services marketing session 8
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Positioning Services in Competitive Markets
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Positioning
“Creating, communicating, and maintaining distinctive differences that will be noticed and valued by those customers with whom the firm would most like to develop a long-term relationship”
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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.
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Need for Focus
• Variables!• Breadth of Service Offering• Number of Markets Served
• Dimensions of Focus• Market Focus• Service Focus
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Basic Focus Strategies for Services
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) Se
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Segmentation as Basis for Focus
• Segmentation types• Mass Customization• Micro Segmentation
• Identifying & Selecting Target Segment
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Use of Research for Developing Service Concept
• Identifying needs• Identifying Decision Maker• Timing of Use• User profile (Individual/Group)• Composition of Group
• Important vs. Determinant Attributes Se
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Competitive Positioning in Services
• Questions to be answered before positioning strategy is made• What does the firm stand for in the minds of customers• Which customers do we want to target now and in future• What are the characteristics of our current offering and which
segment is each one targeting• In each market how does our offering differ from competition• In a chosen segment how do customers perceive our service
offering as meeting their needs• What changes do we need to make to strengthen our
competitive position
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Copy positioning versus product positioning
• Decisions are based on the perception of reality rather than expert’s definition of that reality• Associating positioning with the
communication elements of the marketing mix – Copy positioning
• Decisions on substantive attributes that are important to customers, relating to price, product performance and service availability – Product positioning
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Positioning’s Role in Marketing Strategy
• Diagnostic Tool for Defining & Understanding Relationship Between Products & Markets• How does the product compare to the
competition on specific attributes• How well the product meet consumer needs
and expectations on specific attributes• What is the predicted demand with given
characteristics and price
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Positioning’s Role in Marketing Strategy
• Identify Market Opportunities• Introducing new products
• What segments to target• What attributes to offer
• Repositioning/Redesigning existing products• Appeal to the same segment or new one• What attributes to add, drop or change• What attributes to emphasize in advertising
• Eliminating Products that• Do not satisfy consumer needs• Face excessive competition
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Positioning’s Role in Marketing Strategy
• Other Marketing Mix Decisions• Distribution strategies
• Where to offer• When to make the product available
• Pricing strategies• How much to charge• When to make the product available
• Communication strategies• Selecting target audience• Selecting the message• Selecting communication channels
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Undesirable outcomes of failure to select a desired
positioning
• Head-on competition with stronger competition• Position of limited customer demand• Position of blurred/vague distinctive competence• Nobody has heard of the product
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Developing a Market Positioning Strategy
- Size- Composition- Location- Trends
MarketingAction Plan
MARKET ANALYSIS
INTERNAL ANALYSIS
- Resources- Reputation- Constraints - Values
COMPETITIVEANALYSIS
- Strengths- Weaknesses- Current Positioning
Define, AnalyzeMarket Segments
Select Target Segments
To Serve
ArticulateDesired Position
in Market
Select Benefitsto Emphasize to Customers
Analyze Possibilities forDifferentiation
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Analyses for Positioning
• Anticipating Competitive Response• Evolutionary Positioning
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Positioning of Hotels in Belleville:Price vs. Service Level
Expensive
Shangri-LaHigh
Service Moderate Service
Grand
Regency
Sheraton
Italia
CastleAlexander IV
Airport Plaza
PALACE
Atlantic
Less Expensive
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Positioning of Hotels in Belleville:
Location vs. Physical Luxury
High Luxury
Shopping District and Convention Centre
Shangri-La
Moderate Luxury
Financial District
Inner Suburbs
Grand Regency
Sheraton
ItaliaCastleAlexander IV
Airport Plaza
PALACE
Atlantic Se
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Positioning after New Hotel Construction:
Price vs. Service Level Expensive
Shangri-LaHigh
Service Moderate Service
HeritageMandarin
New GrandMarriott
Continental
Regency
Sheraton
Italia
Alexander IVAirport Plaza
PALACE
Atlantic
No action?
Action?
Less Expensive
Castle
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Positioning after New Hotel Construction: Location vs. Physical
LuxuryHigh Luxury
Shangri-La
Financial District
Inner Suburbs
Heritage
MandarinNew Grand
MarriottContinental
RegencySheraton
ItaliaAlexander IV
Airport Plaza
PALACE
Atlantic
No action?
Action?
Moderate Luxury
Castle
Shopping District and Convention Centre
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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
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Changing Competitive Positioning
• Repositioning• Innovative positioning
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Designing & Managing Services Processes
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Significance of Service Process
• Architecture of Service• Method• Sequence• Linkages• Outcomes
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Blueprinting
• Developing a Blueprint• Identify key activities in performing a service• Create linkages• Refine activities by drilling down• Differentiate front-stage from backstage• Identify the line of visibility• Clarify interactions of customers, employees,
equipment etc.
