SQ Lecture Three : Positioning Services & Developing Service Products (Ch 3 and 4)
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SQ Lecture Three : Positioning Services & Developing Service Products (Ch 3 and 4)

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SQ Lecture Three : Positioning Services & Developing Service Products (Ch 3 and 4) SQ Lecture Three : Positioning Services & Developing Service Products (Ch 3 and 4) Presentation Transcript

  • JAN 2013 Semester 1 Service Quality MKTG 1268 Lecture Three • Positioning Services in Competitive Markets (Chapter 3) • Developing Service Products (Chapter 4)
  • This lecture:2  Heavy set of topics: two chapters involved (3 and 4)  Need to read up EARLY in order to work on your project  IMPORTANT topics for understanding Service Marketing especially on the elements of the service product  Positioning is at the CORE of strategy
  • 3 Chapter Three Positioning Services in Competitive Markets
  • Overview of Chapter 34  Customer-Driven Services Marketing Strategy  Segmenting Service Markets  Targeting Service Markets  Positioning Services  Using Positioning Maps to Analyze Competitive Strategy
  • Customer-Driven Services Marketing Strategy Developing a services marketing positioning strategy (Fig. 3.1)5 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Customer-Driven Services Marketing Strategy Customer, Competitor and Company Analysis (3Cs)6 • Customer analysis  Overall examination of market characteristics  Customer needs and related characteristics and behaviors • Competitor analysis  Current positioning  Strengths and weaknesses • Company analysis  Current brand positioning and image  Resources  Limitations and constraints © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Conducting SWOT Analysis of the Company7
  • Customer-Driven Services Marketing Strategy Segmentation, Targeting and Positioning8 • Segmentation  Dividing population of possible customers into groups with common service-related characteristics  Similar needs within same segment, different needs between segments • Targeting  Choose one/more segments to focus on • Positioning  Unique place in the minds of customers  Differentiation forms first step to creating unique positioning © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • 9
  • Market Segmentation10  Firms vary widely in ability to serve different types of customers  Adopt strategy of market segmentation, identifying those parts of market can serve best  A market segment is composed of a group of buyers sharing common:  Characteristics  Needs  Purchasing behavior  Consumption patterns  Within segments, they are as similar as possible. Between segments, they are as dissimilar as possible
  • Segmenting Service Markets Market Segmentation11 • Various ways to segment markets  Demographics ― on its own will not result in meaningful segments  Psychographic segmentation – useful for strengthening brand identity and creating emotional connection  Behavioral segmentation – focuses on observable behavior  Needs-based segmentation – focuses on what customers truly want in a service © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Developing Right Service Concept for a Specific Segment12  Use research to identify and prioritize which attributes of a given service are important to specific market segments  Individuals may set different priorities according to:  Purpose of using the service  Who makes decision  Timing of use  Whether service is used alone or with a group  Composition of that group
  • Targeting the right group of customers13
  • Important vs. Determinant Attributes14  Consumers usually choose between alternative service offerings based on perceived differences between them  Attributes that distinguish competing services from one another are not necessarily the most important ones  Important attributes are not necessarily those attributes that determine which service brand the consumer finally selects
  • Important vs. Determinant Attributes15  Important attributes:  are met by all competing service providers  do not necessarily sway the purchase decision in favor of one service provider as opposed to another  Determinant attributes determine buyers‟ choices between competing alternatives  Servicecharacteristics that are important to purchasers  Customers see significant differences between competing alternatives on these attributes
  • Determinant attributes for business travellers16
  • Establishing Service Levels17  Need to make decisions on service levels – level of performance firm plans to offer on each attribute  Easily quantified attributes are easier to understand and generalizable – e.g. vehicle speed, physical dimensions  Qualitative attributes are ambiguous and subject to individual interpretation – e.g. physical comfort, noise levels
  • Establishing Service Levels18  Can often segment customers according to willingness to give up some level of service for a lower price  Price-insensitive customers willing to pay relatively high price for high levels of service on each important attribute  Price-sensitive customers look for inexpensive service with relatively low performance on many key attributes (e.g., Services Insights 3.2 Capsule Hotels)
