Product and Services for Global Markets - Finals.pdf

Products and Services for Global Markets – Midterm Notes Defining the Product Development and Adaptation Process Production  The manufacturing of products for commercial purposes for domestic and international markets.  Includes quality control, testing, packaging...

Products and Services for Global Markets – Midterm Notes Defining the Product Development and Adaptation Process Production  The manufacturing of products for commercial purposes for domestic and international markets.  Includes quality control, testing, packaging, labeling and service. Product Development and Adaptation  The continual process of bringing goods to the marketplace as products move through their lifecycle. Companies bring products to markets through di erent means and for di erent purposes. For example:  New product that opens an entirely new market.  Product modification improves the product, engages new consumers and re-engages existing consumers.  Product that relates to an existing product.  Product that significantly broadens the market.  Existing/old company product: o Introduced in a new market. o Packaged in a di erent way. o Marketed in a di erent manner. To satisfy new markets companies Di erent types of products can serve di erent have several options purposes Selling standardized products as is Innovative products = enter new market Modifying products for specific Additions to product lines = supplement and safety and functional requirements expand options Designing entirely new products Improvements or revisions = improve market share Incorporating locally induced Repositioning products = target new markets di erences Products developed and adapted = reduce product costs and possibly pricing Reasons for Product Development and Adaptation Product development and adaptation can:  Increase or defend an existing product line’s market share by o ering more choices or updating older products.  Appeal to new markets segments.  Diversify to enter into new markets.  Improve relationships with distributors.  Maintain the organization’s brand and reputation or create reputation for being leading-edge.  Provide consistency of demand.  Maximize the use of the organization’s resources.  Provide returns (profits) in the short and long term. Market Entry Strategies When is it worth investing in adapting or developing a  Supplier alliances product if it is at the end of its lifecycle?  Co-production alliances Will it:  Involve expensive, short-run production with Product Lifecycle decreased demand?  Take up inordinate human resources?  Launch  Project an image of non-progressive and  Growth technologically backward company?  Maturity  Delay new product development?  Decline Market Research Options when introducing a product into foreign market:  Sell the product as is.  Create several modified versions, each aimed at di erent markets.  Create new products for new markets.  Incorporate required changes into one product to address the global market.  Introduce modifications to the processes of design, manufacture and delivery.  Modify the services to better accommodate market requirements. Modifications might not be necessary if the company:  Has customer who want a product because it is the same worldwide.  Supplies generic components for export.  Produces a unique product with status or foreign appeal.  Product sold exclusively on a commodity or price basis. Applying trade research to product design and modification involves several considerations and factors:  How products are advertised and sold.  How products are designed, manufactured, and packaged.  What happens when orders are received from customers.  How products are stored and shipped.  The speed and reliability of delivery and the comprehensiveness of any after-sales service. The Stages of Product Development and Product Adaptation 1 2 3 4 Innovation Design Testing Launch  The Innovation Stage KOEN’S FIVE DIFFERENT ELEMENTS  Identification of design criteria. 1  Idea analysis. Innovation  Concept genesis.  Prototype.  Product development. The Critical Front End The Design Stage  Sizes, weights, and measures  Packaging preferences 2  Labelling Design  Pricing  Logos, branding, and messaging  Quality  Preferred purchasing method  Desing  Regulations and prohibitions  Materials  Engineering  Warranties and services Executing Design Standardization o Suitability for their purpose o E icient, sale, and reliable o Devoid of features that may o end customer o Attractive o Compliant with regulations in the target market  Administering Design Policy Selecting Product Diversification, Segmentation, or Extension Policies The Testing Stage 3 The testing stage provides validation of the product, the Testing production/manufacturing process, associated production costs, customer acceptance, and resource allocation. Market or concept testing evaluates response to a product using quantitative and qualitative methods. Fifteen Point Market/Concept Assessment Questions  Is there a need of consumer desire for the  If it is a trend, can the organization sell it product? quickly enough to make a profit?  