Services and Retailing

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Services and Retailing
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Session Outline

• International services
• Nature of services
• implications for international marketing
• Typology of international services
• International retailing
• Retailing mix
• Standardisation/adaptation
• Guest Speaker
• Dr Kerrie Bridson
• Research Director
• Australian Centre for Retail Studies

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International Services

• Whether in the form of
• Professional services
• e.g. engineering, management consulting
• Experiential services
• e.g. sport, tourism
• Services encased in a physical package
• e.g. software
• The global marketplace is being increasingly
  characterised by the speed and ease with which
  services are transcending national boundaries

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International Services

• World trade in services now represents around 25
  of the total value of global trade (La et al.
  2003)
• Growth in this sector being faster than the world
  trade in goods
• Increase in the globalisation of services has
  been attributed to
• Opening of previously closed markets
• GATT (WTO) negotiations
• Demand for services to match economic development
• Advances in information and communication
  technologies
• Acceptance of service outsourcing (Wymbs, 2000)

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Nature of Services

• Intangibility
• Cannot be seen, tasted, felt, heard or smelled
  before purchase
• Inseparability
• Consumer and service cannot be separated
• Variability
• Quality depends on who provides the service, when
  , where and how
• Perishability
• Cannot be stored for later sale or use

Which characteristics have the most implications
for internationalisation, entry strategy and
marketing strategy?
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Typology of International Services

• Patterson Cicic (1995)

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Degree of face-to-face contact
Degree of tangibility
Low
High
Location-free professional services i.e.
executive recruitment, SME market research,
environmental science consulting, transportation,
finance and insurance, information technology,
product design services
Location-bound customised projects i.e. project
management, engineering consulting, management
consulting, human resource development
consulting, larger market research firms, legal
services
Low
Pure services
Standardised service packages i.e. software
development, installation/testing of new
hardware/ equipment, development of distance
education courses, compact disks
Value-added customised services i.e. on-site
training, computer hardware consulting,
facilities management, accommodation services,
catering, software training and support
High
Services bundled with goods
(Patterson Cicic, 1995)
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Retail Format

• Essential to distinguish between international
  retailers on the basis of format as different
  retail formats
• Have internationalised at varying rates
• Utilised different market entry strategies
• Adapted their offers to different degrees
• Experienced varying levels of success

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Retail Format

• Specialty retail formats may be more likely to
  use franchising or organic growth
• Body Shop
• Barnes Noble
• Laura Ashley
• Benetton
• Mass merchandise retailers may be more likely to
  use joint ventures or acquisitions
• Tesco
• WalMart

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Retail Offer

• The retailing mix represents the totality of the
  offer made by the retailer to potential customers
• It includes aspects of

Merchandise
Communication
Trading Format
Customer Service
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Merchandise

• Merchandise
• Quality
• Assortment breadth (No. categories of
  merchandise)
• Assortment depth (No. brands per category)
• Fashion/Innovation
• Price
• Standard merchandise range
• Helps to achieve economies of scale
• Presents a strong and consistent brand image
• Retailers risk alienating customers

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Merchandise

• Most common approach is to produce a core
  merchandise range, which may vary across markets
• Benetton, IKEA, Foot Locker
• Retailers may still need to adapt their
  merchandise range
• As a means of differentiation
• In response to specific needs of the market
• Due to legal requirements
• IKEA had to adapt its range of beds for the US
  market
• Body Shop had to adapt some product ingredients
  because of legal restrictions in Japan

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Trading Format

• Trading Format
• Store atmosphere
• Quality of displays
• Store layout
• Trading location
• A standard store design helps to create a strong
  global brand
• May have to adjust for
• Variations in merchandise range
• Differences in planning restrictions and store
  size

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Trading Format

• Daimaru (Australia)
• Attempted to position itself as a premium
  department store
• Store layout and atmosphere did not support this
  position

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Customer Service

• Customer Service
• After sales service
• Personal selling
• Levels of service
• In-store customer facilities
• Extended opening hours
• Customer service is one of the most difficult
  aspects of the retail offer to standardise

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Customer Service

• Intangible aspect is difficult to control
• Legal requirements may affect some aspects, such
  as extended opening hours
• The way we interact with people varies
  substantially across countries
• The level of service that customers expect varies
  across countries
• Daimaru Australia attempted to differentiate
  itself on the basis of superior service
• Only added costs to the operation and resulted in
  300 staff redundancies in the first year

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Communication

• Communication
• Advertising
• Public Relations
• Direct Marketing
• Sales Promotions
• A standardised communication strategy can result
  in cost efficiencies
• May have to adjust for
• Cultural differences
• Regulation
• Availability of media
• Competition

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Summary Key Points

• Major issues for international services
• Internationalisation
• Difficult to internationalise incrementally due
  to inseparability
• Need to establish a reputation in the domestic
  market, prior to foreign expansion
• Professional service providers often
  internationalise by following clients into new
  markets
• Intangibility has implications for marketing
  strategy in terms of
• Strategies to establish trust and credibility
• Importance of reputation and brand

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Summary Key Points

• Major issues for retailers
• Most common approach is to produce a large core
  merchandise range, which allows variations across
  markets
• Trading format is heavily influenced by
  regulation and availability of sites
• Customer service is difficult to standardise and
  attempts to do so have met with customer and
  staff resistance
• Of the communication elements, sales promotions
  tend to vary the most across markets
• Impacted by macro-environmental forces and
  industry norms