  • Capsule Hotels (what type of customer and what are their service expectations? (read Service Insight 3.2)19
  • Targeting Service Markets Achieve Competitive Advantage through Focus (Fig. 3.5)20 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Considerations for Using the Focus Strategies (1)21  Fully focused  Limited range of services to narrow and specific market  Opportunities  Developing recognized expertise in a well-defined niche may provide protection against would-be competitors  Allows firms to charge premium prices  Risks  Market may be too small to generate needed volume of business  Demand for a service may be displaced by generic competition from alternative products  Purchasers in chosen segment may be susceptible to economic downturn
  • Example of a fully focused strategy – private air charter for VIPs22
  • Considerations for Using the Focus Strategies (2)23  Market focused  Narrow market segment with wide range of services  Need to make sure firms have operational capability to do an deliver each of the different services selected  Need to understand customer purchasing practices and preferences  Service focused  Narrow range of services to fairly broad market  As new segments are added, firm needs to develop knowledge and skills in serving each segment
  • Market Focused (Rentokil) – read Service Insight 3.3 on page 7824
  • Considerations for Using the Focus Strategies (3)25  Unfocused  Broad markets with wide range of services  Many service providers fall into this category  Danger – become a “jack of all trades and master of none”
  • Four Principles of Positioning Strategy26  Must establish position for firm or product in minds of target customers  Position should provide one simple, consistent message  Position must set firm/product apart from competitors  A company cannot be all things to all people - must focus its efforts Jack Trout
  • Positioning : One Key Message - Globally27
  • Positioning Services Six Questions for Effective Positioning Strategy28 1. What does our firm currently stand for in the minds of current and potential customers? 2. What types of customers do we serve now, and which ones would we like to target in future? 3. What is value proposition for each of our current service products, and what market segments is each one targeted at? © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Positioning Services Six Questions for Effective Positioning Strategy29 4. How does each of our service products differ from competitors‟? 5. How well do customers in chosen target segments perceive our service products as meeting their needs? 6. What changes must we make to our offerings to strengthen our competitive position? Avoid trap of investing too heavily in points of differences that are easily copied © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Key marketing mix elements of BreadTalk‟s positioning strategy30 30
  • Positioning Services Developing an Effective Positioning Strategy31 • Point of difference  Most compelling benefit offered by brand that stands out from competitors • Reason to believe  Proof that brand can deliver the benefits that are promised © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Points of difference, points of parity and points of contention 32
  • Using Positioning Maps to Analyze Competitive Strategy33  Great tool to visualize competitive positioning and map developments of time  Useful way to represent consumer perceptions of alternative products graphically  Typically confined to two attributes, but 3-D models can be used to portray positions on three attributes simultaneously  Also known as perceptual maps  Information about a product can be obtained from market data, derived from ratings by representative consumers, or both
  • Selected courier services:positioning map of speed of delivery versus cost 34
  • An example of positioning of a luxury hotel – Dubai‟s Burj Al Arab35
  • Using Positioning Maps to Analyze Competitive StrategyPositioning of Belleville Hotels: Service Level vs. Price (Fig. 3.14)36 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Using Positioning Maps to Analyze Competitive StrategyPositioning of Belleville Hotels: Location vs. Physical Luxury (Fig. 3.15)37 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Using Positioning Maps to Analyze Competitive StrategyFuture Positioning of Belleville Hotels: Service Level vs. Price (Fig. 3.17)38 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Using Positioning Maps to Analyze Competitive StrategyFuture Positioning of Belleville Hotels: Location vs. Physical Luxury(Fig. 3.18)39 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Positioning Maps Help Managers to Visualize Strategy40  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
