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McGraw-Hill 2000 The McGraw-Hill Companies

Chapter 13

DELIVERING SERVICE

THROUGH

INTERMEDIARIES AND

ELECTRONIC CHANNELS

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Objectives for Chapter 13:Objectives for Chapter 13:Delivering Service throughDelivering Service through

Intermediaries and ElectronicIntermediaries and Electronic

ChannelsChannels Identify the primary channels through which

services are delivered to end customers

Provide examples of each of the key serviceintermediaries

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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SM Service Provider ParticipantsService Provider Participants

service principal (originator)

creates the service concept

(like a manufacturer)

service deliverer (intermediary)

entity that interacts with the customer in theexecution of the service

(like a distributor/wholesaler)

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Key IssuesKey Issues

Involving IntermediariesInvolving Intermediaries

conflict over objectives and performance

conflict over costs and rewards

control of service quality

empowerment versus control

channel ambiguity

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SM Services IntermediariesServices Intermediaries

franchisees

e.g., Jiffy Lube, H&R Block, McDonalds

agents and brokers

e.g., travel agents, independent insurance agents

electronic channelse.g., ATMs, university video courses, TaxCut

software

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Exhibit 13-4Exhibit 13-4

Summary of Benefits and ChallengesSummary of Benefits and Challenges

for Franchisers of Servicefor Franchisers of Service

Leverages the business

format to gain

expansion and revenues

Maintains consistency

in outlets

Gains knowledge oflocal 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 underminethe company name

Control of customer

relationship by intermediary

Benefits Challenges

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Summary of Benefits andSummary of Benefits and

Challenges for Franchisees ofChallenges for Franchisees of

ServiceService

Obtaining an established

business format onwhich 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

Benefits Challenges

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Exhibit 13-6Exhibit 13-6

Summary of Benefits and ChallengesSummary of Benefits and Challengesin Distributing Services throughin Distributing Services through

Agents and BrokersAgents 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 otheraspects of marketing

Representation of

multiple service

principals

Benefits Challenges

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Exhibit 13-7Exhibit 13-7

Summary of Benefits and Challenges inSummary of Benefits and Challenges in

Electronic Distribution of ServicesElectronic Distribution of Services

Consistent delivery for

standardized services

Low cost

Customer convenience

Wide distribution

Customer choice andability to customize

Quick customer feedback

Customers are active, not passive

Lack of control of electronic

environment Price competition

Inability to customize withstandardized services

Lack of consistency withcustomer involvement

Security concerns

Competition from widening

geographies

Benefits Challenges

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SM Strategies for Effective ServiceStrategies for Effective Service

Delivery through IntermediariesDelivery through Intermediaries

Measurement

Review

Control Strategies

Alignment of goals

Consultation andcooperation

Help the intermediary

develop customer-basedservice processes

Provide needed support

Develop the

intermediary to deliverservice quality

Change to a cooperativemanagement structure

Empowerment Strategies

Partnering Strategies