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Services Marketing - Service Positioning


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Service Positioning
After a service strategy has been identified, a company must decide how to position its product most effectively. The concept of positioning involves establishing a distinctive place in the minds of target customers relative to competing products.
In “The New Positioning: The Latest on the World's #1 Business Strategy”, Jack Trout distills the essence of positioning into the following four principles
1. A company must establish a position in the minds of its targeted customers.
2. The position should be singular, providing one simple and consistent message.
3. The position must set a company apart from its competitors.
4. A company cannot be all things to all people—it must focus its efforts.
Positioning and Marketing Strategy
Companies use positioning strategies to distinguish their services from competitors and to design communications that convey their desired position to customers and prospects in the chosen market segments. There are a number of different dimensions around which positioning strategies can be developed.

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Services Marketing - Service Positioning

  1. 1. Welcome to Services Marketing / Chapter 9
  2. 2. Positioning & Differentiation of Services By Himansu S M / 12-Aug-2013
  3. 3.  Listening to Customer involves Marketing / Market Research and / or Consumer Research, and the Study of Marketing Research (MR).  Marketing managers often commission formal marketing studies of specific problems and opportunities.  It‘s the job of marketing researchers to produce customer insight into the problem. 3
  4. 4.  Positioning and Differentiation is the third logical step after the MR  (1) Market Segmentation,  (2) Market Targeting,  (3) Market Positioning.  commonly known as STP – in short (Segmenting, Targeting and Positioning) 4
  5. 5. Top 10 Product Brands Top 10 Service Brands 1. Nokia 2. Colgate 3. Lux 4. Dettol 5. Britania 6. Lifebuoy 7. Clinic Plus 8. Pond‘s 9. Fair & Lovely 10.Pepsodent 1. Vodafone 2. BSNL 3. State Bank of India 4. LICI 5. Tata Indicom 6. Big Bazaar 7. ICICI Bank Ltd. 8. Bank of India 9. Hindustan Petroleum 10.Bharti Airtel
  6. 6.  Segmenting is dividing the whole market into uniform, manageable and profitable units.  A market segment is composed of a group of buyers, who share common characteristics, needs, purchasing behaviour, or consumption patterns.  Effective segmentation should group buyers into segments in ways that result in as much similarity as possible on the relevant characteristics within each segment but dissimilarity on those same characteristics between segments. 6
  7. 7.  Geographic Segmentation –  Demographic Segmentation –  Psychological / Behavioural Segmentation -  Psychographic Segmentation –  Socio-Cultural Segmentation –  Use Related Segmentation –  Use Situation Segmentation –  Benefit Segmentation –  Hybrid Segmentation – 7
  8. 8.  Targeting is choosing a single or a few of these units and focusing on them.  A target segment is the one that a firm has selected from among those in the broader market and may be defined on the basis of several variables. 8
  9. 9.  Ex. : Service firms that are developing strategies based on use of technology recognise that customers can also be segmented according to their degree of competence and comfort in using technology based delivery systems. 9
  10. 10.  An important marketing issue for any business is to accept that some market segments offer better opportunities than others.  Target segment should be selected not only on the basis of their sales and profit potential but also with reference to the firm's ability to match or exceed competing offers directed at the same segment. 10
  11. 11. 1. Single Segment Concentration 2. Selective Specialisation M-1 M-2 M-3 M-4 P-1 P-2 P-3 P-4 M-1 M-2 M-3 M-4 P-1 P-2 P-3 P-4
  12. 12. 3. Product Specialisation 4. Market Specialisation M-1 M-2 M-3 M-4 P-1 P-2 P-3 P-4 M-1 M-2 M-3 M-4 P-1 P-2 P-3 P-4
  13. 13. 5. Full Market Coverage ‗P‘ denotes ‗Products‘ ‗M‘ denotes ‗Markets‘ M-1 M-2 M-3 M-4 P-1 P-2 P-3 P-4
  14. 14.  Positioning for a marketer is occupying a relative position in the minds of customers with respect to other service providers / competitors.  Differentiation is slightly different but very close to positioning – making the service offered something distinct or with some distinctive advantage from competitors' offerings.  Definitions : The following definitions are very close and both are complementary and supplementary to each other. 14
  15. 15.  Positioning is defined as the process of establishing and maintaining a distinctive place in the market for an organisation and/or its products/services offerings. This is the creating of a distinct place in the minds of a customer, or the perception of a customer w.r.t. other companies or their products/services.  Differentiation is defined as a company seeking to serve and creation of a different advantage or a competitive edge, that will enable the firm to serve the target market more effectively than the competitor. 15
