Discuss the various ways in which services can be distributed and the challenges faced using the various channels of distribution.
A service can be defined as an essentially intangible benefit either on its own right or as a significant part of a tangible product which through some form of exchange satisfies an identified need (Palmer, 2001). From the dictionary it is said to be a system or organization that provides for a basic public need.
Distribution is the process of making a product or service available for use or consumption by a consumer or business user.
A channel is simply a route and/or means.
We can therefore say that service distribution channels are the routes through which economic activities are allocated, spread or positioned within a given area to create value and provide benefits to customers thus resulting in a desired change of state on the part of the service recipients by making these activities available.
There are different types of service offers i.e.
Pure tangible good: These are primarily tangible goods with no accompanying service e.g. toothpaste, sugar, etc. •
Tangible goods with accompanying service.
Hybrid: consists in equal parts both service and goods e.g. a restaurant offers food (good) as well as ambience (service). •
Major Service with accompanying goods and services e.g. airline travelers get both the service of transport and goods in form of food and magazines etc. •
Pure service: is primarily a service offer e.g. massage, etc. There are further distinctions of service related to the equipment used, the need met (personal or business), objectives (profit or non-profit), ownership (public or private), among others.
CHARACTERISTICS OF SERVICES.
Intangible: Services cannot be felt, tasted or heard before they are purchased. •
Perishable: They cannot be stored and are available for only that time. •
Inseparable: They cannot be separated from the provider because they are produced and consumed simultaneously, thus making the provider part and parcel of the service. •
Variability: the quality of the service depends on the provider as well as the time and place in which they are rendered. These characteristics play a major role in the way that the service will be delivered and distributed and hence influence the type of channel that will be used.
Distribution channels perform various functions primarily availing the service to the consumer. Among these functions include informing, promoting and providing an avenue through which the trading parties can negotiate, place orders as well as make payments. These channels are important for moving a service from producer to consumer. Distribution channels can be direct (no intermediaries). E.g. telemarketing, door-to-door salesmen or manufacturer/service provider owned firms or indirect (inclusive of intermediaries). Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc. Services are normally located where the target market is or at points convenient to them e.g. schools, banks, nightclubs, etc. Various factors come into play when choosing a distribution channel. Therefore those designing the channels have to decide what is ideal, feasible and available, but these have to be adjusted according to the situation at hand.
Such factors include:
Customer characteristics - Size of the market, geographical dispersion, etc.
Company characteristics - The company’s objectives, financial status, desired degree of control, etc.
Intermediary characteristics – what markets do they serve? Are they financially stable? Are they feasible? Etc.
Competitive characteristics – will you use the channels already being used by competitors or your own?
Environmental characteristics – political, economic, socio-cultural, technological, legal and ecological...
References: Felix O. Okatch, Marketing Management Systems (Pesisu Industries, 2002)
G. Lancaster and L. Massingham, 'Essentials of Marketing ' (McGraw-Hill, 1988)
P. Kotler, 'Marketing Management ' (Prentice-Hall, 7th ed., 1991).
Pascal Petit (1987). Services, the New Palgrave: A Dictionary of Economics, v. 4, pp. 314-15.
Richard E. Wilson, 'A Blueprint for Designing Marketing Channels ', (www.chicagostrategy.com, 2008)
Roger J. Calantone, Michigan State University, Eli Broad College of Business, East Lansing, Michigan, USA
Scott B. Keller, Michigan State University, Eli Broad College of Business, East Lansing, Michigan, USA
William J. Stanton, Fundamentals Of Marketing (McGraw-Hill, 5th ed., 1978)
Please join StudyMode to read the full document