Chapter 17Chapter 17

Marketing Channels for Services

1717Major Topics for Ch. 17

• Characteristics of Services and Their Implications**

• Focus of Service Marketing Channel**

• Key Service Intermediaries*

• Key Source of Service Distribution Problem*

• Service Delivery Strategy

• Additional Issues

1717Five Characteristics of Services*Five Characteristics of Services*

1.1. TheThe intangibility intangibility of servicesof services

2.2. The The inseparabilityinseparability of services from of services from service providersservice providers

3.3. The difficulty of standardizing The difficulty of standardizing services services variabilityvariability

4.4. The The perishabilityperishability of services of services

5.5. The higher degree of The higher degree of customer customer involvementinvolvement in services in services

1717Implications of Service CharacteristicsImplications of Service Characteristics

for Channel Management*for Channel Management*

1. • Intangibility & Channel Management

2. • Inseparability & Channel Management

3. • Variability of Services & Channel Management

4. • Perishability of Services & Channel Management

5. Higher Customer Involvement & Channel Management

1717Intangibility of Services & Intangibility of Services & Channel ManagementChannel Management

Marketing channels provide the most direct & potent basis

for making a service more tangible.

The customer is directly exposed to and experiences the service provided by the channel.

Why?

1717Inseparability of Services & Inseparability of Services & Channel ManagementChannel Management

Service provider does not havethe “safety net” available to the product manufacturer

All aspects of the marketing channel with which the consumer comes into contact

are thus a reflection of the quality of the service.

Why?

1616Variability of ServicesVariability of Services& Channel Management& Channel Management

In the case of franchises, it is difficult for the channelmanager to get the franchisees to deliver a

consistent level of service.

Why?

Human behavior isoften involved in providing services.

Perishability of ServicesPerishability of Services& Channel Management& Channel Management

1177

The channel must be designed so as to connectas efficiently as possible those providing the

service with those desiring to obtain it.

Why?

Design should maximize the sale of service during its limited exposure to the target market.

Ex) Temporary Jobs

1717Customer Involvement & Customer Involvement & Channel Management* Channel Management*

In a channel containing services such as barbers, fitness clubs, and tax preparation, the channel design should facilitate customer involvement.

Why?

Such services generally require input from thecustomer in order to be performed successfully.

Ex) Co-creation; market segmentation(High vs. Low involvement): Health Care

2. Focus of Service Channel*: Identifying ways to bring the customer and service provider together.Ex) E-bay

3. Three Key Service Intermediaries*:1) Franchising: License by a franchisor to deliver a unique service concept it has created or popularized.

2) Agents and Brokers: Representative who distribute or sell services of one or more service suppliers.

3) Electronic Channels: All forms of service provision by electronic media (TV, phone, computer, etc,.)

4. A Key Source of Service Distribution Problems*:

Gap 3: (Actual) Service delivery does not meet the specifications of the service provider.

Service-Quality Model*Service-Quality Model*

Personal needs

Expected service

Perceived service

Service delivery (includingpre- and post-contacts)

Management perceptionsof consumer expectations

Past experienceWord-of-mouth

communications

Externalcommuni-cations to

consumersTranslation of perceptions

to service-quality specifications

Mar

kete

r

Gap 2

Gap 3Gap 4

Gap 5

Co

nsu

mer

Gap 1

Three Major Reasons for Gap 3 Problem

1) Channel Conflict over (a) Objectives and Performance, and (b) Costs and Rewards.

2) Difficulty Controlling Quality and Consistency across Different Channels/Stores

3) Tension between Empowerment and Control of Channel.*

5. Effective Service Delivery Strategy through Intermediaries

1) Control Strategies: Measurement and Review Reward/Punishment (Carrot versus Stick)

2) Empowerment Strategies: Problem Solving and Support.

My Prediction: The more service-intensive your business is, the better it is to delegate and empower front line employees

17176. Additional Perspectives6. Additional Perspectives

1. Channel Flows2. Channel Structure3. Franchised Channels

Important considerations for developing &operating marketing channels for services

1717Channel Flows for ServicesChannel Flows for Services

• Flows that “carry” the service through thechannel are those of information,negotiation, & promotion.

• Many can be handled electronically,with the role of technology becomingeven greater in the future.

Channel Structure for ServicesChannel Structure for Services 1717

• Channel level for services: Zero? • Distribution intensity: scalable • Ownership and function (type of intermediaries): Pre-sale and Post-sale multichannel

Franchised Channels for Franchised Channels for ServicesServices

1717

Business format franchising can give theservice provider the potential to reap benefits: • the scale of economies of a large organization• the entrepreneurial drive & motivation

associated with independently owned businesses

• the degree of control necessary to fosterstandardization in services offered by the individual franchised units

• www.worldfranchising.com