Educating Customers

and Promoting the
Value Proposition

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 1

Overview
• Role of Marketing Communications
• Communicating Services Presents Both Challenges and
Opportunities
• Setting Communication Objectives
• The Marketing Communications Mix
• Role of Corporate Design
• Marketing Communications and the Internet

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 2

Role of Marketing Communication

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 3

service benefits • Persuade target customers that service offers best solution to meet their needs and build relationship with them • Help maintain relationships with existing customers Requires comprehensive. specific features. text messages o  For example.4 .Adding Value through Communication Content • Information and consultation represent important ways to add value to a product • Provide information to prospective customers o Service options available. doctors sending annual checkup reminders to patients Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . cost. up-to-date customer database and ability to make use of this in a personalized way o Direct mail and contacts by telephone. e-mail. websites. functions.

6 .Communicating Services Presents Both Challenges and Opportunities Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

Overcoming Problems of Intangibility • May be difficult to communicate service benefits to customers.7 . multidimensional new offerings Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . especially when intangible • Intangibility creates four problems: o Abstractness  No one-to-one correspondence with physical objects o Generality  Items that comprise a class of objects. persons. or events o Nonsearchability  Cannot be searched or inspected before purchase o Mental impalpability  Customers find it hard to grasp benefits of complex.

8 . o Source: Banwari Mittal and Julie Baker. April 2002. ―Advertising Strategies for Hospitality Services.Advertising Strategies for Overcoming Intangibility Intangibility problem Advertising strategy • Generality objective claims : Document physical system capacity Cite past performance statistics o subjective claims : Present actual service delivery incident • Nonsearchability : Present customer testimonials • Abstractness : Display typical customers benefiting • Impalpability : Documentary of step-by-step process.‖ Cornell Hotel and Restaurant Administration Quarterly 43. 53 Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

Kerala • Metaphors communicate value propositions more dramatically and emphasize key points of difference • Highlight how service benefits are actually provided • Can you suggest some examples from recent advertising? Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .Using Metaphors to Communicate Value Propositions • Tangible metaphors help to communicate benefits of service offerings.10 . for example: o Gods own Country .

HOW ? -Show service delivery in action • Television and videos engage viewer o Dentists showing patients videos of surgical procedures before surgery • Advertising and publicity can make customers aware of changes in service features and delivery systems in b2b and b2c contexts o Sales promotions to motivate customers o Offer incentives to make necessary changes in their behaviour o Price discounts to encourage self-service on an ongoing basis Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .Facilitate Customer Involvement in Production • When customers are actively involved in service production. they need training to perform well.13 .

procedures. newness of aircraft • If Firm’s expertise is hidden in low-contact services – Ex Imports business – DHL o Need to illustrate equipment. mechanic’s maintenance skills. the global network of DHL and special relations to national Public Postal Operators (PPOs) DHL Global Mail can offer you direct connections to more than 200 countries. employee activities that take place backstage With 100 sales offices worldwide.Help Customers to Evaluate Service Offerings • Customers may have difficulty distinguishing one firm from another o Provide tangible clues related to service performance • Some performance attributes lend themselves better to advertising than others o Airlines  Boast about punctuality  Do not talk overtly in advertising about safety. admission that things might go wrong make prospective travelers nervous  Use indirect approach: promote pilot expertise. o Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .14 .

Stimulate or Dampen Demand to Match Capacity • Live service performances are time-specific and can’t be stored for resale at a later date o o For example. free breakfast Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .15 . for example:  Run promotions that offer extra value—room upgrades.increase price Stimulating demand during demand during off-peak period. haircut on Tuesdays Advertising and sales promotions can change timing of customer use • Examples of demand management strategies o o Reducing usage during peak demand periods.

Promote the Contributions of Service Personnel • Frontline personnel are central to service delivery in high-contact services • Ads should show employees at work and this helps customers understand the nature of service encounter and what to expect once they reach the service center. highlight expertise and commitment of employees whom customers normally do not normally encounter Service personnel should be informed about the content of new advertising campaigns or brochures before launch Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . Ex ICICI Banks New Ad _ Khayal Aapka • Show customers the work performed behind the scenes to ensure good delivery o o To enhance trust.16 .

