Services Retailing AND LOGISTIICS

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Goods - things you can touch - tangible

Services - things you cant touch - but you can see their effect intangible
services are not physical, they are intangible
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Service
A Service is a type of a product.
a deed performed by one party for another

Discussions about the marketing of goods apply to services as well. Services have special characteristics that make them different than products.
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Service
A product without physical characteristics;
a bundle of performance and symbolic attributes designed to produce consumer want satisfaction.
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Tangible / Intangible Attributes

Tangible touch see taste smell Intangible cant see cant touch cant smell cant taste
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Goods and Services: Scale of Elemental Dominance
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4 Characteristics of Services 1. Intangibility - u cant touch this 2. Production (or performing the service) and Consumption (using the service) happens at the same time 3. Heterogeneity - services are not
always delivered the same way
4. Perishability - cannot be put in

inventory or stored for later use
ie. You cant buy 2 haircuts
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Characteristics of Services 1. Intangibility - u cant touch this

Services cannot be stored Services cannot be protected through patents
- therefore a really great travel package and service can be copied

a really great physical object can be patented, and NOT allowed to be copied
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Characteristics of Services 1. Intangibility - u cant touch this

Hard to explain and display Services if you cant see them
Prices are difficult to set - depends on customers expectations
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Characteristics of Services
1. Intangibility - u cant touch this

Marketing Strategies stress tangible cues, eg. Smiling face use personal information, sources, references use word-of-mouth
contact customers after they buy to stimulate continued enthusiasm and hope they talk it up
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2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same time
Many people involved in delivering a service
mass production of services is hard to do
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Marketing Strategies
2. Inseparability of Production (or performing the service) and Consumption (using the service) - happens at the same time
Emphasize how much you train your people - so their ability to give you good service will be high
Have many locations so customers can get to you ie. Insurance sales come to your home
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Characteristics of Services 3. Heterogeneity - services are not always

delivered the same way It is very difficult to standardize services eg. A machine can make ice cream cones a standard size 100% of the time A person filling an ice cream cone with a scoop cannot do it the same amount each time, unless you use a machine to dispense the ice cream
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Characteristics of Services 3. Heterogeneity - services are not always

delivered the same way
It is very difficult to standardize services eg. A Taxi driver cannot drive you to the office in exactly the same time each day because the traffic patterns change eg. A travel agent can sell you a vacation package - but cannot guarantee you will like the trip exactly the same way another tourist did.
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4. Perishability - cannot be put in

inventory or stored for later use ie. You cannot go to the doctor once for all your life Demand fluctuates and changes, sometimes depending on the season, or weather eg. Taxi in the rain, vacation in summer
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Service Providers
service providers have product lines and product mixes as well examples Mastercard insurance telephone services cable services ISPs - internet service providers airlines, first class, economy class banks
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=- Kinds of Service Retailing

Rented goods services Owned goods services
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Four Characteristics of Services Retailing

Intangibility Inseparability Perishability Variability
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Figure 2.8a: Characteristics of Service Retailing

Intangibility
No patent protection possible Difficult to display/communicate service benefits Service prices difficult to set Quality judgment is subjective Some services involve performances/experiences
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Figure 2.8b: Characteristics of Service Retailing

Inseparability
Consumer may be involved in service production Centralized mass production difficult Consumer loyalty may rest with employees
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Figure 2.8c: Characteristics of Service Retailing

Perishability
Services cannot be inventoried Effects of seasonality can be severe Planning employee schedules can be complex
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Figure 2.8d: Characteristics of Service Retailing

Variability
Standardization and quality control hard to achieve Services may be delivered in locations beyond control of management Customers may perceive variability even when it does not actually occur
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Figure 2-9: Consumer Perceptions of Service Retailing
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Figure 2-10: Innovative Marketing at McDonalds
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Figure A2-1: Lessons in Service Retailing
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Retail Bank Components

Checking Accounts Savings Accounts Time Deposit
Liabilities
Fee Based
Wealth Management
Assets
Personal Loan Credit Cards Mortgage Auto
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Pillars
Banking of Retail
(New) Paradigm Distributions

Risks/Analytics
Operations/Collections
Customer Service
Product Offering
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Distribution Strategy
Building Distribution
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Logistics
Process of managing the flow of merchandise from vendor to distribution center to store to customer
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Distribution Centers
Very sophisticated Big Few employees very automated Ideally, not used to store goods; -- take off delivery truck and load truck destined for a particular store
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Who uses distribution centers

