Chapter 3 - Services

3
Chapter
Three
Positioning Services in Competitive

Markets
Overview of Chapter 3
4
Customer-Driven Services Marketing Strategy
Segmenting Service Markets
Targeting Service Markets
Positioning Services
Using Positioning Maps to Analyze Competitive

Strategy

Developing a services marketing positioning strategy (Fig.
3.1)

Customer, Competitor and Company Analysis (3Cs)
6
Customer analysis
Competitor analysis
Overall examination of market characteristics

Customer needs and related characteristics and
behaviors
Current positioning
Strengths and weaknesses
Company analysis
Current brand positioning and image

Resources
Limitations and constraints
Conducting SWOT Analysis of the Company

7

Segmentation, Targeting and Positioning
8
Segmentation
Targeting
Dividing population of possible customers into groups with

common service-related characteristics
Similar needs within same segment, different
needs between segments
Choose one/more segments to focus on
Positioning
Unique place in the minds of customers

Differentiation forms first step to creating unique
positioning
Market Segmentation
10
Firms vary widely in ability to serve different types of

customers
Adopt strategy of market segmentation,
identifying those
parts of market can serve best
A market segment is composed of a group of buyers
sharing common:
Characteristics
Needs
Purchasing
behavior
Consumption
patterns
11
Segmenting Service
Markets Market
Segmentation
Various ways to segment markets
Demographics on its own will not result in

meaningful segments
Psychographic segmentation useful for
strengthening brand identity and
creating emotional connection
Behavioral segmentation focuses on
observable
behavior
Needs-based segmentation focuses on what
customers truly want in a service
Developing Right Service Concept for

a Specific Segment
12
Use research to identify and prioritize which

attributes of a given service are important
to specific market segments
Individuals may set different priorities
according to:
Purpose of using the service

Who makes decision
Timing of use
Whether service is used alone or with a group
Composition of that group
Targeting the right group of customers

13
Important vs. Determinant Attributes

14
Consumers usually choose between alternative

service offerings based on perceived
differences between them
Attributes that distinguish competing services from
one another are not necessarily the most
important ones
Important attributes are not necessarily those
attributes that determine which service brand
the consumer finally selects
Important vs. Determinant Attributes

15
Important attributes:
are met by all competing service providers
do not necessarily sway the purchase decision in
favor of one service provider as opposed to
another
Determinant attributes determine buyers

choices
between competing alternatives
Service characteristics that are important to

purchasers
Customers see significant differences between
competing alternatives on these attributes
Determinant attributes for business travellers

16
Establishing Service Levels

17
Need to make decisions on service levels

level of performance firm plans to offer
on each attribute
Easily quantified attributes are easier to

understand and generalizable e.g. vehicle speed,
physical dimensions
Qualitative attributes are ambiguous and subject
to individual interpretation e.g. physical comfort,
noise levels
Establishing Service Levels

18
Can often segment customers according to

willingness
to give up some level of service for a lower price
Price-insensitive customers willing to pay relatively
high price for high levels of service on each
important attribute
Price-sensitive customers look for inexpensive
service with relatively low performance on many
key attributes (e.g., Services Insights 3.2
Capsule Hotels)
Capsule Hotels (what type of customer and what are

their service expectations? (read Service Insight 3.2)
19
Targeting Service Markets

Achieve Competitive Advantage through Focus
(Fig. 3.5)
20
Considerations for Using

the Focus Strategies (1)
21
Fully focused
Limited range of services to narrow and specific market
Opportunities
Developing recognized expertise in a well-defined niche
may provide protection against would-be competitors
Allows firms to charge premium prices
Risks
Market may be too small to generate needed volume
of business
Demand for a service may be displaced by generic
competition from alternative products
Purchasers in chosen segment may be susceptible to
economic downturn
Example of a fully focused strategy private air

charter for VIPs
22

23
Market focused
Narrow market segment with wide range of
services
Need to make sure firms have operational
capability to do an deliver each of the
different services selected
Need to understand customer purchasing
practices
and preferences
Service focused
Narrow range of services to fairly broad
market
As new segments are added, firm needs to
Market Focused (Rentokil) read Service Insight

3.3 on page 78
24

25
Unfocused
Broad markets with wide range of services
Many service providers fall into this
category
Danger become a jack of all trades and
master of none
Four Principles of Positioning Strategy

26
Must establish position for firm or product in minds

of
target customers
Position should provide one simple,
consistent message
Position must set firm/product apart from
competitors
A company cannot be all things to all people - must
focus its efforts
Jack Trout
Positioning : One Key Message - Globally

27
Six Questions for Effective Positioning
Strategy
28
1.
2.
3.
What does our firm currently stand for in the minds of

current
and potential customers?
What types of customers do we serve now, and which ones
would we like to target in future?
What is value proposition for each of our current service
products, and what market segments is each one targeted
at?
Six Questions for Effective Positioning
Strategy
29
4.
5.
6.
How does each of our service products differ from

competitors?
How well do customers in chosen target segments perceive
our service products as meeting their needs?
What changes must we make to our offerings to strengthen
our competitive position?
Avoid trap of investing too heavily in points of
differences that are easily copied
Key marketing mix elements of

