Chapter

13

Delivering Service Through Intermediaries and Electronic Channels

Service Intermediaries Direct or Company-owned Channels Common Issues Involving Intermediaries Key Intermediaries for Service Delivery Strategies for Effective Service Delivery Through Intermediaries

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 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.
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Objectives for Chapter 13: Delivering Service through Intermediaries and Electronic Channels

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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2003. The McGraw-Hill Companies. All Rights Reserved

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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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
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Table 13.1

Benefits and Challenges for Franchisers 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
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Challenges
Difficulty in maintaining and motivating franchisees Highly publicized disputes and conflict Inconsistent quality Control of customer relationship by intermediary

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Table 13.1 (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

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2003. The McGraw-Hill Companies. All Rights Reserved

Table 13.2

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

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Table 13.3

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
Customers are active, not passive Lack of control of electronic environment Price competition Inability to customize with highly standardized services Lack of consistency with customer involvement Requires changes in consumer behavior Security concerns Competition from widening geographies
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Strategies for Effective Service Delivery through Intermediaries

Control Strategies
Measurement Review

Empowerment Strategies
Help the intermediary develop customeroriented service processes Provide needed support systems Develop intermediaries to deliver service quality Change to a cooperative management structure
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Partnering Strategies
Alignment of goals Consultation and cooperation

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