17 .Setting Communication Objectives Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

18 .Checklist for Marketing Communications Planning: The ―5 Ws‖ Model • • • • • Who is our target audience? What do we need to communicate and achieve? How should we communicate this? Where should we communicate this? When do communications need to take place? Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

Target Audience: 3 Broad Categories • Prospects o Employ traditional communication mix because prospects are not known in advance – Ex Ads. PR. not accessible to customers Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .19 . telemarketing etc • Users o More cost-effective channels.ex – relationship manager • Employees o o o Secondary audience for communication campaigns through public media Risk generating cynicism among employees if communication in question promotes levels of performance that are seen as unrealistic Communications may be directed specifically at employees as part of internal marketing campaign.

20 . discourage during peak Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .Common Educational and Promotional Objectives in Service Settings (1) • Create memorable images of specific companies and their brands • Build awareness/interest for unfamiliar service/brand • Build preference by: o o Communicating brand strengths and benefits Comparing service with competitors’ offerings and countering their claims • Reposition service relative to competition • Stimulate demand in off-peak.

g.21 . promote service guarantees) • Familiarize customers with service processes before use • Teach customers how to use a service to best advantage • Recognize and reward valued customers and employees Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 ..Common Educational and Promotional Objectives in Service Settings (2) • Encourage trial by offering promotional incentives • Reduce uncertainty/perceived risk by providing useful info and advice • Provide reassurance (e.

time frames Methods of measuring and evaluating performance Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .Key Planning Considerations • Full understanding of service product and how well prospective buyers can evaluate its characteristics in advance • Knowledge of target market segments o o Exposure to different media Awareness of products and attitudes • Recognition of decisions to be made o o o o o Content. structure.22 . and style of message Manner of presentation Most suitable media Budget.

The Marketing Communications Mix Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .23 .

Marketing Communications Mix • Numerous forms of communication • Different forms have distinctive capabilities –depending on o o Types of messages that can be conveyed Market segments most likely to be exposed to them • Two types of communication o o Personal communications: personalized messages that move in both directions between two parties Impersonal communications: messages move in only one direction • Technology creates gray area between both o For example. interactive software.24 . combine word processing technology with information from database to create impression of personalization. Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

podcasts Sampling Customer service Print Coupons Training Internet Sign-up rebates Telemarketing Outdoor Gifts Direct mail Prize promotions Word of (other customers) mouth Word-of-mouth Key: * Denotes communications originating from outside the organization Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .Marketing Communications Mix for Services (1) Personal communications Selling * Advertising Sales promotion Broadcast.25 .

Marketing Communications Mix for Services (2) * Publicity & public relations Instructional manuals Corporate design Press releases/kits Websites Signage Press conferences Manuals Interior decor Special Events Brochures Vehicles Sponsorship Interactive software Equipment Trade Shows. exhibitions Voice mail Stationery Media-initiated coverage Uniforms Key: * Denotes communications originating from outside the organization Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .26 .

27 A U D I E N C E . 2005. 397 Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . p.. Principles of Services Marketing.4th ed. London: McGraw-Hill.Sources of Messages Received by Target Audience Front-line staff Messages originating within organization Sources Messages originating outside organization Production channels Service outlets Marketing channels Advertising Sales promotions Direct marketing Personal selling Public relations Word of mouth Media editorial Source: Adapted from a diagram by Adrian Palmer.

resolving problems.Messages Transmitted through Production Channels (1) • Developed within organization and transmitted through production channels that deliver the service itself • Customer service from front-line staff o o o Shape customer’s perceptions of service experience and the firm Responsible for delivering supplementary services such as providing information.28 . Firm may require customer service staff to cross-sell additional services Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . receiving payment. etc.