  • Positioning Maps Help Managers to Visualize Strategy (cont’d)41  Predictions can be made of how positions may change in light of future developments  Simple graphic representations are often easier for managers to grasp than tables of data or paragraphs of prose  Charts and maps can facilitate “visual awakening” to threats and opportunities, suggest alternative strategic directions
  • Summary for Chapter 3: Positioning Services In Competitive Markets (1)42 • Effective positioning starts with the 3Cs, then segmentation, targeting and positioning. • Market segmentation forms the basis for focused strategies • Service attributes that are determinant attributes are often the ones most important to customers • Four focus strategies:  Service focused  Fully focused  Market focused  Unfocused © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Summary for Chapter 3: Positioning Services In Competitive Markets (2)43 • Positioning distinguishes a brand from its competitors • Segmentation, targeting and positioning integrates with customer, competitor and company analyses to give us a positioning statement • To develop a positioning statement, we need  Target audience  Frame of reference  Point of difference  Reason to believe © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Summary for Chapter 3: Positioning Services In Competitive Markets (2)44 • Positioning maps are useful for plotting competitive strategy  Mapping future scenarios help identify potential competitive responses  Positioning charts help visualization of strategy © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • 45 Chapter Four Developing SERVICE Products: Core and Supplementary Elements
  • Overview of Chapter 446  Designing a Service Product  The Flower of Service  Facilitating Supplementary Services  Enhancing Supplementary Services  Branding Service Products and Experiences  New Service Development
  • Service Product47  A service product comprises all elements of service performance, both tangible and intangible, that create value for customers.  The service concept is represented by: A core product, Accompanied by supplementary services
  • Designing a Service Concept (1)48  Core Product  Centralcomponent that supplies the principal, problem-solving benefits customers seek  Supplementary Services  Augmentthe core product, facilitating its use and enhancing its value and appeal
  • What is the service product for Starbucks?49
  • The Flower of Service A core product surrounded by cluster of supplementary services (Fig. 4.2) (1)50 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • The Flower of Service (2)51  There are two kinds of supplementary services  Facilitating supplementary services – either needed for service delivery, or help in the use of the core product  Enhancing supplementary service – add extra value for the customer  In a well-designed and well-managed service organization, the petals and core are fresh and well-formed  Market positioning strategy helps to determine which supplementary services should be included
  • Both facilitating and enhancing services add value to the service product52
  • Supplementary Services (1)53  Facilitating  Information – customers often require information about how to obtain and use a product or service  Order-Taking – Customers need to know what is available and may want to secure commitment to delivery. The process should be fast and smooth  Billing – Bills should be clear, accurate and intelligible  Payment – Customers may pay faster and more cheerfully if you make transactions simple and convenient for them
  • Supplementary Services (2)54  Enhancing  Consultation – Value can be added to goods and services by offering advice and consultation tailored to each customer‟s needs and situation  Hospitality – Customers who invest time and effort in visiting a business and using its services deserve to be treated as welcome guests  Safekeeping – Customers prefer not to worry about looking after the personal possessions that they bring with them to a service site  Exceptions – Customers appreciate some flexibility when they make special requests and expect responsiveness when things don‟t go according to plan
  • Facilitating Services – Examples of Information55 55
  • Information to the customer – example of courier services ; they offer document tracking56
  • Facilitating Services – Examples of Order-Taking57 57
  • Reservations systems on the web58
  • Facilitating Services – Examples of Billing59 59
  • Facilitating Services – Examples of Payment60 60
  • Enhancing Services – Examples of Consultation61 61
  • Enhancing Services – Examples of Hospitality62 62
  • Hospitality in retailing service63
  • Enhancing Services – Examples of Safekeeping64 64
  • Enhancing Services – Examples of Exceptions65 65
  • Responding to customer requests66
  • Managerial Implications67  Not every core product is surrounded by supplementary elements from all eight clusters  Nature of product helps to determine:  Which supplementary services must be offered  Which might usefully be added to enhance value and ease of doing business with the organization  People-processing and high contact services tend to have more supplementary services  Firms that offer different levels of service often add extra supplementary services for each upgrade in service level
