Global Services Chapter 15

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.

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.

Airline Offerings

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.

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.

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.

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.

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.

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

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.

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.

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.