Page 236 - DMGT510_SERVICES_MARKETING

Unit 12: Distribution of Services

13. intermediary management strategy is used when the service principal Notes
and the intermediary both are on an equal footing in the power equation.
14. is a formal relationship between two or more parties to pursue a set of
agreed upon goals.

15. Virgin Mobile has teamed up with to distribute its mobile network services
in India.

12.3 Summary

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.
The intermediaries like retailers, wholesalers, dealers, stockists, agents, buyers, etc., are

important sources of information for the marketer as they are in touch with their respective
customers, other traders and competitors.
It is not necessary that firms in similar services should have the same distribution systems.

Nor is it necessary for service firms to choose only one distribution system.
There are four basic steps in designing an effective distribution system: Specifying the

role of distribution, selecting the type of channel, determining the intensity of distribution
and choosing specific intermediaries.
Basically firms resort to two types of distribution systems: direct and indirect. But many

firms also follow a multiple channel distribution.
The primary factor that affects the choice of channel for a service firm is the nature of the

market and the service consumer’s buying behaviour. The secondary factors that affect
channel choice are the service product, the intermediaries and the service firm itself.
Channel conflicts arise amongst channel members when one starts perceiving that the

other is a roadblock to his progress. Channel conflicts can also take place when some
members perceive differential benefits being given by the service firm to other members.

It is imperative for the service firm to control the intermediaries to attain their strategic

goals - be it in terms of image, profit, revenue, efficiency, effectiveness of performance,
etc. But the problem invariably lies in the perception of the role of the intermediary: as a
customer, partner or an extension of the service firm.
There are few options that can lead to an effective and growing distribution network:

empowering, controlling and empowering strategies. To grow in international and
domestic market, firms also resort to mergers and acquisitions, joint ventures and strategic
alliances.

12.4 Keywords

Direct Distribution: consists of only producer and end customer.
Horizontal Channel Conflict: it occurs between intermediaries at the same level in a marketing
channel, such as two or more retailers.
Indirect Distribution: producer, end consumer and at least one intermediary.
Joint Venture: entities formed by two or more individual entities for growth.

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