SERVICE POSITIONING Through Structural Change Sethaphat P. GSBS 6111 Service Marketing

Outline Service Positioning Complexity and Divergence Service Blueprinting Alternative Directions for Structural Change Structural Alternatives Role of Service and Facilitating Goods

Service Positioning

Complexity and Divergence

Service Blueprinting

Alternative Directions for Structural Change

Structural Alternatives

Role of Service and Facilitating Goods

Service Product Positioning The basic of service positioning strategy is the service itself, but marketing offers how to make service processes for positioning purposes.

The basic of service positioning strategy is

the service itself, but marketing offers how to make service processes for positioning purposes.

What is positioning? POSITIONING: is the process of establishing and maintaining a distinctive place in the market for an organization and/or its individual offerings. (Lovelock., Patterson., Walker., 2004, p.188)

POSITIONING:

is the process of establishing and maintaining a distinctive place in the market for an organization

and/or its individual offerings. (Lovelock., Patterson., Walker., 2004, p.188)

How to positioning products PRODUCTS: are often manufactured to reach certain market eg: Light beer - calorie conscious consumer are positioned after manufacturing eg: Xerox copier may be changed in order to its market position eg: Jeep - military vehicle to family vehicle

PRODUCTS:

are often manufactured to reach certain market eg: Light beer - calorie conscious consumer

are positioned after manufacturing

eg: Xerox copier

may be changed in order to its market position

eg: Jeep - military vehicle to family vehicle

What is service? Services = Product = Process airline . air transportation movie . entertainment services hotel . lodging rental If Services = Product = Process , so service can be designed, managed and changed for positioning

Services = Product = Process

airline . air transportation

movie . entertainment services

hotel . lodging rental

If Services = Product = Process , so service can be designed, managed and changed for positioning

Process Characteristics S tandardised: non-varying continual process, similar to mass production of goods C ustomised: tailor-made process C omplexity: steps and sequences become the process D ivergence: variability of process steps and sequences

Complexity and Divergence S ervice’s c omplexity measuring by number of steps in the service . Accounting > Bookkeeping .Architecture > Plumbing > Lawn Mowing .Hospital > Clinic S ervice’s d ivergence degree of freedom in process step every perform of the process is “ unique ” low divergence = more standardised

S ervice’s c omplexity

measuring by number of steps in the service

. Accounting > Bookkeeping

.Architecture > Plumbing > Lawn Mowing

.Hospital > Clinic

S ervice’s d ivergence

degree of freedom in process step

every perform of the process is “ unique ”

low divergence = more standardised

Relative Positions Based On Structural Analysis High Complexity Low Complexity Hotel Services X-Ray Lab Exams run by university Professional Services High Divergence Singer Painter, Teacher Low Divergence Clinic Diagnostic Services Specialist Treatment Hospital

Alternative Directions for Structural Change R educed d ivergence (Volume-oriented positioning strategy) - reduce costs, improve productivity, easier to distribute, - more uniform service quality, greater service availability - NEGATIVE - inflexibility in operating procedures, low customization-limits options “ customer may reject the highly standardized service even it costs less”

R educed d ivergence

(Volume-oriented positioning strategy)

- reduce costs, improve productivity, easier to distribute,

- more uniform service quality, greater service availability

- NEGATIVE

- inflexibility in operating procedures, low customization-limits options

“ customer may reject the highly standardized service even it costs less”

Alternative Directions for Structural Change I ncreased d ivergence (Job Shop) (Niche Positioning Strategy) - customization and flexibility command higher price - less volume more margin - NEGATIVE - difficult to manage, control, and distribute “ customers may not be willing to pay the price”

I ncreased d ivergence (Job Shop)

(Niche Positioning Strategy)

- customization and flexibility command higher price

- less volume more margin

- NEGATIVE

- difficult to manage, control, and distribute

“ customers may not be willing to pay the price”

Alternative Directions for Structural Change R educed c omplexity (specialization strategy) - narrow service offering, easy to control, being an expert - NEGATIVE - customers perceive service as “stripped down” - specialized quality might not enough to overcome price - risky in competition

R educed c omplexity

(specialization strategy)

- narrow service offering, easy to control, being an expert

- NEGATIVE

- customers perceive service as “stripped down”