Is it practical?  How great is the threat of competition?  Is it unique?  Is there a ready, reputable, and reliable  Is it the right price? facility to manufacture, package, and get  Is it good value for the money? the product to market?  Can the organization make money on the  Does it have a market that can be e ectively product? and e iciently reached?  Can the organization make money on the  Does it conform to rules, regulations, product? product standards, and other legal  Does it appeal to a wide enough market? requirements?  Is the market segment interested in the  Is the payo worth the time and money product too small. involved?  Does it have a long lifecycle, or is it just a passing trend? Prototype and test marketing evaluates the product in limited, real-life situations. Techniques to evaluate consumer response: Test Marketing Questions o Use of select groups of product users to test prototypes.  Do you prefer this product over the product you are o Tasting panels. currently using? o Product demonstrations.  Does this product meet the need you thought it o Follow-up with consumer after purchase. would?  Does the way the product work provide an important benefit? Product testing is carried out throughout the product’s lifecycle. There is a wide range of product tests:  Life test.  Highly accelerated stress screening.  Usability testing.  Product safety testing.  Drug and chemical testing. Four reasons for product testing: Type of tests:  Advertising claims  Sight and handling  Cost savings/Process testing  Use tests  Product improvement/New product  Competitive threat Testing Models  Monadic  Sequential monadic  Paired comparisons The Product Launch or Commercialization Stage 4 Organizations launching new or adapted products may start in a few selected Launch markets with a small run of products and a sales and marketing campaign to monitor product uptake. This initial data can determine whether to proceed.  10 Practical Steps for a Successful Product Launch Make the product Brief industry Create buzz Plan a low-key Start early available to analysts online release influencers 1 2 3 4 5 Make it easy Focus on Have a rolling Grab their Involve for customers meaningful release attention partners engagement 6 7 8 9 10 Core Elements of Product Development and Adaptation Developing New Products Key questions for new products:  What is the target market?  What does the market need?  What is the benefit of the proposed new product?  What are the market’s frustrations with similar existing products?  Where are similar or related products in the product’s lifecycle?  How will the product fit into the current market?  What sets this product apart from its competition?  Adapting Products Assess the following to decide if a product should be adapted for export:  Cultural and consumer preferences Product Adaptation Strategy  Functionality  Systems of measurement According to ‘Innovative Marketing’ there are four  Regulations top factors that drive product adaptation:  Packaging 1. Culture 2. Market Development 3. Competition 4. Laws Customizing Products Customization helps organizations di erentiate their products. Mass customization allows for customizable options:  Almost on-demand production.  Overnight or rapid small package distribution.  Just-in-time and cost-savings inventory management strategies.  Online sales digital interfaces. Advantages of Configuration Systems Business to Business (B2B) advantages Business to Customer (B2C) advantages Lower distribution costs Di erentiation through individuality Quicker response time to customer inquiries Better knowledge of customers’ needs Reduced capital commitment and less Reduced capital commitment and less overproduction overproduction Error elimination throughout the ordering and Shopping as an experience production processes Quality improvements in customer service Higher customer loyalty Worldwide access to up-to-date product information Five Rules for Successful Product Customization Boost customer loyalty and engagement – and sales – by introducing customizable products. Organizations that achieve success in this area follow these five rules: Know how Enhance the Know what much Keep it Encourage customer you want customization simple sharing experience – needs to be do not o ered disappoint 1 2 3 4 5 1. Know what you want: Organizations need to be clear about the strategic value they hope to derive from their customization e orts. For example, will customization be used to engage with customers, generate direct profits or meet another strategic goal? 2. Know how much customization needs to be o ered: Customization can range from the addition of a monogram to a shirt to entirely customized suits. It is important to understand the product and the consumer to determine the degree of customization required. Remember that customers do not have to co-design every element of the o er. In some cases, it could involve simply choosing a custom combination of existing products. 