Retailers who have widely fluctuating demand for specific items at the store level more accurate sales forecast is demand is aggregated across stores Retailers who require frequent replenishment Retailers who carry large # of items Retailers with large number of outlets within 150 200 miles
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What is logistics?
Logistics is the total process of planning, implementing, and coordinating the physical movement of merchandise from manufacturer (wholesaler) to retailer to customer in the most timely, effective, and cost-efficient manner possible
Procurement Movement Storage
Materials Parts Finished goods
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Goals of Logistics
Economy in movement of goods (external internal movement) Accuracy in order management Time management of shipments and deliveries Shelf-life and replenishment of perishable goods Coordination with suppliers and third-party service providers Backup plans and return shipments
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Logistics spans across the functions of

Supply Chain Management Order Processing & Fulfillment
QR (Quick Response) ECR (Effecient Customer Response)
Transportation & Warehousing Customer Transactions & Customer Satisfaction Inventory Management Logistics
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Performance Goals
Relate costs incurred to specific logistics activities Place and receive orders as easily, accurately, and satisfactorily as possible Minimize the time between ordering and receiving merchandise Coordinate shipments from various suppliers Have enough merchandise on hand to satisfy customer demand, without having so much inventory that heavy markdowns will be necessary
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Performance Goals_2
Place merchandise on the sales floor efficiently Process customer orders efficiently and in a manner satisfactory to customers Work collaboratively and communicate regularly with other supply chain members Handle returns effectively and minimize damaged products Monitor logistics performance Have backup plans in case of breakdowns in the system
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Supply Chain Management

The supply chain is the logistics aspect of a value delivery chain Parties involved Manufacturers Wholesalers Third-party specialists Retailer
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Supply Chain Management

Facilitating system for movement of goods or services from supplier to customer Coordinates suppliers, intermediaries, third-party service providers and customers
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CPFR
(Collaborative Planning, Forecasting and Replenishment)
Inventory replenishment Information sharing Satisfying customer demands Economy in inventory, logistics and transportation expenditure
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3PL
Procurement (Sourcing) Order Management Production Distribution After Sales Service Reverse Logistics Warehousing Transport
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Order Processing & Fulfillment

Starts with product enquiry Ends with delivery or return
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Transportation & Warehousing

No. of shipments Minimum / Economic Order Quantity Shipment Ownership Infrastructure quality Non-store retailing
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Customer Transactions & Customer Service

Outbound logistics Retail stores Non-store retailers Webtailers Direct Sellers Customer Service vis--vis logistical efficiency
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Warehousing
Centralized Warehousing Direct Store Distribution
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Inventory Management
Cost effectiveness Vendor managed inventory Loss in inventory Employee theft Customer shoplifting Vendor fraud and errors Electronic surveillance Reverse Logistics
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Problems Balancing Inventory Levels

The retailer wants to be appealing and never lose a sale by being out of stock; it does not want to be stuck with excess merchandise What fad merchandise and how much should be carried? Customer demand is never completely predictable Shelf space allocation should be linked to current revenues
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Services Retailing AND LOGISTIICS

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2-1

Goods - things you can touch - tangible

a deed performed by one party for another

Tangible / Intangible Attributes

Goods and Services: Scale of Elemental Dominance

4. Perishability - cannot be put in

Characteristics of Services 1. Intangibility - u cant touch this

- therefore a really great travel package and service can be copied

Characteristics of Services 1. Intangibility - u cant touch this

1. Intangibility - u cant touch this

mass production of services is hard to do

Characteristics of Services 3. Heterogeneity - services are not always

Characteristics of Services 3. Heterogeneity - services are not always

4. Perishability - cannot be put in

=- Kinds of Service Retailing

Four Characteristics of Services Retailing

Figure 2.8a: Characteristics of Service Retailing

Figure 2.8b: Characteristics of Service Retailing

Figure 2.8c: Characteristics of Service Retailing

Figure 2.8d: Characteristics of Service Retailing

Figure 2-9: Consumer Perceptions of Service Retailing

Figure 2-10: Innovative Marketing at McDonalds

Figure A2-1: Lessons in Service Retailing

Retail Bank Components

Personal Loan Credit Cards Mortgage Auto

(New) Paradigm Distributions

Who uses distribution centers

Procurement Movement Storage

Materials Parts Finished goods

Logistics spans across the functions of

Supply Chain Management

Supply Chain Management

Order Processing & Fulfillment

Transportation & Warehousing

Customer Transactions & Customer Service

Problems Balancing Inventory Levels

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