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SM
Chapter 13

DELIVERING SERVICE
THROUGH
INTERMEDIARIES AND
ELECTRONIC CHANNELS

McGraw-Hill © 2000 The McGraw-Hill Companies

McGraw-Hill © 2000 The McGraw-Hill Companies
 Objectives for Chapter 13: 2
Delivering Service through
SM 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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SM 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)

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM Key Issues
Involving Intermediaries
• conflict over objectives and performance

• conflict over costs and rewards

• control of service quality

• empowerment versus control

• channel ambiguity

McGraw-Hill © 2000 The McGraw-Hill Companies

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SM Services Intermediaries

• franchisees
– e.g., Jiffy Lube, H&R Block, McDonald’s

• 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
SM Summary of Benefits and Challenges
for Franchisers of Service
Benefits Challenges
• Leverages the business
• Difficulty in maintaining and
format to gain
motivating franchisees
expansion and revenues
• Highly publicized disputes
• Maintains consistency in
and conflict
outlets
• Possibility of inconsistent
• Gains knowledge of
quality that can undermine
local markets
the company name
• Shares financial risk and
• Control of customer
frees up capital
relationship by intermediary
McGraw-Hill © 2000 The McGraw-Hill Companies
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Summary of Benefits and
SM Challenges for Franchisees of
Service

Benefits Challenges
• Obtaining an established • Disappointing profits and
business format on revenues
which to base a business • Encroachment and franchise
• Receiving national or saturation
regional brand • High failure rates and unfair
marketing terminations
• Minimizing the risks of • Lack of perceived control
starting a business • High fees and rigid contracts
• Unrealistic expectations
McGraw-Hill © 2000 The McGraw-Hill Companies
 Exhibit 13-6 8
Summary of Benefits and Challenges
SM in Distributing Services through
Agents and Brokers
Benefits Challenges
• Reduced selling and • Loss of control over
distribution costs pricing and other
• Intermediary’s aspects of marketing
possession of special • Representation of
skills and knowledge multiple service
• Wide representation principals
• Knowledge of local
markets
• Customer choice
McGraw-Hill © 2000 The McGraw-Hill Companies
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Exhibit 13-7
SM Summary of 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
McGraw-Hill
Challenges
• 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
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SM Strategies for Effective Service

Delivery through Intermediaries

Control Strategies Empowerment Strategies

• Measurement • Help the intermediary
• Review develop customer-based
service processes
Partnering Strategies • Provide needed support
• Alignment of goals • Develop the
intermediary to deliver
• Consultation and
service quality
cooperation
• Change to a cooperative
management structure
McGraw-Hill © 2000 The McGraw-Hill Companies