1. Webster University MRKT 5980

2. Services Marketing & Service Lifecycle Management

3. 9/19/2015 Webster University MRKT 5980 Page 3 Differences Between Services and Goods Definitions and distinctions Definitions and distinctions Goods are physical objects, devices, or things.Goods are physical objects, devices, or things. Services are deeds, performances, or actions.Services are deeds, performances, or actions. Goods are fixed in form and require physical distribution. Services are delivered as problem solutions on or off- site.Goods are fixed in form and require physical distribution. Services are delivered as problem solutions on or off- site. The main difference between goods and services is intangibility. Services are generally more intangible,personalized, and perishable.The main difference between goods and services is intangibility. Services are generally more intangible,personalized, and perishable.

4. 9/19/2015 Webster University MRKT 5980 Page 4 Linkage between Services and Goods Goods and services complement one another. Goods frequently require servicing after their purchase. 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. 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. Customer groups have differing perspectives on the features and provision of services.

5. 9/19/2015 Webster University MRKT 5980 Page 5 Stand-Alone Services Services compete with goods and compete with other services (e.g., video rentals). 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. Services are intangible and perishable, presenting problems in matching service capacity to variations in demand. Consumption of services requires provider and customer involvement. Consumption of services requires provider and customer involvement. Service consistency is required. Service consistency is required.

6. 9/19/2015 Webster University MRKT 5980 Page 6 Tangible/Intangible Offerings of Airlines Distribution Price Airlines Intangible Tangible Vehicle Transport Service Frequency Food and Drinks In-flight Service Pre- and Postflight Service SOURCE: G. Lynn Shostack,”Breaking Free from Product Marketing,” in Services Marketing ed. Christopher H. Lovelock (Englewood Cliffs, NJ; Prentice-Hall, 1984),40.

7. 9/19/2015 Webster University MRKT 5980 Page 7 Problems with Services Market transparency Market transparency Consumers have difficulty in evaluating services because customers may use (or require )the same service in different way.Consumers have difficulty in evaluating services because customers may use (or require )the same service in different way. Service heterogeneity Service heterogeneity Services vary in their content and quality of delivery as customer requirements change.Services vary in their content and quality of delivery as customer requirements change. Cultural sensitivity Cultural sensitivity Services are delivered directly to the customer, making them potentially more culturally sensitive than products.Services are delivered directly to the customer, making them potentially more culturally sensitive than products.

8. 9/19/2015 Webster University MRKT 5980 Page 8 The Role of Services In the U.S. economy In the U.S. economy The service sector produces 80% of U.S. GNP and employs 83% of the workforce.The service sector produces 80% of U.S. GNP and employs 83% of the workforce. Financial and technical services exporting and importing are both growing rapidly.Financial and technical services exporting and importing are both growing rapidly. In the world economy In the world economy Services are the fastest growing world trade sector.Services are the fastest growing world trade sector. International services contribute more than half of GNP in many industrial nations.International services contribute more than half of GNP in many industrial nations. Trade in services is about 29% of all world trade.Trade in services is about 29% of all world trade.

9. 9/19/2015 Webster University MRKT 5980 Page 9 Global Transformation of Services Reduced governmental regulation Reduced governmental regulation Transportation, banking, and telecommunicationsTransportation, banking, and telecommunications Decreased regulation by industry groups. Decreased regulation by industry groups. Technological advances are opening up and increasing worldwide service trade opportunities. Technological advances are opening up and increasing worldwide service trade opportunities. Both labor-intensive and technology-intensive services are expanding into global markets. Both labor-intensive and technology-intensive services are expanding into global markets.

10. 9/19/2015 Webster University MRKT 5980 Page 10 International Trade Problems in Services Data collection problems 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.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.Services lack of homogeneity for transparency, making comparisons and the measurement of the effects of services in global markets difficult.

11. 9/19/2015 Webster University MRKT 5980 Page 11 Regulation of Services Trade U.S. disincentives to international services U.S. disincentives to international services state and federal regulations are formidable barriers to entrystate and federal regulations are formidable barriers to entry Governmental justification for entry barriers Governmental justification for entry barriers national Securitynational Security economic Securityeconomic Security protection of infant industriesprotection of infant industries Obstacles to service trade abroad Obstacles to service trade abroad barriers to entrybarriers to entry performanceperformance discriminatory and nondiscriminatory regulationsdiscriminatory and nondiscriminatory regulations

12. 9/19/2015 Webster University MRKT 5980 Page 12 Corporations and Involvement in International Services Marketing E-commerce has played an important role in expanding global services. E-commerce has played an important role in expanding global services. Many service providers know customers “virtually” only. Many service providers know customers “virtually” only. Language barriers slow e-commerce service expansion. Language barriers slow e-commerce service expansion. Typical international services include financial, construction, design, engineering services, legal and accounting, teaching, and management consulting. Typical international services include financial, construction, design, engineering services, legal and accounting, teaching, and management consulting.

