Export Services Marketing

Service exports, just like goods, require marketing support.

When people talk about exports, they usually mean goods. That is, something with a physical embodiment, including at the moment of crossing the customs border. However, the reality is that the volume of services that are also exported increases every year. Service markets are globalizing at a high pace, and international competition is growing. To be successful, service companies, just like goods producers, implement marketing strategies across the entire complex of tools. However, marketing services for export has certain features that distinguish it from the marketing of export goods and the marketing of services not related to foreign economic activity. We will talk about this below.

What is service export?

Service exports can be quite diverse, which requires different combinations of marketing tools.

First, services provided on the territory of the Russian Federation, paid for in rubles, but for non-residents of our country, can be classified as service exports. This includes, for example, services provided by the hospitality sector, medical institutions where foreign patients apply, and so on. That is, various types of inbound tourism.

Secondly, service exports are possible without individuals coming to Russia. A typical case is services for conducting master classes and consultations (knitting, sewing, playing musical instruments, etc.), design services for personal spaces, foreign language teaching, and so on. In such cases, payment is made in the currency of the country where the performer is located, or in freely convertible currencies through international payment systems.

Thirdly, service exports are those services provided to foreign legal entities. Actually, this is the type of export that is subject to more detailed accounting, is more tracked, and is accompanied by state support measures. Examples of such services are software development (in general, most of the IT market already actively uses the international division of labor and attracts foreign performers - individuals and legal entities), legal services, management consulting, various spheres of show business (purchase of music beats and samples), and so on.

Actually, we will talk about the last type of service exports further, as it covers the area of trade relations between legal entities. Moreover, with the development of business and its scaling, many services provided according to the first or second option transition to the format "from legal entity to legal entity". For example, tourism organizations form partnerships in a country where there is interest in their services with a company that organizes the sending of tourists, which leads to an increase in sales volumes.

Features of marketing services intended for export

As we know from marketing theory, marketing services is quite different from marketing goods. The development of the service sector and a new understanding of the role of marketing in working with the market served, in particular, as a reason for the transformation of the 4P model, which is convenient for managing goods, into the 4C model, intended more for marketing services.

As for marketing services for export, in addition to the specifics of the service market as such, the cross-border nature of their implementation is also of great importance. This affects almost all stages of developing a project to enter a foreign market with a service(s) - from market research to promotion measures and post-sale interactions. Let's consider some key features.

First, and most importantly, when exporting services, it is very important to proceed from the global nature of the market. If a service can be exported in principle, then unlike goods, there are no barriers associated with physical movement for it. The costs of moving services that can be converted to electronic form (texts, graphics, musical sequences, etc.) are at a very low level and are not related to the distance from the seller to the buyer. As a result, when studying the market of services that can be exported, and therefore imported, we must proceed from the fact that competition in it is certainly global in nature. Although even in such cases, certain objective preferences remain for the service provider located in the country where the service buyer is located, that is, studying the internal market is still necessary in more detail.

Such a nature of service "logistics", on the one hand, is a negative point for a potential exporter, as it is necessary to calculate the risks of competition of a completely different order. But on the other hand, the exporter itself is not bound by distribution area restrictions like goods producers (which is a big problem for many types of businesses located deep in the territory of Russia, far from state borders and sea routes). In a sense, the ability to produce a quality service becomes more significant than when creating a physical product that also needs to be delivered with minimal costs. Here, the main efforts can be focused precisely on the quality of the service as such.

The need to analyze the market of services that we intend to export, especially from the point of view of consumers in the target country, nevertheless remains. Since the number of potential export countries expands to the list of states where such a service is in principle in demand in more or less serious volumes, the importance of such analytical work increases sharply. And here lies a very serious problem for the exporter - compared to commodity analytics of international trade, accounting for exports and imports of services is carried out at a very low level.

For marketers who analyze commodity flows between countries, there are many resources where they can view data and identify main priorities, therefore, build hypotheses - where to go with the goods, where it will be in demand. If necessary, for a number of countries, it is possible to purchase customs statistics databases, information from which allows for qualitative elaboration and preparation of a marketing strategy for market expansion. For the service sector, all this is not applicable. Statistics on international trade in services are extremely scarce, and it is generally impossible to buy customs databases for services.

