Service Delivery Channels

1
Service Delivery Channels
2
Alternative Delivery Channels

• Services offered to customer directly
• e.g. extended WKU campus
• Services offered through an intermediary
• e.g. OTCC courses
• principal vs. agent
• Electronic channels
• e.g. distance learning online
• Direct vs. intermediaries

3
Direct vs. Intermediaries

• Inseparability
• Quality preservation
• Alignment of goals
• Making service available locally at lowest cost
  to provider

4
Potential Costs

• Direct service
• Start up in new area (i.e., building, supplies,
  etc.)
• Building customer base
• Intermediaries
• Training
• Controls of their behavior (quality issues)

5
Direct/Company Owned Channels

• Local services
• e.g. Doctors, hairstylists, etc.
• National chains
• e.g. Starbucks,
• Benefits
• Complete control over outlets
• Consistency in service provided
• Flexibility in expansion/contraction
• Ownership of customer relationships

6
Disadvantages of Corporate Owned Channels

• Responsible for all capital in expansion
• Low expertise in local markets
• Responsible for all risks
• Responsible for all operating costs, advertising,
  customer relations, etc.

7
Functions of Intermediaries

• Fulfill principals obligation to customers
• Time and place convenience for customers
• Sometimes carry a variety of brands
• Strong customer relationships
• Knowledge of the culture

8
Issues With Intermediaries

• Conflicts over objectives and performance
• Differing goals, competing roles and rights,
  views of channel performance
• Conflicts over costs and rewards
• e.g. Airline caps on agent fees in 1980s
• Controlling quality and consistency across
  outlets
• Jeopardizes brand and reputation
• Empowerment vs. control
• Role conflict

9
Key Types of Intermediaries

• Franchising
• Agents and brokers
• Intermediaries in the form of electronic channels

10
Franchising

• Most common form of intermediary
• Examples McD, HR Block, Red Roof Inn
• Franchisor advantages/disadvantages
• Franchisee advantages/disadvantages

11
Agents and Brokers

• Agent works on behalf of the principal
• Selling agents
• Brokers
• Benefits and challenges of using agents and
  brokers

12
Electronic Channels

• Can be direct or through intermediaries
• Benefits and challenges of using electronic
  intermediaries

13
Strategies for Effective Service Delivery Through
Intermediaries

• Control strategies
• Measurement review
• Empowerment strategies
• Support structure
• Partnering strategies
• Goal alignment consultation and cooperation