cost elements
impact on pricing in may favor low-cost can be centralized &
labor-sensitive services. locations. minor cost elements
localized.
Government Social policies (e.g., Policies may Policies may impact
health) vary widely and decrease/increase demand and supply
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may affect labor cost etc. cost & and distort pricing
encourage/discourage
certain activities
References
• Lovelock, Christopher; Wirtz, Jochen and Chatterjee,
Jayanta, Services Marketing – People, Technology,
Strategy – A South Asian Perspective, Pearson Education,
India (2013)
• Zeithaml, Valarie A.; Gremler, Dwayne D.; Bitner, Mary J.
and Pandit, Ajay, Services Marketing – Integrating
Customer Focus Across the Firm, Tata McGraw Hill (2013)
• Hoffman, Douglas K. and Bateson, John E.G., Marketing of
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Services – Cengage Learning (2014)
SUGGESTIONS FOR TELECOM SERVICE PROVIDERS
• Telecom service providers need to put greater focus on pre-
paid consumers to prevent them from availing MNP and
churning.
• Telecom service providers need to focus more on the
functional dimension of service quality rather than the
technical dimension of service quality.
Thank You
• Service providers need to make greater efforts to retain those
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customers who have been on the network for a longer time
and who have been contributing more to the top line or
bottom line.
