Success Strategies in Channel Management

1. Success Strategies in Channel Management Channels for Services

2. Channels for Services Direct Delivery of Value Delivery of Value via Intermediaries Independent Service Channels Innovations in Methods of Distributing Services

3. All organisations - whether producing tangibles or intangibles - are concerned with place decisions. In general, this element of the marketing mix has been neglected as far as services are concerned for most texts deal with place decisions in the context of the movement of physical items. Their transfer to the area of services marketing, without clarification, can cause conceptual problems. The usual generalisation made about service distribution is that direct sale is the most common method and that channels are short. It would be incorrect to suggest that direct sale is the only method of distribution in services markets. Intermediaries are common. Some of these intermediaries assume ownership risks; some perform roles that change ownership (e.g. purchasing); some perform roles that enable physical movement (e.g. transporting). Channels for Services

4. Where direct sale is selected through choice then the service marketer does so presumably to derive specific marketing advantages such as: maintaining better 'control' over how the service is provided or performed. obtaining distinguishable service product differentiation in what are otherwise standard and uniform markets through real personal service. (c) obtaining direct feedback from customers on their existing needs, how those needs are changing and their perceptions of competitors' market offerings. Sometimes direct sale means limited geographic market coverage; particularly where a large personal element of service is involved and technology cannot be used, Many personal and business services are characterised by the direct channel between service organisation and customer. Direct Delivery of Value

5. The most frequently used channel by service organisations however is that which operates through intermediaries. Some of the more novel channel forms for distributing service products have emerged because service organisations have developed or taken advantage of new value offers to overcome the problem of inseparability. The bank credit card is an example of a physical representation of a service offered: The credit card is a tangible representation of the service of credit though it is not the service itself. As such it has enabled banks to overcome the inseparability problem and use the retail merchant as an intermediary in the distribution of credit. Delivery of Value via Intermediaries

6. Service Intermediaries • Many forms of intermediary are now common in services markets. They include: • (a) Agents. • (b) Dealers. • Institutional middlemen. • (d) Wholesalers. • (e) Retailers.

7. Independent Service Channels • Independent channels emerge to fulfil a specific need and are not necessarily associated with another product or service. • Thus a consulting company or a travel agent not linked with any other company and operated separately from other organisations are examples of independent service organisations. • Independent service organisations may of course make use of other intermediaries (e.g. as in film distribution).

8. Combined Service Channels • Combined service channels on the other hand emerge when the service is integrated with a channel that distributes a product. Combined service channels can arise through: • (a) Combination by Acquisition • (b Combination through Concessions • (c) Combination through a Tie in Agreement

9. Innovations in Methods of Distributing Services • There have been considerable innovations, in recent years, in methods of distributing services. This contrasts with views expressed some years ago that service marketers had lagged in using innovative marketing practices. Four examples are included here to illustrate the nature of some of these innovations: • (a) the growth of rental services; • (b) the growth of franchising; • (c) the growth of service integration; • (d) quasi-retailing.

10. An interesting phenomenon of the service economies is the growth of rental services. That is many individuals and organisations have moved and are moving away from the ownership of goods and services to the renting or leasing. Franchising Franchising is a growing phenomenon in those service industries where standardisation of the service is possible. At a general level: 'a franchise is where one person grants rights to another to exploit an intellectual property right involving perhaps trade names, products, trade marks, equipment distribution'. The Growth of Rental Services

11. The Growth of Service Integration • The growth of franchising outlined in the previous section is a manifestation of another phenomenon in the service sector - integration. • Integrated corporate systems and integrated contractual systems are developing and beginning to dominate in certain fields. In travel and tourism the service systems link two or more service industries like airlines, hotels, motels, car rental, tour buses, restaurants, seat booking agencies, leisure and recreation sites, ski resorts, shipping lines and so on.

12. One of the most important intermediaries for services is the retailer. A feature of the development of the service economy in recent years has been the emergence of 'quasi-retail' outlets. Quasi-retail outlets sell services rather than goods. They include: Hairdressers; Estate agents; Amusement arcades; Undertakers; Building societies; Launderettes; Travel agents; Employment agencies; Ticket agents: Car hire agencies; Hotels; Banks; Driving schools Restaurants. Quasi-retailing