Marketing Channels Chapter 17: Marketing Channels for Services

Channel Flows

-Flows that "carry" the service through the channel are those of information, negotiation, & promotion -Many can be handled electronically, with the role of technology becoming even greater in the future than it already is.

The relationship between the characteristics of services & the management of marketing channels includes:

-Intangibility & Channel Management -Inseparability & Channel Management -Difficulty of Standardization & Channel Management -Customer Involvement & Channel Management -Perishability & Channel Management

Customization of Services

-Many services provide for a high degree of customization. -For services requiring a high degree of customization, small-scale channel consisting of local independent service providers are likely to continue to play a major role.

Characteristics of Services that Distinguish them from Products

-The intangibility of services -The inseparability of services from service providers -The difficulty of standardizing services -The high degree of customer involvement in services -The perishability of services

Additional Perspectives

1. Shorter Channels 2. Franchised Channels 3. Customization of Services 4. Channel Flows

Customer Involvement & Channel Management

In a channel containing services such as barbers, fitness clubs, and tax preparation, the channel design should facilitate customer involvement Why? -Such services generally require input from the customer in order to be performed successfully

Difficulty of Standardization & Channel Management

In the case of franchises, it is difficult for the channel manager to get the franchisees to deliver a consistent level of service Why? -The amount of human involvement— is often involved in providing services

Intangibility & Channel Management

Marketing channels provide the most direct & potent basis for making a service more tangible Why? -The customer is directly exposed to and experiences the service provided by the channel

Customer Involvement in Services

Service -Consumers are more involved in the production of services than they are in the production of products ≠ Product -Individual consumers do not play much of a role in determining the nature of products manufactured for them = Consumer is involved only in consumption of product

Inseparability of Services

Service -Inextricably tied to provider of service -Services produced do not exist as entities in and of themselves ≠ Product -An entity that exists apart from the manufacturer itself

Difficulty of Standardization

Service -More difficult to standardize than products -Variability associated with human element is much more likely to creep into the production of services than into the production of products ≠ Product -High degree of standardization found in advanced industrial societies

Intangibility of services

Service -Much less tangible than physical products -Difficult to differentiate brands ≠ Product -Consumers have more definite impressions & preferences about physical products because of their tangibility

Perishability of Services

Service -Services cannot be produced in anticipation of customer needs & then stored in inventory until purchased ≠ Product -Products can be inventoried and stored— even the most perishable products

Perishability & Channel Management

The channel must be designed so as to connect as efficiently as possible those providing the service with those desiring to obtain it Why? -Because of the high degree of perishability of unsold services, design should maximize the sale of service during its limited exposure to the target market

Shorter Channels

The direct structure in a short channel eliminates the challenge of designing a channel structure in terms of: -length, intensity, & type of intermediaries at each level -the selection of intermediaries -the need to motivate intermediaries to do an effective job of selling the product.

Inseparability & Channel Management

The inseparability of services from the provider means that the service provider does not have the "safety net" available to the product manufacturer, whereby the product itself can make up for poor distribution Why? -All aspects of the marketing channel with which the consumer comes into contact are thus a reflection of the quality of the service

Franchised Channels

Using business format franchising can give the service provider the potential to reap benefits: -the scale of economies of a large organization -the entrepreneurial drive & motivation associated with independently owned businesses -the degree of control necessary to foster standardization in services offered by the individual franchised units