13. 9/19/2015 Webster University MRKT 5980 Page 13 Starting to Market Services Internationally For services tied to complementary goods“ For services tied to complementary goods“ Follow the path of the good in the market.Follow the path of the good in the market. For services independent of goods 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 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 Identify and understand transition points Domestic and economics changes in foreign countries can create the need for services expertise.Domestic and economics changes in foreign countries can create the need for services expertise.

14. 9/19/2015 Webster University MRKT 5980 Page 14 International Services Marketing Strategic Implications Strategic Implications Identify the nature and the aim of the service offering core.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.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.Train organizational personnel to convey the spirit, values, and attitudes of the corporation. Address issues of service pricing and financing.Address issues of service pricing and financing. Consider the distribution implications of international services.Consider the distribution implications of international services.

15. Logistics and Supply Chain Management

16. 9/19/2015 Webster University MRKT 5980 Page 16 A Definition of International Logistics “…designing and managing of a system that controls the flow of materials into, through, and out of the international corporation” “…designing and managing of a system that controls the flow of materials into, through, and out of the international corporation” In taking a systems approach to linkages among logistics components, firms can incorporate efficiencies through system design and management techniques In taking a systems approach to linkages among logistics components, firms can incorporate efficiencies through system design and management techniques JIT - just-in-timeJIT - just-in-time EDI - electronic data interchangeEDI - electronic data interchange ESI - early supplier involvementESI - early supplier involvement ECR - efficient customer response systemsECR - efficient customer response systems

17. 9/19/2015 Webster University MRKT 5980 Page 17 The Phases of International Logistics Materials management Materials management Timely movement of raw materials, parts, and supplies through the firmTimely movement of raw materials, parts, and supplies through the firm Physical distribution Physical distribution Movement of the firm’s product to its customersMovement of the firm’s product to its customers

18. 9/19/2015 Webster University MRKT 5980 Page 18 The Systems Concept The extensive and complex materials-flow activities within and outside of the firm must be considered in the context of their interaction. The extensive and complex materials-flow activities within and outside of the firm must be considered in the context of their interaction. Total-cost concept Total-cost concept Minimizing overall logistics costs by identifying activity-based costs that impact after-tax profits.Minimizing overall logistics costs by identifying activity-based costs that impact after-tax profits. Trade-off concept Trade-off concept Recognize that logistics activities involve trade-off in areas such as time-saved in delivery versus the increased costs of expedited delivery systems.Recognize that logistics activities involve trade-off in areas such as time-saved in delivery versus the increased costs of expedited delivery systems.

19. 9/19/2015 Webster University MRKT 5980 Page 19 Supply-Chain Management An integration of the three system concepts. An integration of the three system concepts. Value-added activities connect the company’s supply side with the demand side. Value-added activities connect the company’s supply side with the demand side. Efficient supply chain design increases customer satisfaction and saves money Efficient supply chain design increases customer satisfaction and saves money reduces inventory holding costsreduces inventory holding costs increases inventory turnover cyclesincreases inventory turnover cycles reduces operating costsreduces operating costs reduces order handling and mailing costsreduces order handling and mailing costs makes firm more price competitivemakes firm more price competitive

20. 9/19/2015 Webster University MRKT 5980 Page 20 The Impact of International Logistics Logistical costs are 10% to 30% of the total landed cost of an international order. Logistical costs are 10% to 30% of the total landed cost of an international order. Factors necessary for the use of logistics as a competitive tool: Factors necessary for the use of logistics as a competitive tool: Close collaboration with suppliers and customers.Close collaboration with suppliers and customers. Technologically advanced information processing and communication exchange capabilities.Technologically advanced information processing and communication exchange capabilities. An integrated business infrastructure.An integrated business infrastructure.

21. 9/19/2015 Webster University MRKT 5980 Page 21 New Dimensions of International Logistics Basic differences Basic differences DistanceDistance Currency variation and exchange rate differencesCurrency variation and exchange rate differences Varying entry regulationsVarying entry regulations Different transportation modesDifferent transportation modes Country-specific differences Country-specific differences Transportation systems and intermediaries vary.Transportation systems and intermediaries vary. Reliability of carriers may be different.Reliability of carriers may be different. Computation of freight rates may be different.Computation of freight rates may be different.

