Services Marketing

Chapter 13 : Place in Services

Significance of Location
Channel Decisions
Direct Distribution

Types of Intermediaries for Service Delivery

Franchising
Agents and Brokers
Electronic Channels

Strategies for Effective Service Delivery through Intermediaries

Control Strategies
Empowerment Strategies
Partnering Strategies

Chapter Summary

The fourth element of the marketing mix, namely, ‘place', involves various efforts made by the service organizations to make the services accessible and available to the customers. Service location plays an important role in service delivery. Further, it conveys the service quality provided by the service provider, and stamps an image of the service company in the customer's mind.

In case of direct distribution where service personnel are also involved in the service delivery, the behavior of service personnel towards with customers also creates an image of the service provider in the customer's mind. Service organizations aim to deliver services through direct distribution, where a service provider visits the customer or a customer visits a service provider. When service providers cannot deliver services through direct distribution, they opt for various forms of intermediaries.

Franchisees, agents and brokers, and electronic channels are the main types of distribution channels of a service provider. Franchising benefits the franchiser by providing him opportunities to expand the business at minimum cost, maintain consistent quality, and gain local knowledge and share financial risks. However, franchisers face some challenges in the form of having to strive to motivate their franchisees to deliver consistent quality, failing to maintain direct customer relationships, and having to manage conflicts with the franchisees.

A franchisee on the other hand is benefited by gaining established business processes and a brand name, and by the minimizing of risks involved in starting an independent business. However, franchisees also face challenges in the form of reduced profits and revenues, strict adherence to the franchiser's rules and standards, encroachment by other franchisees, termination of contracts, and unrealistic expectations on the part of the franchiser.

Agents deal with the service principal on a continuous basis, unlike brokers. Selling agents, purchasing agents, and facilitating agents are the three types of agents. A service principal benefits by choosing these intermediaries, because of reduced costs, having access to the special skills and knowledge of agents and brokers, having a large representation, an enhanced knowledge of local markets, and being able to serve according to the choice of customers.

The challenges include reduced control on pricing and in other marketing areas; and marketing of various service providers'offers by these agents and brokers. Electronic channels of distribution have gained popularity in the recent years, with the advent of the Internet and World Wide Web. Lower costs, increased customer convenience, extensive distribution, and the ability to customize services that offer quick feedback, are the benefits of the electronic channels.

The challenges include uncontrolled price competition, customer variability, and security challenges. Service principals can effectively manage their intermediaries by adopting any of the control, empowerment, or partnering strategies. Control strategies include exerting control over intermediaries through measurement and review. Empowerment strategies include empowering intermediaries to develop customer-oriented service processes, providing them with the required support systems, training them to deliver quality service and changing to a cooperative management structure. Partnering strategies include alliance of goals, and participation and cooperation.

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