1. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter 12 Global Services

3. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Services versus Products Characteristics of Services Intangibility A service cannot easily be touched Heterogeneity The service is not exactly the same each time Inseparability Services are produced when they are consumed Perishability A service cannot be stored

4. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Services versus Products A Product Equivalence From a marketing viewpoint Many similarities exist between physical goods and services The core service is what the buyer is “really” buying The basic service package refers to the specified services offered to the customer The augmented service is the totality of benefits that the individual receives A key factor in global services marketing is whether the basic service package can be replicated abroad

5. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Foreign Entry of Services Foreign Trade in Services Tourism exports provide an illustration of foreign trade in services A franchising expansion provides an illustration of a licensing mode of service entry In consulting services, foreign direct investment is sometimes necessary

6. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Foreign Entry of Services Service Entry Modes Exporting Licensing Strategic Alliances Foreign Direct Investment

7. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Local Marketing of Global Services Similarities and Differences in Product and Service Marketing Market Segmentation Positioning Product Line Branding Pricing Promotion Distribution

8. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Controlling Local Service Quality Critical Incidents in Global Services A “critical incident” or “moment of truth” Is the period of time during which a consumer directly interacts with a service The quality of a service during a critical incident or moment of truth Is typically measured in terms of a “gap” between the customer’s expectations of the service and the perceived actual performance Three different levels of service expectations Desired service – the highest or ideal quality Adequate service – the lower limit below which service is unacceptable Predicted service – between the desired and the adequate service

9. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Controlling Local Service Quality The Gap and Zone of Tolerance As long as the perceived service performance lies between the desired and the adequate service level there is no gap and the customer is satisfied If the performance drops below the adequate level, there is a gap and dissatisfaction Between desired and adequate service levels is the zone of tolerance where the customer will be more or less satisfied If the performance is above that predicted, the customer is positively surprised

10. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Controlling Local Service Quality Culture and Service Quality The relationship between culture and service delivery affects both perceived quality and customer satisfaction The intangibility of services is typically assumed to make consumer evaluation of service quality more difficult than for tangible products Quality is a matter of how people feel and of their particular taste This dependence on subjective feelings means that what is perceived as high-quality service may differ between individuals

11. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Service Globalization Potential Basic Drivers of Service Expansion Market Drivers Competitive Drivers Cost Drivers Government Drivers Technology Drivers Stage of the Life Cycle The potential for global expansion of the service concept is highest during the maturity stage of the life cycle

12. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Service Globalization Potential Infrastructure Barriers The global applicability of a service depends on whether the infrastructure through which the service is offered exists in foreign markets Idiosyncratic Home Market is required factors for services globalization Reasonable similarity to the home country situation Distillation of key features of the service concepts Localization of these factors to another environment while still maintaining FSAs of the firm

13. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Close-Up: Two Globalized Services Fast-Food Franchising Many multinational firms are increasingly turning to franchising A wide variety of firms have utilized franchising to penetrate new markets Successful franchisers provide a host of preplanning tools to help prospective local investors

14. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Close-Up: Two Globalized Services Fast-Food Franchising (cont’d) Advantages of franchising Enables a franchisee to start a business with limited capital and benefit from the business experience of the franchiser Disadvantage of franchising The franchiser’s ability to dictate many facets of business operation could prove overly intrusive

15. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Close-Up: Two Globalized Services Professional Services Despite local regulations that vary between countries, professional services have recently expanded in step with the expansion of global firms The global expansion of professional services has been facilitated by the increased sophistication in creating strategic alliances