DISTRIBUTION OF SERVICES :DISTRIBUTION OF SERVICES


SERVICE DISTRIBUTION :SERVICE DISTRIBUTION Direct Delivery of Service Channels for services are often direct- from creator of the service directly to the customer Services cannot be owned, there are no titles or rights to most services that can passed along a delivery channel Inventories cannot exist, making warehousing a dispensable function


Slide 3:Delivery of Service through Intermediaries Intermediaries may co-produce service, fulfilling service principals’ promises to customers. eg: Franchise Services They make service locally available Provide time and place convenience for the customers Provide retailing function for customers because they represent multiple service principals. eg: travel agents Primary types of intermediaries – Franchisees, Agents & Brokers, Electronic Channel


COMMON ISSUES INVOLVING INTERMEDIARIES :COMMON ISSUES INVOLVING INTERMEDIARIES conflict over objectives and performance conflict over costs and rewards control of service quality empowerment versus control channel ambiguity – lack of role clarity


DIRECT/ COMPANY OWNED CHANNELS :DIRECT/ COMPANY OWNED CHANNELS Benefits Company has control over the outlets thus owner can maintain consistency in service provision Control over hiring, firing, and motivating employees Allow expansion or contraction of sites without being bounded by contractual agreements Owns the customer relationship


Slide 6:Challenges Company must bear all financial risk Large companies are rarely experts in local market. When adjustments are needed in business formats for different markets, they may be unaware of what these adjustments should be Service partnerships – they are very much like company owned channels except that they have multiple owners. eg: Jet & Kingfisher Benefit: risk, resources and effort are shared Disadvantage: control and returns gets distributed


FRANCHISING :FRANCHISING Benefits for Franchisor Leveraged business format for greater expansion and revenues- increased revenues, market share, brand name recognition and economies of scale for Franchisors Can maintain consistency in outlets across cultures and countries Company can obtain connection to the (knowledge about) local markets Franchisees must contribute their own capital for equipment and personnel, thereby bearing part of the financial risk of doing business.


Slide 8:Benefits for Franchisee Franchisees obtain an en established business format They receive benefit of national or regional brand marketing expertise as well as established reputation Minimized risk of starting a business


Slide 9:Challenges for Franchisor Difficulty in maintaining and motivating franchisees Highly publicized disputes and conflict Inconsistent quality that may undermine the company’s image, reputation and brand name Customer relationships are controlled by the franchisee rather than the franchisor


Slide 10:Challenges for Franchisee Encroachment – the opening of new units near existing ones without compensation to the existing franchisee Disappointing profits and revenues Lack of perceived control over operations High fees


AGENTS & BROKERS :AGENTS & BROKERS Benefits Reduced selling and distribution costs – eg: if an airline need to contact every potential traveler to promote its offerings, cost would be exorbitant Intermediary’s possess special skills and knowledge in their areas – eg: Passport Agent Wide representation – they act as company representative in different areas


Slide 12:Knowledge of local markets – knowing the culture and taboos of a country is critical for successful selling Customer choice – agents provide retailing service (assorted services of multiple service providers) for customers Challenges Loss of control over pricing and other aspects of marketing Representation of multiple service principals


ELECTRONIC CHANNELS :ELECTRONIC CHANNELS Benefits Consistent delivery for standardized services Low cost Customer convenience Wide distribution Customer choice and ability to customize Quick customer feedback


Slide 14:Challenges Customers are active, not passive Lack of control of electronic environment Price competition Inability to customize with highly standardized services Lack of consistency with customer involvement Requires changes in consumer behavior Security concerns Competition from widening geographies


STRATEGIES FOR EFFECTIVE SERVICE DELIVERY THROUGH NTERMEDIARIES :STRATEGIES FOR EFFECTIVE SERVICE DELIVERY THROUGH NTERMEDIARIES Control Strategies create standards both for revenues and service performance, measures results, and compensates or rewards on basis of performance level Empowerment Strategies Service principal allows greater flexibility to intermediaries Help intermediary develop customer oriented service processes Provide needed support systems Develop intermediaries to deliver service quality Change to a cooperative management structure


Slide 16:Partnering strategies Partnering with intermediaries to learn together about end customers, set specifications, improve delivery, and communicate honestly Alignment of company and intermediary’s goals Consultation & Cooperation