3. Keep it simple: It is much easier for the customer to be presented with a template, i.e. a starting point with parameters; a totally blank canvas can be intimidating. The organization must have a drawing that leads the customer into a desirable level of customization. The design process should be as simple as pushing a button, but with some limitations. Too many options can lead to no purchasing decision, and too complex a process leads to frustration. Processes, such as returns and repairs, must be clear and easy for customers to access. 4. Encourage: Considering the customer base that would invest in customized purchasing. It is important to include the ability to share creations on social media, such as including the capability to post to Facebook or Instagram. Companies can create galleries of customers’ designs, promoting their customers and the capacity of their products for individualization. 5. Enhance the customer experience – don’t disappoint: The customization process needs to be a satisfying, enjoyable experience with seamless returns in case the product does not meet customer expectations. The Service-Product Relationships Many services are related to products because they:  Are part of the product, such as a warranty.  A ect products, such as transportation.  Are part of the reverse supply chain, such as free delivery of products. Product-related services generate billions in international trade revenue. Servitization for Manufacturers Servitization refers to the process manufacturing companies and other organizations undergo to develop the capabilities they need to provide services that complement their traditional products. As equipment becomes increasingly complex, customers need more service expertise than ever before. Manufacturers around the world are redeveloping their approach to meet the needs of customers. Servitization has grown to become a popular strategy for boosting both customer satisfaction and profits in the manufacturing industry.  Three Key Benefits of Servitization for Manufacturers Manufacturers benefit from integrating servitization into their business model through: More e ective solutions: Greater financial stability: Increased customer retention: Customers want a strong Long-term service contracts Servitization allows service program to paired with servitization manufacturers to become complement the equipment guarantee more secure familiar with customers’ they purchase revenue streams equipment and needs Manufacturers play an active Foundation for customer Manufacturers gain information role in solving customer’s loyalty and provide further to make customers’ businesses problems selling opportunities more e icient Managing Disruptive Technologies Disruptive technologies displace established technologies or create entirely new industries  3D printers  Drones  Autonomous driven automobiles  Interconnected products for example, linking toothbrush use to iPad applications  Light emitting diode (LED) light bulbs Regulatory Compliance Manufacturing compliance is comprised of technical, legal, and corporate requirements, regulations, and practices manufacturers must comply with in order to produce and market products. The risk of non-compliance has become an increasingly major concern in recent years, particularly for manufacturers with operations in multiple countries and jurisdictions. Why is Regulatory Compliance Such a Big Deal?  Constantly changing regulatory environment: With the regulatory environment constantly evolving, the compliance target is always moving. You might find that just when you have achieved full compliance. Your business needs to be able to adapt; otherwise, you put your business at risk.  Failure to comply: When your business fails to comply, you open yourself up to potential lawsuits and financial liability.  In a few high-profile, 2017 data-breach examples, Hilton Hotels paid $700,000 to state regulators, Nationwide Insurance paid $5.5 million in fines, and Target paid $18.5 million to settle regulatory actions and claims.  Protects your company: Regulatory compliance helps you protect your business’ resources and reputation. It takes time to build trust with customers, prospects, and vendors, and a big part of that centers on your ethical behaviour.  For example, security regulations exist to help protect against data breach, financial regulations are there to protect against fraud, and safety regulations are designed to keep workers safe. Regulatory Compliance Compliance generally centres on nine aspects: 1. Product safety 6. Fair competition 2. Health, safety, and the environment 7. IT safety and security 3. Data protection 8. Anti-corruption 4. Employment laws 9. Shipping 5. Export controls Product Safety Compliance Product safety compliance requires products to conform to regulations that ensure the product does not harm consumers, property, or the environment throughout the product lifecycle from inception to disposal. Regulations normally govern product concept/design, manufacturing, labelling, packaging, use, and disposal. Product Compliance Through the Lifecycle Labelling Regulations Labelling Regulations:  O icial languages.  Product information.  Product tracing information such as barcodes or Radio Frequency.  