Distributing Services

Through Physical and

Electronic Channels
Distribution in a services context

• In a services context, we often move nothing

• Experiences, performances and solutions are not

being physically shipped and stored

• More and more informational transactions are

conducted through electronic and not physical
channels
Options for service delivery
Six options for service delivery

Focusing on advantages of a specific medium of delivery:

https://www.youtube.com/watch?v=M_ZSg07_FBY&feature=youtu.be
Channel Preferences Vary among customers
 Complex and high-perceived risk services -
personal channels
 Individuals with greater confidence and knowledge
about a service/channel - impersonal and self-
service channels
 Customers with social motives - personal channels
 Convenience is a key driver of channel choice
 Blurring of different channels: Nike store example:
https://www.youtube.com/watch?v=52nLywJeMRU
Place and Time Decisions
Distribution example

 Zara Introduction
https://www.youtube.com/watch?v=Cn-q5gF--
9U&t=22s
 Amazon drone delivery:
https://www.youtube.com/watch?v=mzhvR4wm_
_M
 Places of Service Delivery
 Cost, productivity, and access to labor are key
determinants to locating a service facility
 Locational constraints
 Operational requirements
- Airports

 Geographic factors
- Ski resorts

 Need for economies of scale

- Hospitals
Places of Service Delivery
 Ministores
 Creatingmany small service factories to maximize
geographic coverage
- Automated kiosks

 Separating front and back stages of operation

- Taco Bell, Dunkin Donuts, etc.
 Purchasing space from another provider in
complementary field
 Dunkin Donuts and Burger King
 Locating in multipurpose facilities
 Proximity to where customers live or work
 Pods and flexible locations
‘Sleepbox’ helps travelers catch 40 winks
The Sleepbox is a small, self-contained cabin designed to give users
a quiet place to get some rest.
Vending machine dispenses freshly-baked baguettes
An entrepreneurial baker in North-East France recently rolled out 24-hour automated
baguette dispensers next to his two bakeries in Paris and Hombourg-Haut.
 Delivery options to address last mile problem:
https://www.youtube.com/watch?v=mUa2gAVeewc
 Time of Service Delivery
 Traditionally, schedules were restricted

 Today
 For flexible, responsive service operations:
- 24/7 service—24 hours a day, 7 days a week, around the world
 24/7, unstaffed grocery store pioneers new way to shop
Located in New Prague, Minnesota, Farmhouse Market is an unstaffed grocery
store that provides members with 24/7 access via keycard and self-checkout.
Membership costs USD 99 for the first year, and then USD 20 for every year afterwards. All
members sign a legal agreement setting out agreed standards of use before receiving a keycard
that provides 24/7 access to the store. Cameras are used throughout the shop, and customers
use self-checkouts to pay. The store stocks organic, local products from nearby farmers and
makers. Non-members can shop during the Market’s limited, staffed weekly opening hours for
the general public.
Source: Springwise.com
For 75 euros customers get a barbecue lunch and a guest room from 1-5pm,
plus access to the hotel’s gym and rooftop pool.

diagonalmarbarcelona.hilton.com
Delivering Services in
Cyberspace
e-Commerce: Move to Cyberspace
 Electronic channels offer complement/alternative
to traditional physical channels
 Convenience (24-hour availability, save time,
effort)
 Ease of obtaining information online and
searching for desired items
 Better prices than in many bricks-and-mortar
stores
 Broad selection
 Driving sales to online channels
 Developments in
telecommunications and
computer technology
 Swissôtel Hotels & Resorts
- Its revamped website more
than doubled online revenues
within 7 months of launch
- “Best Rate Guarantee” was a
key driver of its success

 Banking and service

transactions by voice
telephone
Courtesy of Swissotel Hotels & Resorts
Service Delivery Innovations Facilitated by
Technology
 Technological Innovations
 Development of “smart” mobile telephones and PDAs as
well as Wi-Fi high-speed Internet technology that links
users to Internet from almost anywhere
 Voice and face-recognition technology
 Websites

 Smart cards
- Store detailed information about customer
- Act as electronic purse containing digital money

 Increase accessibility of services

 Deliver right information or interaction at right time
https://www.youtube.com/watch?v=3vkz3
VcaoRg
 e-Commerce: Move to Cyberspace
 Linking Websites, customer management (CRM)
systems, and mobile telephony
 Integrating mobile devices into the service delivery
infrastructure can be used as means to:
 Access services
 Alert customers to opportunities/problems
 Update information in real time

 Geofencing and location-based marketing through

wireless technologies:
https://www.youtube.com/watch?v=UC5vB7wLXcA
Role of Intermediaries
 Splitting Responsibilities For
Supplementary Service Elements
As created by As enhanced As experienced
originating firm by distributor by customer

Core + = Core

Core product Supplementary Total experience

services and benefits
Challenges for original supplier
 Act as guardian of overall process
 Ensure that each element offered by intermediaries fits overall service concept
 Franchising
 Popular way to expand delivery of effective service
concept
 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 preempt competition

 Disadvantages of franchising
 Some loss of control over delivery system and, thereby,
over how customers experience actual service
 Effective quality control is important yet difficult
 Conflict between franchisees may arise especially as
they gain experience
McDonald’s Distributes Its Branded
Service Concepts through Franchisees

Example: Franchising with McDonalds

http://www.youtube.com/watch?v=54kt0xYOlMo
Disintermediation

App for the modeling industry bypasses agencies

Swipecast is an app that connects modeling professionals directly with clients,
sidestepping agencies altogether.
Reintermediation
Reintermediation through information aggregators