Services Distributions –

Distribution Channel

Presented
Presented By
By –– Ankur
Ankur Kumar
Kumar

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 Service Distribution

Direct Delivery Of Delivery of Service

Service. through Intermediaries

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 Direct Delivery of Service

• Services are generally intangible &

experimental in nature.
• It allows the service principal (service
producer) to deliver the service directly to
the customer.
• Example-IBM Global Services.

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 Delivery of Service through
Intermediaries
• Intermediaries often deliver services & perform
several imp. functions for service principals
(service producer).
• Services such as haircutting, dry cleaning, etc are
produced by the intermediaries (the franchisee)
using the process developed by the service
principal.
• The primary types of intermediaries
used in service delivery are
franchises, agents, brokers and
electronic channels.
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 Direct or Company–Owned
Channels
• In this services are distributed directly
from provider to the customer.
• Some of these are local services–doctors,
dry cleaners and hairstylists (their area of
distribution are limited).
• Others are national chains with multiple outlets
but are considered direct channels because the
provider owns all the outlets.
• Example- Starbucks, the popular chain of coffee
shops in United States.
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 Advantages & Disadvantages

• The company has the complete control over the outlets and can
maintain consistency in service provision.
• Standards can be established & will be carried out as planned as
the company itself monitors & rewards proper execution of the
service.
• A final benefit of the company-owned channels is that the
company owns the customer relationship.
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 Advantages & Disadvantages

• The company must bear all the financial risk.

• When expanding, the firm must find all the capital.
• Partnering or joint venture is almost always
preferred to company-owned channels.

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 Channel as Partnership

CooperationCollaboration

Relationship
Coordination
Marketing

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 Franchising

Franchising
Franchising

Most
Most common
common type
type of
of distribution
distribution
in
in services
services

Franchising
Franchising isis aa relationship
relationship or
or partnering
partnering in in
which
which the
the service
service provider–
provider– thethe franchiser-develops
franchiser-develops
&& optimizes
optimizes aa service
service format
format that
that itit licenses
licenses for
for
delivery
delivery by
by other
other parties-
parties- the
the franchisees
franchisees
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 Agents And Brokers
•• An
An Agent
Agent isis anan intermediary
intermediary who who acts
acts on
on behalf
behalf ofof aa
service
service principal
principal (such(such asas real
real estate
estate agent)
agent) oror aa
customer
customer andand isis authorized
authorized to to make
make agreements
agreements between
between
the
theprincipal
principal and
and the
the customer.
customer.
•• AA Broker
Broker isis an an intermediary
intermediary who who brings
brings buyers
buyers andand
sellers
sellers together
together while
while assisting
assisting in
in negotiation.
negotiation. Brokers
Brokers
are
are paid
paid byby the
the party
party who
who hired
hired them,
them, rarely
rarely become
become
involved
involved inin financing
financing or or assuming
assuming risk
risk and
and are
are not
not long-
long-
term
term representatives
representatives of of buyers
buyers oror sellers.
sellers.
•• Examples-
Examples- RealReal estate
estate brokers,
brokers,
Insurance
Insurancebrokers,
brokers,Security
Security brokers.
brokers.
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 Electronic Channels

• Electronic channels are the only service

• distributors
Electronic channels
that do notare the direct
require only service
human
distributors
interaction. that do not require direct human
interaction.
• Examples- Telephone, Television channels,
• Examples- Telephone, Television channels,
Internet and Web.
Internet and Web.

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 Benefits

• Consistent Delivery for standardized services.

• Consistent Delivery for standardized services.
• Low Cost.
• Low Cost.
• Customer Convenience.
• Customer Convenience.
• Wide distribution.
• Wide distribution.
• Customer choice and ability to customize
• Customer choice and ability to customize
• Quick Customer feedback
• Quick Customer feedback

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 Challenges

• Price Competition.
• Price Competition.
• Changes in Consumer Behavior.
• Changes in Consumer Behavior.
• Security Concerns.
• Security Concerns.
• Refusal to deal.
• Refusal to deal.
• Exclusive Territory.
• Exclusive Territory.

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