Other suppliers track information depending on the type of product, distribution channels, and jurisdiction. Packing Regulations Pre-packaged consumer products must usually meet the following packing requirements:  Fill level: Packages must be filled so that a consumer can reasonably determine the quantity of product they contain.  Package design and display: Packages must be manufactured, constructed or displayed in a way that a consumer can reasonably determine the quality or quantity of product they contain.  Standard package size: Certain food and non-food pre-packaged products must be packaged in standard-size containers.  Environmental sustainability and disposal: Companies are under pressure by consumers demanding environmentally responsible packaging that is recyclable, reusable and meets requirements for sale disposal. Shipping Compliance Seven Categories of Marking used Shipping Compliance: for Shipments:  Ensuring marks are clearly visible on at least two 1. Customer identification code external sides of the package. (shipper’s mark).  Making all marks legible. 2. Country of origin.  Identifying fragile goods with the word ‘Fragile’ or with 3. Ports of entry. the symbol of broken wine glass. 4. Pack numbers.  Removing all previous markings. 5. Special cautionary markings.  Marking dangerous materials clearly. 6. Component numbers.  Stating any special handling instructions. 7. Dangerous goods label. Packing dangerous goods varies by the degree of hazard. Very dangerous goods require more stringent packing:  Remove unnecessary labels.  Use durable, quality labels with correct specifications.  Ensure all required information is on the label.  A ix label securely and in correct location. Health and Safety Compliance  Health and Safety Compliance is required for the protection of consumers. Governing the production, licensing, and testing of pharmaceuticals, chemical products, and any other goods that have the potential for being hazardous.  Safety certifications required for imports also exist to protect consumers. Environmental Compliance Environmental Compliance is developed by governments and organizations to protect their environment; in particular, product and packaging disposal. Environmental regulations vary from country to country and from product to product. For example, a phytosanitary certificate is often required when importing or exporting agricultural products. This is an o icial document issued by the plant protection organization of the exporting country that certifies that the plants or plant products being shipped have been inspected and are considered to be free from quarantine pests in conformance with the current phytosanitary regulations of the importing country. In both the General Agreement on Tari s and Trade (GATT – Article VI) and General Agreement on Trade In Services (GATS – Article VI), the World Trade Organization (WTO) reinforces sustainable development as a guiding principle. Regulatory Compliance Practices Research Regulatory Environment and Compliance Strategies to minimize risk:  Researching laws, regulations, and unwritten business practices.  Researching business reputation and legal record.  Researching potential domestic laws and regulations to determine liability.  Researching export requirements.  Incorporating detailed codes of conduct and acceptable practices. Establish Regulatory Compliance Programs Common checks performed on finished products ready for shipping:  Double-check product specifications and shipment numbers against customer orders.  Examine random selections of the product for quality problems.  Confirm all necessary documentation has been completed.  Examine packaging to ensure it meets required regulations.  Prepare audit reports to confirm quality procedures were implemented.  Check required certification procedures have been applied to shipment. Employ Compliance Specialists Manufacturing Specialists Require:  Traceability  Fundamental knowledge of organization’s products.  Labelling  Production process knowledge.  Packing materials  Regulatory knowledge.  Safety certifications  Environmental and health safety regulations.  Environmental safety  Regulatory requirements for product disposal and recycling.  Ability to design and implement business practices.  Ability to evaluate compliance testing data and make recommendations.  Ability to work with product design teams.  Ability to design and enforce quality control systems.  Traceability: Materials can be traced to the supplier; the company uses a standard system of product tracking to facilitate tracking of materials through the supply chain and is responsive to voluntary or involuntary recalls.  Labelling: Products meet contract specifications, e.g. print vs. tag, and regulatory requirements of each market.  Packaging materials: Packaging meets the needs of distributors for protection and marketing, and regulatory requirements of each market for labelling and disposal.  Safety certifications: Products have been tested to meet safety requirements and have obtained required certification marks for each market and are properly displayed, or required safety warnings appear on labels.  