McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Chapter 13 Delivering Service Through Intermediaries and Electronic Channels Service Intermediaries Direct or Company-owned Channels Common Issues Involving Intermediaries Key Intermediaries for Service Delivery Strategies for Effective Service Delivery Through Intermediaries

McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved 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.

McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved 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)

McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Key Issues Involving Intermediaries conflict over objectives and performance conflict over costs and rewards control of service quality empowerment versus control channel ambiguity

McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved 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

McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Table 13.1 Benefits and Challenges for Franchisers of Service Leveraged business format for greater expansion and revenues Consistency in outlets Knowledge of local markets Shared financial risk and more working capital Difficulty in maintaining and motivating franchisees Highly publicized disputes and conflict Inconsistent quality Control of customer relationship by intermediary Benefits Challenges

McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Table 13.1 (Continued) Benefits and Challenges for Franchisees of Service An established business format National or regional brand marketing Minimized risk of starting a business Encroachment Disappointing profits and revenues Lack of perceived control over operations High fees BenefitsChallenges

McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Table 13.2 Benefits and Challenges in Distributing Services through Agents and Brokers Reduced selling and distribution costs Intermediary’s possession of special skills and knowledge Wide representation Knowledge of local markets Customer choice Loss of control over pricing and other aspects of marketing Representation of multiple service principals Benefits Challenges

McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Table 13.3 Benefits and Challenges in Electronic Distribution of Services Consistent delivery for standardized services Low cost Customer convenience Wide distribution Customer choice and ability to customize Quick customer feedback 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 Benefits Challenges

McGraw-Hill/Irwin ©2003. The McGraw-Hill Companies. All Rights Reserved Strategies for Effective Service Delivery through Intermediaries Measurement Review Control Strategies Alignment of goals Consultation and cooperation Help the intermediary develop customer- oriented service processes Provide needed support systems Develop intermediaries to deliver service quality Change to a cooperative management structure Empowerment Strategies Partnering Strategies