Copyright? 2001 by Harcourt,Inc.,All rights reserved,Requests for permissions to make copies of any part of the work should be mailed to
the following address,Permissions Department,Harcourt,Inc.,6277 Sea Harbor Drive,Orlando,Florida 32887-6777.
INTERNATIONAL MARKETING 6e
Services Marketing
Chapter 17
Copyright? 2001 by Harcourt,Inc.,All rights reserved,Requests for permissions to make copies of any part of the work should be mailed to
the following address,Permissions Department,Harcourt,Inc.,6277 Sea Harbor Drive,Orlando,Florida 32887-6777.
INTERNATIONAL MARKETING 6e
Working for a foreign-owned firm
The number of Americans working for foreign firms is
dramatically increasing,but problems related to work in
a foreign firm’s culture are many and can be tiresome,
Some of the problems are in the areas of strategic
planning,consensus building,career advancement,
commitment to a firm,patience,documentation and
language barriers,
Discuss how each of them will affect Americans working in
Germany and Japan,
How are the above concerns related in a reversed situation,I.e if
foreigners were working for an American owned firm or institution?
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-3
Definitions and distinctions
Goods are physical objects,
devices,or things.
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.
Differences Between Services and Goods
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-4
Differences Between Services and Goods
Definitions and distinctions
The main difference between
goods and services is intangibility,
Services are generally more
intangible,personalized,
and perishable.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-5
Linkage between Services and Goods
Goods and services complement
one another,
Goods frequently require servicing
after their purchase (mostly related
to industrial goods).
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-6
Linkage between Services and Goods
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? 2001 by Harcourt,Inc,All rights reserved,17-7
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-8
Stand-Alone Services
Consumption of services
requires provider and
customer involvement.
Service consistency
is required.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-9
Tangible/Intangible Offerings of Airlines
Vehicle
Transport
Service
Frequency
Food and
Drinks
Transport
Transport
Distribution
Price Airlines
Intangible
Tangible
Source,Adapted from G,Lynn Shostack,“Breaking Free from
Product Marketing,,in Services Marketing,ed,Christopher H,
Lovelock (Englewood Cliffs,NJ,Prentice-Hall,1984),40.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-10
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? 2001 by Harcourt,Inc,All rights reserved,17-11
The Role of Services
In the U.S,economy
The service sector produces 77% of
U.S,GNP and employs 80% of the
workforce.
Financial and technical services
exporting and importing are both
growing rapidly.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-12
The Role of Services
In the U.S,economy
The service sector produces 77% of U.S,
GNP and employs 80% of the workforce.
Financial and technical services exporting
and importing are both growing rapidly.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-13
The Role of Services
,In the world economy
Services are the fastest growing world trade
sector
International services contribute
more than half of GNP in
many industrial nations.
Trade in services is about
25% of all world trade.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-14
The Role of Services
Models of Economic Systems by importance
to GNP;
– Developed countries path of economic structure
Model I,agriculture,Industry and services
Model II,Industry,service and agriculture
Model III,service,industry and agriculture
– Developing countries path of economic structure
Model I,agriculture,services and industry
Model II,agriculture,industry and service
Model III,industry,agriculture and service
Model IV,service,industry and agriculture
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-15
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? 2001 by Harcourt,Inc,All rights reserved,17-16
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? 2001 by Harcourt,Inc,All rights reserved,17-17
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? 2001 by Harcourt,Inc,All rights reserved,17-18
Governmental Responses to Services Problems
Trade liberalization developments
OECD code on invisible transactions
(1950’s)
GATT and the Tokyo Round
The Government Procurement Code
Subsidies and Countervailing Measures
Code
The Uruguay Round and the General
Agreement on Trade in Services (GATS)
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-19
Corporate Involvement in Services Marketing
Typical International Services
Banking and financial services
Construction,design,and engineering
services
Legal and accounting services
Communication services
Teaching and training services
Management consulting
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-20
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-21
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.
the following address,Permissions Department,Harcourt,Inc.,6277 Sea Harbor Drive,Orlando,Florida 32887-6777.
