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- Simultaneous production and consumption

- Perishability
- Heterogeneity instead of Homo

- Stage of PLC to take product internationally

7 Ps of Marketing
Factors that Affect International
Product Decisions
• Social-Cultural Factors
– Values, beliefs (religions) and customs esp. in food & drink,
fashion and tastes
• Usage Factors
– the same product used in different ways or in different
• Legal Standards
– very country-specific even within the EU e.g. pharmaceutical and
• Product Liability
– litigation can lead to huge financial settlements. May need to
adapt product content, packaging, labelling etc.

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Factors that Affect International
Product Decisions
• Product Acceptability
– Perceptions of value and satisfaction can vary considerably e.g. try
selling instant coffee in France or Italy
• The Big “E”ssues
– Climate change, sustainable development, pollution and waste
• Stages of PLC
– Product reaches different stages and maintain at varying length of
time in different countries

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Components of a Product or Service Offer
Standardization vs. Adaptation in international markets

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Product Strategies

One Product Product

Product, Extension, Adaptation, Dual Product
One Promotion Promotion Adaptation Invention
Message Adaptation Extension

One Sound, Adapt
product, Total
One Vision, product to
localise Adaptation Tailored,
- Global suit local
promotion new to
Reliability market
e.g. market
e.g. Insurance,
e.g. Coke-
University Banking, e.g.
Cola, Rolls e.g. IBM
Degrees, Constructio Limited
Royce Computing
Jack n editions
Aero Solutions
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The International Product Life Cycles

• A PLC is useful in depicting the

life of a product or group
charting its infancy to maturity
• Many firms are multi-product,
serving multi-markets – a
combinations of stages of life
• Resources implications and
allocation are complex
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International Trade of Services
• The value of cross-border trade in services is estimated US$3.25 trillion, or about
20% of total cross-border trade
• Its true size is underestimated as much of which takes place through establishment in the
export market, and is not recorded in the balance- of-payment statistics.
• The largest commercial services are transportation services and travel
i.e. services that facilitate businesses that take place globally and, hence, are
invisible in the statistics
• Most developed countries have an interest in the increasing globalization of services as
their economies are now largely made up of trade in services.
– E.g. 77% of US GDP is generated from the services sectors which employ 80% of its
– The UK economy shares a similar pattern with 70% of GDP
generated from services and only 18% from manufacturing.
– In Hong Kong, it is 89% of GDP and 80% of employment.

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The services and intangibility continuum

The consumer-producer interaction

Six-Sector Service Taxonomy Lovelock and Yip (1996)
Categories of Service

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Drivers for Growth in Cross-Border
Intangibility Vs. Environmental Sensitivity

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Challenges of Marketing Services
Internationally Intangibility

• Most services cannot be experienced or tested by customer

prior to making the purchase
• High perceived risks associated with purchase decision
• Communicating service benefits to an international target
customer is difficult due to language, physical and cultural
• International communication must be sensitive to the meaning
that the customers give to the symbols, images and wording

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Challenges of Marketing Services Internationally

• Unlike production of tangible products, it is

difficult to ‘standardize’ the production of
services due to their variable nature
• Challenge for service providers to ensure a
predetermined standard of quality and
satisfaction level across all markets
• To minimize heterogeneity, service
providers can standardize procedures,
communication, systems etc. to maximize
• Rigorous training programme for
employees and use of new, interactive
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Challenges of Marketing Services
Internationally Inseparability
• Customer is an active participant and ‘essential ingredient’ in the
service production process
• Service production and consumption often need to take place
– Service provider and customer must ‘interact’ to complete
– Each market would varies significantly due to an
idiosyncratic blend of politico-economic and socio-cultural
• It creates difficulties in applying segmentation strategies and
matching the company’s offerings to intended targets
• It is therefore costly to internationalize services that are difficult
to separate the production and consumption processes

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Challenges of Marketing Services
Internationally Perishability

• The lower the tangibility level, the higher the

level of perishability in a service
• For most services, it is not possible
‘inventorize’ them if it is not consumed at a
given time and place e.g. hotel
• This problem is further complicated by
fluctuations in the pattern of demand and
supply e.g. seasonality
• If sales projection is wrong, service providers
will need to turn customer away OR suffer
losses due to unsold services

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Strategic Considerations
(People as asset)

Knowledge as a Source for Advantage

• Service organizations often go to great length to set standards to
improve the service quality
• In ‘high-contact’ services, people become the most important component,
which determines the success or failure of the service
• Employees must understand appropriate behaviour, service procedures and
systems in a way which is consistent with the values of the company
• It is primarily through the effective management of people and its knowledge base
that the service organization takes control of the ‘service factory’ in the production
• Effective management of knowledge can provide the basis for developing a
source for competitive advantage
• Effective knowledge management is about smart ways of
managing people
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The Development of Effective Knowledge Management

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Strategic Options for Cross-Border Services Marketing

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Using Physical Evidence to
Communicate Service Quality
• In the absence of a
physical product,
service providers use
'tangible cues' such as
pleasant atmosphere
which customers use
to make a judgement
on the service quality

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