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Blueprinting
• Creating a Script for Employees & Customers• Provide full description of the encounter• Identify potential problems• Discover and modify the nature of interaction to
improve quality of service, and enhance customer’s experience
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Blueprinting• Identifying fail points
• Identify all potential points where there is a risk of service going wrong• Product failure• Excessive wait
• Setting Service Standards• Use research and experience to learn customer expectations• Set parameters for standards so they can be quantified• Cover start and end of encounter
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Failure Proofing
• Fail-Safe Methods for Service Personnel• Incorrect Task• Wrong Order• Slow Speed• Wrong Work• Treatment errors• Tangible errors S
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Failure Proofing
• Fail Safe Methods for the Customer• Failure to Follow Steps• Forgetting Steps• Incorrect Sequence• Ignoring Instructions• Wrong Specification of Need
• Solutions• Marketing Communication• Flowcharts
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Service Blueprinting: Key Components
1. Define standards for frontstage activities
2. Specify physical evidence
3. Identify principal customer actions
4. ------------line of interaction (customers and front stage personnel)--------
5. Front stage actions by customer-contact personnel
6. ------------line of visibility (between front stage and backstage)--------------
7. Backstage actions by customer contact personnel
8. Support processes involving other service personnel
9. Support processes involving IT
Where appropriate, show fail points and risk of excessive waits
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Simplified Example: Blueprinting a Hotel Visit(extract only)
PhysicalEvidence
Customer Actions
Employee Actions Face-to-face
Fro
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Sta
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Phone Contact
Bac
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Makereservation
Rep. records, confirms
Arrive, valet park
Check-in at reception
Doorman greets, valet takes car
Enter data
Valet Parks Car
Make up Room
Register guest data
Receptionist verifies, gives key to room
Go to room
Hotel exterior, lobby,employees, key
Elevator, corridor,room, bellhop
Line of Interaction
Line of Visibility
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Process Redesign
• Institutional Rust• External Environment• Internal Deterioration
• Aims of Process Redesign• Reduce Service Failures• Reduce Cycle Time• Enhance Productivity• Increase Customer Satisfaction S
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Process Redesign: Principal Approaches
• Eliminating non-value-adding steps• Shifting to self-service• Delivering direct service• Bundling services• Redesigning physical aspects of service
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Customers as Co-Producers:Levels of Participation in Service
Production
• Low – Employees and systems do all the work• Medium – Customer inputs required to assist
provider• Provide needed information, instructions• Make personal effort• May share physical possessions
• High – Customer works actively with provider to co-produce the service
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Self Service Technologies
• Self-service is ultimate form of customer involvement in service production
• Customers undertake specific activities using facilities or systems provided by service supplier
• Customer’s time and effort replace those of employees
• Concept is not new—self-serve supermarkets date from 1930s, ATMs and self-serve gas pumps from 1970s
• Today, customers face wide array of SSTs to deliver information-based services, both core and supplementary
• Many companies seek to divert customers from employee contact to Internet-based self-service
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Service Firms as Teachers: Well-trained Customers Perform Better
• Firms must teach customers roles as co-producers of service• Customers need to know how to achieve best results
• Education can be provided through:• Brochures• Advertising• Posted instructions• Machine-based instructions• Websites, including FAQs• Service providers• Fellow customers
• Employees must be well-trained to help advise, assist customers
Managing Customers as Partial Employees
to Increase Productivity and Quality
1. Analyze customers’ present roles in the business and compare to management’s ideal
2. Determine if customers know how to perform and have necessary skills
3. Motivate customers by ensuring that will be rewarded for performing well
4. Regularly appraise customers’ performance; if unsatisfactory, consider changing roles or termination S
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The Problem of Customer Misbehavior – Identifying and Managing “Jaycustomers”
What is a jaycustomer?
A customer who behaves in a thoughtless or abusive fashion, causing problems for the firm itself, employees, other customers
Why do jaycustomers matter?• Can disrupt processes• Affect service quality• May spoil experience of other customers
What should a firm do about them?• Try to avoid attracting potential jaycustomers• Institute preventive measures • Control abusive behavior quickly• Take legal action against abusers• BUT firm must act in ways that don’t alienate other customers
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Six Types of “Jaycustomer”
• Thief – seeks to avoid paying for service• Rule breaker – ignores rules of social behavior and/or
procedures for safe, efficient use of service• Belligerent – angrily abuses service personnel (and sometimes
other customers) physically and/or emotionally• Family Feuders – fight with other customers in their party• Vandal – deliberately damages physical facilities, furnishings,
and equipment• Deadbeat – fails to pay bills on time S
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