Page 220 - DMGT510_SERVICES_MARKETING

Unit 12: Distribution of Services

In this unit, you will learn about the role service intermediaries, how they are chosen, and a Notes
service firm can grow and internationalise the distribution of their services.

12.1 Delivering Services through Intermediaries

While for goods business, distribution’s role in the marketing mix is to get the product to its
target market, there are other, larger implications:

Arrange for its final sale;

Transfer title (ownership) to the goods from the producer to the consumer;

Promote the product;

Store and stock the product (which further implies higher risks of thefts, breakages, losses,

etc.);
Transportation of the goods to its destination (which implies shouldering the financial

and other risks).
While a producer can handle these functions, they are so complex and different from his core
areas, that he employs the services of a series of middlemen or intermediaries. These are specialists
in their respective areas, like a warehouse service provider, dealer, retailer, etc.

!
Caution In the case of services, as mentioned earlier, the offer has to be produced
and consumed at the same time in the place of offer (outlet).
The middlemen are classified on the basis of their taking title or ownership of the offers being
distributed:
Those who take title to the goods and services are called merchant middlemen, like

wholesalers and retailers.
The middlemen who do not take title to the offer, because of the nature of the offer or their

business, are known as agent middlemen. They earn a commission or a fee for the services
rendered and facilitates the transfer of ownership to the consumer.

Example: These would be real estate brokers, agents of manufacturers like arms (Bofors)
and expensive Computerized Numerically Controlled (CNC) machines, travel agents, etc.
Services invariably have agent middlemen.

12.1.1 Why should Service Firms use Intermediaries?

Service firms use intermediaries because of the following reasons:
Specialisations: Manufacturing of goods is vastly different from managing a distribution

network. The two are very much specialized operations in their own way. While the
former requires the optimum usage of material and human resources to produce goods,
the latter’s main concern is to move the finished goods to the desired destination and
customers in the shortest possible time in the most cost-effective way. With the use of
intermediaries, the manufacturer could concentrate on his core area.

But in the case of services, since the offer was produced and consumed in one place, and it
was mostly intangible, the question of distribution problems was not very acute; the
service transaction itself and its quality was the main issue. In the production and

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