Strategic Types of Services and International Marketing

Abstract

IntroductionStrategies for services marketing typically attempt to differentiate a service for competitive advantage. The properties that a customer perceives the service to have, become a key to such a differential advantage (Zeithaml, 1981). Even a low cost strategy can be seen as one of differentiation: a service is merely differentiated on price. A service can be differentiated by selection of the properties included in the service offer and by development of the perceived superiority of these properties relative to competitors. The existing competitive situation and the firm's competences naturally direct the options for such a strategy. It is important, however, that there is consistency between the service concept and its differentiation strategy in the customer's mind.We introduce a strategic typology of services -three strategic types of services -corresponding to their respective differentiation strategies. We discuss each type, called generic, specialized and customized service, and link them to international marketing strategy, especially to a mode of international operations. The strategic types of services are presented mainly as tools for strategic thinking. In reality, they rarely occur in the pure form but as combinations (Porter, 1980). Such a typology is, nevertheless, valuable when service firms develop their service concepts and plan the marketing of the service internationally (Lovelock, 1991). Differentiation and Strategic Types of ServicesConceptually, differentiation can be divided into two parts (Abell, 1980). The first is differentiation across competitors. The aim is relative superiority or uniqueness in some service dimension(s) (Day and Wensley, 1988). Secondly, a service may be differentiated across markets (customers), which implies segmentation and association of the service properties to the needs of each target segment (Kotler, 1987). Due to the varying usage of the term "differentiation" in the literature (Dickson and Ginter, 1987), there is some confusion whether a product, market, or strategy is differentiated [1]. There are varying views whether product differentiation is an alternative to market segmentation (Smith, 1956;Lewitt, 1980) or whether it is complementary (Cravens, 1982). In the latter view held here, product/service differentiation provides means of competing in the target segments. By differentiation we mean the process of creating or increasing the

The risks of providing services

“…The first of these, customisation, represents a means of competing by offering superior or unique value through the design, modification, and selection of services (and perhaps goods) that fit into a customer's environment and meet that customer's needs (Valikangas and Lehtinen, 1994;Tuli et al, 2007). In making a strategic decision to focus on the service market, a firm must strike an appropriate balance between transferability across markets (standardisation) and specific benefits for individual end-users (customisation) (Oliva and Kallenberg, 2003).…”

Social Concerns and Willingness to Support Charities

“…Jüttner and Wehrli (1994) mention that marketing strategies affect the commitments and the long-term relationships of customers. Välikangas and Lehtinen (1994) indicate that strategies may increase competitive advantages for services marketing.…”

Network Parenting in International Service Development

“…The notion of a completely decentralized network model (e.g. Sölvell and Zander's (1995) distributed ‘firm as a brain’) with its radically modified notions of agency (Välikangas and Lethinen, 1994) is arguably more a thought‐provoking concept than real organizational type. However the emphasis on decentralized structures and ‘adapt[ation]… not by top‐management fiat but by the interactions of problems, peoples and resources’ (Baker, 1992, p. 398) is significant.…”

“…Discussion of the effects of globalization upon service organizations is increasingly common, with many authors extolling the competitive benefits of international service networks (Bartlett and Ghoshal, 1989; Incandela, McLaughlin and Smith‐Shi, 1999; Lovelock and Yip, 1996; Välikangas and Lethinen, 1994; Van Dierdonck, 1998). Inevitably, the management of such networks also introduces a number of practical and conceptual challenges.…”