Messages Transmitted through Production Channels (2) • Customer training o Familiarize customers with service product and teach them how to use it to their best advantage.29 . Eg Sales Rep training customers use internet banking • Service outlets o o Planned and unintended messages reach customers through the medium of the service delivery environment itself Servicescape: Physical design of service outlet Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

medical services • Face-to-face selling of new products is expensive— telemarketing is lower cost alternative Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .Messages through Marketing Channels: Personal Selling • Interpersonal encounters educate customers and promote preferences for particular brand or product o o Common in b2b and infrequently purchased services For example. insurance.30 . investment. education. and consultation For example. property • Relationship marketing strategies based on account management programs o o o Customer assigned to a designated account manager Ongoing need for advice. insurance.

31 . samples. demonstrations Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .Messages through Marketing Channels: Trade Shows • • • • Popular in b2b marketplace Stimulate extensive media coverage Many prospective buyers come to shows Opportunity to learn about latest offerings from wide array of suppliers o o o Environment is very competitive Compare and contrast Question company reps • Physical evidence displayed through exhibits.

59% feel ads have little relevance TV.2) • Effectiveness remains controversial • Research suggests that less than half of all ads generate a positive return on their investment Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .Messages through Marketing Channels:Advertising • Build awareness. persuade. Internet.32 . inform. transit vehicles—all cluttered with ads Wide array of paid advertising media Ads reinforced by direct marketing tools Many e-tailers now using electronic recommendation agents (RI 6. and remind • Challenge: How does a firm stand out from the crowd? o o o o o Yankelovitch study shows 65% of people feel ―constantly bombarded‖ by ad messages. newspapers. many physical facilities. radio broadcasts. magazines.

recorded telephone messages.33 . faxes.Messages through Marketing Channels: Direct Marketing (1) • Mailings. e-mail • Potential to send personalized messages to highly targeted microsegments o Need detailed database of information about customers and prospects Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

e-mail spam filters.Messages through Marketing Channels: Direct Marketing (2) • Advance in on-demand technologies empower consumers to decide how and when they prefer to be reached. pop-up blockers.34 . people invited to register at a firm’s website and specify what type of information they like to receive via e-mail Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . podcasting • Permission marketing: customers encouraged to ―raise their hands‖ and agree to learn more about a company and its products in anticipation of receiving something of value o o Enables firms to build strong relationships with customers For example. and by whom o For example.

in greater volume with each purchase. or more frequently • Provides a ―competitive edge‖ during periods when demand would be weak Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . or customer group • Motivates customers to use a specific service sooner. price.Messages through Marketing Channels: Sales Promotion (1) • Defined as ―communication attached to an incentive‖ • Should be specific to a time period.35 .

Messages through Marketing Channels: Sales Promotion (2) • Speeds up introduction and acceptance of new services • Interesting sales promotions can generate attention and put firm in favorable light (especially if interesting results publicized) o o For example. he received it—and got a game of tennis with the general manager! Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . SAS International Hotels—if a hotel had vacant rooms. guests older 65 years old could get a discount equivalent to their years When a guest announced his age as 102 and asked to be paid 2% of the room rate in return for staying the night.36 .

FedEx safely transported two giant pandas from Chengdu.C. China. sponsorships • Corporate PR specialists teach senior managers how to present themselves well at public events.37 . D. press conferences. in a FedEx aircraft renamed FedEx PandaOne Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . news releases.Messages through Marketing Channels: Public Relations • PR/publicity involves efforts to stimulate positive interest in an organization and its products through third parties o For example. especially when faced with hostile questioning • Unusual activities can present an opportunity to promote company’s expertise o For example. to the National Zoo in Washington.

attitudes. and behaviors Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .38 .Messages Originating from Outside the Organization (1) • Word of Mouth (WOM) o o Recommendations from other customers viewed as more credible Strategies to stimulate positive WOM  Referencing other purchasers and knowledgeable individuals  Creating exciting promotions that get people talking about firm’s great service  Developing referral incentive schemes  Offering promotions that encourage customers to persuade others to join them in using the service  Presenting and publicizing testimonials that stimulate WOM • Pass along e-mails—consumers’ motivation.

Messages Originating from Outside the Organization (2) • Blogs—a new type of online WOM • Editorial coverage o o Compares. contrasts service offerings from competing organizations Advice on ―best buys‖ Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .39 .

