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

Chapter 3
Positioning Services in
Competitive Markets
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 2
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 - 3
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

Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 4
Basic Focus Strategies for Services (Fig. 3.1)
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)
Source: Robert J ohnston
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
4. Firm cannot be all things to all people--must focus
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)
- Size
- Composition
- Location
- Trends
Marketing
Action
Plan



MARKET
ANALYSIS

INTERNAL
ANALYSIS

- Resources
- Reputation
- Constraints
- Values
COMPETITIVE
ANALYSIS
- Strengths
- Weaknesses
- Current
Positioning

Define, Analyze
Market Segments
Select
Target Segments
To Serve
Articulate
Desired Position
in Market
Select Benefits
to Emphasize
to Customers
Analyze
Possibilities for
Differentiation
Source: Adapted from Michael R. Pearce
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 9
Positioning of Hotels in Belleville:
Price vs. Service Level (Fig. 3.4)
Expensive
Shangri-La
High
Service
Moderate
Service
Grand
Regency
Sheraton
Italia
Castle
Alexander IV
Airport Plaza
PALACE
Atlantic
Less Expensive
Slide 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 3 - 10
Positioning of Hotels in Belleville:
Location vs. Physical Luxury (Fig. 3.5)
High Luxury
Shopping District
and Convention Centre
Shangri-La
Moderate Luxury
Financial
District
Inner
Suburbs
Grand
Regency
Sheraton
Italia
Castle
Alexander IV
Airport Plaza
PALACE
Atlantic
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
Shangri-La
High
Service
Moderate
Service
Heritage
Mandarin
New Grand
Marriott
Continental
Regency
Sheraton
Italia
Alexander IV
Airport Plaza
PALACE
Atlantic
No action?
Action?
Less Expensive
Castle
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
Shangri-La
Financial
District
Inner
Suburbs
Heritage
Mandarin
New Grand
Marriott
Continental
Regency
Sheraton
Italia
Alexander IV
Airport Plaza
PALACE
Atlantic
No action?
Action?
Moderate Luxury
Castle
Shopping District
and Convention Centre
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