Positioning Services in Competitive Markets

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Positioning

“Creating, communicating, and maintaining distinctive differences that will be noticed and valued by those customers with whom the firm would most like to develop a long-term relationship”

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Search for Competitive Advantage in Services Requires Differentiation and

Focus

• Intensifying competition in service sector threatens firms with no distinctive competence and undifferentiated offerings.

• Slowing market growth in mature service industries means that only way for a firm to grow is to take share from competitors.

• Rather than attempting to compete in an entire market, firm must focus efforts on those customers it can serve best.

• Must decide how many service offerings with what distinctive (and desired) characteristics.

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Need for Focus

• Variables!• Breadth of Service Offering• Number of Markets Served

• Dimensions of Focus• Market Focus• Service Focus

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Basic Focus Strategies for Services

BREADTH OF SERVICE OFFERINGS

NUMBER OF MARKETS SERVED

Narrow

Many

Few

Wide

Service Focused

Unfocused (Everything

for everyone)

Market Focused

Fully Focused (Service and

market focused) Se

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Segmentation as Basis for Focus

• Segmentation types• Mass Customization• Micro Segmentation

• Identifying & Selecting Target Segment

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Use of Research for Developing Service Concept

• Identifying needs• Identifying Decision Maker• Timing of Use• User profile (Individual/Group)• Composition of Group

• Important vs. Determinant Attributes Se

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Competitive Positioning in Services

• Questions to be answered before positioning strategy is made• What does the firm stand for in the minds of customers• Which customers do we want to target now and in future• What are the characteristics of our current offering and which

segment is each one targeting• In each market how does our offering differ from competition• In a chosen segment how do customers perceive our service

offering as meeting their needs• What changes do we need to make to strengthen our

competitive position

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Copy positioning versus product positioning

• Decisions are based on the perception of reality rather than expert’s definition of that reality• Associating positioning with the

communication elements of the marketing mix – Copy positioning

• Decisions on substantive attributes that are important to customers, relating to price, product performance and service availability – Product positioning

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Positioning’s Role in Marketing Strategy

• Diagnostic Tool for Defining & Understanding Relationship Between Products & Markets• How does the product compare to the

competition on specific attributes• How well the product meet consumer needs

and expectations on specific attributes• What is the predicted demand with given

characteristics and price

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Positioning’s Role in Marketing Strategy

• Identify Market Opportunities• Introducing new products

• What segments to target• What attributes to offer

• Repositioning/Redesigning existing products• Appeal to the same segment or new one• What attributes to add, drop or change• What attributes to emphasize in advertising

• Eliminating Products that• Do not satisfy consumer needs• Face excessive competition

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Positioning’s Role in Marketing Strategy

• Other Marketing Mix Decisions• Distribution strategies

• Where to offer• When to make the product available

• Pricing strategies• How much to charge• When to make the product available

• Communication strategies• Selecting target audience• Selecting the message• Selecting communication channels

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Undesirable outcomes of failure to select a desired

positioning

• Head-on competition with stronger competition• Position of limited customer demand• Position of blurred/vague distinctive competence• Nobody has heard of the product

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Developing a Market Positioning Strategy

- Size- Composition- Location- Trends

MarketingAction Plan

MARKET ANALYSIS

INTERNAL ANALYSIS

- Resources- Reputation- Constraints - Values

COMPETITIVEANALYSIS

- Strengths- Weaknesses- Current Positioning

Define, AnalyzeMarket Segments

Select Target Segments

To Serve

ArticulateDesired Position

in Market

Select Benefitsto Emphasize to Customers

Analyze Possibilities forDifferentiation

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Analyses for Positioning

• Anticipating Competitive Response• Evolutionary Positioning

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Positioning of Hotels in Belleville:Price vs. Service Level

Expensive

Shangri-LaHigh

Service Moderate Service

Grand

Regency

Sheraton

Italia

CastleAlexander IV

Airport Plaza

PALACE

Atlantic

Less Expensive

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Positioning of Hotels in Belleville:

Location vs. Physical Luxury

High Luxury

Shopping District and Convention Centre

Shangri-La

Moderate Luxury

Financial District

Inner Suburbs

Grand Regency

Sheraton

ItaliaCastleAlexander IV

Airport Plaza

PALACE

Atlantic Se

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Positioning after New Hotel Construction:

Price vs. Service Level Expensive

Shangri-LaHigh

Service Moderate Service

HeritageMandarin

New GrandMarriott

Continental

Regency

Sheraton

Italia

Alexander IVAirport Plaza

PALACE

Atlantic

No action?

Action?

Less Expensive

Castle

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Positioning after New Hotel Construction: Location vs. Physical

LuxuryHigh Luxury

Shangri-La

Financial District

Inner Suburbs

Heritage

MandarinNew Grand

MarriottContinental

RegencySheraton

ItaliaAlexander IV

Airport Plaza

PALACE

Atlantic

No action?

Action?

