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12. Chapter. Global Services. Services versus Products. Characteristics of Services Intangibility A service cannot easily be touched Heterogeneity The service is not exactly the same each time Inseparability Services are produced when they are consumed Perishability

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  1. 12 Chapter Global Services

  2. Services versus Products • Characteristics of Services • Intangibility • A service cannot easily be touched • Heterogeneity • The service is not exactly the same each time • Inseparability • Services are produced when they are consumed • Perishability • A service cannot be stored

  3. Services versus Products • A Product Equivalence • From a marketing viewpoint • Many similarities exist between physical goods and services • The core service is what the buyer is “really” buying • The basic service package refers to the specified services offered to the customer • The augmented service is the totality of benefits that the individual receives • A key factor in global services marketing is whether the basic service package can be replicated abroad

  4. Foreign Entry of Services • Foreign Trade in Services • Tourism exports provide an illustration of foreign trade in services • A franchising expansion provides an illustration of a licensing mode of service entry • In consulting services, foreign direct investment is sometimes necessary

  5. Foreign Entry of Services • Service Entry Modes • Exporting • Licensing • Strategic Alliances • Foreign Direct Investment

  6. Local Marketing of Global Services • Similarities and Differences in Product and Service Marketing • Market Segmentation • Positioning • Product Line • Branding • Pricing • Promotion • Distribution

  7. Controlling Local Service Quality • Critical Incidents in Global Services • A “critical incident” or “moment of truth” • Is the period of time during which a consumer directly interacts with a service • The quality of a service during a critical incident or moment of truth • Is typically measured in terms of a “gap” between the customer’s expectations of the service and the perceived actual performance • Three different levels of service expectations • Desired service – the highest or ideal quality • Adequate service – the lower limit below which service is unacceptable • Predicted service – between the desired and the adequate service

  8. Controlling Local Service Quality • The Gap and Zone of Tolerance • As long as the perceived service performance lies between the desired and the adequate service level there is no gap and the customer is satisfied • If the performance drops below the adequate level, there is a gap and dissatisfaction • Between desired and adequate service levels is the zone of tolerance where the customer will be more or less satisfied • If the performance is above that predicted, the customer is positively surprised

  9. Controlling Local Service Quality • Culture and Service Quality • The relationship between culture and service delivery affects both perceived quality and customer satisfaction • The intangibility of services is typically assumed to make consumer evaluation of service quality more difficult than for tangible products • Quality is a matter of how people feel and of their particular taste • This dependence on subjective feelings means that what is perceived as high-quality service may differ between individuals

  10. Service Globalization Potential • Basic Drivers of Service Expansion • Market Drivers • Competitive Drivers • Cost Drivers • Government Drivers • Technology Drivers • Stage of the Life Cycle • The potential for global expansion of the service concept is highest during the maturity stage of the life cycle

  11. Service Globalization Potential • Infrastructure Barriers • The global applicability of a service depends on whether the infrastructure through which the service is offered exists in foreign markets • Idiosyncratic Home Market is required factors for services globalization • Reasonable similarity to the home country situation • Distillation of key features of the service concepts • Localization of these factors to another environment while still maintaining FSAs of the firm

  12. Close-Up: Two Globalized Services • Fast-Food Franchising • Many multinational firms are increasingly turning to franchising • A wide variety of firms have utilized franchising to penetrate new markets • Successful franchisers provide a host of preplanning tools to help prospective local investors

  13. Close-Up: Two Globalized Services • Fast-Food Franchising (cont’d) • Advantages of franchising • Enables a franchisee to start a business with limited capital and benefit from the business experience of the franchiser • Disadvantage of franchising • The franchiser’s ability to dictate many facets of business operation could prove overly intrusive

  14. Close-Up: Two Globalized Services • Professional Services • Despite local regulations that vary between countries, professional services have recently expanded in step with the expansion of global firms • The global expansion of professional services has been facilitated by the increased sophistication in creating strategic alliances

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