AMB340 Services Marketing

Lecture 4: Positioning Services &

Developing Service Products
Big Ideas from Lecture 3

• Quality and productivity need to be considered jointly in marketing

services
• SAT + SQ  loyalty, repeat purchase, positive WOM, profit,
sustainable competitive advantage
• All customers have a zone of tolerance (adequate vs. desired
service)
• Research consolidated service quality dimensions into five (RATER)
• GAP model is a tool to diagnose problems in service design and
delivery
• Both soft and hard measures used to measure service quality
• Efficiency, productivity and effectiveness need to be distinguished
when measuring service quality
Course Overview
PART 1: Lecture 1, 2 & 3
Customer Focus
• Introduction to Services Marketing
•Consumer Behaviour in a Services Context
•Evaluation of Services

PART 2:
Lectures 4, 5, 6, 8, 9 & 10
Creating value using the 7 Ps
•Positioning Services and Developing Service Products
•Distributing Services and Service Environment
•Managing People
•Setting Prices
•Promoting Services and Educating Customers
•Managing the Service Process; Balancing Demand and Capacity

PART 3: Lectures 11 & 12

Managerial Focus
• Complaint Handling and Service recovery
•Managing Relationships and Building Loyalty
Agenda

• Core products and supplementary services

– What is a service product?
– Flower of Service
– New service development
• Positioning services
– 3Cs analysis
– Segmentation, targeting and positioning
– Repositioning
What is a Service Product?
o A service product comprises all elements of service
performance, both tangible and intangible, that create value
for customers

o A service product comprises:

– A core product
– Supplementary services

o Supplementary services help to differentiate by:

o Facilitating use of core product (a service or a good)
o Enhancing the value and appeal of the core product
o http://www.westin-hotelsathome.com/bed.aspx
Augmenting the Core Product
Distribution Marketing Positioning
Shostack’s Molecular (weighted toward evidence)
Price
Model:
Passenger
Airline Service Vehicle
Frequency
Service
In-flight
Transport Service
Pre- &
Postflight
Service Food &
Drink
Key
Tangible Elements
Intangible Elements
A Novel Supplementary Service?

ore

Kensington Forum Holiday Inn, London

The Flower of Service

Information

Payment Consultation

Billing Core Order-Taking

Exceptions Hospitality

Safekeeping
KEY:
Facilitating elements
Enhancing elements
Flower of Service:
Facilitating Services - Information

SEARCH / INFORMATION

Customers need to know how to

obtain and use a product or service.

- Traditional vs Innovative
Core - Timely and accurate

Examples :
 Directions to service site
 Schedule/service hours
Conditions of sale
 Usage instructions
Flower of Service:
Facilitating Services - Information
Flower of Service:
Facilitating Services - Order-Taking

ORDER TAKING

Customers need to know what is

available and how to buy.

Should be fast and smooth.

Core
Examples:

 Applications
 Order entry
 Reservations and check-in
Flower of Service:
Facilitating Services - Order-Taking
Flower of Service:
Facilitating Services - Billing

BILLING

Bills should be timely, clear,

accurate, and intelligible.

Core Examples:
• Periodic statements of account
activity
• Invoices for individual transactions
• Verbal statements of amount due
• Self-billing (computed by customer)
• Machine display of amount due
Flower of Service:
Facilitating Services - Billing
Flower of Service:
Facilitating Services - Payment

PAYMENT

Make transactions simple

and convenient.
Core
Examples:

 Self service payment

 Direct to payee or intermediary
 Automatic deduction
Flower of Service:
Facilitating Services - Payment
Flower of Service:
Enhancing Services - Consultation

CONSULTATION

Value-add by offering ‘tailored’

advice and consultation.

