The document discusses objectives and strategies for distribution channels of services. It outlines 6 key objectives: increase availability and customer satisfaction, ensure promotion, obtain market information, increase cost-effectiveness, and maintain flexibility. It categorizes service transactions and discusses distribution strategies like extensive, selective, and exclusive distribution. The document also covers factors in selecting service locations, using direct distribution or intermediaries like franchising, agents, brokers, and electronic channels. It provides benefits and challenges of these distribution methods and offers strategies for effective channel management.
2. 12-2
Designing Distribution Channels: What are
the Objectives to be Accomplished?
• Objectives of distribution channels:
– Increase the availability of the good or service
to potential customers.
– Satisfy customer requirements by providing
high levels of service.
– Ensure promotional effort.
– Obtain timely and detailed market information.
– Increase cost- effectiveness.
– Maintain flexibility.
3. 12-3
Service Transactions
• Transactions in services can be broadly categorised into
three groups:
1. Customers Calling Service Outlets
Example: Educational institute, theatres, beauty care
centres, health clubs etc.
2. Service Firms Calling Customers
Example: Postal services, security services, personal
services etc.
3. Service Provider and Consumer Transact at Arms
Length
Example: Telecom services, cellular services, credit
cards services etc.
4. 12-4
Distribution Strategy Available to Service
Organization
• Extensive Distribution, suitable for mass
consumption, E.g. Transportation, electricity,
telecommunication and primary education
• Selective Distribution, suitable for service that
require to follow specified conditions and regulations
and special skills to the service provider, E.g. Higher
and technical education, tourism and courier
services
• Exclusive Distribution, used for services that
reflect the corporate brand image and exclusivity in
many dimensions of the service package, E.g.
Health care services, hospitality services, retail
networks etc.
5. 12-5
Service Location
• While selecting a location for service
outlets, the following factors are to be
considered:
Proximity
Image
Parking Facility
Convenience
Accessibility to other services
Competitive Advantage
6. 12-6
Service Providers
• Service firms may opt for direct distribution
or private channels or they may use both
• In case of service distribution through a
middleman, there are two marketers-one
is the ‘service principle’ and other is
‘service deliverer’
7. 12-7
Distribution of Services
Service Principal Service Consumer
Service Principal Agent/Brokers
Service
Consumer
Service
Principal
Agent/Bro
kers
Service
Franchiser
Service
Consumer
8. 12-8
Distribution of Services Conti..
Service
Principal
Agent/
Brokers
Service
Franchisers
Electronic
Channels
Service
Consumer
9. 12-9
Distributors for Service Delivery
1. Franchising
-Mostly used in educational institutions, film-processing
companies, hotels and restaurants
-Agreements and contracts are essential documents in
franchising
-Agreements and contracts include:
Nature of the service
The geographic territory
The percentage share to be paid to the franchiser on the revenue
of the franchisee
The time period of agreement
The instructions, interactions and conditions
The roles and responsibilities of franchisee
The rules and regulations of termination of agreement
10. 12-10
Distributors for Service Delivery
Conti..
• Benefits and challenges of franchising:
Business expansion and revenue gains
Consistency in outlets
Knowledge of local markets
Sharing financial risk and less investment burden
Challenges:
Problems in maintaining and motivating
franchises
Quality inconsistency may affect company image
Control of customer relationship by the
franchisee
11. 12-11
Distributors for Service Delivery
Conti..
2. Agent and Brokers
-Benefits of agents and brokers:
Low selling and distribution cost
Specialised skills and knowledge of the agents
and brokers
Wider representation in the market
Knowledge of local markets
Customer choice
Challenge:
-loss of control, in pricing and other aspects of
marketing when agents and brokers interfere and
prevail over the producers as well as consumers
12. 12-12
Distributors for Service Delivery
Conti..
2. Electronic Channels
-Benefits and challenges of electronic channels:
Quality control
Low cost
Customer convenience
Wide distribution customer choice
Challenges:
No control on electronic environment
Inability to customise
Customer involvement
13. 12-13
Working a Service Distribution System
• Donald H. Light has suggested seven points
that help in making the distribution system work
Align the system properly
Remember each part of the sales cycle
Balance retail and wholesale intermediaries
Make wholesale intermediaries effective
product managers
Keep intermediaries loyal
Pay the price to do multiple-marketing
correctly
Control the pace of change