SERVICES MARKETING CHANNEL REVISED 2014.pptx

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Part 4: Additional Perspectives on Marketing
Channels
CHAPTER 17
Marketing
Channels for
Services
1

Learning
Objectives ① The importance of services
② Services marketing objectives
③ Characteristics of services
④ Intangibility and channel management
⑤ Inseparability and channel management
⑥ Customer involvement and channel management
⑦ Perishability of services and channel
management
⑧ Additional perspectives
2

Objective
1 The Importance of Services
1. The services sector of the economy is more than
twice the size of the manufacturing sector.
2. Services account for more than half of all
consumer expenditures.
3. Almost 80% of all new jobs created over the past
10 years have been in the service sector.
3

Objective
2 Services Marketing Objectives
Services Marketing Objectives
=
Product Marketing Objectives
1. Offer services (or products) that are
targeted to meet customer demand
2. Present services (or products) to
customers so as to maximize their appeal.
4

Objective
3 Characteristics of Services
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
5

Intangibility of Services
Service
Much less tangible than
physical products
Difficult to differentiate
brands
Product
Consumers have more
definite impressions &
preferences about physical
products because of their
tangibility
6

Inseparability of Services
Service
Inextricably tied to
provider of service
Services produced do not
exist as entities in and of
themselves
Product
An entity that exists apart
from the manufacturer itself
7

Difficulty of Standardization
Service
More difficult to
standardize than products
Variability associated with
human element is much
more likely to creep into
the production of services
than into the production of
products
Product
High degree of
standardization found in
advanced industrial
societies
8

Customer Involvement in Services
Service
Consumers are more
involved in the production
of services than they are
in the production of
products.
Product
Individual consumers do
not play much of a role in
determining the nature of
products manufactured for
them.
=
Consumer is involved only
in consumption of product
9

Perishability of Services
Service
Services cannot be
produced in anticipation of
customer needs & then
stored in inventory until
purchased.
Product
Products can be inventoried
and stored— even the most
perishable products.
10

Implications of Service Characteristics
for Channel Management
The relationship between the characteristics of
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
11

Objective
4 Intangibility & Channel Management
12

Objective
5 Inseparability & Channel Management
13

Difficulty of Standardization & Channel
Management
14

Objective
6
Customer Involvement & Channel
Management
15

Objective
7
Perishability of Services & Channel
Management
16

Objective
8 Additional Perspectives
Important considerations for developing &
operating marketing channels for services
1. Shorter Channels
2. Franchised Channels
3. Customization of Services
4. Channel Flows
17

Shorter Channels
The direct structure in a short channel Eliminates the
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.
18

Franchised Channels
Using business format franchising can give the
service 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 foster standardization in
services offered by the individual franchised units
19

Customization 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.
20

Channel Flows
Flows that “carry” the service through the channel
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.
21

Discussion Question #1
Firms of all sizes have developed many kinds of social-
networking tools, instant messaging programs, and text
messaging systems to deal with customer service
inquiries. But a recent survey by American Express Co.
found that almost 90 percent of the respondents said
they still want their inquiries handled by real customer
service representatives in real time over the “old-
fashioned” telephone.
In light of all the new technology available to customers,
why do you think they still prefer the old-fashioned telephone-
based service channel? Discuss.
22

OpenTable.com Inc., with more than 13,000 participating
restaurants, is the market leader in online restaurant reservations
service providers. Restaurants pay a monthly fee as well as $1.00
per head for reservations made by diners through OpenTable.com.
But OpenTable also charges 25 cents per head even if diners make
reservations through the restaurants’ own Web sites. By making
reservations through OpenTable, diners also earn points that can be
redeemed for discount coupons. But there may be a problem with
this seemingly straightforward deal between OpenTable and
restaurants using its services. Some diners claim that if they make
their reservations through OpenTable, the restaurants retaliate for
the extra cost involved by seating diners at inferior table locations
and by providing poor service. OpenTable denies this.
Why would restaurants unhappy with the deal being offered to
them by OpenTable take out their frustration on diners? Discuss.
23

Automated teller machines (ATMs) and, more recently, online
banking, were thought to provide such a valuable service alternative
that customers would need far fewer personal banking services with
human tellers in traditional bank branches. In short, these new
technologies were supposed to reduce drastically the number of
bank tellers and branches. But things did not work out that way.
Between 1995 and 2005 the number of bank branches grew from
50,000 to 70,000, an increase of 40 percent. The number of tellers to
staff the branches also increased in roughly the same proportion
during this decade. This happened despite the fact that the number
of banking firms actually decreased dramatically from 10,000 to less
than 8,000 during that same period.
What do you think is going on here? Why do you think so many
consumers still demand “old-fashioned” bank branches and tellers in
spite of new technological alternatives? Discuss.
24

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