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Chapter 2

Chapter 2. Distributing Services. Applying the Flow Model of Distribution to Services. Information and promotion flow Negotiation flow Product flow. Distribution embraced three interrelated elements. Information and Physical Processes of the Augmented Service Product (Fig. 7.1).

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Chapter 2

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  1. Chapter 2 Distributing Services

  2. Applying the Flow Model of Distribution to Services • Information and promotion flow • Negotiation flow • Product flow Distribution embraced three interrelated elements

  3. Information and Physical Processes of the Augmented Service Product (Fig. 7.1) Information Processes Information Consultation Payment Order- Taking Core Billing Exceptions Hospitality Safekeeping Physical Processes

  4. Using Websites for Service Delivery Core Information Read brochure/FAQ; get schedules/ directions; check prices Consultation Conduct e-mail dialog Use expert systems Payment Pay by bank card Direct debit Billing Receive bill Make auction bid Check account status Order-Taking Make/confirm reservations Submit applications Order goods, check status Exceptions Make special requests Resolve problems Hospitality Record preferences Safekeeping Track package movements Check repair status CORE: Use Web to deliver information-based core services

  5. Options for Service Delivery • 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.) There are 3 types of interactions between customers and service firms

  6. Method of Service Delivery (Table 7.1)

  7. Place- customers and suppliers meet in a physical environment Cyberspace- customers and suppliersdo business electronically in virtual environment created by phone/internet linkages 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 Place vs. Cyberspace

  8. Economic pressure from consumers Changes in legislation Economic incentives to improve asset utilization Availability of employees to work nights, weekends Automated self-service “24/7” - Factors Encouraging Extended Operating Hours (Mgt Memo 7.1)

  9. 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”

  10. 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

  11. Splitting Responsibilities for Delivering Supplementary Services (Fig. 7.2) + = Core Core As created by As enhanced As experienced originating firm by distributor by customer

  12. Franchising • Resources are limited • Long-term commitment of store managers is crucial • Local knowledge is important • Fast growth is necessary to pre-empt competition Franchising is a fast growth strategy, when

  13. 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

  14. 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)

  15. Market drivers Competition drivers Technology drivers Cost drivers Government drivers Impact will vary by service type (people, possessions, information) Forces for Internationalization

  16. 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

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

  18. Impact of Globalization Drivers on Different Service Categories (Table 7.2, cont’d)

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