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Prepared byPranita Raul Medhavi Mhatre

Objectives :
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

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)

Key Issues Involving Intermediaries

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

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




2000 The McGraw-Hill Companies

Agents and Brokers


Electronic channels


2000 The McGraw-Hill Companies

Summary of Benefits and Challenges for Franchisers of Service

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

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

Summary of Benefits and Challenges for Franchisees of Service

Obtaining an established business format on which to base a business Receiving national or regional brand marketing Minimizing the risks of starting a business

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

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

Reduced selling and distribution costs Intermediarys possession of special skills and knowledge Wide representation Knowledge of local markets Customer choice

Loss of control over pricing and other aspects of marketing Representation of multiple service principals

Summary of Benefits and Challenges in Electronic Distribution of Services

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


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

Strategies for Effective Service Delivery through Intermediaries

Control Strategies
Measurement Review

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

Partnering Strategies
Alignment of goals Consultation and cooperation