2Strategic Service Vision Target market segmentService conceptOperating strategyService Delivery System
3Competitive 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
4Competitive 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
5Competitive 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.
6Competitive 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)
7Customer 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)
8Service 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.
9Service 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).
12Case 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?
13Case Analysis: American West Airline Questions:2. Identify the service winners, qualifiers, and service losers in America West's market.
14Case Analysis: American West Airline Questions:3. How has America West addressed the ”Strategic Service Vision”?Target MarketService ConceptOperating StrategyService Delivery
15Case 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."