Chapter 3

Positioning Services in
Competitive Markets

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3- 1
 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

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3- 2
 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
Positioning is defined as the process of establishing &
maintaining a distinctive place in the market for an
organization or for its individual; products/ services in offering

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3- 3
 Basic Focus Strategies for Services (Fig. 3.1)

BREADTH OF SERVICE OFFERINGS

Narrow Wide

Unfocused
Service (Everything
Many Focused for everyone)
NUMBER
OF MARKETS
SERVED
Fully Focused
Market
(Service and
Focused
Few market focused)

Source: Robert Johnston

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3- 4
 Fully focused : a fully focused organization provides a
limited range of services to a narrow and specific market
segment.

Market focused: a market focused company concentrates

on a narrow market segment but has a wide range of
services.

Service focused: firms offer a narrow range of services to a

fairly broad market.

Unfocused: many service providers fall into the focused

categories because they try to serve broad markets and
provide wide range of services.

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3- 5
 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

Jack Trout

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3- 6
 Uses of Positioning in
Marketing Management (Table 3.1)

Understand relationships between products and markets

compare to competition on specific attributes
evaluate products ability to meet consumer needs/expectations
predict demand at specific prices/performance levels

Identify market opportunities

introduce new products
redesign existing products
eliminate non-performing products

Make marketing mix decisions, respond to competition

distribution/service delivery
pricing
communication

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3- 7
 Possible Dimensions for Developing Positioning
Strategies

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

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3- 8
 Developing a
Market Positioning Strategy (Fig. 3.3)

MARKET - Size Define, Analyze

ANALYSIS
- Composition Market Segments
- Location
- Trends
Select
Target Segments
To Serve

INTERNAL - Resources Articulate Marketing

ANALYSIS - Reputation Desired Position Action
- Constraints in Market Plan
- Values
Select Benefits
to Emphasize
to Customers
- Strengths
COMPETITIVE - Weaknesses Analyze
ANALYSIS - Current Possibilities for
Positioning Differentiation
Source: Adapted from Michael R. Pearce

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3- 9
 Positioning of Hotels :
Price vs. Service Level (Fig. 3.4)

Expensive

Grand
Regency
PALACE

Shangri-La
High Moderate
Service Atlantic Service
Sheraton

Italia
Castle
Alexander IV
Airport Plaza
Less Expensive

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 10
 Positioning of Hotels :
Location vs. Physical Luxury (Fig. 3.5)

High Luxury

Regency
Grand

Shangri-La
Sheraton
PALACE
Financial Shopping District Inner
District and Convention Centre Suburbs

Castle Italia
Alexander IV
Atlantic
Airport Plaza

Moderate Luxury

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 11
 Positioning after New Hotel Construction:
Price vs. Service Level (Fig. 3.6)

Expensive
Mandarin
New Grand Heritage
Marriott
Continental

Action?
Regency PALACE
Shangri-La
High No action? Moderate
Service Service
Atlantic
Sheraton
Italia

Castle
Alexander IV
Less Airport Plaza
Expensive

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 12
 Positioning after New Hotel Construction:
Location vs. Physical Luxury (Fig. 3.7)

High Luxury
Mandarin
New Grand
Continental Heritage
Marriott Regency
Sheraton Shangri-La
Action?
PALACE

Financial No action? Shopping District Inner

District and Convention Centre Suburbs

Castle Italia
Alexander IV
Atlantic
Airport Plaza

Moderate Luxury

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 13
 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

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 14