Presentation on Distribution Channel.

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Services DistributionsServices Distributions ––
Distribution ChannelDistribution Channel
Presented By – Ankur KumarPresented By – Ankur Kumar

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Service DistributionService Distribution
Direct Delivery Of
Service.
Delivery of Service
through Intermediaries

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Direct Delivery of ServiceDirect Delivery of Service
• Services are generally intangible &
experimental in nature.
• It allows the service principal (service
producer) to deliver the service directly to
the customer.
• Example-IBM Global Services.

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Delivery of Service throughDelivery of Service through
IntermediariesIntermediaries
• Intermediaries often deliver services & perform
several imp. functions for service principals
(service producer).
• Services such as haircutting, dry cleaning, etc are
produced by the intermediaries (the franchisee)
using the process developed by the service
principal.
• The primary types of intermediaries
used in service delivery are
franchises, agents, brokers and
electronic channels.

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Direct or Company–OwnedDirect or Company–Owned
ChannelsChannels
• In this services are distributed directly
from provider to the customer.
• Some of these are local services–doctors,
dry cleaners and hairstylists (their area of
distribution are limited).
• Others are national chains with multiple outlets
but are considered direct channels because the
provider owns all the outlets.
• Example- Starbucks, the popular chain of coffee
shops in United States.

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Advantages & DisadvantagesAdvantages & Disadvantages
• The company has the complete control over the outlets and can
maintain consistency in service provision.
• Standards can be established & will be carried out as planned as
the company itself monitors & rewards proper execution of the
service.
• A final benefit of the company-owned channels is that the
company owns the customer relationship.

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Advantages & DisadvantagesAdvantages & Disadvantages
• The company must bear all the financial risk.
• When expanding, the firm must find all the capital.
• Partnering or joint venture is almost always
preferred to company-owned channels.

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Channel as PartnershipChannel as Partnership
CooperationCollaboration
Relationship
Marketing
Coordination

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FranchisingFranchising
FranchisingFranchising
Most common type of distribution
in services
Most common type of distribution
in services
Franchising is a relationship or partnering in
which the service provider– the franchiser-develops
& optimizes a service format that it licenses for
delivery by other parties- the franchisees
Franchising is a relationship or partnering in
which the service provider– the franchiser-develops
& optimizes a service format that it licenses for
delivery by other parties- the franchisees

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Agents And BrokersAgents And Brokers
• An Agent is an intermediary who acts on behalf of a
service principal (such as real estate agent) or a
customer and is authorized to make agreements between
the principal and the customer.
• A Broker is an intermediary who brings buyers and
sellers together while assisting in negotiation. Brokers
are paid by the party who hired them, rarely become
involved in financing or assuming risk and are not long-
term representatives of buyers or sellers.
• Examples- Real estate brokers,
Insurance brokers, Security brokers.
• An Agent is an intermediary who acts on behalf of a
service principal (such as real estate agent) or a
customer and is authorized to make agreements between
the principal and the customer.
• A Broker is an intermediary who brings buyers and
sellers together while assisting in negotiation. Brokers
are paid by the party who hired them, rarely become
involved in financing or assuming risk and are not long-
term representatives of buyers or sellers.
• Examples- Real estate brokers,
Insurance brokers, Security brokers.

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Electronic ChannelsElectronic Channels
• Electronic channels are the only service
distributors that do not require direct human
interaction.
• Examples- Telephone, Television channels,
Internet and Web.
• Electronic channels are the only service
distributors that do not require direct human
interaction.
• Examples- Telephone, Television channels,
Internet and Web.

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BenefitsBenefits
• Consistent Delivery for standardized services.
• Low Cost.
• Customer Convenience.
• Wide distribution.
• Customer choice and ability to customize
• Quick Customer feedback
• Consistent Delivery for standardized services.
• Low Cost.
• Customer Convenience.
• Wide distribution.
• Customer choice and ability to customize
• Quick Customer feedback

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ChallengesChallenges
• Price Competition.
• Changes in Consumer Behavior.
• Security Concerns.
• Refusal to deal.
• Exclusive Territory.
• Price Competition.
• Changes in Consumer Behavior.
• Security Concerns.
• Refusal to deal.
• Exclusive Territory.