What Is Service Distribution | Meaning | Types | Challenges |

                       SERVICE
                                   DISTRIBUTION                  

Distribution (or place) is one of the four elements of  the marketing mix. Distribution is the process of 

making a product or service available for the consumer or business user who needs it. This can be done 

directly by the producer or service provider, or using indirect channels with distributors or 

intermediaries. The other three elements of the marketing mix are product, pricing, and promotion.

Service distribution channels comprise service firms, their intermediaries, and their customers.

 

               Types of
                          Distribution

                                        Channels

1. Direct Channel (Zero Level):

It is the shortest and simplest channel of direct distribution of goods from manufacturer to customers.

It is called as zero level channel of distribution as it does not involve any intermediary. It is called as 

zero level channel of distribution as it does not involve any intermediary. It facilitates direct 

relationship between the manufacturer and  the customer .

Examples – e-business (selling through internet); Direct Mail

Order Houses; Chain Stores (Colourplus, Nike, Bata etc.);

Direct selling (Amway; Oriflame etc.)

2. Indirect Channel:

When a manufacturer employs one or more intermediaries to sell and distribute their

product to the customers it is called as indirect selling. In this, goods move from the

point of production to the point of consumption through a distribution network.

The various forms of indirect distribution networks are:

(a) One Level Channel:

This channel of distribution involves one intermediary to transfer goods from the

manufacturer to the customer. In this, the title and risk transfers from manufacturers to

retailers who in turn sell goods to customers. This distribution channel enables

manufacturers to retain control and approach large number of potential customers.

Examples – Automobile manufacturers sell their cars through authorised dealers.

(b) Two Level Channel:

This channel of distribution involves two intermediaries to transfer goods from the

manufacturer to the customer. In this wholesalers and retailers act as a connecting link

between manufacturers and consumers. This network enables manufacturer to cover a

large market area. It is a most adopted distribution channel for consumer products.

(c) Three Level Channel:

This channel of distribution involves manufacturers using the services of agents or

brokers to connect with wholesalers and retailers. Manufacturers appoint agents in

major areas who in turn connect them to wholesalers and retailers. It is suitable for

manufacturers of limited product line with customers spread over a wide geographical

area.

           Challenges Of

                     Service Distribution

1. Inability to Customize:

Some of you have experienced learning basic college courses through large, video-transmitted

courses. If you consider what you missed in learning that way compared with learning directly

from a professor, you will understand this challenge. In mass sections, you cannot interact

directly with the professor, ask questions, raise points for clarification, or experience the

connection that you receive in person.

In electronic classes-as in video conferences that are springing up in many businesses-the quality

of the service can also be impeded by the way the audience reacts (or doesn’t react) in those

situations. People talk among themselves, leave, laugh, and criticize, among other behaviors.

2.Customization:

Customization can be achieved in these channels. IN college courses, small groups of students

can be led by teaching assistants to discuss the electronic lecture. Call-in questions can simulate

direct interaction. Two-way video can control the behavior of receivers.

In advertising on the Internet and other electronic channels, it is conjectured that personalized

advertising will ultimately be developed because customers will be in control. Consumers will

actively seek pertinent advertising, so marketers must develop ways to make their advertising

compelling. Ad resources will shift toward supplying information the customer wants to know,

rather than pitching what the company wants to sell.

3.Customer Involvement:

Customer Involvement May times the customer produces the service herself using the technology.

Unless the technology is highly user-friendly, customers may be reluctant to try it or to continue

 using it if it requires ongoing education.

4.Security:

Security One issue confronting marketers using electronic channels is security of information,

particularly financial information. Many marketers who advertise on the Internet will not accept

credit-card orders because of potential security problems in the transactions.

5.The value delivery system:

The value delivery sequence consists of three key steps – choose the value, provide the value and

communicate the value

6.Choose the value:

It can be argued that customers select products and services because they believe they offer

superior value. The prerequisite here is an understanding of changing customer needs in terms of

the forces driving demand as well as customer economics and the buying process and also

understanding how well the competition serves those needs particularly in terms of the products,

the service and price charged.

Provide the value. The second stage, providing the value, is concerned with developing a product or

service package that creates clear and superior value. This involves a focus on things such as

product quality and performance, service cost and responsiveness, manufacturing cost and

flexibility, channel structure and performance, and price structure.

Communicate the value. This involves the various aspects of promotional activity needed to

persuade customers that the values are better than those offered by competitors. It involves not

only the issues of organizing sales promotion, advertising and the sales force, but also of

providing outstanding service in a way that is continually recognized by the target audience.