Environmental safety: Product and packaging materials meet disposal and environmental regulations for each market. Topic: Free Trade Agreements and Tari s Global Commerce and Supply Chain Flows Impact of Free Trade on Globalization Canadian Customs Act https://laws-lois.justice.gc.ca/eng/acts/C-52.6/FullText.html Harmonized Commodity Description and Coding System https://www.cbsa-asfc.gc.ca/trade-commerce/tari -tarif/hcdcs-hsdcm/menu-eng.html  Multiple free trade agreements, such as CUSMA previously known as NAFTA, CCFTA, CCOFTA, and CEFTA  These free trade agreements were inspired by GATT and WTO.  Canada is clearly defined as a globalized trading nation. NAFTA includes the countries of Canada, Mexico, and the United States. Before NAFTA there was Canada – US Free Trade Agreement; this bilateral agreement was rolled over into NAFTA. CUSMA is a new and updated agreement of NAFTA provisions that seeks to address 21st-century trade issues and promote opportunities for the nearly half a billion people who call North America home. CCFTA – Trade agreement between Canada and Chile  This agreement was launched in 1997.  This bilateral agreement has merchandise trade go almost fourfold since.  2017, the stock of Canadian investment in Chile was 17.1 billion.  February 5, 2019, modernized progressive rules-based trading environment. Canada-Chile Free Trade Agreement: https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr- acc/chile-chili/index.aspx?lang=eng CCOFTA – Trade agreement between Canada and Colombia  This is one of the first four to be designated in the customs tari as “free trade partners.”  Free trade Agreement between Canada and Colombia signed on November 21, 2008. Laws and Tari s Governing Global Commerce CEFTA – Canada, Iceland, Norway, Liechtenstein, and Switzerland  It was enforced in July 2009.  CETA - Canada-European Union Comprehensive Economic and Trade Agreement is a more intensive and widespread European free trade agreement including many more countries in Europe. General Preferential Tari (GPT) Least-Developed-Country Tari (LDCT) Commonwealth Caribbean Countries Tari (CCCT) Australia (AUT) and New Zealand (NZT) Global Commerce and Supply Chain Flows  A large group of over 100 countries are accorded to GPT.  Just under half of the 100 are the least developed countries while getting further preference under the (LDCT).  Commonwealth countries of the Caribbean receive preferred tari s.  Australia and New Zealand have been receiving special trade agreement since 1925. Laws and Tari s Governing Global Commerce  Tari treatments and deciding to know which treatment to use  Key international membership for tari treatment includes WTO and WCO.  HS data is assembled from declarations of imports and exports is used to:  Determine appropriate duty rates.  Negotiate trade agreements.  Maintain trade statistics.  Identify goods and shipments that pose a risk to the health, safety, and security of Canada. Harmonized Commodity Description and Coding System - https://www.cbsa-asfc.gc.ca/trade-commerce/tari -tarif/hcdcs-hsdcm/menu-eng.html Usually, when importing into Canada, one must observe to use MFN or Free trade treatment. World Customs Organization (WCO) adopted in 1983 and enforced in 1988. WCO Harmonized code of 6 digits internationally.  Bilateral trade accords and free trade partner agreement constitute a key element of the custom tari.  The customs tari s can be used a measure for global trade and a way to protect Canadian industries, workers, consumers, and the economy as a whole.  WTO – World Trade Organization created in 1995  One of the successors of GATT General Agreement on Tari s and Trade was WTO.  MFN was used with GATT and ultimately used for the WTO.  Most Favoured Nation is under the WTO accord.  Treatment of 222, 150 treatments are WTO members. Global Commerce and Supply Chain Videos Let's Talk WTO How Global Trade Runs on U.S. Dollars | WSJ  What is WTO, and does it a ect daily life?  The USD is the most used international currency; this makes it easier for trade. Global Commerce and Supply Chain Flows  There is an importance of Global Trade in Canada.  Looking through preferential treatments, free trade agreements  Lessening the number of Countries to fit under the General  Tari : North Korea is one of these countries Types of Intellectual Property Protection The Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement by the WTO provides a framework of principles and minimum standards for protection of Intellectual Property (IP). Patent  Exclusive rights granted for an invention.  Typically, provides protection for a limited period (for example, 20 years).  Cost must be weighed against competitive advantage. Trade Secrets  Commercially valuable, secret proprietary formulas, processes, computer programs, and business plans that are controlled by limited access to specific people and using non-disclosure agreements.  Protection for unlimited time. Geographical Indications  The protected use of specific geographical locations or appellations of origin that denote specific qualities and value of a product.  