Core Examples:

 Customised advice
 Personal counseling
 Management consulting
Flower of Service:
Enhancing Services - Consultation
Flower of Service: Enhancing Services -
Consultation gone too far?
British Airways: the brand that knew too
much?
Tue, 3 Jul 2012 | By Michael Barnett
Marketing Week

British Airways has launched Know Me, a new approach to customer service
that gives flight and airport staff immediate access to customer data on iPads.
It will be a powerful tool, but BA must be careful what it does with it.
                                        
Announced at Marketing Week Live at London’s Olympia exhibition centre,
Know Me will allow BA staff in airports and on planes to see each passenger’s
history of flying with BA, including a record of complaints they’ve made. It also
links customers’ profiles to pictures of them from Google Images.

The idea is that staff can assist customers or resolve issues in person, in real
time and with knowledge of that individual’s preferences. BA head of revenue
and customer analysis Jo Boswell told the Marketing Week Live audience:
“Solving problems at the point of failure is a lot more powerful than waiting
until after the event. It is more powerful when customers don’t have to repeat
their stories to different departments within BA.”

Boswell could well be right about that, and BA’s trials showed an improvement •Staff will use Google Image search to identify
in customer satisfaction, she says. But BA also needs to be wary, because if it
doesn’t deal with the data sensitively, it could find itself handling a hot PR passengers before they board
potato.
•Privacy campaigners hit out at BA and say
While Boswell says customers have so far welcomed the individual
approaches they get from staff acting on information from Know Me, some will measures could be illegal
inevitably find it intrusive. Some will feel affronted that they are receiving
special treatment because they’ve previously complained, while others will
take advantage of it. And some will be shocked to learn that BA is storing their
•Staff carrying iPads will have customer data
images. available immediately
Know Me could be a powerful weapon for BA, enabling it to tailor its service to
individuals in a way its competitors can’t. But it needs to be careful not to trip •British Airways say they want to create a 'more
itself up and fall on its own sword.
personalised service'
Flower of Service:
Enhancing Services - Hospitality

HOSPITALITY

Make customers feel like welcome guests

— after all, marketing invited them!

Examples:
Core
 Greeting
 Waiting facilities and amenities
 Food and beverages
 Toilets and washrooms
 Security
Flower of Service:
Enhancing Services - Hospitality
Flower of Service:
Enhancing Services - Safekeeping

SAFEKEEPING

Customers want to feel secure.

Examples:

Core  Looking after possessions

customers bring with them
 Caring for goods purchased
(or rented) by customers
Flower of Service:
Enhancing Services - Safekeeping
Flower of Service:
Enhancing Services - Exceptions

EXCEPTIONS

Customers appreciate some

flexibility when making special
requests and expect responsiveness
when things don’t go according to
Core plan.

Examples:

 Special requests in advance

 Complaints or compliments
 Problem solving
 Restitution
Flower of Service:
Enhancing Services - Exceptions
Flower of Service:
Managerial Implications
o Nature of product helps to determine:
– Which supplementary services must be offered
– Which might usefully be added to enhance value -
simplicity + efficiency
– People-processing and high-contact services have
more supplementary services
o Market positioning strategy helps determine which
supplementary services
o Firms that offer different levels of service add
supplementary services for upgrades
Developing New Services:
A Hierarchy of Service Innovation
1. Major service innovations: new core
product for new market
2. Major process innovations: new
processes to deliver core service
3. Product line extensions: additions to
product line
4. Process line extensions: new ways to
deliver existing products
5. Supplementary service innovations:
adding or improving supplementary
services
6. Service redesign: altering current
product offering
Product Innovation at Ryanair:
A Mini Case-Study

“Seat belts don’t matter”

RyanAir CEO Michael O’Leary
Competitive Positioning of Services
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)

• Starts with an customer, competitor and company (3 Cs)

analysis

• Determine the key elements of

the services positioning strategy:
Segmentation, Targeting and
Positioning (STP)
Competitive Positioning of Services (2)
3Cs Analysis
1. Customer Analysis
• Market attractiveness: Focus on overall level and trend of demand and
geographic locations of demand; look into size and potential of different
market segments
• Customer needs: Who are the customers, understand customer needs and
preferences for different groups, and how they perceive the competition
2. Company Analysis
• Identify organization’s resources, limitations, goals, and values
• Understand strengths and weaknesses; current positioning and brand
image
3. Competitor Analysis
• Understand competitors’ strengths and weaknesses; current positioning
and brand image
• Anticipate responses to potential positioning strategies
Segmenting Markets (1)
Bases for Segmentation (Consumer Markets)

