Services Marketing - SZABIST

Positioning Services in Competitive Markets

Positioning
Creating, communicating, and maintaining distinctive differences that will be noticed and valued by those customers with whom the firm would most like to develop a long-term relationship
Services Marketing - SZABIST

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.

Services Marketing - SZABIST

Need for Focus

Variables! Breadth of Service Offering Number of Markets Served Dimensions of Focus Market Focus Service Focus

Services Marketing - SZABIST

Basic Focus Strategies for Services

BREADTH OF SERVICE OFFERINGS

Narrow
Service Focused

Wide
Unfocused (Everything for everyone)
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Many
NUMBER OF MARKETS SERVED

Few

Fully Focused (Service and market focused)

Market Focused

Segmentation as Basis for Focus

Segmentation types Mass Customization Micro Segmentation
Identifying & Selecting Target Segment

Services Marketing - SZABIST

Use of Research for Developing Service Concept

Identifying needs Identifying Decision Maker Timing of Use User profile (Individual/Group) Composition of Group Important vs. Determinant Attributes

Services Marketing - SZABIST

Competitive Positioning in Services

Questions to be answered before positioning strategy is made
What does the firm stand for in the minds of customers Which customers do we want to target now and in future What are the characteristics of our current offering and which segment is each one targeting In each market how does our offering differ from competition In a chosen segment how do customers perceive our service offering as meeting their needs What changes do we need to make to strengthen our competitive position
Services Marketing - SZABIST

Copy positioning versus product positioning

Decisions are based on the perception of reality rather than experts definition of that reality Associating positioning with the communication elements of the marketing mix Copy positioning Decisions on substantive attributes that are important to customers, relating to price, product performance and service availability Product positioning

Services Marketing - SZABIST

Positionings Role in Marketing Strategy

Diagnostic Tool for Defining & Understanding Relationship Between Products & Markets How does the product compare to the competition on specific attributes How well the product meet consumer needs and expectations on specific attributes What is the predicted demand with given characteristics and price

Services Marketing - SZABIST

 Identify Market Opportunities

Introducing new products
What segments to target What attributes to offer

Positionings Role in Marketing Strategy

Repositioning/Redesigning existing products

Appeal to the same segment or new one What attributes to add, drop or change What attributes to emphasize in advertising

Eliminating Products that

Do not satisfy consumer needs Face excessive competition

Services Marketing - SZABIST

Positionings Role in Marketing Strategy

Other Marketing Mix Decisions
Distribution strategies
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Where to offer When to make the product available

Pricing strategies
How much to charge When to make the product available

Communication strategies
Selecting target audience Selecting the message Selecting communication channels

Undesirable outcomes of failure to select a desired positioning

Head-on competition with stronger competition Position of limited customer demand Position of blurred/vague distinctive competence Nobody has heard of the product

Services Marketing - SZABIST

Developing a Market Positioning Strategy

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

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

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Select Target Segments To Serve

Analyses for Positioning

Anticipating Competitive Response Evolutionary Positioning

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Positioning of Hotels in Belleville: Price vs. Service Level

Expensive

Grand PALACE
Services Marketing - SZABIST

Regency

Shangri-La
High Service Sheraton Atlantic Moderate Service

Italia Castle Alexander IV Airport Plaza Less Expensive

Positioning of Hotels in Belleville: Location vs. Physical Luxury

High Luxury

Grand Sheraton PALACE

Financial District Shopping District and Convention Centre

Regency

Shangri-La
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Inner Suburbs

Castle

Italia

Alexander IV
Atlantic
Airport Plaza Moderate Luxury

Positioning after New Hotel Construction: Price vs. Service Level

Mandarin New Grand Heritage Marriott Continental Expensive

Regency High Service

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

Less Expensive

Services Marketing - SZABIST

Action?

Positioning after New Hotel Construction: Location vs. Physical Luxury

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
Services Marketing - SZABIST

Castle

Moderate Luxury

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

Services Marketing - SZABIST

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

Changing Competitive Positioning

Repositioning Innovative positioning

Services Marketing - SZABIST

Services Marketing - SZABIST

Designing & Managing Services Processes

Significance of Service Process

Architecture of Service Method Sequence Linkages Outcomes

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Blueprinting
Developing a Blueprint
Identify key activities in performing a service Create linkages Refine activities by drilling down Differentiate front-stage from backstage Identify the line of visibility Clarify interactions of customers, employees, equipment etc.

