Chapter 17 Marketing Channels for Services

Major Topics for Ch. 17 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

Five Characteristics of Services* 17 The intangibility of services The inseparability of services from service providers The difficulty of standardizing services  variability The perishability of services The higher degree of customer involvement in services

Implications of Service Characteristics for Channel Management* 17 Implications of Service Characteristics for Channel Management* • Intangibility & Channel Management • Inseparability & Channel Management • Variability of Services & Channel Management • Perishability of Services & Channel Management Higher Customer Involvement & Channel Management

Intangibility of Services & Channel Management 17 Intangibility of Services & Channel Management Marketing channels provide the most direct & potent basis for making a service more tangible. Why? The customer is directly exposed to and experiences the service provided by the channel.

Inseparability of Services & Channel Management 17 Service provider does not have the “safety net” available to the product manufacturer Why? All aspects of the marketing channel with which the consumer comes into contact are thus a reflection of the quality of the service.

Variability of Services & Channel Management 16 In the case of franchises, it is difficult for the channel manager to get the franchisees to deliver a consistent level of service. Why? Human behavior is often involved in providing services.

Perishability of Services & Channel Management 17 The channel must be designed so as to connect as 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

Customer Involvement & Channel Management* 17 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 the customer in order to be performed successfully. Ex) Co-creation; market segmentation(High vs. Low involvement): Health Care

3. Three Key Service Intermediaries*: 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,.) product/trade name franchising

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* Word-of-mouth communications Personal needs Past experience Expected service Consumer Gap 5 Perceived service Gap 1 Service delivery (including pre- and post-contacts) External communi- cations to consumers Gap 4 Gap 3 Marketer Translation of perceptions to service-quality specifications Gap 2 Management perceptions of consumer expectations 11

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 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

6. Additional Perspectives 17 Important considerations for developing & operating marketing channels for services Channel Flows Channel Structure Franchised Channels

Channel Flows for Services 17 • Flows that “carry” the service through the channel are those of information, negotiation, & promotion. • Many can be handled electronically, with the role of technology becoming even greater in the future.

Channel Structure for Services 17 Channel level for services: Zero? Distribution intensity: scalable Ownership and function (type of intermediaries): Pre-sale and Post-sale  multichannel

Franchised Channels for Services 17 Business format franchising can give the service 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 foster standardization in services offered by the individual franchised units www.worldfranchising.com