40 . selling. and sales promotion all lend themselves easily to misuse • Poor internal communications between operations and marketing personnel concerning level of service performance • Deliberately exaggerated promises to secure sales • Deceptive promotions • Unwanted intrusion by aggressive marketers into people’s personal lives Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .Ethical Issues in Communication • Advertising.

41 .Role of Corporate Design Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

g.. logos. uniforms.Strategies for Corporate Design (1) • Many service firms employ a unified and distinctive visual appearance for all tangible elements o For example. with name secondary o o Shell’s yellow scallop shell on a red background MacDonald’s ―Golden Arches‖ Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . physical facilities • Provide a recognizable theme linking all the firm’s operations in a branded service experience through strategic use of physical evidence o e. BP’s bright green and yellow service stations • Use of trademarked symbol as primary logo.42 .

Strategies for Corporate Design (2) • International companies need to select designs carefully to avoid conveying a culturally inappropriate message Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .43 .

44 .FedEx: Use of Company Name In Corporate Design (1) • Changed trade name from Federal Express to FedEx • Distinctive logo featuring new name • Chose FedEx Ground when decided to rebrand the RPS ground delivery service it had purchased some years earlier o Transfer positive image of its air services to less expensive small-package ground service Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

45 .FedEx: Use of Company Name In Corporate Design (2) • Created ―FedEx family of companies‖ consisting of subbrands for different services o o o o o o o FedEx Express FedEx Ground FedEx Home Delivery FedEx Freight FedEx Custom Critical FedEx Supply Chain Services FedEx Kinko’s • Each subbrand has different color scheme for second word to create differentiation for subbrands o o Express is red/orange Ground is green Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

46 .Marketing Communications and the Internet Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

Marketing Communications and the Internet • Can be accessed from almost anywhere in the world • Simplest form of international market entry available “The firm cannot avoid creating interest in its offerings outside its local or national market” Christian Grönroos Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .47 .

Internet Marketing Offers Powerful Opportunities for Interactivity (1) • Internet used for a variety of communications tasks o o o o Promoting consumer awareness Providing information and consultation Facilitating two-way communications Enabling customers to place orders • Can market through firm’s own websites or advertise on other sites o Supplement conventional communications channels at reasonable cost Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .48 .

well-designed communications strategy • Able to establish rapport with individual customers o o Interactive nature of the Internet can increase customer involvement Facilitates permission marketing and ―self-service‖ marketing  Banks allow customers to pay bills electronically. apply for loans over the Internet.Internet Marketing Offers Powerful Opportunities for Interactivity (2) • Must be part of integrated.49 . and check account balances online Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

Website Design Considerations (1)
• Contain useful, interesting information for target
customers
• Facilitate self-service in information gathering
• Users expect
o
o
o

Fast access
Easy navigation
Relevant and up to date content

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 50

Website Design Considerations (2)
• Firms must set explicit communication goals for websites
• Design should address attributes that affect website
―stickiness‖
o
o
o
o

Content quality
Ease of use
Speed of download
Frequency of update

• Memorable web address helps attract visitors to a site
o

Ensure that people are aware of/can guess firm’s web address

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 51

EasyJet Paints Its Website Address on Each of
Its More than 200 Aircraft

Source: www.easyjet.com/EN/About/photogallery.html. © easyJet airline company limited
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 - 52

53 . but noncompeting services o o o Advertisements for financial service providers on Yahoo!’s stock quotes page Small messages from Amazon.Effective Advertising on Internet: Banner Advertising (1) • Placing advertising banners and buttons on portals such as Yahoo!.com on web pages devoted to a specific topic Links relevant to e-mail content on GMail Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . Netscape and other firms’ websites • Draw online traffic to the advertiser’s own site • Websites often include advertisements of other related.

Effective Advertising on Internet: Banner Advertising (2) • Easy for advertisers to measure how many visits to its own website are generated by click-throughs • Limitations o o Obtaining many exposures (―eyeballs‖) to a banner does not necessarily lead to increase in awareness.54 . or sales Problem of fraudulent click-throughs designed to boost apparent effectiveness Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . preference.

