1. Chapter 7 Marketing Channels for Services
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2. The importance of services.
Services marketing objectives.
Characteristics of services.
Intangibility and channel management .
Inseparability and channel management .
Customer involvement and channel management
Additional perspectives.

3. The Importance of Services1
1. The services sector of the economy is more
than twice the size of the manufacturing sector.
2. Services account for more than half of all
consumer expenditures.
3. Almost 80% of all new jobs created over the
past 10 years have been in the service sector.

4. Services Marketing Objectives2
Services Marketing Objectives =
Product Marketing Objectives
Offer services (or products) that are targeted to meet customer demand.
Present services (or products) to customers so as to maximize their demand.

5. Characteristics of Services3
Characteristics of Services that
Distinguish them from Products
The intangibility of services.
The inseparability of services from service providers
The difficulty of standardizing services.
The high degree of customer involvement in services.

6. Intangibility of Services
Much less tangible
than physical products
Difficult to differentiate
Brands .
Product
Consumers have more
definite impressions &
preferences about physical
products because of
their tangibility ≠

7. Inseparability of Services
Inseparably tied to
provider of service
Services produced do
not exist as entities in
and of themselves.
Product
An entity that
exists separately from
the manufacturer itself. ≠

8. Difficulty of Standardization
Service
More difficult to
standardize than products
Variability associated
with human element is
much more likely into the production
of services than into
the production of products
Product
High degree of
standardization
found in advanced
industrial societies ≠

9. Customer Involvement in Services
Consumers are more
involved in the
production of services than they are in the production of products.
Product
Individual consumers
do not play much of a
role in determining the
nature of products
manufactured for them. =
Consumer is involved only
in consumption of
product ≠

10. Implications of Service Characteristics for Channel Management
The relationship between the characteristics
of services & the management of marketing
channels includes:
Intangibility & Channel Management.
Inseparability & Channel Management.
Difficulty of Standardization & Channel Management.
Customer Involvement & Channel Management.

11. Intangibility & Channel Management4
Marketing channels provide
the most direct & effective basis
for making a service more tangible.
Why?
The customer is directly
experiences the service provided by the channel.

12. Inseparability & Channel Management5
The inseparability of services from the provider
means that the service provider does not have
the “safety net” available to the product manufacturer,
whereby the product itself can make up for
poor distribution.
Why?
All aspects of the marketing channel with
which the consumer comes into contact
are a reflection of the quality of the service.

13. Difficulty of Standardization & Channel Management
In the case of franchises, it is difficult for the channel
manager to get the franchisees to deliver a
steady level of service.
Why?
The human involvement—behavior— is
often involved in providing services.

14. Customer Involvement & Channel Management6
In a channel containing services such as 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.

15. Additional Perspectives8
Important considerations for developing
& operating marketing channels for
services
Shorter Channels.
Franchised Channels.
Customization of Services.
Channel Flows.

16. Shorter Channels The direct structure in a short channel
Eliminates the challenge of designing
a channel structure in terms of:
Length, & type of intermediaries at each level.
The selection of intermediaries.
The need to motivate intermediaries
to do an effective job of selling
the product.

17. Franchised Channels Using business format franchising can
give the service provider the potential
to gain 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.

18. Customization of Services
Many services provide for a high
degree
of customization.
For services requiring a high degree of
customization, small-scale channel consisting
of local independent service providers are
likely to continue to play a major role.

19. Channel Flows Many can be handled electronically,
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 than it
already is.

20. Discussion Question #1
Firms of all sizes have developed many kinds of social-networking tools, direct messaging programs, and text messaging systems to deal with customer service inquiries. But a recent survey by American Express Co. found that almost 90 percent of the respondents said they still want their inquiries handled by real customer service representatives in real time over the “old-fashioned” telephone.
Q: In light of all the new technology available to customers, why do you think they still prefer the old-fashioned telephone-based service channel? Discuss.

21. Discussion Question #3
OpenTable.com Inc., with more than 13,000 participating restaurants, is the market leader in online restaurant reservations service providers. Restaurants pay a monthly fee as well as $1.00 per head for reservations made by diners through OpenTable.com. But OpenTable also charges 25 cents per head even if diners make reservations through the restaurants’ own Web sites. By making reservations through OpenTable, diners also earn points that can be redeemed for discount coupons. But there may be a problem with this seemingly straightforward deal between OpenTable and restaurants using its services. Some diners claim that if they make their reservations through OpenTable, the restaurants react for the extra cost involved by seating diners at inferior table locations and by providing poor service. OpenTable denies this.
Q: Why would restaurants unhappy with the deal being offered to them by OpenTable take out their disappointment on diners? Discuss.

22. Discussion Question #5
Automated teller machines (ATMs) and, more recently, online banking, were thought to provide such a valuable service alternative that customers would need far fewer personal banking services with human tellers in traditional bank branches. In short, these new technologies were supposed to reduce extremely the number of bank tellers and branches. But things did not work out that way. Between 1995 and 2005 the number of bank branches grew from 50,000 to 70,000, an increase of 40 percent. The number of tellers to staff the branches also increased in roughly the same proportion during this decade. This happened despite the fact that the number of banking firms actually decreased dramatically from 10,000 to less than 8,000 during that same period.
Q: What do you think is going on here? Why do you think so many consumers still demand “old-fashioned” bank branches and tellers in spite of new technological alternatives? Discuss.