Webster University

1. Webster University MRKT 5980

2. Services Marketing & Service Lifecycle Management

3. 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. Webster University MRKT 5980

4. 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. Webster University MRKT 5980

5. 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. Webster University MRKT 5980

6. 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. Webster University MRKT 5980

7. 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. Webster University MRKT 5980

8. 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. Webster University MRKT 5980

9. 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. Webster University MRKT 5980

10. 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. Webster University MRKT 5980

11. 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 Webster University MRKT 5980

12. 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. Webster University MRKT 5980

13. 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. Webster University MRKT 5980

14. 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. Webster University MRKT 5980

15. Logistics and Supply Chain Management

16. A Definition of International Logistics • “…designing and managing of a system that controls the flow of materials into, through, and out of the international corporation” • In taking a systems approach to linkages among logistics components, firms can incorporate efficiencies through system design and management techniques • JIT - just-in-time • EDI - electronic data interchange • ESI - early supplier involvement • ECR - efficient customer response systems Webster University MRKT 5980

17. The Phases of International Logistics • Materials management • Timely movement of raw materials, parts, and supplies through the firm • Physical distribution • Movement of the firm’s product to its customers Webster University MRKT 5980

18. The Systems Concept • The extensive and complex materials-flow activities within and outside of the firm must be considered in the context of their interaction. • Total-cost concept • Minimizing overall logistics costs by identifying activity-based costs that impact after-tax profits. • Trade-off concept • Recognize that logistics activities involve trade-off in areas such as time-saved in delivery versus the increased costs of expedited delivery systems. Webster University MRKT 5980

19. Supply-Chain Management • An integration of the three system concepts. • Value-added activities connect the company’s supply side with the demand side. • Efficient supply chain design increases customer satisfaction and saves money • reduces inventory holding costs • increases inventory turnover cycles • reduces operating costs • reduces order handling and mailing costs • makes firm more price competitive Webster University MRKT 5980

20. The Impact of International Logistics • Logistical costs are 10% to 30% of the total landed cost of an international order. • Factors necessary for the use of logistics as a competitive tool: • Close collaboration with suppliers and customers. • Technologically advanced information processing and communication exchange capabilities. • An integrated business infrastructure. Webster University MRKT 5980

21. New Dimensions of International Logistics • Basic differences • Distance • Currency variation and exchange rate differences • Varying entry regulations • Different transportation modes • Country-specific differences • Transportation systems and intermediaries vary. • Reliability of carriers may be different. • Computation of freight rates may be different. Webster University MRKT 5980

22. International Transportation Issues • Transportation infrastructure • Roads,rail lines, airports, seaports, pipelines • Availability of transportation modes • Overland shipping, ocean shipping, air shipping • Choice of modes • Transit time, predictability, cost, noneconomic factors • Noneconomic Factors • Government involvement, the UNCTAD and the 40/40/20 concept Webster University MRKT 5980

23. International Shipment Documentation • Bill of Lading • acknowledges receipt of goods • Shipper’s export declaration • states proper authorization for export under general or special validated export license • Packing list of contents • Dock and warehouse receipts • Collection documents • commercial (consular) invoice • certificate of origin • import and foreign exchange licenses Webster University MRKT 5980

24. International Inventory Issues • Inventory carrying costs can be up to 25% of the value of an inventory. • Just-in-Time policies minimize inventory volume by making it available when needed. • Inventories assist in the movement of products. • Factors in deciding on the level of inventory to maintain: • Order cycle time • Desired level of customer service • Use of Inventory as a strategic tool Webster University MRKT 5980

25. Order Cycle Time • The total time that passes between the placement of an order and the receipt of the merchandise. • Length of the total order cycle • Longer cycle in international marketing than domestic • Consistency of the order cycle • More complicated delivery mode reduces consistency • Altering cycle times • Change transportation methods • Change inventory locations • Change ordering process Webster University MRKT 5980

26. International Storage Issues • The storage facilities location decision • Availability • Adequacy • Physical Conditions • Optimizing the logistics system • Rank products by warehousing needs “A” products stocked in all distribution center • “B” products stored only in selected locations • “C” products with low demand stocked only at headquarters Webster University MRKT 5980

27. International Packaging Issues • Packaging for domestic shipping may NOT be adequate for international shipping. • Goods should arrive in a safe, undamaged, maintainable, and presentable condition. • Packaging should minimize the stress of intermodal movement and storage. • Protected from climatic conditions. • Weight based on delivery mode. • Follow customer instructions for labeling, packaging, and routing. Webster University MRKT 5980

28. Management of International Logistics • Centralized logistics management • Headquarters retains decision-making power and control, coordinates all logistics. • Decentralized logistics management • The “decentralized full profit center model” allows the organization to respond to local market conditions. Possibility for loss of coordination. • Contract logistics • Growing preference to outsource logistics function to “third party” specialists such as FedEx or UPS. • The supply chain and the Internet Webster University MRKT 5980

29. Logistics and the Environment • Reverse Distribution • “a system responding to environmental concerns that ensures a firm can retrieve a product from the market for subsequent use, recycling, or disposal” Webster University MRKT 5980