Exporting Services Successfully: Antecedents and Performance Implications of Customer Relationships - Essay Example

International Service Marketing In an article by Christina Sitchmann and Maren von Selasinky, Exporting services successfully; Antecedents and performance implications of customer relationships which is my point of reference; the two writers try to explain the drivers of service export performance. This they have done by continually over the past few years in the recent times. According to their article, it is concluded that exports of commercial services has grown by 11%between 2000 and 2006 (Sichtmann & von, nd). They try to focus on the performance of service firms in the international context rather than the usual way where most studies focus on the manufacturing firms. In an overview, the nature of service export performance differs from the way the manufactured goods do due to the nature of services. Actually service providers face a lot of challenges when exporting their products. This is mainly attributed to the intangible nature of services which makes it very difficult for the consumers to evaluate the quality of the service before its delivery. Moreover, the inseparable nature of the service provider and the consumer of the service demand the participation of the customer and direct participation with the provider which has implications for the efficiency and effectiveness of the delivery of the service mostly in the export market. This now makes the nature of service export mechanism be very dependent on some very specific factors (Sichtmann & von). They consider the use and relevance of cross border customer relationships (CCRs) and relation market activities (RMAs) as the potential drivers of the export performance of services. The use of the two has not been really emphasized in the real market due to inadequate research gaps and therefore their lack of exposure and lack of use in the international market. In a bid to address this research gaps, the two authors examined the link between the CCRs and RMAs of any service provider and its export performance in a broader approach. According to the article, CCRs emerge as key factors that influence the performance of exports. This is based on the assumption that the CCRs are positively influenced by service providers’ RMAs and the interaction of the two will lead to the four internal factors that influence the RMAs. These include export commitment, customers’ orientation, trust in customers and the cross cultural skills of responsible managers. According to the article, CCRs differ from occasional transactions as they entail the ongoing transactions between customers and the service providers (Sichtmann & von). The unit of analysis in the study of relationship between the provider and the service provider is the venture level. According to the article, in the export market of services, there are two dimensions of relationships which are qualitative or quantitative. The qualitative dimension is associated with the value of customers to the service provider in the market or in a particular market. A valuable CCR is that which entails a relationship with a consumer who is interested in keeping and maintaining a long term relationship and doing the very best to make it mutually satisfying and beneficial. It is a direct proportion of the costs incurred in maintaining the CCR and the benefits it brings (Sichtmann & von). The quantitative dimension is a measure of how many relationships a service provider has in a market of interest in terms of the size of the relational customer networks in the export market. Cross border customers have lot difficulties in evaluating the quality of an exported service and therefore the service providers must be keen to understand why their potential customers in the export market are or might be uncertain about the quality of the service. This will help them signal the assurance that their service is of the required or even higher quality. Signaling in the domestic markets may take different forms such as word of mouth communication, the reputation of a product but this may not be effective in the export market as the product is usually new in the market. As a result, the service provider need get a way to convince the export market that their goods are completely quality which is sometime very hard due to different cultural backgrounds. Therefore, the article recommends a service provider must recognize and very well understand the different forms of customer coproduction across the domestic and export markets and /or encourage the consumers to adapt theirs’ so as to fit in. More numerous and valuable CCRs will help the service providers gain access to more valuable and more variety of resources which in turn will affect the effectiveness of co production as it gives them a more specific view on the kinds of partner they should team up with (Sichtmann & von, nd). Cross border challenges on quality can also be overcome by the service providers leveraging CCRs and use them as bridges or tunnels to reach their clients. Likewise, numerous and valuable CCRs may also lead to effective governance mechanisms that reduce the transaction costs which increases the willingness among transaction partners to reinforce their competitive advantages. Other valuable relationships, governance mechanisms such as trust and commitment may also reduce the customers’ perceived fear or risk of poor quality and encourage more investments and also lower the transaction costs. According to the article, many CCRs can be used to compensate for more costly marketing activities for signal quality for example advertising as if the customer base increases, there is more to lose on the side of the service providers if they don’t meet their promises (Sichtmann & von, nd). But if they do, trust and reputation in the service provider increases such that new customers get attracted and attached to the provider. Relation