Chapter 12

Global Marketing of Services

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Differences Between Services and

Goods
Goods are physical objects, devices, or
things
Services are deeds, performances, or
efforts
Goods are fixed in form and require
physical distribution

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Differences Between Services and

Goods
Services differ from goods most strongly
in their intangibility
Services are generally more intangible,
personalized, and perishable

Linkage between services and goods

Goods and services complement one another

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Differences Between Services and

Goods
Stand-alone services
Services are strong in their intangibility
where they are consumed rather than
possessed
Services have high perishability
Services present problems in matching
service capacity to variations in demand
Production and consumption of services
requires customer involvement

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Differences Between Services and

Goods
Services are custom-made
Firms need to maintain some amount of service
consistency

Quality perception of service customers is

largely determined by the behavior of the
employees they contact
Market transparency: Details of the service are
clear, comparable, and available to all interested
parties
Service heterogeneity - Services may never be the
same from one delivery to another

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Differences Between Services and

Goods
Services require new channels of distribution
Since services are perishable, traditional distribution
channels cannot be used

Cultural sensitivity
Services are delivered directly to the customer,
making them potentially more culture sensitive than
products

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The Role of Services in the U.S

Economy
Infrastructure services comprises of
telecommunications, insurance, banking,
and logistics
Cross-border transactions: People,
information, and money crossing national
borders during the exchange process
Total U.S. service exports grew from $6
billion in 1958 to $560 billion in 2010
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The Role of Services in the U.S

Economy
The leading U.S. services exported in
2010
Business, professional, and technical services
(46 percent of services exports)
Travel services (19 percent of services
exports)
Royalties and license fee (19 percent of
service exports)

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The Role of Services in the U.S

Economy
The United States had a trade surplus of
around $132 billion in 2009
Trade surplus: Positive difference between
exports and imports
Trade deficit: Imports are greater than
exports

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Exhibit 12.4 U.S. Exports of

Services by Industry, 2010

Source: FT-900 U.S. International Trade in Goods and Services, Census Bureau and the Bureau of Economic
Analysis, Prepared by International Trade Administration, Office of Trade and Industry Information, 2011
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Exhibit 12.5 U.S. Imports of

Services, by Industry, 2010

Source: FT-900 U.S. International Trade in Goods and Services, Census Bureau and the Bureau of Economic
Analysis, Prepared by International Trade Administration, Office of Trade and Industry Information, 2011

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The Role of Services in the World

Economy
According to the WTO, cross-border
exports of services globally totaled $3.6
trillion in 2010
The impact of the service sector is also
evident on some smaller countries of the
world

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Global Transformation of Services

Deregulation: Reduction of government
interference in the marketplace
Decreased regulation of service industries by
industry groups
Primary deregulated industries in the United
States
Transportation
Banking
Telecommunications

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Global Transformation of Services

Technological advancement is another
major factor in increasing service trade

Expansion of both labor-intensive and technologyintensive services into global markets

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International Trade Problems in

Services
Data collection problems
Services are often invisible statistically and
physically
Difficulty of quantifying and tracking the
delivery of services
Lack of elaborate data collection system
Lack of data transparency

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International Trade Problems in

Services
Regulation and service trade negotiations
Barriers to entry
Justified by government with reference to economic
and national security
Infant industry argument
Tariff barriers inhibit market entry for the service
provider or consumer
Nontariff barriers impede service performance
Distinction between discriminatory and
nondiscriminatory regulations
Barriers to services destined for the U.S. market
result mainly from regulatory practices
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Corporate Involvement in
International Services Marketing
Services and e-commerce
E-commerce has reduced the meaning of
distance
Internet helps service firms gain credibility in
international markets and save travel costs
Note of caution
Many businesses and consumers do not have access
to electronic business media

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Corporate Involvement in
International Services Marketing
Need for a multilingual website:
Facilitate a shift toward non-Englishspeaking Internet users
Use as a cost-effective marketing tool
Access new customers
Increase sales with little investment
Demonstrate that company is customercentric

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Corporate Involvement in
International Services Marketing
Generate trust by providing services in a
customers native language
Demonstrate cultural sensitivity
Beat competition
Show that company thinks, works, and
deals internationally
Be picked up by more search engines

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Corporate Involvement in
International Services Marketing
Services and academia
Higher education is one of the largest service
exports in the U.S., with international
students contributing $21 billion to the U.S.
economy in the 2011 academic year

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Corporate Involvement in
International Services Marketing
Typical international services
Financial services
Construction, design, and engineering
services
Legal and accounting services
Teaching services
Management consulting
Tourism services

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Corporate Involvement in
International Services Marketing
Combining international advantages in
services help to develop newer and
drastic comparative lead
Various starting points for marketing
services internationally
Participation in the Internet
Services tied to complementary goods can
follow the path of the good in the market

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Corporate Involvement in
International Services Marketing
Services which are independent of goods
Search for market situations that are similar to the
domestic market

Identify and understand transition points

abroad
Stay informed about international projects
sponsored by domestic organizations

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Corporations and Involvement in

International Services Marketing
Strategic implications for international
services marketing
Identify the nature and the aim of the service
offering
Communicate the performance of the service
on both the mass level and the one-on-one
level

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Corporations and Involvement in

International Services Marketing
Train the organizational personnel to convey
the spirit, values, and attitudes of the
corporation
Address issues of service pricing and financing
Consider the distribution implications of
international services

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