Distribution of Services

1. DISTRIBUTION OF SERVICES
Place Decision: Delivering the services through intermediary
Dr. Amitabh Mishra, giBS Rohini 1

2. • Distribution is the process of making a product or
service available for use or consumption by a
consumer or business user, using direct means, or
using indirect means with intermediaries.
• The marketers are involved in delivering the services
through intermediary.
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3. • Distribution of products takes place by means of
channels.
“A Channel of Distribution comprises a set of institutions
(intermediaries) which perform all of the activities utilised
to move a product and its title from production to
consumption”
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Producers Middlemen Final Consumer Or
Business Users

4. Ways of Service Distribution
• The services can be delivered via two ways-
1. Through Originator or Service Principal.
2. Through Intermediary or Service Deliverer.
• Service Principal is the entity that creates the service concept
(in physical goods the manufacturer).
• Service Deliverer is the entity that interacts with the
customers in actual execution (in physical goods the whole
sellers, distributers).
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5. Channel Flows
• Service Marketing Channels perform following flows
in –
– Title & Negotiation flow
– Payment flow
– Information and Promotion flow
– Product Flow
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6. Options for Service Delivery
• There are six possible options for service distribution.
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7. FUNCTIONS OF INTERMEDIARY
Role and
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8. Functions of Intermediary
• Intermediary co-produce the services, fulfilling service
principal promises to customers.
• Intermediary use the process developed by principal hence called co-
producer.
• Intermediary make services locally available, providing time &
place convenience for customers.
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9. • Intermediary share financial risks.
• Intermediary promote the services on the behalf of
company.
• Intermediary gather the information about the
consumers, competitors etc.
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10. • Many Intermediary represent multiple service principals
(travel agent & insurance agents), provide a retailing
function to the customers, gathering together in one place a
variety of choices.
• In contrast to channels for products, channels for services
are almost direct, if not to the customers then to the
intermediary who sell the services to the customers.
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11. • Because services are intangible & perishable, inventories can
not exist, hence warehousing is impossible.
• Many of the primary function of distribution channel, as
inventorying, securing and taking title, have no meaning in
services.
• The focus in service distribution is on identifying the ways to
bring the customer & principal together.
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12. PROBLEMS WITH THE
INTERMEDIARY
Limitations
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13. PROBLEMS WITH THE INTERMEDIARY
• Key problems with the intermediary include-
1. Channel conflict over objectives and performance.
– Channel conflict can occur between the service provider & service
intermediary, among intermediaries in a given area, & between
different type of channels used by provider. Conflict may centers on
the parties having different goals, competing roles & rights etc.
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14. 2. Channel conflict over costs and rewards
– monetary arrangement between those who create the services &the those
who deliver is of pivotal issue of connection.
3. Difficulty in controlling quality and consistency across the
outlets
– when shoddy performance occurs, even at single outlet, the service
principal suffers because entire brand & reputation are jeopardized.
4. Tension between empowerment and control
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15. FRANCHISING
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16. FRANCHISING
• Franchises are service outlets licensed by a principal to
deliver a unique service concept it has created or
popularized.
• Service principal take fees or royalty in return.
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17. AGENTS & BROKERS
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18. AGENTS & BROKERS
• An agent is an intermediary who on acts on behalf of service
principal and is authorized to make an agreement between
customers and principle.
• Travel agents, insurance agents
• Brokers bring buyers and sellers together while assisting in
negotiation. They are paid by the party who hire them.
• Real estate brokers, Securities brokers
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19. • Agents & brokers do not take title to service
but instead deliver the rights to them.
• They have legal authority to market the
service as well as to perform other marketing
on behalf of producers.
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20. • BENEFITS:-
• Reduced selling & distribution cost
• Possession of special skill & knowledge
• Wide representation
• Knowledge of local markets
• Customer choice
• CHALLENGES:-
• Loss of control
• Representation of multiple service principal
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