Effective Service Distribution: Channels and Strategies

Distribution Channels

Three key flows define service distribution channels:

1. Information and Promotion Flow: Distribution of information and promotional materials to generate customer interest in purchasing the service.
2. Negotiation Flow: Reaching an agreement on the service features and terms to close the deal. Sell the right service to the right consumer.
3. Product Flow: Determining the delivery location.
   • People-processing and possession-processing services typically require physical facilities for delivery.
   • Information-processing services can often be delivered through electronic channels.

Service Location Strategies

Ministores

Create numerous small service factories to maximize geographic coverage.

Locating in Multipurpose Facilities

Establish service locations close to where customers live or work.

Locational Constraints

Operational requirements can impose strict constraints on location choices (e.g., airports, hospitals).

Factors Influencing Extended Operating Hours

Several factors encourage businesses to extend their operating hours:

• Economic pressure from consumers
• Changes in legislation
• Economic incentives to improve asset utilization
• Availability of employees to work during "unsocial" hours
• Automated self-service facilities

Technology's Role in Service Delivery Innovation

Service delivery innovations are often facilitated by technology, including:

• "Smart" mobile telephones and Wi-Fi technology
• Voice recognition technology to request services by speaking to a phone
• Websites
• Drones
• Kiosks
• Chatbots

E-Commerce in Service Distribution

The internet significantly impacts service distribution:

• It facilitates the distribution of information-based services and all the information elements (petals) of the Flower of Service model.
• It enables researchers to:
  1. Collect data
  2. Obtain feedback from consumers
  3. Create online communities for help and marketing services

Integrating Mobile Devices in Service Delivery

Mobile devices can be integrated into service delivery to:

1. Access services
2. Alert customers by delivering information or interacting at the right time
3. Update information in real-time
4. Provide alerts via SMS and email
5. Utilize Apps

Franchising as a Service Expansion Strategy

Franchising (a form of licensing) is a popular way to expand the delivery of an effective service concept and is an appealing strategy for growth-oriented service firms.

Disadvantages:

• Loss of control over the delivery system and how customers experience the service.
• Franchisees may gain experience, resent the fees paid to the franchisor, and believe they can operate the business better without the agreements, potentially leading to legal disputes.

Distribution Challenges in Large Domestic Markets

Distributing services across large domestic markets presents challenges such as:

• Language differences
• Varying tax regulations
• Different fees
• Government regulations
• Climate variations
• Time zones

Distributing Possession-Processing Services

Geographic Constraints: Services like maintenance, cleaning, and warehousing are often difficult to deliver consistently across large countries or internationally. Most companies address this by:

• Establishing local service facilities.
• Utilizing mail for certain processes.
• Implementing remote fixes where possible (e.g., remote diagnostics for TV/Cable issues).

Distributing Information-Based Services Internationally

Information-based services can be distributed internationally in three main ways:

1. Exporting the Service to a Local Service Factory: The service is made available in a local facility that customers visit (e.g., showing foreign movies in local cinemas).
2. Importing Customers: Customers travel abroad to visit the service facilities (e.g., international students attending universities).
3. Exporting Information via Telecommunications and Transforming it Locally: Information is sent electronically or physically (e.g., DVDs, CDs, music streaming) and then accessed or processed locally.