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Chapter 15
Global Services
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
Differences Between
Services and Goods
• Definitions and distinctions
– Goods are physical objects, devices, or things.
– Services are deeds, performances, or efforts.
– Goods are fixed in form and require physical
distribution.
– The main difference between goods and services is
intangibility.
Services are generally more intangible,personalized,
and perishable.
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
Linkage between Services and
Goods
• Goods and services complement one another. Goods
frequently require servicing after their purchase.
• Goods and services are marketed in varying
packages or combinations to targeted customer
groups.
• Customer groups have differing perspectives on
the features and provision of services.
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
Airline Offerings
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Stand-Alone Services
• Services compete with goods and compete with other
services (e.g., video rentals).
• Services are intangible and perishable, presenting
problems in matching service capacity to variations in
demand.
• Consumption of services
requires provider and
customer involvement.
• Service consistency
is required.
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
Problems with Services
• Market transparency
– Consumers have difficulty in evaluating services because
customers may use (or require )the same service in different
way.
• Service heterogeneity
– Services vary in their content and quality of delivery as
customer requirements change.
• Cultural sensitivity
– Services are delivered directly
to the customer, making them
potentially more culturally
sensitive than products.
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
The Role of Services
• In the U.S. economy
– The service sector produces 80.5% of U.S. GDP.
– Financial and technical services exporting and
importing are both growing rapidly.
– Total services imported into the U.S. in 2005 was
$319 billion.
• In the world economy
– Services account for 66.7% of the GDP.
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
Global Transformation of
Services
• Reduced governmental regulation
– Transportation, banking, and telecommunications
• Decreased regulation by industry groups.
• Technological advances are opening up and
increasing worldwide service
trade opportunities.
• Both labor-intensive and
technology-intensive
services are expanding
into global markets.
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
International Trade Problems in
Services
• Data collection problems
– The quality of data collected on the service trade
is poor due to the difficulty of quantifying and
tracking the delivery of services.
– Services lack of homogeneity for transparency,
making comparisons and the measurement of the
effects of services in global markets difficult.
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
Regulation of Services Trade
• U.S. disincentives to international services
– state and federal regulations are formidable
barriers to entry
• Governmental justification for entry barriers
– national Security
– economic Security
– protection of infant industries
• Obstacles to service trade abroad
– barriers to entry
– performance
– discriminatory and nondiscriminatory regulations
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
Corporations and Involvement in
International Services Marketing
• E-commerce has played an important role in
expanding global services.
• Many service providers know customers “virtually”
only.
• Language barriers slow e-commerce service
expansion.
• Typical international services include financial,
construction, design, engineering services, legal and
accounting, teaching, and management consulting.
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.
Starting to Market Services
Internationally
• For services tied to complementary goods
– Follow the path of the good in the market.
• For services independent of goods
– Identify market situations abroad similar to the
domestic market where the application of services
expertise presents opportunities for market
entry and expansion.
• Identify and understand transition
points
– Domestic and economics
changes in foreign countries
can create the need for
services expertise.
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International Services Marketing
• Strategic Implications
– Identify the nature and the aim of the service
offering core.
– Communicate the performance of the service on
both the mass level and the personal level.
– Train organizational personnel to convey the spirit,
values, and attitudes of the corporation.
– Address issues of service pricing and financing.
– Consider the distribution implications of
international services.
Copyright © 2007 by South-Western, a division of Thomson Learning. All rights reserved.