Geographic
Demographic
Psychographic
Behavioural characteristics: purchasing behaviour or
consumption patterns
Needs-based: what attributes customers truly want in a
service, which can vary depending on:
oPurpose of the service
oTiming of use
oWho makes the decision
oWhether service is consumed individual vs. group
Segmenting Markets (2)
Bases for Segmentation (Business Markets)

 Industry type
 Size
 Location and strategic importance of different firms
 The nature of the purchasing situation
 Anticipated purchasing volume and requirements
 Potential for reciprocal purchasing and alliances

Other Bases for Segmentation

 Aesthetic tastes and preferences

 Quality and value expectations
 Special interest and requirements
 Socio-cultural differences
 Protocol expectations
 Required and expected benefits
Evaluating Potential Market Segments

Measurability: degree to which size of segment and

purchasing behaviour can be measured/quantified

Accessibility: degree to which segment can be reached and

served

Substantiality: degree to which segment is economically

viable and profitable

Actionability: degree to which it is possible to design an

effective marketing program for a segment
Targeting the Market: Focus Strategies
Targeting the Market: Focus Strategies
A fully focused organisation provides a limited range of
services (perhaps just a single core product) to a narrow
and specific market segment

A market-focused company concentrates on a narrow

market segment but has a wide range of services

Service-focused firms offer a narrow range of services to

a fairly broad market

Unfocused service providers try to serve broad markets

and provide a wide range of services
Effective Positioning
Positioning Strategy:
Creating, communicating and maintaining distinctive differences that will be
noticed and valued by customers with whom the firm would most like to
develop a long term relationship
Six Questions for Effective Positioning:
1. What does our firm currently stand for in the minds of current and potential
customers?
2. What customers do we serve now, and which ones would we like to target in
future?
3. What is value proposition for each of our current service products, and what
market segments is each one targeted at?
4. How does each of our service products differ from competitors’?
5. How well do customers in chosen target segments perceive our service products
as meeting their needs?
6. What changes must we make to our offerings to strengthen our competitive
position?
Positioning Maps
A tool to:
1.Visualise competitive positioning
2.Map developments over time
3.Develop scenarios of potential competitor responses
Writing a Positioning Statement
Four basic elements to writing a good positioning
statement:

1. Target audience (e.g., wealthy retirees who desire a

hassle free travel experience)

2. Frame of reference: the category that the brand is

competing in (e.g., travel agency)

3. Point of difference: the most compelling benefit offered by

the brand relative to competition (e.g., customised tour
packages with personal guides)

4. Reason to believe: proof that the brand can deliver (e.g.,

we are retirees who know what retirees want in a holiday)
Positioning Pitfalls

 The organisation (or one of its service products) is pushed into

head-on competition from stronger competitors

 The organisation is pushed into a position that nobody else

wants because there is little demand for its offerings

 The organisation’s service position is so fuzzy that nobody knows

what its distinctive competence really is

 The service has no position at all because nobody has heard of it

 RepositioningMcDonalds:
Repositioning McDonalds: AAMini Case-Study
Mini-Case Study
Key Points to Take Away
• Creating services involve designing (a) core product, (b) supplementary services and
(c) a delivery process
• Flower of Service includes core product and two types of supplementary services:
– Facilitating services include information, order taking, billing, and payment
– Enhancing services include consultation, hospitality, safekeeping, and
exceptions

 To develop a customer-driven services marketing strategy, we need to conduct

customer, company and competitor analyses

 The key elements of a customer-driven services marketing strategy are

segmentation, targeting and positioning

 Targeting ensures that the firm focuses its efforts on those customers it can serve
best
 Service focused
 Fully focused
 Market focused
 Unfocused
Next Week

• Read Chapters 3 and 4 this week

• Mid-semester exam is coming in Week 7!

• Please keep up with tutorial activities