Chapter 17Chapter 17

Marketing Channels for Services

The Importance of The Importance of

ServicesServices

1177

Objective 1:

The services sector of the economy is more than twice the size of the manufacturing sector.

Services account for more than half of allconsumer expenditures.

Almost 80% of all new jobs created over the past 10 years have been in the service sector.

1717Services Marketing ObjectivesServices Marketing Objectives

Objective 2:

Services Marketing Objectives

= Product Marketing Objectives

1. Offer services (or products) that are targeted to meet customer demand

2. Present services (or products) to customersso as to maximize their appeal.

1717Characteristics of ServicesCharacteristics of Services

Objective 3:

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

1717Intangibility of ServicesIntangibility of Services

Product

• Consumers have more definite impressions &

preferences about physicalproducts because of

their tangibility

Service

• Much less tangiblethan physical products

• Difficult to differentiatebrands

≠

1717Inseparability of ServicesInseparability of Services

Service

• Inextricably tied toprovider of service

• Services produced donot exist as entities in

and of themselves

Product

• An entity thatexists apart from

the manufacturer itself≠

1717Difficulty of StandardizationDifficulty of Standardization

Service

• More difficult to standardize than products

• Variability associatedwith human element is

much more likely tocreep into the production

of services than into the production of products

Product

• High degree ofstandardization

found in advancedindustrial societies

≠

Customer Involvement in Customer Involvement in ServicesServices

1717

Service

• Consumers are moreinvolved in the

production of services than they are in the

production of products.

Product

• Individual consumersdo not play much of arole in determining the

nature of products manufactured for them.

= Consumer is involved only

in consumption ofproduct

≠

1717Perishability of ServicesPerishability of Services

≠

Service

• Services cannot beproduced in anticipationof customer needs &

then stored in inventoryuntil purchased.

Product

• Products can be inventoried and stored—

even the most perishable products.

1717Implications of Service Implications of Service CharacteristicsCharacteristics

for Channel Managementfor Channel Management

The relationship between the characteristicsof services & the management of marketing

channels includes:

• Intangibility & Channel Management• Inseparability & Channel Management• Difficulty of Standardization & Channel Management• Customer Involvement & Channel Management• Perishability of Services & Channel Management

1717Intangibility & Intangibility & Channel ManagementChannel Management

Objective 4:

Marketing channels provide the most direct & potent basis

for making a service more tangible.

The customer is directly exposed to and experiences the service provided by the channel.

Why?

1717Inseparability & Inseparability & Channel ManagementChannel Management

Objective 5:

The inseparability of services from the providermeans 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.

All aspects of the marketing channel with which the consumer comes into contact

are thus a reflection of the quality of the service.

Why?

1616Difficulty of StandardizationDifficulty of Standardization& Channel Management& Channel Management

In the case of franchises, it is difficult for the channelmanager to get the franchisees to deliver a

consistent level of service.

Why?

The amount of human involvement—behavior— isoften involved in providing services.

1717Customer Involvement & Customer Involvement & Channel ManagementChannel Management

Objective 6:

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 thecustomer in order to be performed successfully.

Perishability of ServicesPerishability of Services& Channel Management& Channel Management

1177

Objective 7:

The channel must be designed so as to connectas 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.

1177Additional PerspectivesAdditional Perspectives

Objective 8:

1. Shorter Channels2. Franchised Channels

3. Customization of Services4. Channel Flows

Important considerations for developing &operating marketing channels for services

Shorter ChannelsShorter Channels 1177

The direct structure in a short channel eliminatesthe 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.

Franchised ChannelsFranchised Channels 1177

Using business format franchising can give theservice 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 fosterstandardization in services offered by the individual franchised units

1717Customization of ServicesCustomization 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.

1717Channel FlowsChannel Flows

• Flows that “carry” the service through thechannel 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.