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Chapter 13

DELIVERING SERVICE THROUGH INTERMEDIARIES AND ELECTRONIC CHANNELS

McGraw-Hill
McGraw-Hill

2000 The McGraw-Hill Companies

2000 The McGraw-Hill Companies

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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 2000 The McGraw-Hill Companies

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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)

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2000 The McGraw-Hill Companies

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Key Issues Involving Intermediaries

conflict over objectives and performance conflict over costs and rewards control of service quality empowerment versus control channel ambiguity

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2000 The McGraw-Hill Companies

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Services Intermediaries

franchisees e.g., Jiffy Lube, H&R Block, McDonalds agents and brokers e.g., travel agents, independent insurance agents electronic channels e.g., ATMs, university video courses, TaxCut software
McGraw-Hill 2000 The McGraw-Hill Companies

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Exhibit 13-4

Summary of Benefits and Challenges for Franchisers of Service

Benefits Challenges
Difficulty in maintaining and motivating franchisees Highly publicized disputes and conflict Possibility of inconsistent quality that can undermine the company name Control of customer relationship by intermediary
2000 The McGraw-Hill Companies

Leverages the business format to gain expansion and revenues Maintains consistency in outlets Gains knowledge of local markets Shares financial risk and frees up capital
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Summary of Benefits and Challenges for Franchisees of Service

Benefits Challenges

Obtaining an established business format on which to base a business Receiving national or regional brand marketing Minimizing the risks of starting a business
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Disappointing profits and revenues Encroachment and franchise saturation High failure rates and unfair terminations Lack of perceived control High fees and rigid contracts Unrealistic expectations
2000 The McGraw-Hill Companies

Exhibit 13-6

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Summary of Benefits and Challenges in Distributing Services through Agents and Brokers

Benefits
Reduced selling and distribution costs Intermediarys possession of special skills and knowledge Wide representation Knowledge of local markets Customer choice
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Challenges
Loss of control over pricing and other aspects of marketing Representation of multiple service principals

2000 The McGraw-Hill Companies

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Exhibit 13-7

Summary of Benefits and Challenges in Electronic Distribution of Services Benefits

Customers are active, not passive Lack of control of electronic environment Price competition Inability to customize with standardized services Lack of consistency with customer involvement Security concerns Competition from widening geographies
2000 The McGraw-Hill Companies

Consistent delivery for standardized services Low cost Customer convenience Wide distribution Customer choice and ability to customize Quick customer feedback
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Challenges

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Strategies for Effective Service Delivery through Intermediaries

Empowerment Strategies
Help the intermediary develop customer-based service processes Provide needed support Develop the intermediary to deliver service quality Change to a cooperative management structure
2000 The McGraw-Hill Companies

Control Strategies
Measurement Review

Partnering Strategies
Alignment of goals Consultation and cooperation

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