Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 1

Chapter 3

Positioning Services in Competitive Markets

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 2

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 - 3

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 - 4

Basic Focus Strategies for Services (Fig. 3.1)

BREADTH OF SERVICE OFFERINGS

NUMBER OF MARKETS SERVED

Narrow

Many

Few

Wide

Service Focused

Unfocused (Everything

for everyone)

Market Focused

Fully Focused (Service and

market focused)

Source: Robert Johnston

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 5

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 - 6

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 - 7

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 - 8

Developing a Market Positioning Strategy (Fig. 3.3)

- Size- Composition- Location- Trends

MarketingAction

Plan

MARKET ANALYSIS

INTERNAL ANALYSIS

- Resources- Reputation- Constraints - Values

COMPETITIVEANALYSIS

- Strengths- Weaknesses- Current Positioning

Define, AnalyzeMarket Segments

Select Target Segments

To Serve

ArticulateDesired Position

in Market

Select Benefitsto Emphasize to Customers

Analyze Possibilities forDifferentiation

Source: Adapted from Michael R. Pearce

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 9

Positioning of Hotels in Belleville:Price vs. Service Level (Fig. 3.4)

Expensive

Shangri-LaHigh

Service Moderate Service

GrandRegency

Sheraton

ItaliaCastle

Alexander IVAirport Plaza

PALACE

Atlantic

Less Expensive

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 10

Positioning of Hotels in Belleville: Location vs. Physical Luxury (Fig. 3.5)

High Luxury

Shopping District and Convention Centre

Shangri-La

Moderate Luxury

Financial District

Inner Suburbs

Grand Regency

Sheraton

ItaliaCastleAlexander IV

Airport Plaza

PALACE

Atlantic

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 11

Positioning after New Hotel Construction: Price vs. Service Level (Fig. 3.6)

Expensive

Shangri-LaHigh

Service Moderate

Service

HeritageMandarinNew Grand

MarriottContinental

Regency

SheratonItalia

Alexander IVAirport Plaza

PALACE

Atlantic

No action?

Action?

Less Expensive

Castle

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 12

Positioning after New Hotel Construction: Location vs. Physical Luxury (Fig. 3.7)

High Luxury

Shangri-La

Financial District

Inner Suburbs

Heritage

MandarinNew Grand

MarriottContinental

RegencySheraton

ItaliaAlexander IV

Airport Plaza

PALACE

Atlantic

No action?

Action?

Moderate Luxury

Castle

Shopping District and Convention Centre

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 13

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