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Chapter 15

Chapter 15. Services Marketing. Differences Between Services and Goods. Definitions and distinctions Goods are physical objects, devices, or things. Services are deeds, performances, or actions.

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Chapter 15

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  1. Chapter 15 Services Marketing

  2. Differences Between Services and Goods • Definitions and distinctions • Goods are physical objects, devices, or things. • Services are deeds, performances, or actions. • Goods are fixed in form and require physical distribution.Services are delivered as problem solutions on or off-site. • The main difference between goods and services is intangibility. Services are generally more intangible,personalized, and perishable.

  3. Linkage between Services and Goods • Goods and services complement one another. Goods frequently require servicing after their purchase. • Goods and services are marketed in varying packages or combinations to targeted customer groups. • Customer groups have differing perspectives on the features and provision of services.

  4. Stand-Alone Services • Services compete with goods and compete with other services (e.g., video rentals). • Services are intangible and perishable, presenting problems in matching service capacity to variations in demand. • Consumption of servicesrequires provider and customer involvement. • Service consistencyis required.

  5. Tangible/Intangible Offerings of Airlines Airlines Distribution Price Vehicle Service Frequency Transport In-flight Service Pre- and Postflight Service Food and Drinks Intangible Tangible SOURCE: G. Lynn Shostack,”Breaking Free from Product Marketing,” in Services Marketing ed. Christopher H. Lovelock (Englewood Cliffs, NJ; Prentice-Hall, 1984),40.

  6. Problems with Services • Market transparency • Consumers have difficulty in evaluating services because customers may use (or require )the same service in different way. • Service heterogeneity • Services vary in their content and quality of delivery as customer requirements change. • Cultural sensitivity • Services are delivered directly to the customer, making them potentially more culturally sensitive than products.

  7. The Role of Services • In the U.S. economy • The service sector produces 80% of U.S. GNP and employs 83% of the workforce. • Financial and technical services exporting and importing are both growing rapidly. • In the world economy • Services are the fastest growing world trade sector. • International services contribute more than half of GNP in many industrial nations. • Trade in services is about 29% of all world trade.

  8. Global Transformation of Services • Reduced governmental regulation • Transportation, banking, and telecommunications • Decreased regulation by industry groups. • Technological advances are opening up and increasing worldwide service trade opportunities. • Both labor-intensive and technology-intensive services are expanding into global markets.

  9. International Trade Problems in Services • Data collection problems • The quality of data collected on the service trade is poor due to the difficulty of quantifying and tracking the delivery of services. • Services lack of homogeneity for transparency, making comparisons and the measurement of the effects of services in global markets difficult.

  10. Regulation of Services Trade • U.S. disincentives to international services • state and federal regulations are formidable barriers to entry • Governmental justification for entry barriers • national Security • economic Security • protection of infant industries • Obstacles to service trade abroad • barriers to entry • performance • discriminatory and nondiscriminatory regulations

  11. Corporations and Involvement in International Services Marketing • E-commerce has played an important role in expanding global services. • Many service providers know customers “virtually” only. • Language barriers slow e-commerce service expansion. • Typical international services include financial, construction, design, engineering services, legal and accounting, teaching, and management consulting.

  12. Starting to Market Services Internationally • For services tied to complementary goods“ • Follow the path of the good in the market. • For services independent of goods • Identify market situations abroad similar to the domestic market where the application of services expertise presents opportunities for market entry and expansion. • Identify and understand transition points • Domestic and economics changes in foreign countries can create the need for services expertise.

  13. International Services Marketing • Strategic Implications • Identify the nature and the aim of the service offering core. • Communicate the performance of the service on both the mass level and the personal level. • Train 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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