Chapter 3

Positioning Services in Competitive Markets

GENERAL CONTENT

Multiple Choice Questions

1. Brand positioning can do all of the following except ____________.

a. generate interest in a service
b. create awareness for a service
c. meet customers’ needs for a service
d. differentiate a service
e. increase adoption of a service
(c; Challenging; p. 58)

2. Which of the following is NOT one of the four basic focus strategies?
a. Service focused
b. Unfocused
c. Fully focused
d. Refocused
e. Market focused
(d; Easy; p. 59)

3. A ____________ is composed of a group of buyers who share common

characteristics, needs, purchasing behavior, or consumption patterns.
a. target class
b. class
c. focal segment
d. market segment
e. target segment
(d; Moderate; p. 60)

4. A(n) ____________ is one that a firm has selected from among those in the broader
market and may be defined on the basis of several variables.
a. general segment
b. segmentation field
c. target segment
d. holistic segment
e. mass customization
(c; Easy; p. 60)

5. The same individuals may set different priorities for attributes according to all
EXCEPT which of the following?
a. The purpose of using the service.
b. Who makes the decision.

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 c. The timing of use.
d. Whether the individual is using the service alone or with a group.
e. The cost of the service.
(e; Moderate; p. 63)

6. Which of the following is the best example of a determinant characteristic for airline
travel?
a. Oxygen masks
b. Plane size
c. Quality of food and drinks
d. Having cocktail service
e. Floatation devices
(c; Moderate; p. 63)

7. ____________, refers to an explicit form of positioning strategy that is based upon

offering several price-based classes of service concept, each based on packaging a
distinct level of service performance across many attributes.
a. Service tiering
b. Service conscription
c. Broad-basing
d. Price-setting
e. Matching
(a; Challenging; p. 64)

8. Which of the following is NOT one of the four principles of positioning according to
Jack Trout?
a. A company must maintain a strong labor base.
b. A company must establish a position in the minds of its targeted customers.
c. The position should be singular, providing one simple and consistent message.
d. The position must set a company apart from its competitors.
e. A company cannot be all things to all people—it must focus its efforts.
(a; Moderate; p. 65)

9. Market analysis addresses all of the following factors EXCEPT ____________.

a. overall level of demand
b. trend of demand
c. government regulations
d. geographic location of demand
e. market analysis addresses all of the above factors
(c; Easy; p. 68)

10. Competitive analysis addresses all of the following factors EXCEPT ____________.
a. examines competitors’ strengths
b. identifies competitors’ future positioning
c. examines competitors’ current positioning
d. examines competitors’ weaknesses

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 e. suggests opportunities for differentiation
(b; Moderate; p. 68)

True/False

11. It is usually a good idea for firms to try to appeal to all potential buyers in a market,
because customer variety leads to full capacity.
(False; Moderate; p. 58)

12. Market niches that seem too narrow to offer sufficient sales in one country are
indicative of globally narrow market niches.
(False; Moderate; p. 59)

13. A fully-focused organization concentrates on a narrow market segment, but has a

wide range of services.
(False; Moderate; p. 59)

14. One of the reasons why firms with a narrow product line elect to serve multiple
segments is to create a portfolio of customers that hedge against low demand risks.
(True; Challenging; p. 59)

15. A service-focused firm offers a narrow range of services to a fairly broad market.
(True; Moderate; p. 60)

16. A target segment should only be selected on the basis of their sales and profit
potential.
(False; Moderate; p. 60)

17. No service attribute can be easily quantified because of the intangibility of services.
(False; Challenging; p. 63)

18. Positioning plays a pivotal role in marketing strategy, because it links market
analysis and competitive analysis to environmental analysis.
(False; Challenging; p. 67)

19. The objective of internal corporate analysis is to identify the organization’s

resources, any limitations or constraints, its goals, and how it values shape the way it
does business.
(True; Easy; p. 68)

20. The best way to anticipate possible competitive responses is to identify all current or
potential competitors and to put oneself in their own management’s shoes by
conducting an internal corporate analysis for each of these competitors.
(True; Moderate; p. 68)

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Short Answer

21. What are the two dimensions along which a company’s focus can be described?

Market and service.

(Easy; p. 59)

22. What are the characteristics of an unfocused service category?

Serving broad markets and providing a wide range of services.

(Moderate; p. 59)

23. Distinguish between important and determinant attributes

Important attributes represent what customer’s value in a service, whereas

determinant attributes are those that actually determine buyers’ choices between
competing alternatives.
(Moderate; p. 63)

24. Why is it possible to segment customers according to price levels?

Customers have different sensitivities to price. Price insensitive customers are

willing to pay a relatively high price to obtain high levels of service. Price sensitive
customers look for inexpensive service with relatively low levels of performance.
(Moderate; p. 64)

25. What are the three types of analysis to consider when developing a market
positioning strategy?

Market analysis, internal analysis, and competitor analysis.

(Moderate; p. 67)

Essay

26. Explain what a fully-focused and a market-focused strategy are and discuss the
opportunities and risks inherent in selecting each strategy.

A fully-focused organization provides a limited range of services to a narrow and

specific market segment. Opportunities in this strategy include developing
recognized expertise that retains a competitive advantage over other firms. A risk is
that the market may be too small to generate the volume of business necessary.

