Chapter 12: Global Marketing of Services Flashcards
What is the difference between services and goods?
- Goods are physical objects, devices, or things
- Services are deeds, performances, or efforts
- Goods and services complement one another
Services differ from goods most strongly in:
- Intangibility
- Perishability
- Customer involvement (inseparability)
- Inconsistency (heterogeneity)
Why do services require new channels of distribution?
Since services are perishable, traditional distribution channels cannot be used.
Traditional channels are typically multitiered and long and therefore slow.
How do services and goods differ regarding cultural sensitivity?
- Services are delivered directly to the customer, making them more culture sensitive than products
- Sometimes their influence on individuals may be considered with hostility aboard
Deregulation
Reduction of government interference in the marketplace
- Deregulatory movement has spread internationally
What is another major factor in increasing service trade?
Technological advancement
Progress in technology offers new ways of doing business and permits businesses to expand internationally
International trade problems in services: data collection problems
- The data collected on service trade are inadequate
- Difficulty of quantifying and tracking the delivery of services
- Lack of comparability between service categories as used by different national statistical systems
- E.g., gas and electricity production and distribution are categorized as service in the U.S., but as goods in other countries
Two obstacles to service trade:
- Barriers to entry
- Problems in performing services
Obstacles to service trade: Barriers to entry
- Governments often justify barriers to entry with national security, and infant industries
- Other regulations (e.g., licensed accountants in Germany)
Obstacles to service trade: Problems in performing services
- E.g., larger operating costs on foreign service providers than on the local competitors
- E.g., subsidies provided to local firms only
- E.g., denying competitive opportunities to foreign suppliers
- E.g., foreign firms facing competition from government-owned enterprises
Services and e-commerce
- E-commerce has opened up new horizons for global services and reduced the meaning of distance
- Firms can approach their customers via the Internet without establishing retail outlets
- Internet helps service firms save travel costs
- Note of caution: The penetration of the Internet has occurred at different rates in different countries. There are still many businesses and consumers who do not have access to electronic business media.
Need for a multilingual website:
- Facilitate a shift toward non-English-speaking Internet users
- Use as a cost-effective marketing tool
- Access new customers
- Increase sales with little investment
- Demonstrate that company is customer-centric
- Generate trust by providing services in a customer’s native language
- Demonstrate cultural sensitivity
- Beat competition
- Show that company thinks, works, and deals internationally
- Be picked up by more search engines
Academia as a service
Factors affecting other global services affect higher education as well, such as demand and supply
Typical international services
- Financial services (e.g., increased merger and acquisition on a global basis)
- Construction, design, and engineering services (e.g., economies of scale, encouraging subsequent demand for capital goods)
- Legal and accounting services
- Teaching services
- Management consulting
- Tourism services
Various starting point for marketing services internationally:
- Services tied to complementary goods can follow the path of the good in the market
- Service providers whose activities are independent from goods must search for market situations abroad that are similar to the domestic market
- International service opportunities can be gained by staying informed about international projects sponsored by domestic organizations (e.g., EDC) or international organizations (e.g., UN)
Strategic implications for international services marketing
- Personnel’s role is important in international marketing of services
The personal who delivers the service, rather than the service itself, will communicate the spirit and value of the service corporation
Selection, training, and supervision of personnel - Need for international decentralization of service delivery
Higher level of responsibility and trust - Pricing flexibilities
Services cannot be stored
Greater responsiveness to demand fluctuation is needed - More emphasis on relationship building and maintenance
- Short and direct distribution channels are required
What is a product?
A good is an object, a device, a thing
What is a service?
A deed, a performance, an effort
What is another way in which services differ from goods?
Services tend to be more intangible, personalized, and custom-made than goods.
Tangible and intangible offerings of airlines
- Vehicle (Tangible)
- Food and drink (Tangible)
- Inflight service (Intangible)
- Transport (Intangible)
- Pre- and postflight service (intangible)
- Service frequency (intangible)
