ch9-global services marketing

8/3/2019 Ch9-Global Services Marketing

http://slidepdf.com/reader/full/ch9-global-services-marketing 1/26

Ch 9: Global Services

MarketingLearning Objectives

- Drivers that fuel the growth of global services

- Examine critical strategic considerations for marketing services globally.



Significance of Services in Global

Economy

Services sector - Banking, Insurance,

Accountancy, Telecommunication,

Transportation, etc.

According to the World Bank, Services sector

represents over 60% of world GDP

Low-income economies - 38%, Middle-incomeeconomies - 56% & High-income economies >

65%



Significance of Services in Global

Economy

77% of US GDP is generated from services

sector which employ 80% of its workforce;

Hong Kong, 89% GDP from services sector &80% of employment

Tourism - 33% of global services



Defining Global Services

Pure

ServicesServices in

GoodsConsulting, Education, Telecommunication, Healthcare, Software, Restaurants

Services that resides towards the µpure¶ services end cannot be experienced by

customer before the purchase

Services embedded in physical goods are more tangible and easier for customers to

µsample¶ before purchase



Drivers for Growth in Global Services



Deregulation & Liberalization

Primary Objective - create more efficient

services infrastructure by deregulating and

liberalizing nationalized services

Airlines, financial services, Insurance, etc.;

previously inefficient national services

General Agreement on Trade in Services(GATS) established in Jan 1995; 140 WTO

member governments; improve

competitiveness in services and promote

liberalization of trade in services



Quality service as a Business

Imperative

Providing µGood¶ level of service is no longer

an option for companies that operate globally

Customers not only expect high quality goods,

they also expect high levels of service

Competitive advantage through distinctive and

consistent service in addition to qualityphysical product



Homogenization of Global Consumer

Increasing invasiveness of global media

broadcasting channels

reduction in costs in communications, air

travel and information transfer

Increasing demand for products & services

globally leading to proliferation of services

such as international travel, credit cards,

insurance, banking & entertainment

Examples, emergence of global brands such

as American Express, Marriott Hotels,

McDonald¶s, etc.



Global Economies of Scale

Leveraging economies of scale through

geographical expansion of operations

Excess capacity due saturation and/or

declining domestic markets

Management aspiration to pursue

organizational growth

Perceived potential for high profitability in

overseas market



Enabling Technologies

Dramatic changes and technical innovations in

the communications technologies

Technological advancements in air travel has

helped reduce costs of long distance travel;

replace domestic supply by consumption

abroad

Examples, Education (e-learning), Banking

(tele-banking and internet banking)



Following the Clients

Consumers are more likely to purchase a

brand of goods or goods that they trust and

are familiar with.

Example, many UK travel related service

providers such as Barclays, Vodafone &

Europcar set up operational base in Spanish

tourist resorts to provide for UK travelers.



Challenges of Marketing ServicesInternationally



Intangibility

Customer cannot experience or test prior to

purchase; purchase decision is difficult as

perceived risk is high

Difficult for service providers to demonstrate

value before the purchase

Customers have to rely on tangible cues -prior experience, word-of-mouth

Communication across borders impacted by

physical, cultural & language barriers



Heterogeneity (1/2)

The service provider: Employees in different

countries vary in the way they deal with

customers (Ex, Consultancy Service)

The buyer: Perceptions/Preferences vary from

customer to customer (Ex, Business Class vs

Economy class passenger)

The situation: Situational factors affectcustomers¶ perceptions on what they get for

their money (ex, Regular vs Irregular

commuter



Heterogeneity (2/2)

Minimize heterogeneity by standardizing as

many elements (Communication, Procedures,

Systems) = Maximize consistency in delivery =

improving customers¶ service expectation

Contrary to belief, standardization doesn¶t

contribute to increased level of perceived

quality & customer satisfactionEx, banks (automated telephone banking &

internet banking), airlines (standardized

check-in procedures)



Inseparability (1/2)

The degree of simultaneous production &

consumption varies depending on the degree

of tangibility.

Example, educational services (high degree of

intangibility), Chinese takeaway meal (low

degree of intangibility)

Consumer preferences in each country

impacted by macro economic factors



Inseparability (2/2)

Segmentation strategy cannot be transfered

from one country to another

Service provider must develop knowledge &

understanding of each market

Example, Dubai exhibits µWestern Culture¶ but

within the limits of local customs & culturalvalues



Strategic Considerations for Marketing Services Globally



Standardization vs Customization

Standardization

Increased level of customer satisfaction - due higher reliability

Possible cost saving passed on to customers

Increased level of efficiency gains - due mass production

Customization

Exceeding customer expectations

Premium pricing

In-depth understanding of customers - increased interaction with

customers

Degree of standardization or customization depends on degree of intangibility

and the degree of producer-consumer contact during delivery.



The Extended Mix (1/3)

People

In µhigh contact¶ services, people become mostimportant component which determines success or

failure of services

Where µproduction¶ can be separated from

µconsumption¶, organizations reduce interaction of

staff with customers.

Provision of regular training and empowerment of

employees - fundamental to achieving high

standards

Extended 3Ps in marketing mix - People, Process & Physical Evidence - more

prominent than traditional 4Ps




Process

Production & delivery of service is essentially aprocess rather than a tangible object

Composition & execution of the process

influences the way in which service is

experienced by customer

Example, customer who chooses to shop online

for groceries is different from another customer

who prefers to shop in the local supermarket -

Important to manage the delivery of services




Physical Evidence

In the absence of a physical

product, service providers useµtangible cues¶ such as a pleasant

shopping atmosphere which

customers associate with service

quality

Example, travel agent usescolorful brochures of holiday

destinations, the ambience, staff

uniform, etc. as physical evidence

of quality of service.



Socio-Cultural Differences



Role of Technology (1/2)

Increased Productivity - through economies of

scale; making cost saving through automation

of business processes and servicing morecustomers at the same time

Enhancing decision-making - sophisticated

computer systems for problem analysis; helps

decision-making on strategic issues



Role of Technology (2/2)

Delivery of services - use of internet

technologies; Online travel website -

integrates Interactive website, Search Options,Credit Card payments & Electronic mailing

Customer Targeting & Relationship

Management - Accurate marketing information

to the right customer segments; Managerelationship with existing customers



Summarize

Distinguishing characteristics - Intangibility,

Heterogeneity, Inseparability & Perishability

Factors affecting growth of services globally -Deregulation & Liberalization | Quality service as

business imperative | Global consumers |

Economies of scale | Follow the clients

Strategic considerations - Level of Standardizationor Customization | Extended Marketing Mix | Socio-

Cultural differences | Technology

ch9-global services marketing

Documents