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.

1. Welcome to Services Marketing / Chapter 9

2. Positioning &
Differentiation of
Services
By Himansu S M / 12-Aug-2013

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.  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. 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.  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.  Geographic Segmentation –
 Demographic Segmentation –
 Psychological / Behavioural Segmentation -
 Psychographic Segmentation –
 Socio-Cultural Segmentation –
 Use Related Segmentation –
 Use Situation Segmentation –
 Benefit Segmentation –
 Hybrid Segmentation –
7

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.  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.  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.
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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. 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. 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.  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.  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.  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.  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.  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.  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.  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.  Competitor Positioning : This service is
positioned primarily against a
particular competitor, like IIPM
positioning itself against IIMs – dare to
think beyond IIMs.
21

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. 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.  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.  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.  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.  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.  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.  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.  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.
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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.  Price
 Speed
 Reliability
 Convenience
 Trustworthiness
 Level of personal service
 Quality of physical elements
 Industry-specific characteristics that
offer a unique benefit
32

33. 0
5
10
15
20
0 2 4 6
Fuel
Efficiency
Comfort
Fuel Efficiency
Make
- Maruti
- Hyundai
- Ford
33

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.  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.  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.  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. 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. 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. 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. 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
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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.
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43. End of Chapter © Himansu S M / 12-Aug-2013