INTERNATIONAL MARKETING 6e
Services Marketing
Chapter 17
Copyright? 2001 by Harcourt,Inc.,All rights reserved,Requests for permissions to make copies of any part of the work should be mailed to
the following address,Permissions Department,Harcourt,Inc.,6277 Sea Harbor Drive,Orlando,Florida 32887-6777.
INTERNATIONAL MARKETING 6e
Working for a foreign-owned firm
The number of Americans working for foreign firms is
dramatically increasing,but problems related to work in
a foreign firm’s culture are many and can be tiresome,
Some of the problems are in the areas of strategic
planning,consensus building,career advancement,
commitment to a firm,patience,documentation and
language barriers,
Discuss how each of them will affect Americans working in
Germany and Japan,
How are the above concerns related in a reversed situation,I.e if
foreigners were working for an American owned firm or institution?
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-3
Definitions and distinctions
Goods are physical objects,
devices,or things.
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.
Differences Between Services and Goods
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-4
Differences Between Services and Goods
Definitions and distinctions
The main difference between
goods and services is intangibility,
Services are generally more
intangible,personalized,
and perishable.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-5
Linkage between Services and Goods
Goods and services complement
one another,
Goods frequently require servicing
after their purchase (mostly related
to industrial goods).
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-6
Linkage between Services and Goods
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? 2001 by Harcourt,Inc,All rights reserved,17-7
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-8
Stand-Alone Services
Consumption of services
requires provider and
customer involvement.
Service consistency
is required.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-9
Tangible/Intangible Offerings of Airlines
Vehicle
Transport
Service
Frequency
Food and
Drinks
Transport
Transport
Distribution
Price Airlines
Intangible
Tangible
Source,Adapted from G,Lynn Shostack,“Breaking Free from
Product Marketing,,in Services Marketing,ed,Christopher H,
Lovelock (Englewood Cliffs,NJ,Prentice-Hall,1984),40.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-10
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? 2001 by Harcourt,Inc,All rights reserved,17-11
The Role of Services
In the U.S,economy
The service sector produces 77% of
U.S,GNP and employs 80% of the
workforce.
Financial and technical services
exporting and importing are both
growing rapidly.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-12
The Role of Services
In the U.S,economy
The service sector produces 77% of U.S,
GNP and employs 80% of the workforce.
Financial and technical services exporting
and importing are both growing rapidly.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-13
The Role of Services
,In the world economy
Services are the fastest growing world trade
sector
International services contribute
more than half of GNP in
many industrial nations.
Trade in services is about
25% of all world trade.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-14
The Role of Services
Models of Economic Systems by importance
to GNP;
– Developed countries path of economic structure
Model I,agriculture,Industry and services
Model II,Industry,service and agriculture
Model III,service,industry and agriculture
– Developing countries path of economic structure
Model I,agriculture,services and industry
Model II,agriculture,industry and service
Model III,industry,agriculture and service
Model IV,service,industry and agriculture
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-15
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? 2001 by Harcourt,Inc,All rights reserved,17-16
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? 2001 by Harcourt,Inc,All rights reserved,17-17
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? 2001 by Harcourt,Inc,All rights reserved,17-18
Governmental Responses to Services Problems
Trade liberalization developments
OECD code on invisible transactions
(1950’s)
GATT and the Tokyo Round
The Government Procurement Code
Subsidies and Countervailing Measures
Code
The Uruguay Round and the General
Agreement on Trade in Services (GATS)
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-19
Corporate Involvement in Services Marketing
Typical International Services
Banking and financial services
Construction,design,and engineering
services
Legal and accounting services
Communication services
Teaching and training services
Management consulting
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-20
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.
Copyright? 2001 by Harcourt,Inc,All rights reserved,17-21
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.
