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Fall 2013 smu assignments answer of MK0015 Q1. Explain service distribution growth strategies in brief.

Answer: Service distribution: Service firms frequently wish for centralization of production so that economies of scale can be achieved, local accessibility to services is generally preferred by consumers, often, that may not be economical for the producer. To arrive at a decision about the service location, a trade-off has to be made between the requirements of
both the consumer and the producer.
Growth strategies
1) Making services accessible: The method by which a service is made available to customers is a defining characteristic of the service offer. The method by which banks, restaurants and shops make the service offers accessible to customers often is the service itself. Without a strategy to make a service accessible to customers, a service is of no value. It is not possible to produce a service at one point and allow someone else to make it available to consumers in another place.
2) Flexibility in production: The most extreme production inflexibility is evident in services that require the entire service to remain at a distinct site. For instance, tours based on specific historic sites cannot be moved by virtue of their very nature. In case this equipment also turns out to be largely immovable, customers have to travel to the limited number of central service points for receiving their services. A few service firms carry out their operations using ‘hub and spoke’ systems that combine the advantages of large-scale centralized production of specialized services with locally accessible outlets.
3) Flexibility in consumption: The degree of willingness or ability of consumers to display flexibility in consuming services also influences the location decision. Consumers may be inflexible due to numerous reasons:
When the immovable possessions of a consumer are the object of the service, the supplier may have to visit the customer.
At times, the physical immobility of a customer may force suppliers to visit the customer.

4) Reducing locational dependency: The conventional notion of the inseparability of the production and consumption of services poses problems when maximum service accessibility has to be achieved along with maximum production efficiency. This problem can be resolved if production and consumption are made separable

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