ch9-global services marketing
TRANSCRIPT
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Ch 9: Global Services
MarketingLearning Objectives
- Drivers that fuel the growth of global services
- Examine critical strategic considerations for marketing services globally.
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Significance of Services in Global
Economy
Services sector - Banking, Insurance,
Accountancy, Telecommunication,
Transportation, etc.
According to the World Bank, Services sector
represents over 60% of world GDP
Low-income economies - 38%, Middle-incomeeconomies - 56% & High-income economies >
65%
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Significance of Services in Global
Economy
77% of US GDP is generated from services
sector which employ 80% of its workforce;
Hong Kong, 89% GDP from services sector &80% of employment
Tourism - 33% of global services
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Defining Global Services
Pure
ServicesServices in
GoodsConsulting, Education, Telecommunication, Healthcare, Software, Restaurants
Services that resides towards the µpure¶ services end cannot be experienced by
customer before the purchase
Services embedded in physical goods are more tangible and easier for customers to
µsample¶ before purchase
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Drivers for Growth in Global Services
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Deregulation & Liberalization
Primary Objective - create more efficient
services infrastructure by deregulating and
liberalizing nationalized services
Airlines, financial services, Insurance, etc.;
previously inefficient national services
General Agreement on Trade in Services(GATS) established in Jan 1995; 140 WTO
member governments; improve
competitiveness in services and promote
liberalization of trade in services
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Quality service as a Business
Imperative
Providing µGood¶ level of service is no longer
an option for companies that operate globally
Customers not only expect high quality goods,
they also expect high levels of service
Competitive advantage through distinctive and
consistent service in addition to qualityphysical product
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Homogenization of Global Consumer
Increasing invasiveness of global media
broadcasting channels
reduction in costs in communications, air
travel and information transfer
Increasing demand for products & services
globally leading to proliferation of services
such as international travel, credit cards,
insurance, banking & entertainment
Examples, emergence of global brands such
as American Express, Marriott Hotels,
McDonald¶s, etc.
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Global Economies of Scale
Leveraging economies of scale through
geographical expansion of operations
Excess capacity due saturation and/or
declining domestic markets
Management aspiration to pursue
organizational growth
Perceived potential for high profitability in
overseas market
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Enabling Technologies
Dramatic changes and technical innovations in
the communications technologies
Technological advancements in air travel has
helped reduce costs of long distance travel;
replace domestic supply by consumption
abroad
Examples, Education (e-learning), Banking
(tele-banking and internet banking)
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Following the Clients
Consumers are more likely to purchase a
brand of goods or goods that they trust and
are familiar with.
Example, many UK travel related service
providers such as Barclays, Vodafone &
Europcar set up operational base in Spanish
tourist resorts to provide for UK travelers.
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Challenges of Marketing ServicesInternationally
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Intangibility
Customer cannot experience or test prior to
purchase; purchase decision is difficult as
perceived risk is high
Difficult for service providers to demonstrate
value before the purchase
Customers have to rely on tangible cues -prior experience, word-of-mouth
Communication across borders impacted by
physical, cultural & language barriers
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Heterogeneity (1/2)
The service provider: Employees in different
countries vary in the way they deal with
customers (Ex, Consultancy Service)
The buyer: Perceptions/Preferences vary from
customer to customer (Ex, Business Class vs
Economy class passenger)
The situation: Situational factors affectcustomers¶ perceptions on what they get for
their money (ex, Regular vs Irregular
commuter
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Heterogeneity (2/2)
Minimize heterogeneity by standardizing as
many elements (Communication, Procedures,
Systems) = Maximize consistency in delivery =
improving customers¶ service expectation
Contrary to belief, standardization doesn¶t
contribute to increased level of perceived
quality & customer satisfactionEx, banks (automated telephone banking &
internet banking), airlines (standardized
check-in procedures)
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Inseparability (1/2)
The degree of simultaneous production &
consumption varies depending on the degree
of tangibility.
Example, educational services (high degree of
intangibility), Chinese takeaway meal (low
degree of intangibility)
Consumer preferences in each country
impacted by macro economic factors
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Inseparability (2/2)
Segmentation strategy cannot be transfered
from one country to another
Service provider must develop knowledge &
understanding of each market
Example, Dubai exhibits µWestern Culture¶ but
within the limits of local customs & culturalvalues
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Strategic Considerations for Marketing Services Globally
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Standardization vs Customization
Standardization
Increased level of customer satisfaction - due higher reliability
Possible cost saving passed on to customers
Increased level of efficiency gains - due mass production
Customization
Exceeding customer expectations
Premium pricing
In-depth understanding of customers - increased interaction with
customers
Degree of standardization or customization depends on degree of intangibility
and the degree of producer-consumer contact during delivery.
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The Extended Mix (1/3)
People
In µhigh contact¶ services, people become mostimportant component which determines success or
failure of services
Where µproduction¶ can be separated from
µconsumption¶, organizations reduce interaction of
staff with customers.
Provision of regular training and empowerment of
employees - fundamental to achieving high
standards
Extended 3Ps in marketing mix - People, Process & Physical Evidence - more
prominent than traditional 4Ps
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The Extended Mix (2/3)
Process
Production & delivery of service is essentially aprocess rather than a tangible object
Composition & execution of the process
influences the way in which service is
experienced by customer
Example, customer who chooses to shop online
for groceries is different from another customer
who prefers to shop in the local supermarket -
Important to manage the delivery of services
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The Extended Mix (3/3)
Physical Evidence
In the absence of a physical
product, service providers useµtangible cues¶ such as a pleasant
shopping atmosphere which
customers associate with service
quality
Example, travel agent usescolorful brochures of holiday
destinations, the ambience, staff
uniform, etc. as physical evidence
of quality of service.
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Socio-Cultural Differences
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Role of Technology (1/2)
Increased Productivity - through economies of
scale; making cost saving through automation
of business processes and servicing morecustomers at the same time
Enhancing decision-making - sophisticated
computer systems for problem analysis; helps
decision-making on strategic issues
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Role of Technology (2/2)
Delivery of services - use of internet
technologies; Online travel website -
integrates Interactive website, Search Options,Credit Card payments & Electronic mailing
Customer Targeting & Relationship
Management - Accurate marketing information
to the right customer segments; Managerelationship with existing customers
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Summarize
Distinguishing characteristics - Intangibility,
Heterogeneity, Inseparability & Perishability
Factors affecting growth of services globally -Deregulation & Liberalization | Quality service as
business imperative | Global consumers |
Economies of scale | Follow the clients
Strategic considerations - Level of Standardizationor Customization | Extended Marketing Mix | Socio-
Cultural differences | Technology