Notes on Service Strategy in Global Marketing Characteristics of services • In general most products are accompanied by services whilst services tend to have support products. • It would be difficult to find services on the market without the involvement of some product. • Services usually have a number of characteristics: Intangibility, Inseparability, Homogeneity, and Perishability Implications of service features for marketing • The unique features of services, contrasted with products, result in a number of implications or problems for marketing: ⎯ Intangibility - Services cannot be protected through patents. ⎯ Inseparability - Services cannot be readily displayed or communicated. ⎯ Heterogeneity - Prices are difficult to set. The consumer and others are involved in production. ⎯ Perishability - Centralised mass production of services difficult. Standardisation and quality control are difficult to achieve. Services cannot be inventoried. Global service life-cycle • A significant part of any marketing strategy is usually an analysis of service life-cycles. • The overall strategy is to modify the portfolio of services to achieve maximum growth. • In this situation a matrix technique examines market growth and market share with four key service features: Wild Colt, Derby Winner, Stud, and Glue Factory. Criteria for standardisation In the debate between standardisation and adaptation a series of criteria have been developed to assist the marketer in decision-making: ⎯ Nature of the product. ⎯ Market conditions. ⎯ Market environment. ⎯ Market development. ⎯ Infrastructure systems. ⎯ Cost benefit analysis. 1 Standardisation versus adaptation in global marketing • Standardisation means offering a common service on a worldwide basis, while adaptation means making changes to the service to satisfy local needs. • This may involve modifying the service, its presentation, its price, or its promotion. • Standardisation can mean that: ⎯ the product is 100% uniform ⎯ the product is uniform in essential key elements ⎯ the product is standardised around a standard core product even if there is local customisation. Standardising services • Hospitality companies may standardise in a number of ways: ⎯ Maintaining range and style of service throughout the world. ⎯ Adopting uniform facilities within rooms, restaurants, shops etc. throughout the world. ⎯ Developing a standardised service package, for example, packaged holidays. ⎯ Developing uniform architecture and decorations within all buildings. ⎯ Offering world-wide travel packages for business customers. ⎯ Offering consistent business links for services with associated companies such as car-hire, sightseeing, or sports facilities. ⎯ Give intensive training for personnel and make elements of the services offered as specific as possible, thereby reducing variation. ⎯ Customising the service by tailoring it to meet the needs of a specific segment of customers, such as skiers, surfers, gourmets etc. Communications strategies in foreign markets • Whichever strategy is used there is a very close relationship between the firm’s communication strategy and its service strategy. • There are five possible variations of preserving (extending), or adapting both the service and the communications: ⎯ Straight extension strategy. ⎯ Product adaptation of communication extension strategy. ⎯ Communications adaptation and extension strategy. ⎯ Product and communications adaptation strategy. ⎯ Product invention strategy. 2 International communications The methods include the following: ⎯ Advertising. ⎯ Sponsorship. ⎯ Public relations. ⎯ Packaging. ⎯ Sales promotion. ⎯ Direct marketing. Competitive strategies for service marketing • Firms providing services may achieve success in the global market place through the following strategic moves: ⎯ Customisation: given that services are heterogeneous, companies can exploit this characteristic by customising their services. ⎯ Uniqueness: the more unique a service offering is, the more it will attract global customers and the greater the potential for global success. ⎯ Offering superior quality: many firms can obtain and sustain their competitive advantage by offering high quality services at competitive prices. ⎯ Superior management system: This enables a firm to transfer a standardised and high quality management system to a global market. Criteria for effective global service marketing • Dahringer and Muehlbacher (1991) note four factors critical to achieving success in global service marketing: 1. Service companies can achieve success in the global market if they make their services unique: the more this is the case the greater the potential of the service. 2. The firm should customise its services for particular consumer requirements. 3. The provision of a quality service will give the firm a competitive edge over its rivals. 4. An effective management system will enable the firm to be effective in overseas markets. 3