Internationalisation of Services

1
Internationalisation of Services

• Aim To examine the characteristic features of
  services and the resulting consequences for
  international marketing activities.

2
Internationalisation of Services (cont.)

• What are services?
• those fruits of economic activity that you
  cannot drop on your toe banking to butchery,
  acting to accountancy.
• (Economist quoted in Terpstra)
• A service may be described as any activity or
  benefit that a supplier offers a customer that is
  usually intangible and does not result in the
  ownership of anything.
• (Bradley)

3
Internationalisation of Services (cont.)

• deeds, performances, efforts, conducted across
  national boundaries in critical contact with
  foreign cultures
• (Clarke et al.)
• People are the critical element in the provision
  of services
• ? Cultural sensitivity more important

4
Growth in services in world markets

• Growth attributable to three main factors
• Changing lifestyles
• - affluence, leisure time, women in the
  workplace
• Changing world
• - complexity of life, life expectancy, ecology
  and resource concerns
• Changing technology
• - range of new products, complexity of
  products, role of material culture
• (Bradley)

5
Product-service continuum

• List some offerings which are
• product-dominant
• service dominant
• include an element of both

6
Product-service continuum (cont.)
Teaching
Nursing
Advertising agency
Burger Bar
Car
Dog food
(based on Hollensen)
Salt
7
The Nature of Services

• Intangibility
• Services cannot be touched or felt
• most important distinguishing feature
• Inseparability
• service is created at point of sale
• simultaneous production and consumption
• consumer becomes part of the service

8
The Nature of Services (cont.)

• Heterogeneity
• variability due to people factor/high labour
  content
• quality of output may vary
• Perishability
• services cannot be stored or saved (e g. airline
  seat)
• difficult to match supply and demand

9
Marketing Implications of Services Characteristics

• Intangibility
• Services are difficult to display or communicate
• buyers rely on cues - communications
• - word of mouth
• - location
• - equipment
• - people

10
Intangibility (cont.)

• The greater the level of intangibility
• - the more difficult the process of
  differentiation
• - the higher the perceived costs and risks in
• internationalisation
• - the greater the difficulty in exporting

11
Marketing Implications of Services
Characteristics (cont.)

• Inseparability
• often physical presence of customer necessary for
  service to take place
• When exporting not possible, entry forms are
  franchising, strategic alliance, acquisition,
  direct investment

12
Marketing Implications of Services
Characteristics (cont.)

• Heterogeneity
• Service performed by different people
• Quality control more difficult
• Selection and training of employees v. important
• Degree of standardisation dependent on cultural
  factors

13
Marketing Implications of Services
Characteristics (cont.)

• Perishability
• Difficult to forecast demand in many different
  markets
• Important to manage demand prior to service being
  offered (example variations in price of airline
  seats)

14
7 Ps

• In addition to 4 Ps
• - Personnel
• - Process
• - Physical facilities

15
Delivery of Services

• People-processing services
• Customers are part of simultaneous production/
  consumption process.
• Customers and provider must be in the same
  location
• - either customer or provider must cross border
• Examples?
• Ex. passenger transport, accommodation,
  healthcare

16
Delivery of Services (cont.)

• Possession processing services
• Tangible actions to physical products so as to
  improve their value to customers
• Product/object needs to be involved in production
  of service but not the customer
• Local presence required
• Examples?
• Ex. Freight transport, car repair,
  installing/servicing industrial plant

17
Delivery of Services (cont.)

• Information-based services
• Collecting, manipulating, interpreting,
  transmitting data to create value
• Little or no customer involvement in the
  production process
• Can be delivered from centre to any location with
  the appropriate equipment
• Examples?
• Ex. Banking, Accounting, consultancy, education,
  internet services (based on Hollensen)

18
Delivery of Services (cont.)

• Note
• People-processing ? Possession processing ?
  infor-
• mation based services
• - decrease in customer involvement
• - decrease in contact between customer and
  service personnel
• - decrease in cultural sensitivity
• - increasing possibility of standardisation

19
Summary

• Reasons for growth of services
• Product-service continuum
• The nature of services
• Marketing implications
• 7Ps
• Delivery of services