Page 221 - DMGT510_SERVICES_MARKETING

Services Marketing

Notes distribution of services, the wide variety found in the specialisations in the case of goods
was absent.
Service firms had a different kind of dilemma: to own its outlets or get the distribution
done through franchisees. Thus the only distribution problem of NIIT, the computer
education major, would be to make faculty available to its franchises. Most major decisions
are one-time decisions unlike in goods distribution. Only services like retailing that have
higher tangibility content will face the same complexity in distribution as faced by goods
manufacturers.

Did u know? The key to the success of Wal-Mart has been supply chain and logistics
management and perhaps it is no coincidence that all their CEOs have been ex-truckers!
Customer Utility: Customers require choices in their preferences and this was offered to

them by retailers through varieties and assortments. This way, the customers could compare
the merchandise and choose the best buy according to their judgment. With a company
going direct, the ensuing ‘difficult comparison effect’ prevented naturally anxious people
from buying the single offer; low involvement customers went for the convenience of the
marketer coming to them, and either paid more in the process or paid less with less choice.
The intangibility of services might have reduced the scope of the consumers to compare
the offer features, but nevertheless encouraged enquiries and clarifications from at the
distribution outlet.

Example: customers for a holiday package in the outlets of SOTC/Kuoni Travel or
Thomas Cook might compare destinations, price, duration and time, add-ons in the offers.
One of the most successful e-business firms has been auction major ebay, which has truly
lived up to the promise of an e-biz enterprise - no stock, no middlemen and minimum
interference. It has successfully replaced middlemen by enabling its customers to compare
features of the goods in auction (from Mercedes cars to old books) and then bid for them.
Its success has helped eBay create a community of 30 million and revenue of $20 million!

Complexity: When any business - be it goods or services - is small, it is easier to manage

it. This includes the complete marketing mix as well as the environment. But as any
business grows, so does its complexity. To facilitate the exchanges of goods and services
there arose an urgent requirement of complex systems for each type of goods and delivering
them to the consumers.

Example: An FMCG major in many cases only owns the brands and outsource many
complex functions like manufacturing, logistics, advertising, marketing research, media planning
and buying, warehousing, branding and packaging, etc. These are great ways to control costs,
and improve cash flows.
Distance: With the strategic decision of a firm to extend its geographical reach for its
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goods and services, there developed a gap between the producer and the end-user. This
could only be filled by middlemen and intermediaries.

Example: SOTC/Kuoni, the innovative package tour company is a classic example in
services. Mumbai based, it yearned for a wider customer base and took the help of intermediaries
to achieve its goal. Thus Frequent Travels, a travel agency was initially roped in to be its
representative in Madhya Pradesh. But SOTC went on to have its own outlet at Indore, catering
to its package tours.

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