17-1
Chapter 17
MARKETING CHANNELS FOR SERVICES
Teaching Notes
This chapter deals with the marketing channel for services. Instructors should spend
Chapter Objectives
This chapter examines the approach and the emphasis used in the marketing of services
and the channel implications thereof. The service sector is now more than twice the size
of the manufacturing sector in the United States.
Along with the five generally recognized distinguishing characteristics of services, the
channel manager should also be familiar with: shorter channels, widespread use of
franchising, relatively high degree of customizations, and the lack of product flow.
Learning Objectives
1) Recognize the importance of services as a major and rapidly growing sector of the
U.S. economy.
Marketing Channels for Services
17-2
Chapter Topics
1) Special Characteristics of Services
Chapter Outline
Special Characteristics of Services
Five characteristics distinguishing services from products have been emphasized in the
literature of services marketing. These are (1) the intangibility of services, (2) the
A) Intangibility of Services
Services are much less tangible than physical products. Style, visible features, and
B) Inseparability of Services
Most services are inextricably tied to the providers of the service, and the services
C) Difficulty of Standardization
A primary hallmark of products manufactured by an advanced industrial society is the
Marketing Channels 8e
17-3
D) Customer Involvement in Services
With products, essentially the consumer is involved only with the consumption of the
E) Perishability of Services
Services cannot be produced ahead of or in anticipation of customer needs and then
stored in inventory until purchased. The salvage value of an unsold service is zero.
Implications of Service Characteristics for Channel Management
Table 17.1 lists a number of implications for services offered at the retail level.
Our purpose is not to be exhaustive but rather to provide some illustrative examples to
foster a measure of sensitivity to the potential relationships between the characteristics of
services and the management of marketing channels.
A) Intangibility and Channel Management
How a service is actually offered to customers – that is, the marketing channels through
B) Inseparability and Channel Management
Because services do not exist apart from the provider of the service, the service and the
channel providing it are virtually inseparable.
Marketing Channels for Services
17-4
C) Difficulty of Standardization and Channel Management
Any provider of services that achieves a level of service capable of satisfying its target
customers would like to be able to duplicate that performance throughout all of its units
D) Customer Involvement and Channel Management
A channel designed to provide services requiring customer input should attempt to
facilitate customer involvement. The channel manager designing a channel to deliver a
particular service should not overlook the customer’s desire for involvement.
E) Perishability of Services and Channel Management
The main implication of the perishability of services for channel management is
Additional Perspectives on Marketing Channels for Services
Some additional characteristics of services marketing are important in developing and
operating marketing channels for services.
A) Shorter Channels
Marketing Channels 8e
17-5
B) Franchised Channels
When channels involving the use of independent intermediaries are used in providing
services, they often are franchised channels stressing the business format approach to
franchising. This form of franchising is characterized by a close business relationship
C) Customization of Services
Among services, many of them provide for a high degree of customization.
Table 17.2 shows examples of services that can be highly customized.
D) Channel Flows
Marketing channels for products comprise a series of flows. The most obvious is the
physical flow of the products themselves. However, with most services, there is no flow
Marketing Channels for Services
17-6
Answers to Review Questions
1. Much more attention has been paid to services marketing in recent years because
3. Five characteristics distinguish services from tangible goods and present significant
implications for the marketing of services:
▪ The Intangibility of Services: simply, a service is not palpable; tangible features
are not available to the producer to create differential advantage or appeal.
4. The marketing manager will want to tangibilize the service in order to differentiate it
from competitors’ services and to increase its appeal to the customers. The channel
5. The inseparability makes it more difficult to market a service because the “safety net”
6. Services are often tied very closely to the people who provide them. Hence, in the
context of a marketing channel, it is difficult to achieve standardization if channel
Marketing Channels 8e
17-7
7. It depends on the type of service being offered. For some services, such as hair care,
8. Because services are produced and consumed simultaneously, their market life is
9. The short channels typically used for services either exclude intermediaries or
minimize the levels of intermediaries. Thus, channel design is less complicated.
10. The essence of business format franchising is for the franchisor to specify in
considerable detail the methods of business and operating procedures to be followed
11. Most channels rely on standardized, routine and repetitive processes to achieve
12. Channel design is simplified because the variables associated with tangible goods,
Commentaries on Issues for Discussion
1. Many customers may still prefer “old–fashioned,” people intensive channels for certain
types of services because they prefer the personal interaction of a commercial
Marketing Channels for Services
17-8
found that 90 percent of customers preferred to talk to real people on the telephone
when they need customer service. This despite the fact that channel models involving
2. Channels for health care delivery have become more diverse as we saw from the
opening vignette involving Sainsbury’s delivery of dental care within its supermarket
3. There really is not sound reason for restaurants to take out their frustrations with Open
Table out on their diners. Since participation with OpenTable is voluntary, these
restaurants need to consider the purpose of their participation in the first place, to
build brand recognition and build patronage. Since the problem does not originate
4. George Mitchell did get the commodity service he purchased: air transportation.
However, he did not get the benefits and quality that the producer promised and that
Marketing Channels 8e
5. It appears that a large segment of consumers still wants “high touch” along with “high
tech” banking. In other words, ATMs and the Internet just do not seem to provide the
kind of service sought by these consumers. Yet, even for consumers who make use of