BreadTalks positioning
strategy
30
30
Developing an Effective Positioning
Strategy
31
Point of difference
Most compelling benefit offered by brand that

stands out from competitors
Reason to believe
Proof that brand can deliver the benefits that are

promised
Points of difference, points of parity and points of contention
32
Using Positioning Maps to

Analyze Competitive Strategy
33
Great tool to visualize competitive positioning

and map developments of time
Useful way to represent consumer perceptions
of alternative products graphically
Typically confined to two attributes, but 3-D
models can be used to portray positions on three
attributes simultaneously
Also known as perceptual maps
Information about a product can be obtained from
market data, derived from ratings by
representative consumers, or both
Selected courier services:

positioning map of speed of delivery versus cost
34
An example of
positioning of a
luxury hotel
Dubais Burj Al
Arab
35
Using Positioning Maps to Analyze Competitive Strategy

Positioning of Belleville Hotels: Service Level vs. Price (Fig.
3.14)
36

Positioning of Belleville Hotels: Location vs. Physical Luxury (Fig.
3.15)
37

Future Positioning of Belleville Hotels: Service Level vs. Price (Fig.
3.17)
38

Future Positioning of Belleville Hotels: Location vs. Physical
(Fig.
Luxury
3.18)
39
Positioning Maps Help Managers

to Visualize Strategy
40
Positioning maps display relative performance of

competing firms on key attributes
Research provides inputs to development of

positioning maps - challenge is to ensure
that
Attributes employed in maps are important to

target
segments
Performance of individual firms on each attribute accurately

reflects perceptions of customers in target segments
41
Positioning Maps Help Managers

to Visualize Strategy
(contd)
Predictions can be made of how positions may
change in light of future developments
Simple graphic representations are often easier
for managers to grasp than tables of data or
paragraphs of prose
Charts and maps can facilitate visual
awakening to threats and opportunities, suggest
alternative strategic directions
Summary for Chapter 3:

Positioning Services In Competitive Markets (1)
42
Effective positioning starts with the 3Cs, then segmentation, targeting

and positioning.
Market segmentation forms the basis for focused strategies
Service attributes that are determinant attributes are often the ones
most
important to customers
Four focus strategies:

Service focused
Fully focused
Market focused
Unfocused

43
Positioning distinguishes a brand from its competitors
Segmentation, targeting and positioning integrates with

customer, competitor and company analyses to give us a
positioning statement
To develop a positioning statement, we need

Target audience
Frame of reference
Point of difference
Reason to believe

44
Positioning maps are useful for plotting

competitive strategy
Mapping future scenarios help identify potential competitive
responses
Positioning charts help visualization of strategy

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3

Positioning Services in Competitive

Customer-Driven Services Marketing Strategy

Segmenting Service Markets

Targeting Service Markets

Using Positioning Maps to Analyze Competitive

Customer-Driven Services Marketing Strategy

Customer-Driven Services Marketing Strategy

Overall examination of market characteristics

Current brand positioning and image

Conducting SWOT Analysis of the Company

Customer-Driven Services Marketing Strategy

Dividing population of possible customers into groups with

Unique place in the minds of customers

Firms vary widely in ability to serve different types of

Various ways to segment markets

Demographics on its own will not result in

Developing Right Service Concept for

Use research to identify and prioritize which

Purpose of using the service

Targeting the right group of customers

Important vs. Determinant Attributes

Consumers usually choose between alternative

Important vs. Determinant Attributes

Determinant attributes determine buyers

Service characteristics that are important to

Determinant attributes for business travellers

Establishing Service Levels

Need to make decisions on service levels

Easily quantified attributes are easier to

Establishing Service Levels

Can often segment customers according to

Capsule Hotels (what type of customer and what are

Targeting Service Markets

Considerations for Using

Example of a fully focused strategy private air

Considerations for Using

Market Focused (Rentokil) read Service Insight

Considerations for Using

Four Principles of Positioning Strategy

Must establish position for firm or product in minds

Positioning : One Key Message - Globally

What does our firm currently stand for in the minds of

How does each of our service products differ from

Key marketing mix elements of

Most compelling benefit offered by brand that

Proof that brand can deliver the benefits that are

Points of difference, points of parity and points of contention

Using Positioning Maps to

Great tool to visualize competitive positioning

Selected courier services:

Using Positioning Maps to Analyze Competitive Strategy

Using Positioning Maps to Analyze Competitive Strategy

Using Positioning Maps to Analyze Competitive Strategy

Using Positioning Maps to Analyze Competitive Strategy

Positioning Maps Help Managers

Positioning maps display relative performance of

Research provides inputs to development of

Attributes employed in maps are important to