  16. 16.  After a service strategy has been identified, a company must decide how to position its product most effectively.  The concept of positioning involves establishing a distinctive place in the minds of target customers relative to competing products.  Jack Trout has distilled the essence of positioning into the following four principles : 16
  17. 17.  1. A company must establish a position in the minds of its targeted customers.  2. The position should be singular, providing one simple and consistent message.  3. The position must set a company apart from its competitors.  4. A company cannot be all things to all people—it must focus its efforts. 17
  18. 18.  According to Michael Porter, there are three basic positioning alternatives, like :  (1) as a product / service differentiator,  (2) as a low cost leader, and  (3) as a niche market offerer.  He suggested that the marketer should be specialist for a few strategies rather than a generalist for several strategies. The strategies can be based on several attributes as : 18
  19. 19.  Attribute Positioning : Based on a single attribute or feature of a service, like Malayala Manorama- no.1 in circulation, Allahabad Bank- the oldest bank, etc.  Benefit Positioning : Based on some benefit the customer derives using a particular service, like some new generation private banks offering ATMs and internet banking, etc. 19
  20. 20.  Use/Application Positioning : Positioning as the best for a particular service application, like SBI offering education loans, etc.  User Positioning : Based on the requirements of some specific target groups, like India positioning itself as the destination of tourists seeking inner peace of mind, etc. 20
  21. 21.  Competitor Positioning : This service is positioned primarily against a particular competitor, like IIPM positioning itself against IIMs – dare to think beyond IIMs. 21
  22. 22.  Category Positioning : Positioning as a leader of a particular category, so that it becomes synonymous with that service, like Xerox means photocopying, Essel Word means family holiday entertainment, etc.  Quality/Price Positioning : On the basis of quality standard at a particular price, like Oberoi hotels offer high class service at a high price range, other budget hotels offering decent minimum comfortable stay and service with all modern amenities (but not luxury) for affordable prices, etc. 22
  23. 23. Marketers should be careful about their positioning strategies to prevent certain situations :  Some brands are over-positioned when the segment is too narrow for the offer and many potential customers fail to notice,  Some brands are under-positioned when the customers fail to notice any distinctive edge, 23
  24. 24.  Some brands communicate conflicting features / benefits to create a confusion,  Some brands offer irrelevant or redundant features / benefits,  Some brands offer promises which the customer doubt whether the marketer can deliver. 24
  25. 25.  Market positions are rarely permanent. Competitive activity, new technologies, and internal changes may cause a company to reposition itself and its services.  Repositioning involves changing the position a firm holds in a consumer's mind relative to competing services.  This may be necessary to : 25
  26. 26.  Counter competitive attacks,  Remain attractive and appealing to current customers,  Or target new and additional segments.  Repositioning can involve adding new services  Or abandoning certain offerings and withdrawing completely from some markets. 26
  27. 27.  The concept of value chain management was first given by Michael Porter in 1985.  The idea was that the company is not merely a collection of men, machinery, money, material, but a whole system with interrelated activities to create or enhance ―value‖ with a message (marketing communications).  And for services, this should be used for gaining a competitive advantage. 27
  28. 28.  Again according to Porter, the entire activities of a firm is grouped into two major areas – primary (core) and secondary / support (non-core).  Today‘s companies concentrate on the core activities and outsourcing the other activities, so that the value of the core products / services increase and the cost for others decreases. 28
  29. 29.  Many companies use perceptual mapping to help finalise their positioning strategies. Perceptual maps—also called positioning maps—help managers identify the most critical attributes of their own and competing services, as viewed by the customers.  These maps provide a visual picture of a service's distinctive characteristics, identify the nature of competitive threats and opportunities, and highlight gaps between customer and management perceptions about competing services. 29
  30. 30.  To create a perceptual map, researchers first identify attributes that are important to customers and then measure how the firm and its competitors are performing on each attribute.  The results can then be plotted on a chart, using the horizontal axis for measures of one attribute and the vertical axis for a second. Since charts are two-dimensional, perceptual maps are usually limited to two attributes. 30
