Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Chapter 7 Positioning Services in Competitive Markets

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 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 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 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 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 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 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 Developing a Market Positioning Strategy (Fig. 3.3) - Size - Composition - Location - Trends Marketing Action Plan MARKET ANALYSIS INTERNAL ANALYSIS - Resources - Reputation - Constraints - Values COMPETITIVE ANALYSIS - Strengths - Weaknesses - Current Positioning Define, Analyze Market Segments Select Target Segments To Serve Articulate Desired Position in Market Select Benefits to Emphasize to Customers Analyze Possibilities for Differentiation Source: Adapted from Michael R. Pearce

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Positioning of Hotels in Belleville: Price vs. Service Level (Fig. 3.4) Expensive Shangri-La High Service Moderate Service Grand Regency Sheraton Italia Castle Alexander IV Airport Plaza PALACE Atlantic Less Expensive

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 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 Italia Castle Alexander IV Airport Plaza PALACE Atlantic

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Positioning after New Hotel Construction: Price vs. Service Level (Fig. 3.6) Expensive Shangri-La High Service Moderate Service Heritage Mandarin New Grand Marriott Continental Regency Sheraton Italia Alexander IV Airport Plaza PALACE Atlantic No action? Action? Less Expensive Castle

Slide ©2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Positioning after New Hotel Construction: Location vs. Physical Luxury (Fig. 3.7) High Luxury Shangri-La Financial District Inner Suburbs Heritage Mandarin New Grand Marriott Continental Regency Sheraton Italia Alexander 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 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