Distribution Strategies
Service Industry
Distribution
• Is the availability and accessibility of a service
to consumers
• Implications for businesses
– Increase technology
– HR issues- hours of operations
– Channel structure
Channel Structure
• Structure performs 4 functions
– Information provision
– Booking/reservation/
– Consumption->Payment
– Payment->Consumption
– Implications :What to own and what to lease
Channel Structure
• Direct Channel
– Completely own s the structure
• Indirect Channel
– Partly owned, partly through intermediaries
– Eg:Airlines
Channel Options
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Exclusive Distribution
Selective Distribution
Intensive Distribution
Multi channel Distribution
Channel Intermediary management
• Advent of technology has introduced multi
channel distribution.
• Strategy has to choose between cost
effectiveness and reach
• Channel Squeeze effect on intermediaries is
intense
*How should businesses re equip themselves in
today’s multi channel structure?
Distribution Growth Strategy
New
Multi Service Str
Diversification
Service offering
Old
Current serv str
Multi site/Multi segment
Location/Mkt Segment
Old
New
Multi Service Strategy
• Adding peripheral services to core service
model
– Eg:Adding a spa to a beauty salon
– Adding a watch repair center to the showroom
Service Diversification
• Introducing a new Core service
– Jet airways starting a hotel group
Benefits
• Multi Site:
– Rapid Expansion
– Fast Sales growth
– Relatively easy to manage
• Multi Service
– Serving current customers better
– Can gain new customers
– Sales growth without expanding to new facilities
Benefits…
• Multi Segment :
– Better utilization of current resources
– Sales growth without expanding to new facilities
Expanding to International Markets
• Direct Export
– Using local resources to perform service abroad
– Call centers
• Joint Venture
– Merger of local and foreign partner
• Licensing
– Selling licenses to use the brand name
• Franchising
– Sells franchise operations to local partners
• FDI
– Direct investment
Franchising
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Franchisor
Franchisee
Advantages
Disadvantages
Deciding on Distribution Structure
• Control decisions
– Centralized or Decentralized
– Economies of scale
– Nature of business
– Growth objectives
– Capital Investment
– HR issues
Distribution structure strategy
and
channel structure
• Standard Chartered Bank
• Jet Airways
• Starbucks -US and globally
• Amazon
• Apollo Hospitals
Define core service, periphery service
Extensive or intensive
Structure