Page 228 - DMGT510_SERVICES_MARKETING
P. 228
Unit 12: Distribution of Services
Size of the service contract: If the size of the service order is large, then the distribution is most Notes
of the time direct; if the service order size is small, and then intermediaries are used.
Example: Radhakrishna Hospitality Services is in the catering and food supply business
and has a turnover of over ` 600 crore; it prefers to use its own sales personnel to service large
business orders.
Service Offer Considerations
The choice of channel is greatly affected by whether the offer is a good or a service. Thus the
characteristics of a service product, like intangibility, perishibility, inseparability, etc. are major
influencers.
Perishability and Intangibility: Lack of storage makes middlemen redundant in service
distribution. There is no need for holding inventory, breaking bulk or giving varieties and
assortments. Those services which have a higher degree of tangibility in the product-service
continuum will require the services of intermediaries (for example, retailing in general, travel,
restaurants etc.); those which have the minimum tangible components will be able to achieve
their organisational goals through direct marketing (for example, in counselling, psychiatry,
medical and legal services, etc.)
Concept Product: If the offer is highly technical and conceptual, making it very difficult for the
consumer to envision the end product, benefit and usage, then personal selling and very persuasive
marketing would be required. Services like insurance, time-sharing resorts etc. require concept
selling and therefore the use of own sales personnel. It would require higher involvement from
the service firm in servicing the customer before and after the sales.
Unit Value of the Service: If the service value is small, like collection of bills for cell phone
services, then the distribution is done through intermediaries. If the unit value of the service is
large, like leased line connectivity for the Internet through ISPs like Satyam, or managing the
complete travel business, often the firm does direct distribution.
Intermediary Considerations
The channels chosen by the service firm are greatly influenced by the quality, category and
availability of intermediaries.
Availability of Intermediaries: There may not be any intermediaries doing business in the
service firms chosen areas or even if they exist may not be available to the service firm as they
may be associated with its competitors. In either case, the onus of developing the intermediary
or going for an alternative channel lies on the service provider.
Services Provided by the Intermediaries: An intermediary is chosen for his capability of providing
those services which the service firm would normally not be in a position to provide. For
international service firms, this would include contacts, market penetration, legal and other
services and storage. Services which are on the tangibility continuum, like restaurants
(McDonalds, Pizza Hut, KFC etc.), souvenir shops, retailers, etc. as well as tele-info-
communication service providers like cell phone operators and cable channel television will
require intermediaries. It will not be feasible for the service firms to involve themselves in the
services that the intermediaries can provide.
Attitudes of Intermediaries towards the Service Provider: The intermediaries might have
negative or antagonistic attitudes towards the policies of the service provider and may not be
willing to be associated with them. In that case, the service firm might have to look at alternative
LOVELY PROFESSIONAL UNIVERSITY 223