Product must be made in the location. Trademarks  Protection and exclusive right to use or authorize any word, name, symbol, device, or combination that identifies company goods.  Trademarks formalize the ‘branding’. Industrial Designs  Protection of new, original, non-functional ornamental, or aesthetic features of a product.  Protection is usually provided for 10 years. Mitigating Intellectual Property Risk  Global outsourcing of manufacturing poses a much higher risk for loss of intellectual property compared to global sourcing of materials or components.  There is a risk that contract manufacturers will appropriate the IP to set up their own export services centre to produce and sell their version of the product, or to produce unauthorized quantities of the product to sell in the grey market.  Organizations must take stock of their IP assets, such as proprietary information and identify critical concerns, such as ownership, and assess regulations for intellectual property protection in the countries of potential contract manufacturers. Organizations can mitigate some IP risk by: o Requiring agreement to intellectual property contract provisions. o Ordering semi-finished goods in a foreign market and finishing the final production with critical components in the domestic market. o Registering intellectual property in other countries prior to contact negotiations. o Monitoring contract manufacturer’s markets for similar goods. o Auditing production and supply records. o Developing strategic alliances and partnerships. o O shoring manufacturing. Trends in Intellectual Property Protection Intellectual property protection is growing due to increased global trade. With TRIPS there is at least a minimal global standard that o ers IP protection. There are also global mechanisms in place to facilitate applications and registration of products. IP protection remains fluid due to technology, and new fields of study (for example, genetic material). Intellectual Property Infringement  The rapid change in technology that allows easily downloadable and shared information such as music, and newer fields of commercial value, such as microorganisms and genetic material, are challenging IP protection frameworks.   When selecting an intellectual property (IP) protection mechanism, it is important to determine what is necessary to protect the product and what it will cost to enforce that protection. A trademark or patent only means something in a market if its holder is prepared to defend it against infringements. In some markets, that may not be feasible. Monitoring Intellectual Property Infringement A lack of surveillance can lead to a loss of patent or trademark protection, for example: o Laches o Equitable estoppel Several Types of Infringement: o Literal infringement o Doctrine of equivalents infringement o Contributory infringement o Inducement to infringement IP infringement monitoring is also an important function in the prevention of counterfeiting:  Can lead to millions of dollars of losses  Potential to be dangerous for consumers  Can undermine an organization’s reputation and brand image  Implement Intellectual Property Protection Strategies o Select method of protection. o Monitor use of their IP. o Ensure proper contractual agreements are in place. o Obtain qualified legal advice. Topic: Service Development and Design for International Markets 1. Service Development Factors Examines how global factors influence and a ect service development and adaptation in international trade 2. Service Development Processes and Designs Describes the processes and tools used in service design, as well ways to determine customer satisfaction and perceived value of the service provided to develop e ective sales and marketing tools Service Development Factors  Types of Services  The Service-Product Relationship  Service Delivery Modes  Regulations  Market Research  Intellectual Property Protection Trade in Services Importance  Trade in services is the fastest growing segment in world trade. In 2014, the services sector accounted for almost 69 percent of global gross domestic product (GDP).  Although it makes up a smaller share of cross-border trade, the current growth rate of international trade in services exceeds that of trade in goods.  Since 1980, exports in services from developing nations have increased from 20 percent to almost one third of total world services exports. Understanding Trade in Services  Unlike goods, services are not tangible.  They produce essentially intangible benefits on their own or as elements of tangible products that satisfy an identified need.  Most of these services are valued and exchanged for a price  The fundamental service design process for domestic or international services is essentially the same, but the inputs di er significantly when considering international trade Types of Services Main service sectors:  Business and professional services  Technology  Communication services  Energy services  Construction and related services  Environmental services  Distribution services  Financial services  Education services  Health and social services  Information  Tourism services  Communications  Transport services The Service-Product Relationship  Most businesses provide a continuum of service and products.  