Positioning services

in competitive
markets
Market Segmentation

• Firms vary widely in their abilities to serve different

types of customers

• A market segment is composed of a group of buyers

sharing common characteristics, needs, purchasing
behavior, and consumption patterns

• Target segments should be selected with reference to

– Firm’s ability to match or exceed competing offerings directed at
the same segment
– Not just profit potential
Four Principles of Positioning Strategy

1. Must establish position for firm or product in minds of

customers

2. Position should be distinctive, providing one simple,

consistent message

3. Position must set firm/services apart from competitors

4. Firm cannot be all things to all people--must focus

Jack Trout
Principles of Positioning
Basic Focus Strategies

BREADTH OF SERVICE OFFERINGS

Narrow Wide

Unfocused
Service (Everything
Many Focused for everyone)
NUMBER
OF MARKETS
SERVED
Fully Focused
Market
(Service and
Focused
Few market focused)

Source: Robert Johnston

Considerations for using Focused Strategies

• Market focused
– Narrow market segment with wide range of services
– Need to make sure firms have the operational
capability to do and 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 develop
knowledge and skills in serving each segment
Unfocused

• Broad markets with wide range of services

• Many service providers fall into this category

• Danger – becoming a “jack of all trades and master of

none”
Service Attributes and Levels

• Developing Right Service Concept for a Specific

Segment
– 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
Establishing Service Levels
Market, Internal, and Competitive Analyses
Uses of Positioning in Marketing

• Understand relationships between services and markets

– compare to competition on specific attributes
– evaluate services' ability to meet consumer needs/expectations
– predict demand at specific prices/performance levels

• Identify market opportunities

– introduce new products
– redesign existing products
– eliminate non-performing products

• Make marketing mix decisions, respond to competition

– distribution/service delivery
– pricing
– communication
Possible Dimensions for Developing
Positioning Strategies

• Services attributes

• Price/quality relationships

• Reference to competitors (usually shortcomings)

• Usage occasions

• User characteristics

• Service class
Developing a
Market Positioning Strategy
- Size Define, Analyze
MARKET - Composition
ANALYSIS Market Segments
- Location
- Trends
Select
Target Segments
To Serve

INTERNAL - Resources
Marketing
- Reputation Articulate
ANALYSIS Desired Position Action
- Constraints
in Market Plan
- Values

Select Benefits
to Emphasize
to Customers
- Strengths
COMPETITIVE - Weaknesses Analyze
ANALYSIS - Current Possibilities for
Positioning Differentiation
Using Positioning Maps to Plot Competitive
Strategy
• 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

• Information about a product can be obtained from

market data, derived from ratings by representative
consumers, or both
Positioning of Hotels : Price vs. Service Level

Expensive

Grand
Regency
PALACE

Shal
High Moderate
Service Atlantic Service
Sheraton

Italia
Castle
Alex
Airport Plaza
Less Expensive
Positioning of Hotels : Location vs. Physical
Luxury
High Luxury

Regency
Grand

Shal
Sheraton
PALACE
Financial Shopping District Inner
District and Convention Centre Suburbs

Castle Italia
Alex
Atlantic
Airport Plaza

Moderate Luxury
Positioning after New Hotel Construction:
Price vs. Service
Expensive
Mandarin
New Grand Heritage
Marriott
Continental

Action?
Regency PALACE
Shal
High No action? Moderate
Service Service
Atlantic
Sheraton
Italia

Castle
Alex
Less Airport Plaza
Expensive
Positioning after New Hotel Construction:
Location vs. Physical Luxury
High Luxury
Mandarin
New Grand
Continental Heritage
Marriott Regency
Sheraton Shal
Action?
PALACE

Financial No action? Shopping District Inner

District and Convention Centre Suburbs

Castle Italia
Alex
Atlantic
Airport Plaza

Moderate Luxury
 Services as Substitutes for Owning and/or
Using Goods)

Own a Physical Good Rent the Use

of a Physical Good

Perform the • Drive own car • Rent car and drive it

Work Oneself • Type on own word processor • Rent word processor and type

Hire Someone • Hire chauffeur to drive car • Hire a taxi or limousine

to Do the Work • Hire typist to use word proc. • Send work to secretarial service
New Service Development:
A Hierarchy of New Service Categories
• Major service innovations--new core products for previously
undefined markets
• Major process innovations--using new processes to deliver
existing products and offer extra benefits
• Product line extensions--additions to current product lines
• Process line extensions--alternative delivery procedures
• Supplementary service innovations--adding new or improved
facilitating or enhancing elements

• Service improvements—improving performance on certain

attributes of current products

• Style changes--visible changes in service design or scripts

Elements of a Hotel Offering:
Trading off Room Price vs. Features/Services

• External factors
• Room features
• Food-related services
• Lounge facilities
• Services (e.g., reception)
• Leisure facilities
• Security
Success Factors in New Service Development

Market synergy
• Good fit between new product and firm’s image/resources
• Advantage vs. competition in meeting customers’ needs
• Strong support from firm during/after launch
• Firm understands customer purchase decision behavior

Organizational factors
• Strong interfunctional cooperation and coordination
• Internal marketing educates staff on new product and competition
• Employees understand importance of new services to firm

Market research factors

• Scientific studies conducted early in development process
• Product concept well defined before undertaking field studies
 Customer-Led versus Market-Oriented
Philosophies of Management
Customer-led businesses
• Focus on understanding expressed desires of customers in
currently served markets
• Risk: may miss new developments, lose market leader
position if listen too closely to current customers

Market-oriented businesses
• Understand current and latent customer desires plus
competitors’ plans, capabilities
• Scan market more broadly, have longer-term focus
• Pursue customer satisfaction, but set limits on being led by
customers, especially during periods of rapid change