55 .Effective Advertising on Internet: Search Engine Advertising (1) • Reverse broadcast network—search engines let advertisers know exactly what consumer wants through their keyword search • Can target relevant messages directly to desired consumers • Several advertising options o o o Pay for targeted placement of ads to relevant keyword searches Sponsor a short text message with a click-through link Buy top rankings in the display of search results Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .

Effective Advertising on Internet: Search Engine Advertising (2) • Google – The New Online Marketing Powerhouse o o Google AdWords—allows businesses to connect with potential customers at the precise moment when they are looking at related topics.56 . publishers receive a share of advertising revenue generated Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 . advertisers can display their ads at websites that are part of the Google content network Google AdSense—In return for displaying relevant Google ads on their websites.

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57 . overall message about the service firm (need consistency within campaigns about specific service products targeted at specific segments) Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 6 .Developing an Integrated Marketing Communications Strategy • Isolating online marketing activities from other marketing activities may result in conflicting message o Customers will not have a clear picture of a firm’s positioning and value proposition • IMC ties together and reinforces all communications to deliver a strong brand identity • Communications in different media should form part of a single.

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Positioning Services in Competitive Markets .

5 . Vol.Basic Focus Strategies for Services BREADTH OF SERVICE OFFERINGS Narrow Wide Many Service Focused Unfocused (Everything for everyone) Few Fully Focused (Service and market focused) Market Focused NUMBER OF MARKETS SERVED Source: Robert Johnston “Achieving Focus in Service Organizations. 10–20 Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 . 16. January 1996. pp.” The Service Industries Journal.

Market Segmentation Forms the
Basis for Focused Strategies

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 - 7

Market Segmentation
• Firms vary widely in ability to serve different types of
customers
• Micro Segmentation
 Micro segmentation strategies target small groups of customers sharing
certain relevant characteristics at a specific point in time
 e.g., Royal Bank of Canada – 10 million customers
 Segmented monthly basis using data modeling algorithms on basis of
 Risk profile
 Current and projected profitability
 Life stage
 Likelihood of leaving the bank
 Preferred channel
 Products held
 Response to promotions

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 - 8

Identifying and Selecting Target Segments
• Target segments should be selected with reference to
o
o

Firm’s ability to match or exceed competing offerings directed at the same
segment
Not just profit potential

• Some ―underserved‖ segments can be huge, especially
poor consumers in emerging economies
o

For example: rural consumers – Financial Services focusing on this market

Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 - 9

10 .Service Attributes and Levels Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .

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: o o o o o Purpose of using the service – Ex Selection of Restaurant Who makes decision Timing of use Whether service is used alone or with a group Composition of that group Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .11 .

Important versus Determinant Attributes • Consumers usually choose between alternative service offerings based on perceived differences between them • Important Attribute : Prime attribute for selection of a service. ease of making reservations. quality of food and in-flight service – for business class Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .12 . Ex On time departure • Determinant attributes determine buyers’ choices between competing alternatives : Collection of Specific Attributes • Ex availability of frequent flyer programs.

Premium width. lounges at airports etc Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .Establishing Service Levels and Tiers • Need to make decisions on service levels—level of performance firm plans to offer on each attribute o Easily quantified attributes are easier to understand and generalizable • Service tiering: Positioning strategy based on offering several price-based classes of service concept Industry Tiers Key Service Attributes and Physical Elements used in Tiering Hotel Based on Star Ratings Landscaping.13 . amenities etc Airline Classes : Economy. Reservation flexibility. room size. Check in services. meal and beverage service. Architecture. Seat Business.

15 .Positioning Distinguishes a Brand from Its Competitors Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .

providing 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 Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .16 .Four Principles of Positioning Strategy • Must establish position for firm or product in minds of customers • Position should be distinctive.

Principles of Positioning • The service managers needs to answer these questions before planning positioning strategy • What does our firm currently stand for in the minds of current and prospective customers? • What customers do we serve now. and which ones would we like to target in the future? • What is value proposition and target segment for each of our current service offerings? • How do our service offerings differ from competitor’s? • 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 Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .17 .

