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

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)

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

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

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

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

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

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

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