Chapter 3

Positioning Services in Competitive Markets

 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

Search for Competitive Advantage in Services Requires Differentiation and Focus

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

Basic Focus Strategies for Services

(Fig. 3.1)
BREADTH OF SERVICE OFFERINGS

Narrow Many
NUMBER OF MARKETS SERVED Service Focused

Wide
Unfocused (Everything for everyone)

Few

Fully Focused (Service and market focused)

Market Focused

Source: Robert Johnston

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

Uses of Positioning in Marketing Management (Table 3.1)

Understand relationships between products and markets

Identify market opportunities

compare to competition on specific attributes evaluate products ability to meet consumer needs/expectations predict demand at specific prices/performance levels introduce new products redesign existing products eliminate non-performing products distribution/service delivery pricing communication

Make marketing mix decisions, respond to competition

Possible Dimensions for Developing Positioning Strategies

Product attributes Price/quality relationships Reference to competitors (usually shortcomings) Usage occasions User characteristics Product class

Developing a Market Positioning Strategy (Fig. 3.3)

MARKET ANALYSIS
- Size - Composition - Location - Trends Define, Analyze Market Segments Select Target Segments To Serve

INTERNAL ANALYSIS

- Resources - Reputation - Constraints - Values

Articulate Desired Position in Market Select Benefits to Emphasize to Customers

Marketing Action Plan

COMPETITIVE ANALYSIS

- Strengths - Weaknesses - Current Positioning

Analyze Possibilities for Differentiation

Source: Adapted from Michael R. Pearce

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

Expensive Grand

Regency

PALACE

Shangri-La
High Service Sheraton Atlantic Moderate Service

Italia Castle Less Expensive Alexander IV Airport Plaza

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

High Luxury

Grand Sheraton PALACE

Financial District Shopping District and Convention Centre

Regency

Shangri-La

Inner Suburbs

Castle

Italia

Alexander IV
Atlantic
Airport Plaza Moderate Luxury

Positioning after New Hotel Construction: Price vs. Service Level (Fig. 3.6)
Mandarin New Grand Heritage Marriott Continental Expensive

Action? Regency High Service

PALACE
Shangri-La No action? Atlantic Sheraton Italia Castle Alexander IV Airport Plaza Moderate Service

Less Expensive

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

New Grand
Continental Action? PALACE Financial District No action? Shopping District and Convention Centre Italia Alexander IV Atlantic Airport Plaza Inner Suburbs Heritage Marriott Sheraton Shangri-La Regency

Castle

Moderate Luxury

 Positioning maps display relative performance of competing firms on key attributes

Positioning Maps Help Managers to Visualize Strategy

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