MKT 346: Marketing of ServicesDr. Houston

Chapter 3:Positioning ServicesIn 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 focusedLimited range of servicesNarrow 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 attributesDetermine 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 anEffective 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

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