Chapter 3

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

3- 2

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

3- 3

Basic Focus Strategies for Services

(Fig. 3.1)

BREADTH OF SERVICE OFFERINGS

Narrow
Service
Focused

Many
NUMBER
OF MARKETS
SERVED

Few

Fully Focused
(Service and
market focused)

Wide
Unfocused
(Everything
for everyone)

Market
Focused

Source: Robert Johnston

Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

3- 4

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

3- 5

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

3- 7

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

Marketing
Action
Plan

Select Benefits
to Emphasize
to Customers

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

3- 8

Positioning of Hotels in Belleville:

Price vs. Service Level (Fig. 3.4)
Expensive

Grand
Regency

High
Service

PALACE
Shangri-La
Sheraton

Atlantic

Moderate
Service

Italia

Less Expensive
Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

Castle
Alexander IV
Airport Plaza

3- 9

Positioning of Hotels in Belleville:

Location vs. Physical Luxury (Fig. 3.5)
High Luxury

Regency

Grand

Shangri-La
Sheraton
PALACE
Financial
District

Shopping District
and Convention Centre

Inner
Suburbs

Italia

Castle

Alexander IV
Atlantic
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?

Moderate
Service

Atlantic
Sheraton
Italia

Less
Expensive
Slide 2004 by Christopher Lovelock and Jochen Wirtz

Services Marketing 5/E

Castle
Alexander IV
Airport Plaza

3 - 11

Positioning after New Hotel Construction:

Location vs. Physical Luxury (Fig. 3.7)
High Luxury

Mandarin

New Grand

Heritage
Regency
Marriott
Sheraton Shangri-La

Continental
Action?
PALACE
Financial
District

No action? Shopping District

and Convention Centre
Castle

Inner
Suburbs

Alexander IV
Atlantic

Italia

Airport Plaza

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

3 - 13