service marketing

1. SERVICE MARKETING
Recommended Book:- Zeithaml, Bitner & Gremlar

2. PGDM (IIM Raipur)
Bakhresa FMCG (South Africa)
Relationship Manager (HDFC Bank)
MD- Shyam Hospital
Faculty(MBA)- GLA University, Mathura
Swarit Yadav

3. Topics to be covered
 Services in global perspective
 International marketing of services
 Principal driving force in global marketing of
services
 Key decisions in global marketing

4. Service and Retail Exports
 Nearly four of every five dollars in the nation’s
gross domestic product comes from services
 United States is the world’s largest exporter of
services and retailing
 Profitable exports include services such as
engineering, financial, computing, legal services,
insurance, and entertainment
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5. Benefits of Going Global
 Additional revenue
 New insights into customer behavior
 Alternative distribution strategies
 Advance notice of new products
 A major key to achieving success in foreign
markets
 Ability to adapt products to local preferences and
culture
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6. International Economic Environment
 Factors that determine a nation’s prospects as a
host for international business expansion
 Size
 Per-capita income
 Stage of economic development
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7. International Economic Environment
 Infrastructure is an important economic factor
to consider when planning to enter a foreign
market
 Changes in exchange rates can complicate
international marketing
 Exchange rate - Price of one nation’s currency in
terms of another country’s currency
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8. International Social-Cultural
Environment
 To be effective, marketers must understand a
nation’s culture
 Language plays an important role in global
marketing
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9. International Technological
Environment
 The Internet transcends political, economic, and
cultural barriers to reach every corner of the
globe
 Technology presents challenges for global
marketers that extend beyond the Internet and
other telecommunication innovations
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10. International Political-Legal
Environment
 Global marketers must stay abreast of laws and
trade regulations in each country in which they
compete
 Firms set up internal political risk assessment
units
 The political environment involves labor
conditions in different countries
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11. International Political-Legal
Environment
 International law
 U.S. has friendship, commerce, and navigation
(FCN) treaties with other governments
 Europe has pushed for mandatory ISO certification
to standardize quality levels
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12. International Political-Legal
Environment
 U.S. law
 Various trade regulations, tax laws, and import and
export requirements affecting international
marketing
 Export Trading Company Act of 1982 exempts
exporters from antitrust regulations
 Foreign Corrupt Practices Act makes it illegal
to bribe a foreign official in an attempt to
solicit new or repeat sales abroad
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13. International Political-Legal
Environment
 Legal requirements of host nations
 Example: Despite China’s many advances in recent
years, the Chinese government continues to censor
the Internet
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14. Trade Barriers
 Barriers fall into two major categories
 Tariff - Tax levied against imported goods
 Administrative barriers
 GATT and WTO agreements have eliminated
many tariffs on many products
 Countries frequently use nontariff barriers to boost
exports and control the flows of imported products
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15. Tariffs
 Two types of tariffs
 Revenue tariffs - Designed to raise funds for the
importing government
 Protective tariffs - Designed to raise the retail
price of an imported product to match or
exceed that of a similar domestic product
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16. Other Trade Barriers
 Import quotas - Limit the number of units of
products in certain categories that can cross a
country’s border for resale
 Embargo - Complete ban on the import of specified
products
 Subsidies - Government financial support of a
private industry
 Exchange control - Method used to regulate
international trade among importing organizations
by controlling access to foreign currencies
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17. Dumping
 Controversial practice of selling a product in a
foreign market at a price lower than what it
receives in the producer’s domestic market
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18. Multinational Economic Integration
 Free-trade area in which participating nations
agree to free trade among themselves,
abolishing tariffs and trade restrictions
 Custom union establishes a free-trade area and
uniform tariffs for nonmember nations
 Common market extends a customs union by
seeking to reconcile all government regulations
affecting trade
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19. General Agreement on Tariffs and
Trade (GATT)
 International trade accord that has helped
reduce world tariffs
 In 1994, Uruguay round produced several
important outcomes
 Reduced farm subsidies
 Increased protection for patents, copyrights,
and trademarks
 Included services under international
trading rules
 Phased out import quotas on textiles and
clothing from developing nations
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20. World Trade Organization (WTO)
 Succeeded GATT
 Oversees GATT agreements
 Serves as a forum for trade negotiations
 Mediates trade disputes
 Monitors national trade policies
 Works to reduce trade barriers throughout the
world
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21. World Trade Organization (WTO)
 WTO has made slow progress toward its major
policy initiatives
 Liberalizing world financial services
 Telecommunications
 Maritime markets
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22. North American Free Trade
Agreement (NAFTA)
 Accord removing trade barriers among Canada,
Mexico, and the United States
 Particularly important to U.S. marketers because
Canada and Mexico are two of its largest trading
partners
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23. The Free Trade Area of the Americas
and CAFTA-DR
 Proposed free trade area stretching the length of
the entire Western hemisphere
 Designed to extend free trade benefits to
additional nations in North, Central, and South
America
 Central American Free Trade Agreement–DR
(CAFTA-DR) - Trade agreement among the United
States, Central American nations, and the
Dominican Republic
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24. European Union (EU)
 Customs union that is moving in the direction of
an economic union by:
 Adopting a common currency
 Removing trade restrictions
 Permitting free flow of goods and workers
throughout the member nations
 Goal is to remove all barriers to free trade
among its members
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25. Figure 8.2 - The 27 Members of the
European Union25

