1. 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
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

2. Intangibility & 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.
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

3. Inseparability & Channel Management
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.
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

4. Variability & Channel Management
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.
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

5. Perishability of Services & Channel Management
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.
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Unit IV - Services Marketing - Mr.K.Mohan Kumar
Ex) Temporary Jobs

6. Customer Involvement & 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 the
customer in order to be performed successfully.
Ex) Co-creation;
market segmentation(High vs. Low involvement): Medical Care
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

7. Unit IV - Services Marketing - Mr.K.Mohan Kumar
2. Focus of Service Distribution Channel*: Identifying ways to bring the customer and service provider together.
Ex) E-bay
3. Key Service Channel 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
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

8. Unit IV - Services Marketing - Mr.K.Mohan Kumar
4. A Key Source of Service Distribution Problem*:
Gap 3: (Actual) Service delivery does not meet the specifications of the principal (service provider).
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

9. Unit IV - Services Marketing - Mr.K.Mohan Kumar
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

10. Unit IV - Services Marketing - Mr.K.Mohan Kumar
1. Windy 2. Winter 3. White 4. Whistle 5. Wood 6. Wool
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

11. Unit IV - Services Marketing - Mr.K.Mohan Kumar
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

12. 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
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Unit IV - Services Marketing - Mr.K.Mohan Kumar 11

13. Three Major Reasons for Gap 3
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.*
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14. 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
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

15. 6. Additional Perspectives
Important considerations for developing &
operating marketing channels for services
Channel Flows
Channel Structure
Franchised Channels
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

16. Channel Flows for Services
• 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.
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

17. Channel Structure for Services
Channel level for services: Zero?
Distribution intensity: scalable
Ownership and function
(type of intermediaries): Pre-sale
and Post-sale  multichannel
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

18. Unit IV - Services Marketing - Mr.K.Mohan Kumar
Franchising
A system of marketing and distribution where an independent businessperson (the franchisee) is granted the right to market the goods and services of another (the franchisor)
©McGraw-Hill Companies, Inc. 2002
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

19. Unit IV - Services Marketing - Mr.K.Mohan Kumar
Franchising (1)
Popular way to expand delivery of effective service concept
Franchising is a fast growth strategy, when
Resources are limited
Long-term commitment of store managers is crucial
Local knowledge is important
Fast growth is necessary to prompt competition
Study shows significant attrition rate among franchisors in the early years of a new franchise system
One-third of all systems fail within first 4 years
Three-fourths of all franchisors cease to exist after 12 years
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20. Unit IV - Services Marketing - Mr.K.Mohan Kumar
Franchising (2)
Disadvantages of franchising
Some loss of control over delivery system and, thereby, over how customers experience actual service
Effective quality control is important yet difficult
Conflict between franchisees may arise especially as they gain experience
Alternative: license another supplier to act on the original supplier’s behalf to deliver core product, for example:
Trucking companies
Banks selling insurance products
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Unit IV - Services Marketing - Mr.K.Mohan Kumar

21. The Challenge of Distribution In Large Domestic Markets
Marketing services (i.e., physical logistics) face challenges due to:
Distances involved (geographic areas)
Existence of multiple time zones
Multiculturalism (especially, immigrants and indigenous people)
Differences in laws and tax rates
Large U.S. companies counter this by:
Targeting specific market segments
Seeking out narrow market niches
Serving multiple segments across a huge geographic area is biggest marketing challenge
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Unit IV - Services Marketing - Mr.K.Mohan Kumar