Moderate Luxury

Castle

Shopping District and Convention Centre

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Positioning Maps Help Managers to

Visualize Strategy• 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

• Predictions can be made of how positions may change in the light of new developments in the future

• Simple graphic representations are often easier for managers to grasp than tables of data or paragraphs of prose

• Charts and maps can facilitate a “visual awakening” to threats and opportunities and suggest alternative strategic directions

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Changing Competitive Positioning

• Repositioning• Innovative positioning

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Designing & Managing Services Processes

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Significance of Service Process

• Architecture of Service• Method• Sequence• Linkages• Outcomes

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Blueprinting

• Developing a Blueprint• Identify key activities in performing a service• Create linkages• Refine activities by drilling down• Differentiate front-stage from backstage• Identify the line of visibility• Clarify interactions of customers, employees,

equipment etc.

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Blueprinting

• Creating a Script for Employees & Customers• Provide full description of the encounter• Identify potential problems• Discover and modify the nature of interaction to

improve quality of service, and enhance customer’s experience

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Blueprinting• Identifying fail points

• Identify all potential points where there is a risk of service going wrong• Product failure• Excessive wait

• Setting Service Standards• Use research and experience to learn customer expectations• Set parameters for standards so they can be quantified• Cover start and end of encounter

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Failure Proofing

• Fail-Safe Methods for Service Personnel• Incorrect Task• Wrong Order• Slow Speed• Wrong Work• Treatment errors• Tangible errors S

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Failure Proofing

• Fail Safe Methods for the Customer• Failure to Follow Steps• Forgetting Steps• Incorrect Sequence• Ignoring Instructions• Wrong Specification of Need

• Solutions• Marketing Communication• Flowcharts

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Service Blueprinting: Key Components

1. Define standards for frontstage activities

2. Specify physical evidence

3. Identify principal customer actions

4. ------------line of interaction (customers and front stage personnel)--------

5. Front stage actions by customer-contact personnel

6. ------------line of visibility (between front stage and backstage)--------------

7. Backstage actions by customer contact personnel

8. Support processes involving other service personnel

9. Support processes involving IT

Where appropriate, show fail points and risk of excessive waits

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Simplified Example: Blueprinting a Hotel Visit(extract only)

PhysicalEvidence

Customer Actions

Employee Actions Face-to-face

Fro

nt

Sta

ge

Phone Contact

Bac

ksta

ge

Makereservation

Rep. records, confirms

Arrive, valet park

Check-in at reception

Doorman greets, valet takes car

Enter data

Valet Parks Car

Make up Room

Register guest data

Receptionist verifies, gives key to room

Go to room

Hotel exterior, lobby,employees, key

Elevator, corridor,room, bellhop

Line of Interaction

Line of Visibility

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Process Redesign

• Institutional Rust• External Environment• Internal Deterioration

• Aims of Process Redesign• Reduce Service Failures• Reduce Cycle Time• Enhance Productivity• Increase Customer Satisfaction S

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Process Redesign: Principal Approaches

• Eliminating non-value-adding steps• Shifting to self-service• Delivering direct service• Bundling services• Redesigning physical aspects of service

processes Se

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Customers as Co-Producers:Levels of Participation in Service

Production

• Low – Employees and systems do all the work• Medium – Customer inputs required to assist

provider• Provide needed information, instructions• Make personal effort• May share physical possessions

• High – Customer works actively with provider to co-produce the service

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Self Service Technologies

• Self-service is ultimate form of customer involvement in service production

• Customers undertake specific activities using facilities or systems provided by service supplier

• Customer’s time and effort replace those of employees

• Concept is not new—self-serve supermarkets date from 1930s, ATMs and self-serve gas pumps from 1970s

• Today, customers face wide array of SSTs to deliver information-based services, both core and supplementary

• Many companies seek to divert customers from employee contact to Internet-based self-service

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Service Firms as Teachers: Well-trained Customers Perform Better

• Firms must teach customers roles as co-producers of service• Customers need to know how to achieve best results

• Education can be provided through:• Brochures• Advertising• Posted instructions• Machine-based instructions• Websites, including FAQs• Service providers• Fellow customers

• Employees must be well-trained to help advise, assist customers

Managing Customers as Partial Employees

to Increase Productivity and Quality

1. Analyze customers’ present roles in the business and compare to management’s ideal

2. Determine if customers know how to perform and have necessary skills

3. Motivate customers by ensuring that will be rewarded for performing well

4. Regularly appraise customers’ performance; if unsatisfactory, consider changing roles or termination S

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The Problem of Customer Misbehavior – Identifying and Managing “Jaycustomers”

What is a jaycustomer?

A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm itself, employees, other customers

Why do jaycustomers matter?• Can disrupt processes• Affect service quality• May spoil experience of other customers

What should a firm do about them?• Try to avoid attracting potential jaycustomers• Institute preventive measures • Control abusive behavior quickly• Take legal action against abusers• BUT firm must act in ways that don’t alienate other customers

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Six Types of “Jaycustomer”

• Thief – seeks to avoid paying for service• Rule breaker – ignores rules of social behavior and/or

procedures for safe, efficient use of service• Belligerent – angrily abuses service personnel (and sometimes

other customers) physically and/or emotionally• Family Feuders – fight with other customers in their party• Vandal – deliberately damages physical facilities, furnishings,

and equipment• Deadbeat – fails to pay bills on time S

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