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.

1. Distribution
Channel
Unit-2

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

14. 12-14
Strategies for Channel Management
o Control Strategies
o Empowerment Strategies
o Partnering Strategies