26. Going Global
 Reasons for marketers to go global
 Saturation of the target market
 Strong domestic market share
 Globalization of customers
 New customers in emerging markets
 Globalization of competitors
 Reduced trade barriers
 Advances in technology
 Enhanced customer responsiveness
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27. Strategies for Entering Foreign
Markets
 Three basic choices
 Importing and exporting
 Contractual agreements such as franchising,
licensing, and subcontracting
 International direct investment
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28. Figure 8.3 - Levels of Involvement in
Global Marketing28

29. Importing and Exporting
 Decision to import, or bring in foreign goods to
sell domestically or use as component parts,
depends on:
 Ability of supplier to maintain quality
 Flexibility in filling orders that vary
 Response time in filling orders
 Total costs
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30. Importing and Exporting
 First-time exporters can reach foreign
customers through:
 Export-trading companies
 Export-management companies
 Offset agreement
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31. Franchising
 Contractual arrangement in which a wholesaler
or retailer agrees to meet the operating
requirements of a manufacturer or other
franchiser
 Benefits are risk reduction, standardized
operations, and greater recognizability
 Success depends on ability to adapt to local
customer preferences
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32. Foreign Licensing
 Agreement that grants foreign marketers the
right to distribute a firm’s merchandise or to use
its trademark, patent, or process in a specified
geographic area
 Gives access to local partner’s marketing
information and distribution channels, and
protection from legal barriers
 Allows quick entry into a foreign market with a
known product
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33. Subcontracting
 Contractual agreements that assign the
production of goods or services to local or
smaller firms
 Can prevent mistakes involving local culture and
regulations
 Can provide protection from import duties
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34. International Direct Investment
 High involvement and high risk are the major
characteristics
 Firms choosing this method often have a
competitive advantage
 Several forms
 Acquisition
 Joint venture
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35. From Multinational Corporation to
Global Marketer
 Multinational corporation - Significant
operations and marketing activities outside its
home country
 Examples: General Electric, Siemens, Mitsubishi
 Important changes since 1960
 No longer exclusively U.S. based
 Multinationals no longer think of their foreign
operations as mere outsourcing appendages
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36. From Multinational Corporation to
Global Marketer
 Employ large foreign workforces relative to
American staffs
 Reflect interdependence of world economies,
growth of international competition, and
globalization of world markets
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37. Developing an International Marketing
Strategy
 Global marketing strategy - Standardized
marketing mix with minimal modifications that
a firm uses in all of its domestic and foreign
markets
 Can effectively market some goods and services to
segments in many nations that share cultures and
languages
 Can be highly effective for luxury products that
target upscale consumers everywhere
 Major benefit is its low cost to implement
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38. Developing an International Marketing
Strategy
 Multidomestic marketing strategy -
Application of market segmentation to foreign
markets by tailoring the firm’s marketing mix to
match specific target markets in each nation
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39. Figure 8.4 - Alternative International
Product and Promotional Strategies
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40. International Distribution Strategy
 Marketers must set up proper channels and
anticipate extensive physical distribution
problems
 A distribution decision involves two steps
 The firm must decide on a method of entering the
foreign market
 It must determine how to distribute the product
within the foreign market through that entry
channel
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41. Pricing Strategy
 Competitive, economic, political, and legal
factors can limit pricing decisions
 Adaptation to local markets
 Emergence of commodity marketing
organizations
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42. Countertrade
 Form of exporting whereby goods and services
are bartered rather than sold for cash
 May be imposed in less developed nations that
lack sufficient foreign currency to obtain goods
and services they want
 Way to control balance-of-trade problems
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43. The United States as a Target for
International Marketers
 U.S. is an inviting target for foreign companies
 Increasingly, foreign multinationals invest in U.S.
assets as they seek to produce goods locally and
control distribution channels
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44. Strategic Implications of Marketing in
the 21st Century
 Marketers are pioneers in bringing new
technologies to developing nations
 Greatest competitive advantage belongs to
marketers who capitalize on the similarities of
their target markets and adapt to the differences
 New and better products in developing markets
will create and maintain relationships for the
future
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