  31. 31.  Sometimes, three-dimensional models are built so that a third dimension can be included.  When marketers need to feature more than three dimensions to describe service positioning, they can create a series of two-dimensional maps or use computerized models to handle numerous attributes simul-taneously.  Some commonly used attributes include: 31
  32. 32.  Price  Speed  Reliability  Convenience  Trustworthiness  Level of personal service  Quality of physical elements  Industry-specific characteristics that offer a unique benefit 32
  33. 33. 0 5 10 15 20 0 2 4 6 Fuel Efficiency Comfort Fuel Efficiency Make - Maruti - Hyundai - Ford 33
  34. 34.  Differentiation is providing a special or competitive advantage to the service over that of the competitors, in any attributes, price, quality, benefit, features, d elivery, etc.  The customers must feel that the service offered by the company is something special or superior to others, and thereby perceive the service and the company as a favourable and respectable image in their mind.  For this all the elements of the marketing mix play a role. Effective differentiation should have the following criteria : 34
  35. 35.  Important : Customers in the target group attach some value and importance to the services offered by the company,  Distinctive : Customers feel that the services offered by the company has some speciality, advantage, difference, uniqueness, etc. as compared to that of the competitors,  Superior : Customers feel that the services offered by the company is superior to the rest in all respect, 35
  36. 36.  Communicable : The ease with which the company communicates with the customers regarding their service offer,  Pre-emptive : The differentiation is such that it can‘t be easily copied or duplicated or equalled,  Affordable : Customers should be able to pay for the difference willingly,  Profitable : The company should maintain its profitability or profits in offering the difference, or in other words it should be profitable. 36
  37. 37.  Positioning of products is easier than services positioning, because of intangible nature of the services.  So the marketer has to be careful to apply the right marketing mix – the 3 additional Ps in proper context. 37
  38. 38. First the marketing research should be done to ascertain the target market, current positioning, the competitors relative positioning. Then the following strategies may be adopted : 1. Determining levels of positioning : The company should decide at what level it‘s going to position its services. It can choose single level or multiple level, like LICI. 38
  39. 39. 2. Identification of Attributes : The company should decide the service attributes for target market segment, like : ◦ Class : Like hotels offering swimming, sauna bath, health club, Joga, etc. ◦ Uses : Attaching a major benefit to the original service, like investment option to insurance schemes. ◦ Price : Delivered value to price ratio should be high, like MBA in IIMs, XLRI, XIMB, etc. ◦ Users : Meant primarily for a narrow group, like Disneyland for children and fun loving young people. ◦ Rational and Emotional Benefits : Some times customers choose to be rational, and some other times emotional, and sometimes both. 39
  40. 40. 3. Location of Attributes on positioning map : This a highly graphical representation of the positioning by different service providers on the basis of one or a few or several attributes. This can be done separately for each segment. Then the marketer can decide where to position its services. 40
  41. 41. 4. Evaluating positions options : Ries and Trout have given some ideas for services positioning : ◦ Strengthening present position with competitors : Here the company simply enhances the major attributes, like efficiency, etc., of the services offered by it, without having a direct conflict with the market leader and without trying to change the positioning ◦ Identifying an unoccupied market position : Here the company tries to position its services where there is no competition or where the market is not tapped. ◦ Repositioning the competitors : Doing something drastic or changing several major services features, customer relationship, brand image, company policies to try to gain a separate positioning in the target segment 41
  42. 42. 5. Implementing the position : This simply the implementation of the marketing mix : ◦ The Service : The types of services aimed at the target segments, ◦ The Price : Accurately and differently prices for different types of services, ◦ The Location : The service delivery places, ◦ The Promotion : The promotional messages and activities, Ads, etc. should clarify the image of the services and the company, ◦ The People : The class and quality of the service personnel offering a perception in the minds of a customer, ◦ The Process : he actual process, technological advancements, refined methods of services delivery. 42
  43. 43. End of Chapter © Himansu S M / 12-Aug-2013