Market Activities (RMAs) are all the marketing activities directed towards establishing, developing and maintaining successful relational exchanges. In the context of service exports, these are the efforts, attention and resources that each service provider devotes to maintain and build CCRs related to the service export venture. According to the article, customers are more satisfied with sellers who make efforts that are aimed towards them. It also says that by the establishment of formal and informal contacts and by the exchange of systematic information with customers provides a basis for sustaining mutual trust. RMAs are also said to generate frequent and intensive interactions and foster social bonds between relationship partners and this leads to customer commitment and loyalty and this makes the service providing company to enjoy mutual benefits. The article also points out that RMAs’ investments are not recoverable and they only act as an incentive to satisfy the customers and help them deliver the service as it has promised or it will lose all the investments in RMAs (Sichtmann & von, nd). The article also says that culture also influences customers’ perception of the service encounters. The writers argue that misunderstandings may occur if the service employees and the customers do not share the same cultural background as they likely have different perceptions of their specific roles in the service encounter. As a matter of fact, service employees perform better in international service encounters when their intercultural sensitivity level is higher. This is because, the service employees with upper levels of cross cultural skills are able to develop more valuable relationships as they can adapt more effectively to the cross-border customers’ preferences and are more likely to prevent misunderstandings in the service encounter that may occur out of cultural differences (Sichtmann & von, nd). Therefore, similar cross-cultural employees help increase customer satisfaction, trust and commitment such that the two parties involved attain mutual benefits. Cross-culturally-skilled service employees may also influence the number of customers in the export market as people are more satisfied with the service encounter if they interact with cross culturally skilled employees. This increase the retention rate of customers and the positive word –of –mouth behaviors also attract new customers. The cross-cultural skills of managers responsible for the export ventures is also very vital in the growth of the export market for services as their ability to speak the local language and understand the business practices of the local people helps them reduce perceived foreignness and increase culture sensitivity. Managers with these skills should be able to predict local customer’s reactions to RMAs and recognize the importance of relationships and trust building to overcome cultural differences (Sichtmann & von, nd). The export performance of services is also driven by export commitment according to the article. This occurs in a situation where the managers are completely determined to the role and their responsibility to export products in the outside world. In the article, the authors have been able to bring out some strength’s and weaknesses that come by as a result of export of services. Having cross cultured managers manage the outside branches of the export zones is strength to the business as they will work as if they are working for the community and this will in turn add the number of customers as well as maintain the existing ones. Many branches in the export industry of services tend to employ nationals in the area of export as this reduces the notion among the people living in the area of export that the company is an entire foreign company. This is going to act as strength for the export industry of the service as it increases its customer base and area at large. For instance, International branches of La Caixa (2011), provide advice, financing and basic banking services to Spanish companies and operates in foreign countries too including Romania, Morocco and Poland. Though the executive management is in Spain, respective branches bosses and staffs are from the areas where their branches are located and this helps this company enlarge its clientele base (La Caixa blog, 2011) Focused managers and those that are mainly involved in the export markets would be strength in the service markets if they showed export commitment. Export commitment is the determination that the managers to do their best in their jobs and make sure that all they market their services into the outside market or rather export market better. Export commitment will only be strength if managers play their role in crossing borders and moving into nations in search for market of their services and if they are lucky enough they will get loads of followers and consumers of the products they are offering. This will in turn increase the customers’ base of the company and increase the overall profits of the company (Elmah, 2011). Weaknesses can also be noted from the essay and as they apply in the real world. Many companies have also invested in the export markets and suffered great losses as they invest in research market activities due to bad management and poor planning. If a company makes the bad choice on its research market activity, since investments in RMAs are nonrecoverable it can be a weakness in the export market of the service company. These are also known as sunk costs as they are costs incurred that are not recoverable and should not be taken into account when making decisions. If this happens this is a weakness to the export market of the service industry (Elmah, 2011). Due to the human nature that is evident in all beings, trust is not so easy to gain and so it becomes a weakness. If the export market does trust the services of another nation it will not consume them for anything that nation would give. In the