Service providers exist along the spectrum: from those that provide only the service and no tangible output, to those that build their service o ering around a product.  Understanding how services are tied to products is an important part of service development. Service Delivery Modes Market Entry Strategy  Service o erings can also employ more than one type of service delivery model.  Regardless of the service, the market entry strategy will to some degree dictate the modes of delivery and will be influenced by regulations in the domestic and target markets, as well as the schedule of commitments. These factors can a ect the design, cost, and ability to customize the service for international clients. Regulations Service providers must operate in accordance with domestic regulations and export requirements or a schedule of commitment limitations. Service providers must understand market regulations such as:  Restricted or open markets  Protected sectors in a market  Trade policies of markets  Market entry restrictions To minimize risk, organizations may:  Research laws and regulations, scheduled commitments, dispute resolution mechanisms and unwritten business practices.  Research domestic laws and regulations.  Research required processes and costs of exporting services.  Explore appropriate financial safeguards.  Negotiate detailed codes of conduct, acceptable practices, key performance indicators, and penalties and incentives. Intellectual Property Protection  Determine the Intellectual Property (IP) protection mechanisms in the target market:  Patents provide exclusive rights to a product or process.  Copyright grants exclusive use of a work to its creator.  Service Marks identify a service and formalize its branding.  Trade Secrets protect confidential information if secrecy is maintained. Contracts and service agreements should specify:  Security measures to protect customer’s private and proprietary information  Licence agreements for third-party IP being used by customers or by the service provider  Allowable use of licenced IP and the number of licences permitted  Copyright ownership over material produced  Copyright ownership over material produced collaboratively  Share of patent protection  Sales and territorial restrictions Service Development: International Trade in Services Service Development and Design Service Characteristics General characteristics:  Intangible, but can have tangible outputs and measurable factors of performance.  Tend to be delivered and consumed immediately; highly perishable  Tend to be more heterogenous Inseparability:  The strength of a product linkage  The linkage between the service and service provider Reasons for Service Development Di erentiation tends to focus on quality and improvement to the customer experience and may also include examining opportunities for complementary services, for example:  Consistent high-quality service  Ease of access  Quality of online interaction  Quick and e ective resolution of service issues  Development of accompanying products  Delivery of on-call services based on partnership with other businesses Service Development Process Idea generation Tools for Service Design: Idea distillation or screening  Mapping  User diary Concept definition and development  Field research Test marketing  User shadowing  User personas Service launch  Focus groups  Design brief  Design scenarios  Experience prototyping Using Tools for Service Design  Mapping  User Diary  Field Research  User Shadowing  User Personas  Focus Groups  Design Brief Operational Strategies and Performance Indicators Key performance indicators can identify if changes to service delivery improve customer service and the service’s value:  Quality of delivery of the service  Service delivery times  Quality of the service Service Features There are unique features to consider when developing services:  People  Product/Outcomes  Key performance indicators  Systems  Technology  Time frames Service Adaptation and Customization Adaptation and customization can occur in response to:  Changing customer preferences  Compliance with target market regulations  Di erentiation from other service providers  Cultural norms in a target market Standardized Services Standardization of service design and outcomes provides opportunities to reduce costs through economies of scale. Typical barriers to standardization:  Customer preferences and income  Local brand campaigns and brand recognition  Regulations and scheduled commitments protecting local brands or government interests  Local competition and substitutes  Higher costs of trade across di erent foreign markets Disruptive Innovation Something that displaces an established way of conducting business and forces change within an industry, or a ground-breaking service that creates a completely new industry:  Mobile apps  Email and social networks  Online shopping  Airbnb  Cloud computing