WHAT IS SERVICE ?

• Service is a type of economic activity that is intangible,

inseparable is not stored and does not result in
ownership.
• A service is consumed at the point of sale.
• Examples of services include the transfer of goods, such as
the postal service delivering mail, and the use of expertise
or experience, such as a person visiting a doctor.
 PLACE
• The location where the services will
be provided or consumed.
• For example, a medical service can
be provided at hospital, clinic, home,
etc.
 FACTORS OF SERVICES RESPONSIBLE
FOR DECISION OF PLACE :
• DUE TO intangibility and inseparability of services a
firm has to take decision regarding place of service
• The decision regarding place of service can be
divided into :
 Location
 Distribution of service
 SERVICE LOCATION
• What Service location is ?
While selecting a location the following factor are to
be considered.
 Proximity
 Image
 Parking facility
 Convenience
 Accessibility to other services
 Competitive advantage
 ACCESS STRATEGIES
• Age
• Economic status
• Psychographic segmentation
• Cultural background
• Type of benefit
• Frequency
• Level of accessories
• Feed back system to the service principal
• Service performance by intermediary.
 Classification by Location
Classification of services by location can be
given as-
• Location may be irrelevant - eg. Household
repairs, car breakdown services and utilities.
• Services may be concentrated - eg. Software
park.
• Services may be dispersed – eg. Consultants
visits specific customers.
 Important Questions for a Service firm
A service firm should consider following questions in making
location decisions-

• What does the market requires?

• What are the trends within the sector of service activity in
which the service organization operates?
• How flexible is the service?
• Does the organization have an obligation to locate in
convenient sites?
• What new systems,procedures,process and technology can be
followed?
• How critical are complementary services to the location
decision?
 INPUTS FOR LOCATION
DECISIONS

There is a whole range of inputs into the location

decision. These are sourced within the
organization, from the external environment and
from professional agencies. The relative
importance of the information and its impact on
the decision will clearly vary from situation to
situation.
Examples: hotel convenience for the city centre,
for the location of a theme park weather will be a
factor.
 Operations
• Nature of delivery
Human resources system
• Availability of labor • Staff requirements
• Local IR Practices • Equipments
requirements

External environment Professional

• Planning legislation LOCATION agencies
• Central/ Local DECISION • Market research
• Government support • Property services

Marketing
• Size of potential
Finance
market
• Sources of funds
• Location of
• Location related
costumers
costs
• Customers
requirements
 DISTIBUTION OF SERVICES
• Service firms need to select such service
providers who are capable of managing
service outlets efficiently and provide quality
services to the consumers.
• Service firms can opt for both direct
distribution or private channels or they can
opt for both to reach the target market.
 DISTRIBUTORS FOR SERVICE DELIVERY
• There are mainly three channels which are
used for distribution of services:
1. Franchising.
2. Agents and brokers.
3. Electronic channels.
• In case of distribution through a middleman,
there are two marketers:
1. Service Principal: Service Principal is the service
originator.
2. Service Deliverer: Service Deliverer is the
provider of the services.
• There are 4 choices available in the flow of
distribution of services which can be
understood from this flowchart:
 FLOWCHART OF SERVICES DISTRIBUTION

SERVICE PRINCIPAL SERVICE CONSUMER

SERVICE PRINCIPAL AGENTS/BROKERS SERVICE CONSUMER

SERVICE SERVICE
PRINCIPAL AGENTS FRANCHISER CONSUMER

SERVICE AGENTS ELEC.CH SERVICE

FRANCHI.
PRINCIPAL CONSUMER
 Franchising
• It is the most often used channel for the
distribution of services.
• The franchisers are the authorized to distribute
the services to the consumers on behalf of the
Service Principal.
• Agreements and Contracts are the essential
documents in Franchising.
• Franchising has many benefits which can be
given as follows:
• Business Expansion and revenue gains.
• Consistency in outlets.
• Knowledge of local markets.
• Sharing financial risk and less investment
burden.
 In spite of the benefits, there are also some
challenges associated with the distribution
through franchising. Some of the major
challenges associated are:
• Problems in maintaining and motivating
franchisees.
• Quality inconsistency may affect company image.
• Control of customer relationship by the
franchisee.
 AGENTS AND BROKERS
• An agent is an intermediary who is authorized to
negotiate on behalf of the service principal with
the customers.
• Brokers are the middlemen who bring buyers and
sellers together and assist in negotiation.
• Agents and Brokers are different intermediaries ,
both of them perform similar functions.
• Service companies enjoys following benefits in
using Agents and Brokers for service distribution:
• Low selling and distribution costs.
• Specialized skills and knowledge of Agents and
Brokers.
• Wider representation in the market.
• Knowledge of the local market.
• Customer choice.
 However there are some Challenges that a service
organization has to face in using Agents and
Brokers as intermediaries. These are:
• Loss of control in pricing and other aspects of
marketing.
• Some Agents and Brokers represent multiple
Service Principal and as such special focus can’t be
provided to any of the Service Principals.
 ELECTRONIC CHANNELS
• Electronic channels are becoming more and
more popular in the distribution of services.
• Electric channels do not require direct human-to-
human interaction.
• Examples of Electronic channels are
television,telephone,internet,e-commerce and
so on.
• Electronic channels are useful to service
organizations in many ways:
• Quality control.
• Low cost.
• Customer convenience.
• Wide distribution.
• Customer choice.
 Challenges associated with the use of using
Electronic channels for the distribution of
services are:
• No control on electronic environment.
• Inability to customize.
• Customer involvement.
 INNOVATIONS IN METHODS OF
DISTRIBUTING SERVICES
There have been considerable innovations, in
recent years, in methods of distributing services.
This contrasts with views expressed some years
ago that service marketer had lagged in using
innovative marketing practices. Here are included
some examples of innovations:
• The growth of rental services
• The growth of franchising.
• The growth of service integration.
WORKING A SERVICE DISTRIBUTION SYSTEM

While designing a distribution system for services, it is necessary

to take care of its execution effectiveness. A design of the
system with poor execution will certainly yield poor or
sometimes negative results. If the distribution system is designed
properly, it can be used as a truly effective competitive weapon.
Points that help in making an effective distribution system are:
• Align the system properly.
• Remember each part of the sales cycle.
• Keep intermediaries loyal.
• Pay the price to do multi-marketing correctly.
• Control the pace of change.
STRATEGIES FOR CHANNEL MANAGEMENT

Channel management is critical in service companies

as the quality perception of customers depends upon
the performance of distribution. Unless companies
follow effective strategies for channel management, it
is not possible to achieve the desired marketing
objectives. The following strategies are vital in this
respect:
• Control Strategies.
• Empowerment Strategies.
• Partnering Strategies.