- specialized quality might not enough to overcome price

- risky in competition

Alternative Directions for Structural Change I ncreased c omplexity (penetration strategy) - adding more services or enhancing current ones - maximizing revenue from each customer - NEGATIVE - customers might get confused and might cause overall service fall - benefit to specialize competitors

I ncreased c omplexity

(penetration strategy)

- adding more services or enhancing current ones

- maximizing revenue from each customer

- NEGATIVE

- customers might get confused and might cause overall service fall

- benefit to specialize competitors

Structural Change Service industries offer numerous examples of changes in complexity and divergence and how they affect the market position . In retailing , + complexity = supermarkets - complexity = specializing business In fast food industry , + complexity = hamburger outlet

Service industries offer numerous examples of changes in complexity and divergence and how they affect the market position .

In retailing ,

+ complexity = supermarkets

- complexity = specializing business

In fast food industry ,

+ complexity = hamburger outlet

Structural Alternatives (Restaurant) No Reservations Self-seating. Menu on Blackboard Eliminate Customer Fills Out Form Pre-prepared: No Choice Limit to Four Choices Sundae Bar: Self-service Coffee, Tea, Milk only Serve Salad & Entree Together: Bill and Beverage Together Cash only: Pay when Leaving TAKE RESERVATION SEAT GUESTS, GIVE MENUS SERVE WATER AND BREAD TAKE ORDERS PREPARE ORDERS Salad (4 choices) Entree (15 choices) Dessert (6 choices) Beverage (6 choices) SERVE ORDERS COLLECT PAYMENT Specific Table Selection Recite Menu: Describe Entrees & Specials Assortment of Hot Breads and Hors D’oeuvres At table. Taken Personally by Maltre d’ Individually Prepared at table Expand to 20 Choices: Add Flaming Dishes; Bone Fish at Table; Prepare Sauces at Table Expand to 12 Choices Add Exotic Coffees; Sherbet between Courses; Hand Grind Pepper Choice of Payment. Including House Accounts: Serve Mints LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE

Role of Service Employees and Customers The management and control of human behavior is a critical factor in process design, change, and operating quality. Behavior and Motivation are controlled by the design of the process itself and that if the process is properly designed, high motivation and effectiveness will be the natural results. People are just as important as structural design. If people issues are not addressed effectively, even the best design will fail.

The management and control of human behavior is a critical factor in process design, change, and operating quality.

Behavior and Motivation are controlled by the design of the process itself and that if the process is properly designed, high motivation and effectiveness will be the natural results.

People are just as important as structural design. If people issues are not addressed effectively, even the best design will fail.

Role of Facilitating Goods Facilitating goods are also important in structural planning. eg: educational service can be human or videotape or book Sometimes, facilitating goods are used as a replacement for human performance to reduce divergence. Technology can be used to increase complexity and divergence. eg: ATM machine; Past - dispensing and deposit services Now - transferring and investing services

Facilitating goods are also important in structural planning.

eg: educational service can be human or videotape or book

Sometimes, facilitating goods are used as a replacement for human performance to reduce divergence.

Technology can be used to increase complexity and divergence.

eg: ATM machine;

Past - dispensing and deposit services

Now - transferring and investing services

Conclusion To sum up, service positioning can be used to increase company’s market benefits through structural change. For marketers, process design might be a tool that can substantially increase their impact and role in the service sector service marketing.

To sum up, service positioning can be used to increase company’s market benefits through structural change.

For marketers, process design might be a tool that can substantially increase their impact and role in the service sector service marketing.

References Lovelock C. H., Patterson P.G. and Walker R.H. (2004) Services Marketing – An Asia-Pacific Perspective (3rd edition), Pearson Education, Australia, Sydney http://www.belkcollege.uncc.edu/mjkhouja/04%20Design.ppt http://www.fgcu.edu/cob/mkt/langford/analysis.html

Lovelock C. H., Patterson P.G. and Walker R.H. (2004)

Services Marketing – An Asia-Pacific Perspective (3rd edition), Pearson Education, Australia, Sydney

http://www.belkcollege.uncc.edu/mjkhouja/04%20Design.ppt

http://www.fgcu.edu/cob/mkt/langford/analysis.html