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 Wide

Unfocused
Service (Everything
Many Focused for everyone)
NUMBER
OF MARKETS
SERVED
Fully Focused
Market
(Service and
Focused
Few 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 product’s 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)

- Size
MARKET Define, Analyze
- 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
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
PALACE

Shangri-La
High Moderate
Service Atlantic Service
Sheraton

Italia
Castle
Alexander IV
Airport Plaza
Less Expensive

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3- 9
 Positioning of Hotels in Belleville:
Location vs. Physical Luxury (Fig. 3.5)

High Luxury

Regency
Grand

Shangri-La
Sheraton
PALACE
Financial Shopping District Inner
District and Convention Centre Suburbs

Castle Italia
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 PALACE
Shangri-La
High No action? Moderate
Service Service
Atlantic
Sheraton
Italia

Castle
Alexander IV
Less Expensive Airport Plaza

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 11
 Positioning after New Hotel Construction:
Location vs. Physical Luxury (Fig. 3.7)

High Luxury
Mandarin
New Grand
Continental Heritage
Marriott Regency
Sheraton Shangri-La
Action?
PALACE

Financial No action? Shopping District Inner

District and Convention Centre Suburbs

Castle Italia
Alexander IV
Atlantic
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