Therefore, the possibilities of desk marketing research of service markets in terms of exports are very limited. It is necessary to either buy such studies for different countries and bring them to a common comparable form (which is costly and time-consuming), or, based on some partially available data, conduct independent work to determine those markets that may be of primary interest.

Given that marketing research of service markets from the point of view of export potential is very complex, in many cases market prioritization is carried out without deep justification, relying on expert opinion, the foresight of company management. Then the selected market is considered from the point of view of capacity and the level of development of local producers of these services, which to some extent gives an understanding of the prospects for working with it and the need for measures to prepare the service for sale on it.

One can also go the other way - prepare an offer for one's service(s) for the global market as a whole without being tied to specific countries and territories, but such a strategy is usually ineffective. For service markets in the B2B segment, such a market model will only suit those companies that have good recognition and a strong reference.

In any case, one of the serious barriers remains language and culture. For some service markets, due to their development and high possibilities for universalizing the service as a product (for example, in IT), communication problems and the base language are not so pronounced (all programming is somehow tied to the English language, and it is the base in professional communications).

For other markets, for example, corporate legal services, such an approach to doing business will not work - it is better to discuss the nuances of individual issues in languages that are the basis of communication in specific countries, not to mention the fact that legal systems and legislative bases around the world have many variations. Very few players can undertake the provision of services without taking into account such specifics; as a rule, there is a certain specialization of the lawyers of the company providing the services. Therefore, the proposal with which the company enters the market must be addressed with maximum clarity to increase sales efficiency.

The specifics of analytical work, of course, do not exhaust the features of marketing services for export. The next question is the adaptation of the service for a specific export market (or group of markets).

As noted above, mainly services that are transmitted on digital media are exported. One way or another, these are either intellectual services or the results of creative work. The adaptation of such services for the export market is usually associated with solving issues of the specifics of cultural perception of certain information, its translation into foreign languages, as well as compliance with the legislative requirements of the country where exports are planned. Marketing research of country service markets is conducted, among other things, to have information that will allow correctly solving these tasks.

Here is an example from a related field. We, as a marketing agency, provide services for adapting commercial proposals for the markets of target countries for potential exporters. The request to us comes in the form - such and such a product to such and such a country. Providing an intellectual and creative service for adapting a commercial proposal for an export market, we essentially solve three basic tasks.

The first is the formation of a list of information for the commercial proposal and its visual layout. They should be familiar to the business partner in the target country and evoke positive associations favorable to the sender of such a proposal (our customer). This is a creative task related to understanding the business culture of the target country.

The second is checking the information for its compliance with local legislation, as well as the sufficiency of information for developing a draft contract for the sale and purchase transaction.

The third is, actually, the translation of information into the language of business communication in the country (sometimes there may be several such languages), for which professional translators, native speakers, people permanently residing in the target country are involved.

Thus, the service in the form of developing a commercial proposal is adapted to the country of potential export. Sending a universal proposal in English or even a mechanical translation of the material without visual and semantic adaptation will not give the desired effect, which means low quality of the service provided.

Pricing for services is a separate and very interesting question. Applying the 4C concept, according to which it is necessary to analyze not the price, but the consumer's costs, we understand how important this is precisely in pricing for exported services.

The consumer, choosing a service provider abroad, bears higher risks; moreover, his costs increase taking into account the costs of operating the service - the potentially higher they are, the more interesting in terms of acquisition price the offer from a "foreigner" should be. Of course, it is necessary to take into account the payment of import value-added tax, and possibly a duty on the import of the service into the country.

For services, unlike goods, it is difficult to track the sales volume in the market of a foreign state; moreover, price offers from service providers are usually conditional; during negotiations, the price is subject to significant adjustment, usually upwards. All this must be taken into account when developing a commercial proposal. But there are also positive aspects: unlike export pricing for goods, it is not necessary to delve into the issues of delivery bases and calculate logistics options.

Sales channels for services also differ quite strongly from goods in the course of foreign trade activities. It does not exist in material form (in most cases), and sales also mainly occur in electronic format, with the help of remote communications between the buyer and the seller.