A market-focused organization concentrates on a narrow segment with a wide range

of services. This strategy offers the opportunity to sell multiple services to a single

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 customer that enhances the value of promotional efforts. Managers need to ensure
that the firm has the ability to excel at many different tasks and understand what
services go together per customer purchasing practices and preferences.
(Challenging; p. 59)

27. What are the advantages of positioning charts?

Graphic representations of a firm’s profile and product positions are much easier to
understand than tables of quantitative data or paragraphs of writing. Charts and
maps can help to achieve a “visual awakening.” By allowing senior managers to
compare their business with that of competitors and understand the nature of
competitive threats and opportunities, visual presentations can highlight gaps
between how customers (or potential customers) see the organization and how
management sees it. This can thus help confirm or get rid of beliefs that a service or
a firm occupies a unique position in the marketplace.
(Moderate; p. 76)

APPLICATION CONTENT

Multiple Choice Questions

28. Bright Horizons strategy included which of the following?

a. Marketing services to employers instead of parents.
b. Hiring inexpensive labor.
c. Commoditized service offerings.
d. Heavy regulatory oversight.
e. All of the above are strategies employed by BH.
(a; Moderate; p. 57)

29. Segmentation variables at Contiki Holidays include all of the following EXCEPT
____________.
a. geographic
b. income
c. lifestyle
d. household size
e. age
(d; Challenging; p. 62)

30. Which of the following is most likely the determinant attribute for customers of
CEVA Logistics, who have global operations?
a. number of trucks
b. reach
c. delivery times
d. mode of delivery
e. online booking of services

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(b; Challenging; p. 64)

31. Capsule hotels originated from _____________.

a.New York
b.London
c.Japan
d.India
e.Malaysia
(c; Easy; p. 65)

32. Grant Thornton, the fifth largest firm in the accounting industry, has successfully
positioned itself as offering ____________ and having ____________.
a.high investment yield; “a passion for the business of accounting”
b.limited financial obligation; “a desire to exceed expectations”
c.easy access to partners; “a passion for the business of accounting”
d.low employee turnover; “a desire to exceed expectations”
e.high asset turnover; “a passion for the business of accounting”
(c; Moderate; p. 66)

True/False

33. United Church Homes & Services offers housing to retirees. This is an example of a
market focused strategy.
(False; Moderate; p. 58)

34. Rentokil started off as a firm that manufactured rat poison and a pesticide for killing
leeches.
(False; Easy; p. 61)

35. Yotel and Qbic are capsule hotel chains.

(True; Easy; p. 65)

36. Bright Horizons used low-cost strategies to achieve their competitive advantage.
(False; Moderate; p. 67)

37. Google has expanded its offerings to include Google Earth and You Tube in order
increase sales and attract new customers.
(True; Moderate; p. 69)

Short Answer

38. Give an example of service tiering in the airline industry.

Classes (first, business, economy),

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(Easy; p. 64)

39. Give an example of an industry that utilizes service tiering.

Hotels, airlines, car rentals, hardware and software support, healthcare insurance,
cable television, and credit cards.
(Easy, p. 64)

40. Give an example of a key service attribute used in transportation services.

punctuality.
(Easy; p. 64)

41. What were the main benefits of capsule hotels when they first started up?

Convenience and price.

(Easy; p. 65)

42. Give an example of a service firm that used the blue ocean strategy to make
competition irrelevant.

Cirque du Soleil changed the image of circus shows with its brand of ballet and
theater.
(Moderate; p. 69)

Essay

43. Discuss the analysis that took place to develop Bright Horizons and the ways in
which they overcame unappealing industry characteristics.

Bright Horizons (BH) is a childcare company that was born from an industry with
many unappealing characteristics. The firm’s analysis showed an industry with no
barriers to entry, chronically low margins, high labor intensity, no proprietary
technology, low economies of scale, weak brand distinction, and heavy regulatory
oversight. Instead of establishing new independent centers, BH formed partnerships
with companies to provide daycare services to employees with small children. The
advantages over traditional methods included a powerful, low-cost marketing
channel, a partner to supply the capital to build and outfit the centers, a partner with
a vested interest in the success of the programs, and proximity benefits to parents.
(Moderate; p. 57)

44. How did Rentokil Initial grow from a manufacturer of rat poison, to the world’s large
business support services company?

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 Through growth within the firm and buying over other companies, Rentokil Initial
has developed an wide range of products that includes testing and safety services;
security; parcels delivery; interior plants landscaping (including sale or rental of
tropical plants); specialized cleaning services; pest control; rental and cleaning of
uniforms; clinical waste collection and disposal; personnel services; and a washroom
solutions service. The firm sees its core competence as “the ability to carry out high
quality services on other people’s premises through well-recruited, well-trained, and
motivated staff.” Promoting use of additional services to existing customers is an
important part of the firm’s strategy. Initial Integrated Services offers clients full
integration of services. Clients purchase sector-specific solutions that deliver
multiple services but features just “one invoice, one account manager, one helpdesk,
one contract and one motivated service team”. Rentokil Initial’s success lies in its
ability to position each of its many business and commercial services in terms of the
company’s core brand values, which include providing superior standards of
customer care and using the most technically advanced services and products.
(Moderate; p. 61)

45. Discuss who Smart Communication Ltd’s customers are and some of the unique
ways Smart Communication Ltd goes about servicing them.

Smart Communications Ltd’s customers are the low-income group in Philippines.

When they wanted to target that group of customers, they looked at Proctor and
Gamble for ideas on how to keep product prices low. They found that there are
micropacks for items such as shampoo, soaps, and food at low-ticket prices.
Therefore, when they launched their mobile service to the low-income group, they
offered prepaid pricing plans with airtime in small packages, with prices in small
denominations that started from as low as US$0.50. This strategy turned out to be a
resounding success.
(Moderate; p. 62)

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