It should position. given service outlet or specific service outlet Consistency among services offered at same location because the image of one may spill over to others Ex. Hospital is specialized in cardiac care.23 . multi-product business: Position may be established for entire organization.Role of Positioning in Marketing Strategy • Positioning links market analysis and competitive analysis to internal corporate analysis • From the above 3 a positioning statement is developed • Positioning strategy can take place at different levels o o o Multi-site.Heart Care Hospital • Help prospective customers get mental ―fix‖ on what to expect • Failure to select desired position in marketplace and develop a marketing action plan to hold this position may result in: o o Head-on competition from a stronger competitor Organization’s position being so blurred that nobody knows what its distinctive competence really is Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .

24 .Market. Analyze Market Segments Select Target Segments To Serve • • • • INTERNAL ANALYSIS Resources Reputation Constraints Values Articulate Desired Position in Market Marketing Action Plan Select Benefits to Emphasize to Customers . Pearce Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .Strengths COMPETITOR ANALYSIS • Weaknesses • Current Positioning Analyze Possibilities for Differentiation Source: Developed from an earlier schematic by Michael R.3) • • • • MARKET ANALYSIS Size Composition Location Trends Define. Internal. and Competitor Analysis (Fig 7.

Anticipating Competitive Response • Competitors might pursue same market position o o Independently do same positioning analysis and arrive at similar conclusions Competitors may take steps to reposition own service • Get inside competitors’ heads—conduct internal corporate analysis for all current/potential challengers to get sense of how they might act • Couple these insights with market data • Analyze possible effects of alternative competitive moves o o Impact of price cut on demand. market share.25 . and profits Responses of different segments to changes in service attributes Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .

Positioning Maps Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .26 .

27 . or both.Using Positioning Maps to Plot Competitive Strategy • Useful way to represent consumer perceptions of alternative products in visual format • Information about a product can be obtained from market data. then marketing efforts may be needed to change these perceptions • Also known as perceptual maps Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 . derived from ratings by representative consumers. • If consumer perceptions of service characteristics differ sharply from "reality" as defined by management.

Positioning of Hotels : Price versus Service Level Expensive Grand Regency PALACE Shangri-La High Service Sheraton Moderate Service Atlantic Italia Castle Alexander IV Airport Plaza Less Expensive Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .28 .

29 Inner Suburbs .Positioning of Hotels in Belleville: Location versus Physical Luxury High Luxury Regency Grand Shangri-La Sheraton PALACE Financial Shopping District and Convention Center District Italia Castle Alexander IV Atlantic Airport Plaza Moderate Luxury Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .

30 .Positioning after New Construction: Price versus Service Level Mandarin New Grand Heritage Marriott Continental Expensive Action? Regency High Service PALACE Shangri-La No action? Moderate Service Atlantic Sheraton Italia Less Expensive Castle Alexander IV Airport Plaza Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .

31 .Positioning After New Construction: Location versus Physical Luxury High Luxury Mandarin New Grand Heritage Marriott Sheraton Shangri-La Continental Action? Regency PALACE Financial District No action? Shopping District Inner Suburbs and Convention Center Castle Italia Alexander IV Atlantic Airport Plaza Moderate Luxury Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .

Changing Competitive Positioning Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .33 .

34 .Repositioning • Firm may have to make significant change in existing position • Improving negative brand perceptions may require extensive redesign of core product • Repositioning introduces new dimensions into positioning equation that other firms cannot immediately match Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 .

full range of offerings.35 .Changing Perceptions through Advertising: Long Island Trust • Increased competition among banks in New York state after change in banking laws led to opening of new branches • Long Island Trust rated below other banks on branch availability. but #1 on helping residents and economy of Long Island (suburban New York City) • Advertising played to perceived strengths rather than trying to improve perceptions of attributes rated less favorably o o o ―Why send your money to a city if you live on the Island? It makes sense to keep your money to close to home…we concentrate on developing Long Island‖ ―The city is a great place to visit. but would you want to bank there?‖ Perceived strength of being a Long Island bank for Long Islanders had a positive ―halo‖ effect on other attributes Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 7 . service quality etc..