14 chapter delivering service through intermediaries and electronic channels service distribution ...
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14ChapterChapter
Delivering Service Through Intermediaries and Electronic ChannelsDelivering Service Through Intermediaries and Electronic Channels
Service Distribution Direct or Company-Owned Channels Franchising Agents and Brokers Electronic Channels Common Issues Involving Intermediaries Strategies for Effective Service Delivery
Through Intermediaries
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Service Provider ParticipantsService 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)
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Services IntermediariesServices 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
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Table 14.1
Benefits and Challenges forFranchisers of Service
Table 14.1
Benefits and Challenges forFranchisers of Service
Benefits: 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
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Table 14.1 (Continued)
Benefits and Challenges forFranchisees of Service
Table 14.1 (Continued)
Benefits and Challenges forFranchisees 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
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Table 14.2
Benefits and Challenges in Distributing Services through Agents and Brokers
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
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Table 14.3
Benefits and Challenges in Electronic Distribution of Services
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
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Common Issues Involving Intermediaries
Common Issues Involving Intermediaries
conflict over objectives and performance
difficulty controlling quality and consistency across outlets
tension between empowerment and control
channel ambiguity
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Strategies for Effective Service Delivery Through Intermediaries
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