Delivering Services Through Intermediaries and Electronic Channels

1. Chapter Delivering Service Through Intermediaries and Electronic Channels 13 • Service Intermediaries • Direct or Company-owned Channels • Common Issues Involving Intermediaries • Key Intermediaries for Service Delivery • Strategies for Effective Service Delivery Through Intermediaries

2. Objectives for Chapter 13:Delivering Service through Intermediaries and Electronic Channels • Identify the primary channels through which services are delivered to end customers. • Provide examples of each of the key service intermediaries. • View delivery of service from two perspectives--the service provider and the service deliverer. • Identify the benefits and challenges of each method of service delivery. • Outline the strategies that are used to manage service delivery through intermediaries.

3. Service Provider Participants • service principal (originator) • creates the service concept • (like a manufacturer) • service deliverer (intermediary) • entity that interacts with the customer in the execution of the service • (like a distributor/wholesaler)

4. Key Issues Involving Intermediaries • conflict over objectives and performance • conflict over costs and rewards • control of service quality • empowerment versus control • channel ambiguity

5. Services Intermediaries • franchisees • e.g., Jiffy Lube, H&R Block, McDonald’s • agents and brokers • e.g., travel agents, independent insurance agents • electronic channels • e.g., ATMs, university video courses, TaxCut software

6. Leveraged business format for greater expansion and revenues Consistency in outlets Knowledge of local markets Shared financial risk and more working capital Table 13.1 Benefits and Challenges for Franchisers of Service Benefits Challenges • Difficulty in maintaining and motivating franchisees • Highly publicized disputes and conflict • Inconsistent quality • Control of customer relationship by intermediary

7. An established business format National or regional brand marketing Minimized risk of starting a business Table 13.1 (Continued)Benefits and Challenges for Franchisees of Service Benefits Challenges • Encroachment • Disappointing profits and revenues • Lack of perceived control over operations • High fees

8. Reduced selling and distribution costs Intermediary’s possession of special skills and knowledge Wide representation Knowledge of local markets Customer choice Table 13.2 Benefits and Challenges in Distributing Services through Agents and Brokers Benefits Challenges • Loss of control over pricing and other aspects of marketing • Representation of multiple service principals

9. Consistent delivery for standardized services Low cost Customer convenience Wide distribution Customer choice and ability to customize Quick customer feedback Table 13.3Benefits and Challenges in Electronic Distribution of Services Challenges Benefits • 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

10. Measurement Review Strategies for Effective Service Delivery through Intermediaries Empowerment Strategies Control Strategies • Help the intermediary develop customer-oriented service processes • Provide needed support systems • Develop intermediaries to deliver service quality • Change to a cooperative management structure Partnering Strategies • Alignment of goals • Consultation and cooperation