2 Strategic Service Vision Target market segmentService conceptOperating strategyService Delivery System
3 Competitive Environment of Services Relatively Low Overall Entry BarriersEconomies of Scale LimitedHigh Transportation CostsErratic Sales FluctuationsNo Power Dealing with Buyers or SuppliersProduct Substitutions for ServiceHigh Customer LoyaltyExit Barriers
4 Competitive Service Strategies (Overall Cost Leadership) Seeking Out Low-cost CustomersStandardizing a Custom ServiceReducing the Personal Element in Service Delivery (promote self-service)Reducing Network Costs (hub and spoke)Taking Service Operations Off-line
5 Competitive Service Strategies (Differentiation) Making the Intangible Tangible (memorable)Customizing the Standard ProductReducing Perceived RiskGiving Attention to Personnel TrainingControlling QualityNote: Differentiation in service means being unique in brand image, technology use, features, or reputation for customer service.
6 Competitive Service Strategies (Focus) Buyer Group: (e.g. USAA insurance and military officers)Service Offered: (e.g. Shouldice Hospital and hernia patients)Geographic Region: (e.g. Austin Cable Vision and TV watchers)
7 Customer Criteria for Selecting a Service Provider Availability (24 hour ATM)Convenience (Site location)Dependability (On-time performance)Personalization (Know customer’s name)Price (Quality surrogate)Quality (Perceptions important)Reputation (Word-of-mouth)Safety (Customer well-being)Speed (Avoid excessive waiting)
8 Service Purchase Decision Service Qualifier: To be taken seriously a certain level must be attained on the competitive dimension, as defined by other market players. Examples are cleanliness for a fast food restaurant or safe aircraft for an airline.Service Winner: The competitive dimension used to make the final choice among competitors. Example is price.
9 Service Purchase Decision (cont.) Service Loser: Failure to deliver at or above the expected level for a competitive dimension. Examples are failure to repair auto (dependability), rude treatment (personalization) or late delivery of package (speed).
12 Case Analysis: American West Airline Questions:What generic competitive strategy did America West choose when it entered the air passenger market? What are the dangers of this strategy?
13 Case Analysis: American West Airline Questions:2. Identify the service winners, qualifiers, and service losers in America West's market.
14 Case Analysis: American West Airline Questions:3. How has America West addressed the ”Strategic Service Vision”?Target MarketService ConceptOperating StrategyService Delivery
15 Case Analysis: American West Airline 4. Prepare a market position map for America West comparing it with American, Delta and Southwest using the differentiation attributes of "cabin service" and "preflight service."