1. Delivering Service Through Intermediaries and Electronic Channels
Chapter
Delivering Service Through Intermediaries and Electronic Channels 14
Service Distribution
Direct or Company-Owned Channels
Franchising
Agents and Brokers
Electronic Channels
Common Issues Involving Intermediaries
Strategies for Effective Service Delivery Through Intermediaries

2. 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)

3. Services Intermediaries
Franchisees
service outlets licensed by a principal to deliver a unique service concept it has created
e.g., Jiffy Lube, Blockbuster, McDonald’s
Agents and Brokers
representatives who distribute and sell the services of one or more service suppliers
e.g., travel agents, independent insurance agents
Electronic Channels
all forms of service provision through electronic means
e.g., ATMs, university video courses, TaxCut software

4. Table 14.1 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
Challenges:
Difficulty in maintaining and motivating franchisees
Highly publicized disputes and conflict
Inconsistent quality
Control of customer relationship by intermediary

5. Disappointing profits and revenues
Table 14.1 (Continued) Benefits and Challenges for Franchisees of Service
Benefits:
An established business format
National or regional brand marketing
Minimized risk of starting a business
Challenges:
Encroachment
Disappointing profits and revenues
Lack of perceived control over operations
High fees

6. Reduced selling and distribution costs
Table 14.2 Benefits and Challenges in Distributing Services through Agents and Brokers
Benefits:
Reduced selling and distribution costs
Intermediary’s possession of special skills and knowledge
Wide representation
Knowledge of local markets
Customer choice
Challenges:
Loss of control over pricing
Representation of multiple service principals

7. Consistent delivery for standardized services Low cost
Table 14.3 Benefits and Challenges in Electronic Distribution of Services
Benefits:
Consistent delivery for standardized services
Low cost
Customer convenience
Wide distribution
Customer choice and ability to customize
Quick customer feedback
Challenges:
Price competition
Inability to customize with highly standardized services
Lack of consistency due to customer involvement
Changes in consumer behavior
Security concerns
Competition from widening geographies

8. Common Issues Involving Intermediaries
conflict over objectives and performance
difficulty controlling quality and consistency across outlets
tension between empowerment and control
channel ambiguity

9. Strategies for Effective Service Delivery Through Intermediaries
Control Strategies:
Measurement
Review
Partnering Strategies:
Alignment of goals
Consultation and cooperation
Empowerment 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