same way, if a company that produces quality goods ruin their services at once and the public notices, it becomes so hard for the company to gain trust with the public again and assure them of the genuinity of their products. Therefore, as long as trust in cross border customers helps reduces costs that are associated with investments in RMAs such as advertising, it would also increase them in case of any breach or betrayal as the company will be forced to do more on the advertising to get back to its original position. International marketing is the application of marketing principles to more than one country; it involves the firm in making one or more marketing mix decisions across national boundaries (Doole & Lowe, 2001). It also involves the firm establishing manufacturing or service offering a facility oversees and coordinating marketing strategies across the globe. International marketing is the performance of business activities which is either the buying or selling or a service of a good of any company to the consumers or users in more than one nation for a profit. It is the application of marketing orientation and marketing capabilities to international business (Doole & Lowe, 2001). International marketing occurs when a business directs its products or services towards consumers in more than one country. Businesses will choose to explore foreign markets for many reasons. Some of these reasons will include that it will to be in response to orders received from the customers in the markets. Service companies will venture in export markets when the domestic market is saturated, to make quick profits, to absorb the overheads so absorbed in the home markets, minimize the impact of undesirable domestic situations and to also spread the corporate risk of the companies (Bianco, 2011). According to research released last year it indicated that China had become Australian largest services export market with the experts saying that the exports will continually grow in the recent years to come (Bianco, 2011). The United States came second after China. The main exports to China included education related travel services followed by exports of other personal travel and business services which included financial, insurance, professional and technical. In the past times, Australia has been exporting its services to United States, Japan, and New Zealand among other nation all over the world. Elsewhere in the world, the United States leads as the premier producer and exporter of services. The service sector in the U.S economy is about 80%of the GDP. Looking into the future too, the service sector in the U.S is expected to grow larger as service driven businesses in the U.S are on the rise and the business is expanding overwhelmingly led by small entrepreneurial firms and those firms that have employed less than 500 people. Most of the top most companies in the U.S. are service companies. Services in the U.S. play an important role in technology advancement, global competitiveness and even in the growth of skilled jobs. The most typical service exports all over the world will include travel and tourism with recreational and cultural sciences being involved in this category. It also involves services in transportation, lodging, recreational and even travelling on commercial airlines. Other services that are in the export market all over the world will include transportation services, architectural, construction and engineering services, educational and training services which will include management training, technical training among others. Banking, financial and insurance services too are among the services that are very competitive and are very easily transferable all over the world. Services on entertainment, information systems and professional business services can also be transferred all over the world ( A basic guide to exporting,2008) In conclusion, most of the services offered around the world at one position could also be transferred to any other part of the world and consumed only that this time it will at a higher price than the originals place price. Services are generally intangible but they cannot be separated from those persons who offer them. Any person or firm or organization that can offer any service to the public need focus on its strengths and instead work more on the weaknesses so that it will end up achieving all its long term goals. Focusing on the world at large, all nations will be required to embrace the idea of transacting in the exports market setting their goals on being the leader exporters as it is not only a boost to the economy of the nation but also to the technological advancement of the specific nations. Managers in export zones need to embrace export commitment plans so as to drive and propel their organizations and make the world best companies that have embraced the spirit of dealing in the service export markets. References Doole, I. & Lowe, R. (2001), International Marketing Strategy - Analysis, Development and Implementation, Thomson Learning, 3rd Ed Bianco D (2011), International Marketing, Retrieved on 23rd September from http://www.referenceforbusiness.com/encyclopedia/Int-Jun/International-Marketing.html La Caixa blog, (2011), International branches, Retrieved on 23rd September from http://empresa.lacaixa.es/bancainternacional/sucursales_en.html Elmahleh M, (2011), Sunk costs and loss Aversion, Retrieved on 23rd September from http://www.understand-accounting.net/SunkCosts.html Sichtmann C & von M S, (nd) Exporting Services Successfully: Antecedents and Performance Implications of Customer Relationships Department of Foreign Affairs and trade (2011), China becomes Australia’s largest service export market, Retrieved on 23rd September from http://www.dfat.gov.au/media/releases/department/2011/dfat-release-20110315.html A basic guide to exporting (2008), Service Exports, Retrieved on 23rd September from http://www.unzco.com/basicguide/c8.html Read More