In this regard, websites are of particular importance; they should contain all the necessary information about the services and their seller in the language of business communication of the target export country (at least in English). It is better if the company has a landing page on a domain of the country where sales are planned and implements measures to promote it in search results.

The next sales channel is professional communities. To sell a service for export, the company must be recognizable at least in its own country, and better yet, among reference groups in the target export country. Then there is a possibility of recommendations that can be converted into sales. Active work in this regard can be carried out within the framework of functioning online professional groups and communities, as well as large global and country platforms where B2B contacts are established, for example, LinkedIn or Xing in Germany.

Great opportunities open up for companies that build an agency network to implement their offers in export markets. If the service is really of interest in the market, then there are good chances that effective agents - both individuals and companies - will take up its sales. Such a model is more costly (although the costs are variable - tied to sales) and highly risky (the agent can switch to another supplier), but it has proven itself well in general, and it is especially convenient for markets with high language and cultural barriers, for example, for Japan.

Another channel is mailing business correspondence and reaching out for personal communication in the format of negotiations. The return in the short term is usually low, but through such "cold" sales, the company's recognition grows, useful information about customer needs accumulates, and the market model is clarified. If the service is really interesting, and the costs of its acquisition and operation are adequate, then direct sales are possible, especially since technical barriers in services are overcome much faster than in the sale of goods.

To conclude the issue, let's talk a little about promotion. Advertising services, unlike goods, is easier through emphasis on the company and the competencies of its key employees. For B2B markets, this is especially important, as often buyers turn not so much for the service as such, but to those persons whose professional and personal qualities they trust (this works in consulting, legal business, and so on).

Therefore, the company and its key employees should be visible in the information field not only of the country of presence but also of those territories where expansion is planned. So, you should take care of publicity issues in advance, make acquaintances in the professional environment, place meaningfully interesting publications in the media - both electronic and traditional, although lately they are almost inseparable.

If the company focuses on its website and tries to organize sales from it, then it is logical to make efforts in the field of Internet advertising, especially aimed at promotion in search results. Such forms of advertising activity are difficult to implement by specialists located outside the country where promotion is planned, so the main format of work here is hiring an outsourcing company that is competent in advertising activities in a specific country market.

Advertising campaigns in any case are closely related to the geography of sales development. It is impossible to advertise yourself to the whole world, and it is not necessary to do so. So the issue of correct country prioritization becomes especially relevant if advertising activity is expected, supported by a significant budget.

Prospects for Russian companies in service exports

The Russian service industry for business has a certain export potential that can be realized if a competent marketing strategy is developed. Unlike a product in material embodiment, a business service can extremely rarely sell itself; at best, it can be sold by the brand of the service provider (which needs to be formed and "promoted" for the importer) or the personal brand of a key employee (more often the owner) of the company, which also requires significant investments. The typical situation is that it is necessary to form an interesting basic offer and convey it to a wide range of potential buyers.

Analyzing personal experience of communicating with domestic exporters of business services and foreign trade statistics, it can be said that currently and in the near future, the Russian IT industry has the highest export potential. In general, there is an image of a Russian IT company in the world as a provider of good quality services in the average price segment. At the same time, many domestic entrepreneurs in this area themselves actively attract resources from less developed Asian countries.

Companies representing the interests of foreign business in various spheres on the territory of the Russian Federation also have good prospects. First of all, we can name law firms that provide legal support and representation in regulatory and judicial bodies. As competencies develop, such firms can directly enter foreign markets, for example, by implementing representation functions in international judicial instances.

The third segment that can produce services interesting for import is the business in the field of creativity. Russia as a whole has a good reputation as a place where interesting non-standard solutions are created at a moderate price. For example, in the field of industrial design or branding.

Service producers, just like goods producers, have all the same opportunities to work effectively in foreign markets. Moreover, they can attract the same measures of state support used by goods producers. At the same time, one must realize that service markets, the consumption of which is not tied to the place of production, have a particularly high level of competition, and the marketing strategy to ensure success in them must be clearly justified and verified. However, there are no logistical restrictions for the implementation of services - which means that a demanded offer will find a buyer anywhere in the world.