johansson - chap (13)

8/7/2019 JOHANSSON - chap (13)

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Global Services

C h

a p

t e r

13

© 2006 The McGraw-Hill Com anies Inc. All ri hts reserveMcGraw-Hill Irwin



Outline

Characteristics of Services

Services as Products

Service Globalization Potential

Foreign Entry Modes of Services

Service Quality and Cultural Differences

Two special cases: Fast Food and Professional Services

Takeaways.



• Accounting

• Advertising

• Banking

• Broadcasting• Computer services

• Consulting

• Data processing

• Design & engineering

• Distribution

• Education

• Entertainment

• Health care

• Insurance

• Investment banking

• Leasing

• Legal Services• Lodging

• Media

• Reservation systems

• Restaurants

• Tourism

• Telecommunications

• Transportation

• Utilities

The Service Industries



• INTANGIBILITY – you cannot easily touch a service

• HETEROGENEITY – the service is not exactly the same

each time

• INSEPARABILITY – services are produced when they are

consumed

• PERISHABILITY – you cannot store a service

Characteristics of Services



CORE SERVICE : IS WHAT THE BUYER IS REALLY BUYING. FOR

EXAMPLE, AN OIL CHANGE AND TUNE-UP FOR YOUR CAR

PROVIDES TROUBLE-FREE OPERATION.

FORMAL SERVICE PACKAGE : SPECIFIC SERVICES OFFERED TO THE

CUSTOMER INCLUDING PRICE, SERVICE FEATURES, THE

PACKAGING, GUARANTEES.

AUGMENTED SERVICE : THE TOTALITY OF THE BENEFITS ACUSTOMER RECEIVES OR EXPERIENCES THEY HAVE WHEN

BUYING THE PRODUCT.

The Service

“Product”



Generic benefits

Provider’s

behavior

Physical

surroundings

Provider’s

appearance

Brand image

Features

Quality

Packaging

After-sales

support

Price

Warranty

Coreservice

Formalservice package

Augmentedservice

The service as a “product”



• Stage in the Life Cycle – potential is highest during the maturity

stage because then the service is fully developed and can be

blueprinted.

• Infrastructure barriers – service applicability depends on

availability of infrastructure, as when, for example, warehouse

stores require customers to take home large items in their own

cars.

• Idiosyncratic Home Markets – special regulations inducedomestic service providers to develop practices that are not

applicable elsewhere, as when, for example, advertising

agencies in Japan produce television programs whose

sponsorship the agency controls.

Three factors that influence the globalizationpotential of services

Service Globalization

Potential



Reasonable similarity to the home country situation

Distilling exactly what the key features of the

product/service concept are

Localization of the key features to another environmentwhile still maintaining the FSA's of the firm

2

1

3

eys to Successful Service Globalizatio



1. EXPORTING – where services can be transferred via

communications media or personal travel to countries

2. LICENSING – when local involvement is important, where

the service can be standardized (e.g. franchising)

3. STRATEGIC ALLIANCES – when a local presence is

necessary but where government regulations are

restrictive to foreigners

4. FOREIGN DIRECT INVESTMENT – when a local presence

is feasible, where foreign ownership is permitted

The Four Service Entry Modes



Foreign Entry of Services

Tourism exports provide an illustration of foreign trade in

services, as when Americans visit France.

A franchising expansion by McDonalds provides an

illustration of a licensing mode of service entry.

In marketing research, it is common to strike up alliances

with research firms in other countries to be able to provide

global coverage to clients.

In consulting services, foreign direct investment is

sometimes necessary, as when Price-Waterhouse opens an

office in Brussels.



1. MARKET SEGMENTATION – typically new services from

abroad target very specific segments or audiences

2. POSITIONING – the customer benefit of the service needs

to be identified clearly to position the service accordingly

3. PRODUCT LINE – a service provider that fits the local

infrastructure

4. BRANDING – is always important given the intangibility of

services.

The Local Marketing of a Service



5. PRICING – competitive parity, costs, demand, and the

value of time spent by customers must be factored in

6. PROMOTION – many professional services haverestrictions on promotional activities that differ across

countries

7. DISTRIBUTION – since a service is produced &

consumed at the same time, service delivery is identical

to service production; consequently, distributionbecomes the “critical incident” or “moment of truth.”

he Local Marketing of a Service (cont’d)



CRITICAL INCIDENTS/MOMENTS OF TRUTH – the period of time

during which an individual consumes the service

Desired Service – highest or ideal quality

Predicted or Expected Service – lies somewhere

between the desired & the adequate service

Adequate Service – forms the lower limit below which

the service quality is unacceptable

Perceived Service –must lie between the desired & the

adequate service levels to make sure customer is

satisfied

Service Quality



Desired Service

Predicted/Expected

Service

Adequate

Service

(Perceived Service

low)

Surprise

Acceptable

Dissatisfaction

Zone of

tolerance

PerformanceGap

Service Quality: The Gap and the Zone of Tolerance

(Perceived Service

high)

Inadequate Service



•Since services are intangible, service quality is more

difficult to quantify, allowing for a more subjective

view

•Different cultures have different habits andpreferences and therefore different definitions of

service quality

•So culture affects perceived service quality &

customer satisfaction strongly•And what is considered high service quality in one

country is not necessarily high in another country.

Culture and Service Quality



• Asking • Listening

JapaneseAmericans

•Expressing doubt

•Expressing sympathy

• Explain what cannot be done • Explain what can be done

• Defending company policy • Apologize for company policy

• Responsibility of the buyer • Responsibility of the seller

• “We’ll fix it, but…” • “I’m very sorry”

• Low customer satisfaction • High customer satisfaction

Personal Service Quality:Differences in Complaint Handling



Services have become an increasingly important part of the

economy, especially in developing countries.

Like manufacturers of products, service providers are turning

increasingly to foreign markets for growth.

Takeaway



Services have characteristics that make foreign expansion

different from products. Intangibility of many services makes

the mode of entry different from physical goods.

Takeaway



Globalizing a service means identifying what the core

advantages of the service are & whether they can bereproduced in a foreign market.

This usually means that foreign expansion of services occurs

in the mature life cycle stage.

Takeaway



Because of the human factor, the way services are marketed

locally & the trade-off between standardization & adaptation

hinge very much on cultural factors.

Takeaway

johansson - chap (13)

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