22. 9/19/2015 Webster University MRKT 5980 Page 22 International Transportation Issues Transportation infrastructure Transportation infrastructure Roads,rail lines, airports, seaports, pipelinesRoads,rail lines, airports, seaports, pipelines Availability of transportation modes Availability of transportation modes Overland shipping, ocean shipping, air shippingOverland shipping, ocean shipping, air shipping Choice of modes Choice of modes Transit time, predictability, cost, noneconomic factorsTransit time, predictability, cost, noneconomic factors Noneconomic Factors Noneconomic Factors Government involvement, the UNCTAD and the 40/40/20 conceptGovernment involvement, the UNCTAD and the 40/40/20 concept

23. 9/19/2015 Webster University MRKT 5980 Page 23 International Shipment Documentation Bill of Lading Bill of Lading acknowledges receipt of goodsacknowledges receipt of goods Shipper’s export declaration Shipper’s export declaration states proper authorization for export under general or special validated export licensestates proper authorization for export under general or special validated export license Packing list of contents Packing list of contents Dock and warehouse receipts Dock and warehouse receipts Collection documents Collection documents commercial (consular) invoicecommercial (consular) invoice certificate of origincertificate of origin import and foreign exchange licensesimport and foreign exchange licenses

24. 9/19/2015 Webster University MRKT 5980 Page 24 International Inventory Issues Inventory carrying costs can be up to 25% of the value of an inventory. Inventory carrying costs can be up to 25% of the value of an inventory. Just-in-Time policies minimize inventory volume by making it available when needed. Just-in-Time policies minimize inventory volume by making it available when needed. Inventories assist in the movement of products. Inventories assist in the movement of products. Factors in deciding on the level of inventory to maintain: Factors in deciding on the level of inventory to maintain: Order cycle timeOrder cycle time Desired level of customer serviceDesired level of customer service Use of Inventory as a strategic toolUse of Inventory as a strategic tool

25. 9/19/2015 Webster University MRKT 5980 Page 25 Order Cycle Time The total time that passes between the placement of an order and the receipt of the merchandise. The total time that passes between the placement of an order and the receipt of the merchandise. Length of the total order cycleLength of the total order cycle Longer cycle in international marketing than domestic Longer cycle in international marketing than domestic Consistency of the order cycleConsistency of the order cycle More complicated delivery mode reduces consistency More complicated delivery mode reduces consistency Altering cycle times Altering cycle times Change transportation methodsChange transportation methods Change inventory locationsChange inventory locations Change ordering processChange ordering process

26. 9/19/2015 Webster University MRKT 5980 Page 26 International Storage Issues The storage facilities location decision The storage facilities location decision AvailabilityAvailability AdequacyAdequacy Physical ConditionsPhysical Conditions Optimizing the logistics system Optimizing the logistics system Rank products by warehousing needs “A” products stocked in all distribution centerRank products by warehousing needs “A” products stocked in all distribution center “B” products stored only in selected locations “B” products stored only in selected locations “C” products with low demand stocked only at headquarters “C” products with low demand stocked only at headquarters

27. 9/19/2015 Webster University MRKT 5980 Page 27 International Packaging Issues Packaging for domestic shipping may NOT be adequate for international shipping. Packaging for domestic shipping may NOT be adequate for international shipping. Goods should arrive in a safe, undamaged, maintainable, and presentable condition. Goods should arrive in a safe, undamaged, maintainable, and presentable condition. Packaging should minimize the stress of intermodal movement and storage. Packaging should minimize the stress of intermodal movement and storage. Protected from climatic conditions. Protected from climatic conditions. Weight based on delivery mode. Weight based on delivery mode. Follow customer instructions for labeling, packaging, and routing. Follow customer instructions for labeling, packaging, and routing.

28. 9/19/2015 Webster University MRKT 5980 Page 28 Management of International Logistics Centralized logistics management Centralized logistics management Headquarters retains decision-making power and control, coordinates all logistics.Headquarters retains decision-making power and control, coordinates all logistics. Decentralized logistics management Decentralized logistics management The “decentralized full profit center model” allows the organization to respond to local market conditions. Possibility for loss of coordination.The “decentralized full profit center model” allows the organization to respond to local market conditions. Possibility for loss of coordination. Contract logistics Contract logistics Growing preference to outsource logistics function to “third party” specialists such as FedEx or UPS.Growing preference to outsource logistics function to “third party” specialists such as FedEx or UPS. The supply chain and the Internet The supply chain and the Internet

29. 9/19/2015 Webster University MRKT 5980 Page 29 Logistics and the Environment Reverse Distribution Reverse Distribution “a system responding to environmental concerns that ensures a firm can retrieve a product from the market for subsequent use, recycling, or disposal”“a system responding to environmental concerns that ensures a firm can retrieve a product from the market for subsequent use, recycling, or disposal”