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Module 1: Service Distribution and Pricing Strategies

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Developing Service Products - Part 3

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MODULE OVERVIEW

Global service experiences - a case from US and Japan
Understanding differences among different consumers
Global marketing of services - challenges, opportunities and marketing strategies
Regulatory mechanism for services:

Brief introduction to the evolution of WTO
WTO agreement- GATS



DIFFERENCES IN SERVICE EXPERIENCE IN US AND JAPAN

An study has examined differences in the service experience across two cultures, in the US and Japan, and provided both vivid examples and solid evidence of cultural nicety that affect service encounters.
Japanese students at an American university were interviewed and their statements/examples were categorized by dimensions of service behavior.

Some of the research findings are as follows:

The above study results, supplemented by other studies conducted in both countries, led to compelling insights, critical for understanding what service providers need to do to influence perceptions and evaluations of service encounters.

Themes of friendliness, being personal, authenticity, and promptness dominate in the US, whereas
Caring and concern are central in Japan.


Civility had different meanings in cultures:

US - paying attention and providing good service;
Japan - being patient and fair.


Authenticity is a relevant dimension in US, but not in Japan, likely based on the Japanese focus on playing a role rather than expressing individual feelings.

UNDERSTANDING DIFFERENCES AMONG CONSUMERS

Global Differences: The role of culture
Culture:

represents common values, norms and behaviors of a particular group and often identified with nations or ethnicity.
learned, shared, multidimensional, and transmitted from one generation to the next.
Understanding cultural differences is important in services marketing because of its effects on the ways that customers evaluate and use services.



VALUES AND ATTITUDES DIFFER ACROSS CULTURES

Values and attitudes help determine what members of a culture think is right, important and/or desirable.
Because behaviours flow from values and attitudes, services marketers who want their services adapted across cultures must understand these differences.

MANNERS AND CUSTOMS

Represent a cultures’ views of appropriate ways of behaving.

 
MATERIAL CULTURE

Material culture consist of the tangible products of culture.
Promotional programs in Mexico

Constrained by the availability of media. Limited ownership of TVs and radios affects the ability of services marketers to reach target audiences.


Zoos represent reflection of material culture’s influence.

American visiting Tokyo zoo is impressed by two things:
Fine collection of animals and the cages in which the animals are kept.
For Japanese small cages are appropriate as they themselves live in relatively small houses vs. for US tourists small cages may look like mistreatment.



GLOBAL MARKETING SERVICES

Given the intrinsic need for people-to-people contact, cultural barriers in the global marketplace are much more prominent for service marketers than in other industries.
Careful screening and training of personnel to ensure consistent quality is extremely vital for international service firms.
The need for direct customer interface also means that service providers often need to have a local presence.
This is especially the case with support services: advertising,insurance, accounting, law firms, overnight package delivery etc.

Challenges in Marketing Services Internationally

Protectionism:

Most cumbersome service trade barriers are the non-tariff barriers, where the creative juices of government regulators know no boundaries.


Need for geographic proximity with service transactions:

Most services are difficult to trade internationally and require physical presence of the service provider.


Difficulties in Measuring Customer Satisfaction Overseas:

In many countries, consumers are not used to sharing their opinions or suggestions. Instead of expressing their trueopinions about the service, foreign respondents may simply state what they believe the company wants to hear.



Opportunities for Global Service Industries

Deregulation of Service Industries:

Some of the GATT rules that only applied to tangible goods are now extended to the international service trade under the new
WTO regime.
In scores of countries, government authorities have privatized services such as utilities, telecommunications, and mail
Several individual countries are taking steps to lift restrictions targeting foreign service.


Increased Value Consciousness:

As consumers worldwide have more alternatives to choose from and have become more sophisticated; they have also grown increasingly value-conscious.


Give Information Technologies (IT) a Central Role:

Service firms add value for their customers by employing technology such as computers, intelligent terminals, and
state-of-art telecommunications.
IT is especially valued in markets that have a fairly underdeveloped infrastructure.
Companies should also recognize the potential of realizing scale economies by centralizing their IT functions via “information hubs.”


Add Value by Differentiation:

Service firms can appeal to their customers by offering benefits not provided by their competitors and/or lowering costs.
Apart from monetary expenses, cost items include psychic costs (hassles), time costs (waiting time), and physical efforts.
Since global service firms usually benefit from scale economies, such savings can be passed through to their customers.


Establish Global Service Networks:

Given the huge investments required to develop a worldwide network on its own, more and more companies are choosing to use outside partners for the purpose.
Trends of firms grouping together to establish global network can be observed in service industries like airline travel and



GATT (GENERAL AGREEMENTS ON TARIFFS & TRADE):

GATT was signed by 23 nations in Geneva on October 30* 1947, and took effect on January 1, 1948.
Since 1950, GATT succeeded ITO.
Provided a forum for multilateral discussions to reduce trade barriers.
Main operating principle was most favored nation (MFN)/ normal trade relations (NTR). This meant that any member state of GATT that extended a tariff reduction to one member had to extend it to all members.

WTO (WORLD TRADE ORGANIZATION)

The eighth and last round of GATT talks — called the Uruguay Round (1986-1994) established an international body called the
WTO which took effect on January 1, 1995.
As of July 2016, WTO had 164 member countries.
WTO has statutory powers to adjudicate trade disputes among nations and has its own secretariat.
WTO is the new legal and institutional foundation for a multilateral trading system.

WTO MAIN FUNCTIONS

Administering WTO trade agreements
Forum for trade negotiations
Handling trade disputes
Monitoring national trade policies
Technical assistance and training for developing countries
Cooperation with other international organizations

 
 
GATS(GENERAL AGREEMENT ON TRADE IN SERVICES)

The creation of the GATS was one of the landmark achievements of the Uruguay Round, whose results entered into force in January 1995.
The GATS was inspired by essentially the same objectives as its counterpart in merchandise trade, the General Agreement on
Tariffs and Trade (GATT):

creating a credible and reliable system of international trade rules;
ensuring fair and equitable treatment of all participants (principle of non-discrimination);
stimulating economic activity through guaranteed policy bindings; and
promoting trade and development through progressive liberalization.



CONCLUSION

We have discussed the service experiences of customers from US and Japan, based on some research studies.
Discussed various differences among consumers based on dimensions like values, attitudes, manners, customs and material culture.
Thereafter we discussed the global marketing of services challenges, opportunities and marketing strategies.
Finally, we discussed the WTO framework around services.