MKT 346: Marketing of Services Dr. Houston Chapter 3: Positioning Services In Competitive Markets

Focus Underlies the Search for Competitive Advantage  Competition is intense  Differentiation is critical  Brand positioning helps:  create awareness  generate interest and desire  What service attributes do your target customers value?

Basic Focus Strategies for Services (Fig. 3.2)

 Fully focused  Limited range of services  Narrow and specific market Considerations for Using Focus Strategies: Fully Focused

 Narrow market segment  Wide range of services  Make sure you have the operational capacity!  Understand customer preferences  Know customer purchasing practices Considerations for Using Focus Strategies: Market Focused

 Narrow range of services  Fairly broad market  Need knowledge and skills for each segment Considerations for Using Focus Strategies: Service Focused

 Broad market  Wide range of services  Many service providers fall into this category  “Jack of all trades and master of none”  Not recommended! Considerations for Using Focus Strategies: Unfocused

Market Segmentation  Identify markets you can serve best  Market segment is group of buyers with common:  Characteristics  Needs  Purchasing behavior  Consumption patterns  Similar within segments  Dissimilar between segments

Identifying and Selecting Target Market Segment  Identify market segments with most opportunities  Select one (or more) target market segment to serve  Target segments should be selected with reference to:  Company’s ability to match or exceed competing offerings directed at the same segment  Not just profit potential

Developing Right Service Concept for a Specific Segment  Use research to identify and prioritize the attributes of a given service that are important to specific market segments  Individuals may set different priorities according to:  Purpose of using the service  Who makes decision  Timing of use  Whether service is used alone or with a group  Composition of that group

Important vs. Determinant Attributes  How do consumers choose between alternative services?  Perceived differences  Not necessarily the most important ones  Determinant attributes  Determine consumers’ choices between competing alternatives  Service characteristics that are important to purchasers

Establishing Service Levels  Level of performance firm plans to offer on each attribute  Quantitative attributes  Qualitative attributes  Can often segment customers according to willingness to give up some level of service for a lower price  Price-insensitive customers  Price-sensitive customers

Four Principles of Positioning Strategy  Must establish position for firm or product in minds of target customers  Provide one simple, consistent message  Position must be unique from competitors  A company cannot be all things to all people - must focus its efforts Source: “Positioning: The Battle for your Mind” by Jack Trout

Six Questions for Developing an Effective Positioning Strategy 1.What does our firm currently stand for in the minds of current and potential customers? 2.What customers do we serve now, and which ones would we like to target in future? 3.What is value proposition for each of our current service products, and what market segments is each one targeted at? 4.How does each of our service products differ from competitors’? 5.How well do customers in chosen target segments perceive our service products as meeting their needs? 6.What changes must we make to our offerings to strengthen our competitive position?

Market, Internal and Competitive Analyses (Fig. 3.11)

Developing an Effective Positioning Strategy Market Analysis Internal Corporate Analysis Competitor Analysis

Using Positioning (Perceptual) Maps to Analyze Competitive Strategy  Helps to visualize competitive positioning  “Pictures speak louder than words”  Useful way to represent consumer perceptions  Typically confined to two attributes, but can be 3-D  Perceptual data can be obtained from:  market data  representative consumer ratings

MKT 346 Key Concepts: Chapter 3  Focus underlies search for competitive advantage  Four focus strategies: service focused, fully focused, market focused, unfocused  Market segmentation  Service attributes: determinant attributes  Determinant attributes are often the ones most important to customers  Four principles of positioning strategy: target market, simplicity, uniqueness, total company effort  Developing a marketing positioning strategy: market analysis, internal analysis, competitor analysis  Positioning maps: useful for plotting and visualizing competitive strategy