Challenges in distributing services through electronic channels

Disadvantages, drawbacks or Challenges in distributing services through electronic channels

The service principals face the following problems in distributing services through electronic channels:

1. customers are active and they must be enticed.
2. Insufficient control of e-environment.
3. Price competition.
4. Inability to customize with highly standardized electronic services.
5. Inconsistency due to customer involvement.
6. Changes needed in consumer behavior.
7. Security concerns.
8. Competition from widening geographies.

1. Customers are active not passive and must be enticed

Traditional advertising media such as magazines consider the customer a passive receiver of their messages. A customer reading an article is most likely to see the advertisement. But the user of the web is different.

The aim of advertising should be to educate, entertain and entice the customer. By reading the marketer’s information, customer must know the benefits of services clearly. So, “permission-based marketing” is a new method used to attract customers to websites. The services firm designs games, offers prizes, creates contests and sends customers to websites. This helps the advertisers build relationships with customers.

2. Lack of control of the electronic equipment

Electronic equipment are used in an unregulated medium. Care should be taken to separate the irrelevant, unwanted material from the useful content. For example, advertising for banking services should be separated from the numerous advertisements for ‘balding concealment devices‘ and ‘quick weight loss programmes‘. In print media, the advertiser can request for right positioning. Such requests are not possible on the internet.

3. Price competition

It is difficult to compare features and price of services. But the internet makes it simple for customers to compare prices for a wide variety of services. For example, priceline.com allows customers to name their prices for a service such an airline ticket. So, customers at present, have the ability to bid on prices for services. Online services enable customers to download hundreds of service offerings along with particulars. So, the service providers encounter challenges in the form of price competition.

4. Inability to customize with highly standardized electronic devices

It is very difficult to customize the services by using highly standardized electronic services. When electronic media is present, customers cannot directly deal with the service provider and raise points for clarification. The reaction of the audience to the message presented by an electronic vehicle may not always be effective. People may talk among themselves, laugh and criticize. Only two-way video can control the behavior of receivers.

5. Inconsistency due to customer involvement

Electronic channels minimize the inconsistency from employees or providers of services. The customer produces the service himself using the technology. While doing so, if the technology is not user friendly, it may lead to errors or frustration. Using a website for example is not easy as it calls for familiarity with that technology. Moreover, the difficulty encountered by online services is that most customers do not have computers.

6. Changes are required in consumer behavior

When a consumer enters a retail store, he can be motivated easily to buy the service. It is because the behavior of customer can be studied and the customer interaction can be modified to instill confidence in him. But for a customer purchasing a service through electronic channels, the method of interaction is different.

While using electronic channel, considerable changes are required in some aspects – the willingness to search for information, the willingness to perform some aspect of the services themselves, the acceptance of different levels of service, etc. But effecting a behavioral change is not easy. So, service marketers should motivate customers by bringing about changes in the long established pattern of behavior.

7. Security concerns

Security of information is a key issue while using electronic channels. This is the major issue confronting the marketers who use electronic channels. Many customers are reluctant to give credit card numbers on the web and internet.

Recently, Adam Cohen has outlined reasons for customer reluctance to use the internet.

They are:

• someone might steal your identity
• you may reveal information about yourself in cyber-space
• personal information that we give to a website might be exploited
• you may enter your credit card number on a fake website
• A stranger may use your computer to spy on you
• you may have a cyber stalker.

8. Global Competition

With the advent of electronic channels, services can be purchased from service firms located anywhere in the world. The fact that services could not be transported is no longer valid because of electronic channels. Virtually, all financial services can be bought from institutions in any area. Since customers have unlimited choice among the providers, services are not protected from competition.