  • Product Lines And Brands68  Most service organizations offer a line of products rather than just a single product.  They may choose among 3 broad alternatives:  Single brand to cover all products and services  A separate, stand-alone brand for each offering  Some combination of these two extremes
  • Spectrum of Branding Alternatives (Fig 4.16)69 69
  • Example: British Airways Sub-brands British Airways offers seven distinct air travel products Intercontinental Offerings Intra-European Offerings Club World First (Deluxe Club Europe (Business Service) (Business Class) Class) Shuttle World World Traveller Plus Traveller Euro-Traveller (Premier (Economy) (Economy) economy)70 70
  • Individual branding for service products71
  • Offering a Branded Experience (1)72  Branding can be used at both company and product levels  Corporate brand:  Easily recognized  Holds meaning to customers  Stands for a particular way of doing business  Product brand:  Helps firm establish mental picture of service in consumers‟ minds  Helps clarify value proposition
  • Service Tiering73
  • 4.4 Branding Service Products and Experiences Offering a Branded Experience (2) • Four key ways to build strong brands  Dare to be different  Determine your own fame  Make an emotional connection  Internalize the brand74 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • Branding Service Products and Experiences Building Brand Equity (Fig. 4.19)75 © Pearson Education South Asia Pte Ltd 2013. All rights reserved
  • A Hierarchy of New Service Categories (1)76 1. Style changes  Visible changes in service design or scripts 2. Service improvements  Modest changes in the performance of current products 3. Supplementary service innovations  Addition of new or improved facilitating or enhancing elements 4. Process-line extensions  Alternative delivery procedures
  • Supplementary service innovation77
  • A Hierarchy of New Service Categories (2)78 5. Product-line extensions  Additions to current product lines 6. Major process innovations  Using new processes to deliver existing products with added benefits 7. Major service innovations  New core products for previously undefined markets
  • Examples of major process innovations79
  • Achieving Success in Developing New Services  In developing new services,  Core product is of secondary importance  Ability to maintain quality of the total service offering is key  Accompanying marketing support activities are vital  Market knowledge is of utmost importance 80
  • Success Factors in New Service Development81  Market synergy  Good fit between new product and firm‟s image/resources  Advantage vs. competition in meeting customers‟ needs  Strong support from firm during/after launch  Firm understands customer purchase decision behavior  Organizational factors  Strong interfunctional cooperation and coordination  Internal marketing to educate staff on new product and its competition  Employees understand importance of new services to firm  Market research factors  Scientific studies conducted early in development process  Product concept well defined before undertaking field studies
  • Summary of Chapter 4: Developing Service Concepts (1)82  Creating services involve:  Designing core product, supplementary services and delivery process  Flower of service includes core product and two types of supplementary services: facilitating and enhancing  Facilitating services include information, order taking, billing, and payment  Enhancing services include consultation, hospitality, safekeeping, and exceptions  Spectrum of branding alternatives exists for services  Branded house  Subbrands  Endorsed brands  House of brands
  • Summary of Chapter 4: Developing Service Concepts (2)83  Seven categories of new services: 1. Style changes 2. Service improvements 3. Supplementary service innovations 4. Process-line extensions 5. Product-line extensions 6. Major process innovations 7. Major service innovations  Success factors in new service development:  Market synergy  Organizational factors  Market research factors
  • Practice Exam Question84  List and explain the five(5) of the seven types of a „new service‟.
  • Practice Exam Question : A Case Situation85  Café Rende is a small café well known among the locals for its delicious cakes, well blended coffee and nice décor. To cater for rising customer expectations, the owner has decided to update her shop by painting the walls, changing the furniture and also installing credit card payment facility because she noted that more customers ask to pay by credit card. She also introduced, due to popular demand, a series of cake baking classes. She also introduced home delivery service for locations within a 3 km radius and for purchases of more than $50. Question for discussion:  There are seven new service development categories. Categorize and define each of the new services introduced at Café Rende.