CHAPTER4DISTRIBUTINGSERVICESTHROUGHPHYSICALANDELECTRONICCHANNELSCOMPANIESBESTEQUIPPEDFORTHETWENTYFIRSTCENTURYWILLCONSIDERINVESTMENTINREALTIMESYSTEMSASESSENTIALTOMAINTAININGTHEIRCOMPETITIVEEDGEANDKEEPINGTHEIRCUSTOMERSREGISMCKENNATHINKGLOBALLY,ACTLOCALLYJOHNNAISBITTANIMPORTANTPARTOFTHESERVICEMODELISTHEDISTRIBUTIONOFCOREANDSUPPLEMENTARYSERVICEELEMENTSTHROUGHSELECTEDPHYSICALANDELECTRONICCHANNELSDELIVERINGASERVICETOCUSTOMERSINVOLVESDECISIONSABOUTWHERE,WHEN,ANDHOWTHERAPIDGROWTHOFTHEINTERNETANDBROADBANDMOBILECOMMUNICATIONSMEANSTHATSERVICEMARKETINGSTRATEGIESMUSTADDRESSISSUESOFPLACEANDTIME,PAYINGATLEASTASMUCHATTENTIONTOSPEED,SCHEDULING,ANDELECTRONICACCESSASTOTHEMORETRADITIONALNOTIONOFPHYSICALLOCATIONFURTHERMORE,INTHEHEATOFGLOBALIZATION,IMPORTANTQUESTIONSAREBEINGRAISEDCONCERNINGTHEDESIGNANDIMPLEMENTATIONOFINTERNATIONALSERVICEMARKETINGSTRATEGIESINTHISCHAPTER,WEDISCUSSTHEROLETHATDELIVERYPLAYSINSERVICEMARKETINGSTRATEGIESBOTHLOCALLYANDGLOBALLY,ANDEXPLORETHEFOLLOWINGQUESTIONS1HOWCANSERVICESBEDISTRIBUTEDWHATARETHEMAINMODESOFDISTRIBUTION2WHATARETHEDISTINCTIVECHALLENGESOFDISTRIBUTINGPEOPLEPROCESSINGSERVICES,POSSESSIONPROCESSINGSERVICES,ANDINFORMATIONBASEDSERVICES983WHATARETHEIMPLICATIONSFORAFIRMOFDELIVERINGTHROUGHBOTHPHYSICALANDELECTRONICCHANNELS4WHATROLESSHOULDINTERMEDIARIESPLAYINDISTRIBUTINGSERVICES5WHATARETHEDRIVERSOFGLOBALIZATIONOFSERVICESANDTHEIRDISTRIBUTIONDISTRIBUTIONINASERVICESCONTEXTIFYOUMENTIONDISTRIBUTION,MANYPEOPLEARELIKELYTOTHINKOFMOVINGBOXESTHROUGHPHYSICALCHANNELSTODISTRIBUTORSANDRETAILERSFORSALETOENDUSERSINSERVICES,THOUGH,THERESOFTENNOTHINGTOMOVEEXPERIENCES,PERFORMANCES,ANDSOLUTIONSARENOTPHYSICALLYSHIPPEDANDSTOREDMEANWHILE,INFORMATIONALTRANSACTIONSAREINCREASINGLYCONDUCTEDVIAELECTRONICCHANNELSHOW,THEN,DOESDISTRIBUTIONWORKINASERVICESCONTEXTINATYPICALSALESCYCLE,DISTRIBUTIONEMBRACESTHREEINTERRELATEDELEMENTSINFORMATIONANDPROMOTIONFLOWDISTRIBUTIONOFINFORMATIONANDPROMOTIONMATERIALSRELATINGTOTHESERVICEOFFERTHEOBJECTIVEISTOGETTHECUSTOMERINTERESTEDINBUYINGTHESERVICENEGOTIATIONFLOWREACHINGANAGREEMENTONTHESERVICEFEATURESANDCONFIGURATION,ANDTHETERMSOFTHEOFFER,SOTHATAPURCHASECONTRACTCANBECLOSEDTHEOBJECTIVEISTOSELLTHERIGHTTOUSEASERVICEEG,SELLARESERVATIONORATICKETPRODUCTFLOWMANYSERVICES,ESPECIALLYTHOSEINVOLVINGPEOPLEPROCESSINGORPOSSESSIONPROCESSING,REQUIREPHYSICALFACILITIESFORDELIVERYHERE,DISTRIBUTIONSTRATEGYREQUIRESDEVELOPMENTOFANETWORKOFLOCALSITESFORINFORMATIONPROCESSINGSERVICES,SUCHASINTERNETBANKING,DISTANCELEARNING,BROADCASTNEWS,ANDENTERTAINMENT,THEPRODUCTFLOWCANBEUNDERTAKENVIAELECTRONICCHANNELS,EMPLOYINGONEORMORECENTRALIZEDSITESDISTINGUISHINGBETWEENDISTRIBUTIONOFSUPPLEMENTARYANDCORESERVICESDISTRIBUTIONCANRELATETOTHECORESERVICEASWELLTOSUPPLEMENTARYSERVICESTHATSANIMPORTANTDISTINCTION,ASMANYCORESERVICESREQUIREAPHYSICALLOCATION,WHICHSEVERELYRESTRICTSDISTRIBUTIONFORINSTANCE,YOUCANONLYCONSUMECLUBMEDHOLIDAYSATCLUBMEDVILLAGES,ANDALIVEPERFORMANCEOFABROADWAYSHOWMUSTTAKEPLACEATATHEATERINMANHATTANUNTILITGOESONTOURHOWEVER,MANYSUPPLEMENTARYSERVICESAREINFORMATIONALINNATUREANDCANBEDISTRIBUTEDWIDELYANDCOSTEFFECTIVELYVIAOTHERMEANSPROSPECTIVECLUBMEDCUSTOMERSCANGETINFORMATIONANDCONSULTATIONFROMATRAVELAGENT,EITHERFACETOFACE,ONLINE,BYPHONE,OREVENBYMAIL,ANDTHENMAKEABOOKINGTHROUGHONEOFTHESESAMECHANNELSINSIMILARFASHION,YOUCANPURCHASETHEATERTICKETSTHROUGHANAGENCYWITHOUTTHENEEDFORANADVANCETRIPTOTHEPHYSICALFACILITYITSELFWHENYOULOOKATTHEEIGHTPETALSOFTHE“FLOWEROFSERVICE,“YOUCANSEETHATNOFEWERTHANFIVESUPPLEMENTARYSERVICESAREINFORMATIONBASEDFIGURE41INFORMATION,CONSULTATION,ORDERTAKING,BILLING,ANDPAYMENTEG,VIACREDITCARDCANALLBETRANSMITTEDUSINGTHEDIGITALLANGUAGEOFCOMPUTERSEVENSERVICEBUSINESSESTHATINVOLVEPHYSICALCOREPRODUCTS,SUCHASRETAILINGANDREPAIR,ARESHIFTINGDELIVERYOFMANYSUPPLEMENTARYSERVICESTOTHEINTERNET,CLOSINGPHYSICALBRANCHES,ANDRELYINGONSPEEDYBUSINESSLOGISTICSTOENABLEANEWSTRATEGYOFARMSLENGTHTRANSACTIONSWITHTHEIRCUSTOMERS1THEDISTRIBUTIONOFINFORMATION,CONSULTATION,ANDORDERTAKINGORRESERVATIONSANDTICKETSALESHASREACHEDEXTREMELYSOPHISTICATEDLEVELSINSOMEGLOBALSERVICEINDUSTRIES,REQUIRINGANUMBEROFCAREFULLYINTEGRATEDCHANNELSTARGETEDATKEYCUSTOMERSEGMENTSFORINSTANCE,STARWOODHOTELSITALSODRAMATICALLYAFFECTSTHENATUREOFTHESERVICEEXPERIENCEFORTHECUSTOMERBANKINGSERVICES,FORINSTANCE,CANBEDELIVEREDREMOTELYVIACOMPUTERORMOBILEPHONE,AVOICERESPONSESYSTEM,ACALLCENTER,ANDAUTOMATICTELLERMACHINESORFACETOFACEINABRANCH,OR,INTHECASEOFPRIVATEBANKINGTHROUGHADIRECTVISITTOAWEALTHYCUSTOMERSHOMERECENTRESEARCHHASEXPLOREDHOWCUSTOMERSCHOOSEAMONGPERSONAL,IMPERSONALANDSELFSERVICECHANNELSANDHASIDENTIFIEDTHEFOLLOWINGKEYDRIVERS2FORCOMPLEXANDHIGHPERCEIVEDRISKSERVICES,PEOPLETENDTORELYONPERSONALCHANNELSFOREXAMPLE,CUSTOMERSAREHAPPYTOAPPLYFORCREDITCARDSUSINGREMOTECHANNELS,BUTPREFERAFACETOFACETRANSACTIONWHENOBTAININGAMORTGAGEINDIVIDUALSWITHGREATERCONFIDENCEANDKNOWLEDGEABOUTASERVICEAND/ORTHECHANNELAREMORELIKELYTOUSEIMPERSONALANDSELFSERVICECHANNELSCUSTOMERSWHOLOOKFORTHEINSTRUMENTALASPECTSOFATRANSACTIONPREFERMORECONVENIENCE,ANDTHISOFTENMEANSTHEUSEOFIMPERSONALANDSELFSERVICECHANNELSCUSTOMERSWITHSOCIALMOT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EOGRAPHICBASISOTHERSTARGETCERTAINGROUPSBASEDONDEMOGRAPHICS,LIFESTYLE,NEEDS,ORINACORPORATECONTEXTINDUSTRYTYPEANDCOMPANYSIZESMALLERFIRMSWISHINGTOOPERATENATIONALLYUSUALLYCHOOSETOSEEKOUTNARROWMARKETNICHES,ATASKMADEEASIERTODAYBYTHEGROWINGUSEOFWEBSITESANDEMAILHOWEVER,THELARGESTNATIONALSERVICEOPERATIONSFACETREMENDOUSCHALLENGESASTHEYSEEKTOSERVEMULTIPIESEGMENTSACROSSAHUGEGEOGRAPHICAREATHEYMUSTSTRIKEABALANCEBETWEENSTANDARDIZATIONOFSTRATEGIESACROSSALLTHEELEMENTSEMBRACEDBYTHE8PSANDADAPTATIONTODIFFERENTSEGMENTSANDLOCALMARKETCONDITIONSDECISIONSTHATAREESPECIALLYCHALLENGINGWHENTHEYCONCERNHIGHCONTACTSERVICESINWHICHCUSTOMERSVISITTHEDELIVERYSITEINPERSONDISTRIBUTINGSERVICESINTERNATIONALLYWHATARETHEALTERNATIVEWAYSASERVICECOMPANYCANTAPTHEPOTENTIALOFINTERNATIONALMARKETSTHEYDEPENDINPARTONTHENATUREOFTHEUNDERLYINGPROCESSESANDDELIVERYSYSTEMPEOPLE,POSSESSION,ANDINFORMATIONPROCESSINGSERVICESHAVEVASTLYDIFFERENTREQUIREMENTSINANINTERNATIONALDISTRIBUTIONSTRATEGYHOWSERVICEPROCESSESAFFECTINTERNATIONALMARKETENTRYPEOPLEPROCESSINGSERVICESPEOPLEPROCESSINGSERVICESREQUIREDIRECTCONTACTWITHTHECUSTOMERTHEREARETHREEOPTIONSEXPORTTHESERVICECONCEPTACTINGALONEORINPARTNERSHIPWITHLOCALSUPPLIERS,THEFIRMESTABLISHESASERVICEFACTORYINANOTHERCOUNTRYTHEOBJECTIVEMAYBETOREACHOUTTONEWCUSTOMERS,ORTOFOLLOWEXISTINGCORPORATEORINDIVIDUALCUSTOMERSTONEWLOCATIONSORBOTHTHISAPPROACHISCOMMONLYUSEDBYCHAINRESTAURANTS,HOTELS,CARRENTALFIRMS,ANDWEIGHTREDUCTIONCLINICS,FORWHICHALOCALPRESENCEISESSENTIALINORDERTOBEABLETOCOMPETEFORCORPORATECUSTOMERS,THEINDUSTRIESARELIKELYTOBEINFIELDSSUCHASBANKING,PROFESSIONALSERVICES,ANDBUSINESSLOGISTICSAMONGOTHERSIMPORTCUSTOMERS17CUSTOMERSFROMOTHERCOUNTRIESAREINVITEDTOCOMETOASERVICEFACTORYWITHDISTINCTIVEAPPEALORCOMPETENCESINTHEFIRMSHOMECOUNTRYPEOPLETRAVELFROMABROADTOSKIATOUTSTANDINGNORTHAMERICANRESORTS,SUCHASWHISTLERBLACKHOLMINBRITISHCOLUMBIAORVAILINCOLORADOIFTHEYCANAFFORDIT,THEYMAYALSOTRAVELFORSPECIALIZEDMEDICALTREATMENTATFAMOUSUSHOSPITALSANDCLINICS,SUCHASTHEMASSACHUSETTSGENERALHOSPITALORTHEMAYOCLINICINCREASINGLY,ATWOWAYTRAFFICISDEVELOPINGINHEALTHCARE,WITHAGROWINGNUMBEROFPATIENTSFROMNORTHAMERICA,EUROPE,ANDAUSTRALASIATRAVELINGTOCUSTOMBUILTMODEMHOSPITALSINASIANCOUNTRIESFORANARRAYOFMEDICALINTERVENTIONSBYWESTERNTRAINEDSPECIALISTS,RANGINGFROMHIPREPLACEMENTSTOCOSMETICSURGERYEVENAFTERPAYINGFORTRAVELANDACCOMMODATION,THETOTALCOSTUSUALLYAMOUNTS114TOFARLESSTHANPATIENTSWOULDPAYINTHEIRHOMECOUNTRIES,WITHTHEADDEDATTRACTIONOFRECUPERATINGUNDERVACATIONLIKECONDITIONSATANOFTENEXOTICLOCATIONPROSENJITDATTAANDGINAKRISHNANSARHDE,“THEHEALTHTRAVELLERS“REPRODUCEDONPP207210,PROVIDESAFASCINATINGPERSPECTIVEONTHESEDEVELOPMENTSTRANSPORTCUSTOMERSTONEWLOCATIONSINTHECASEOFPASSENGER,TRANSPORTATION,EMBARKINGONINTERNATIONALSERVICETAKESTHEFORMOFOPENINGNEWROUTESTODESIREDDESTINATIONSTHISSTRATEGYISGENERALLYUSEDTOATTRACTNEWCUSTOMERS,INADDITIONTOEXPANDINGCHOICESFOREXISTINGCUSTOMERSBESTPRACTICEINACTION42DESCRIBESSOMEOFTHEWAYSINWHICHGROUPEACCOR,AMAJORINTERNATIONALHOTELCHAIN,HASDEVELOPEDAGLOBALPRESENCEPOS