Positioning Services in Competitive Markets

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

3- 1

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

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

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Standing Apart from the Competition

A business must set itself apart from its competition. To be successful it must identify and promote itself as the best provider of attributes that are important to target customers

GEORGE S. DAY

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

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Basic Focus Strategies for Services (Fig. 3.1)

BREADTH OF SERVICE OFFERINGS

Narrow
Service Focused

Wide
Unfocused (Everything for everyone)

Many
NUMBER OF MARKETS SERVED

Few

Fully Focused (Service and market focused)

Market Focused

Source: Robert Johnston

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

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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/product apart from competitors 4. Firm cannot be all things to all people--must focus Jack Trout

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

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Uses of Positioning in Marketing Management (Table 3.1)

Understand relationships between products and markets

compare to competition on specific attributes evaluate products 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

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

3- 6

Possible Dimensions for Developing Positioning Strategies

Product attributes Price/quality relationships Reference to competitors (usually shortcomings) Usage occasions User characteristics Product class
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

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Developing a Market Positioning Strategy (Fig. 3.3)

MARKET ANALYSIS
- Size - Composition - Location - Trends Define, Analyze Market Segments

Select Target Segments To Serve

INTERNAL ANALYSIS

- Resources - Reputation - Constraints - Values

Articulate Desired Position in Market Select Benefits to Emphasize to Customers

Marketing Action Plan

COMPETITIVE ANALYSIS

- Strengths - Weaknesses - Current Positioning

Analyze Possibilities for Differentiation

Source: Adapted from Michael R. Pearce

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

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Positioning of Hotels in Belleville: Price vs. Service Level (Fig. 3.4)

Expensive

Grand

Regency

PALACE

Shangri-La
High Service Sheraton Atlantic Moderate Service

Italia Castle Alexander IV Airport Plaza Less Expensive

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

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Positioning of Hotels in Belleville: Location vs. Physical Luxury (Fig. 3.5)

High Luxury

Grand Sheraton PALACE

Financial District Shopping District and Convention Centre

Regency

Shangri-La

Inner Suburbs

Castle Atlantic

Italia

Alexander IV

Airport Plaza Moderate Luxury

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

3 - 10

Positioning after New Hotel Construction: Price vs. Service Level (Fig. 3.6)
Expensive

Mandarin New Grand Heritage Marriott Continental

Action? Regency High Service

PALACE
Shangri-La No action? Atlantic Sheraton Italia Castle Alexander IV Airport Plaza Moderate Service

Less Expensive

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

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Positioning after New Hotel Construction: Location vs. Physical Luxury (Fig. 3.7)
High Luxury Mandarin

New Grand
Continental Action? PALACE Financial District No action? Shopping District and Convention Centre Italia Alexander IV Atlantic Airport Plaza Inner Suburbs Heritage Marriott Sheraton Shangri-La Regency

Castle

Moderate Luxury

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

3 - 12

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
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E

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