Services Marketing - SZABIST

Blueprinting
Creating a Script for Employees & Customers
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Provide full description of the encounter Identify potential problems Discover and modify the nature of interaction to improve quality of service, and enhance customers experience

Blueprinting
Identifying fail points
Identify all potential points where there is a risk of service going wrong Product failure Excessive wait

Setting Service Standards

Use research and experience to learn customer expectations Set parameters for standards so they can be quantified Cover start and end of encounter

Services Marketing - SZABIST

Failure Proofing
Fail-Safe Methods for Service Personnel
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Incorrect Task Wrong Order Slow Speed Wrong Work Treatment errors Tangible errors

Failure Proofing
Fail Safe Methods for the Customer
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Failure to Follow Steps Forgetting Steps Incorrect Sequence Ignoring Instructions Wrong Specification of Need

Solutions
Marketing Communication Flowcharts

Service Blueprinting: Key Components

1. Define standards for frontstage activities

2. Specify physical evidence

3. Identify principal customer actions 5. Front stage actions by customer-contact personnel 6. ------------line of visibility (between front stage and backstage)-------------7. Backstage actions by customer contact personnel 8. Support processes involving other service personnel
Services Marketing - SZABIST

4. ------------line of interaction (customers and front stage personnel)--------

9. Support processes involving IT

Where appropriate, show fail points and risk of excessive waits

Simplified Example: Blueprinting a Hotel Visit

(extract only)

Physical Evidence Stage

Hotel exterior, lobby, employees, key Customer Actions Make reservatio n

Elevator, corridor, room, bellhop Go to room

Arrive, valet park

Doorman greets, valet takes car

Check-in at reception
Receptionist verifies, gives key to room

Front

Line of Interaction Employee

Actions Face-to-face Phone Contact Rep. records, confirms

Line of Visibility Backstage

Valet Parks Car Enter data Register guest data

Make up Room

Services Marketing - SZABIST

Process Redesign
Institutional Rust
External Environment Internal Deterioration Reduce Service Failures Reduce Cycle Time Enhance Productivity Increase Customer Satisfaction
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Aims of Process Redesign

Process Redesign: Principal Approaches

Eliminating non-value-adding steps Shifting to self-service Delivering direct service Bundling services Redesigning physical aspects of service processes

Services Marketing - SZABIST

Customers as Co-Producers: Levels of Participation in Service Production

Low Employees and systems do all the work Medium Customer inputs required to assist provider Provide needed information, instructions Make personal effort May share physical possessions High Customer works actively with provider to co-produce the service

Services Marketing - SZABIST

Self Service Technologies

Self-service is ultimate form of customer involvement in service production
Customers undertake specific activities using facilities or systems provided by service supplier Customers time and effort replace those of employees
Services Marketing - SZABIST

Concept is not newself-serve supermarkets date from 1930s, ATMs and self-serve gas pumps from 1970s Today, customers face wide array of SSTs to deliver information-based services, both core and supplementary Many companies seek to divert customers from employee contact to Internet-based self-service

Service Firms as Teachers: Well-trained Customers Perform Better

Firms must teach customers roles as co-producers of service Customers need to know how to achieve best results Education can be provided through: Brochures Advertising Posted instructions Machine-based instructions Websites, including FAQs Service providers Fellow customers Employees must be well-trained to help advise, assist customers

Managing Customers as Partial Employees to Increase Productivity and Quality

1. Analyze customers present roles in the business and compare to managements ideal 2. Determine if customers know how to perform and have necessary skills 3. Motivate customers by ensuring that will be rewarded for performing well 4. Regularly appraise customers performance; if unsatisfactory, consider changing roles or termination

Services Marketing - SZABIST

The Problem of Customer Misbehavior Identifying and Managing Jaycustomers

What is a jaycustomer?
A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm itself, employees, other customers Can disrupt processes Affect service quality May spoil experience of other customers
Services Marketing - SZABIST

Why do jaycustomers matter?

What should a firm do about them?

Try to avoid attracting potential jaycustomers Institute preventive measures Control abusive behavior quickly Take legal action against abusers BUT firm must act in ways that dont alienate other customers

Six Types of Jaycustomer

Thief seeks to avoid paying for service Rule breaker ignores rules of social behavior and/or procedures for safe, efficient use of service Belligerent angrily abuses service personnel (and sometimes other customers) physically and/or emotionally Family Feuders fight with other customers in their party Vandal deliberately damages physical facilities, furnishings, and equipment Deadbeat fails to pay bills on time

Services Marketing - SZABIST